The World Bankdocuments.worldbank.org/curated/en/...private consumption and a gradual recovery of...

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Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD3032 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL IDA GRANT IN THE AMOUNT OF SDR 5,800,000 MILLION (US$ 8.00 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR THE NOUADHIBOU ECO-SEAFOOD CLUSTER PROJECT April 23, 2019 Finance, Competitiveness And Innovation Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

Transcript of The World Bankdocuments.worldbank.org/curated/en/...private consumption and a gradual recovery of...

Page 1: The World Bankdocuments.worldbank.org/curated/en/...private consumption and a gradual recovery of iron ore and copper prices. GDP growth stood at 3.5 percent in 2017, up from 2.0 percent

Document of

The World Bank

FOR OFFICIAL USE ONLY Report No: PAD3032

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT PAPER

ON A

PROPOSED ADDITIONAL IDA GRANT

IN THE AMOUNT OF SDR 5,800,000 MILLION

(US$ 8.00 MILLION EQUIVALENT)

TO THE

ISLAMIC REPUBLIC OF MAURITANIA

FOR THE

NOUADHIBOU ECO-SEAFOOD CLUSTER PROJECT April 23, 2019

Finance, Competitiveness And Innovation Global Practice

Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2019)

Currency Unit = SDR

SDR 0.72014 = US$1

US$ 1.3886 = SDR 1

FISCAL YEAR

January 1 - December 31

Regional Vice President: Hafez M. H. Ghanem

Country Director: Louise J. Cord

Country Manager Laurent Msellati

Senior Global Practice Director: Sebastian-A Molineus

Practice Manager: Consolate K. Rusagara

Task Team Leader(s): Cristina Navarrete Moreno, Alexandre Hugo Laure, El Hadramy Oubeid

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ABBREVIATIONS AND ACRONYMS AECID Spanish Agency for International Development Cooperation (Agencia

Española de Cooperación Internacional para el Desarrollo)

AF Additional Financing

AFD French Development Agency (Agence Française de Développement)

ANZF Nouadhibou Free Zone Authority (Autorité de la Zone Franche de Nouadhibou)

CPF Country Partnership Framework

DB Doing Business

CPF Contry Partnership Framework

DGD Directorate General for Development (Direction Générale du Développement)

DGEAI Directorate General for Research and Infrastructure Development (Direction Générale des Études et de l’Aménagement des Infrastructures)

DGICE General Directorate for Public Investment and Economic Cooperation (Direction Générale des Investissements Publics et de la Cooperation Economique)

DGPPI General Directorate for Investment Projects and Programs (Direction Générale des Projets et Programmes d'Investissements)

DGPSP Directorate General for Private Sector Promotion (Direction Générale pour la Promotion du Secteur Privé)

EPBR Artisanal Port of Nouadhibou (Etablissement Portuaire de la Baie du Repos)

ESIA Environmental and Social Impact Assessment

EU European Union

EZZ Exclusive Economic Zone (EEZ)

FDI Foreign Direct Investment

GDP Gross Domestic Product

GIZ German Corporation for International Cooperation (Gesellschaft für Internationale Zusammenarbeit)

GoMR Government of Mauritania

GRS Grievance Redress Service

IC Investment Climate

ICR Implementation Completion Report

IDA International Development Association

ILO International Labor Organization

ISR Implementation Supervision Report

IMROP Mauritanian Institute of Oceanographic Research and Fisheries (Institut Mauritanien de Recherches Océanographiques et de Pêches)

IP Implementation Progress

IRC Illustrative Results Chain

ISSM Fisheries Research Center (Institut Supérieur des Sciences de Mer)

JICA Japan International Cooperation Agency

M&E Monitoring and Evaluation

MEF Ministry of Economy and Finance

MPEM Ministry of Fisheries and Maritime Economy (Ministère des Pêches et de l'Économie Maritime)

MRU Mauritanian Ouguiya

MSMEs Micro, Small and Medium Enterprises

NESC Nouadhibou Eco-Seafood Cluster Project

NFZ Nouadhibou Free Zone

NGO Non-Governmental Organization

ONISPA National Inspection Agency (Office National d'Inspection Sanitaire des Produits de la Pêche et de l'Aquaculture)

PAC Artisanal and Coastal Fisheries

PAN Commercial Port of Nouadhibou (Port Autonome de Nouadhibou)

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PDO Project Development Objective

PIU Project Implementation Unit

PPD Public-Private Dialogue

PPP Public-Private Partnership

SCD Systematic Country Diagnostic

SEZ Special Economic Zone

SMCP Mauritanian National Fish Commercialization Agency (Société Mauritanienne de Commercialisation du Poisson)

TA Technical Assistance

WARFP West Africa Regional Fisheries Program

WBG World Bank Group

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MAURITANIA

NOUADHIBOU ECO-SEAFOOD CLUSTER PROJECT AF

Contents I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ........................................ 1

II. DESCRIPTION OF ADDITIONAL FINANCING ...................................................................... 5

III. KEY RISKS ....................................................................................................................... 9

IV. APPRAISAL SUMMARY .................................................................................................. 11

V. GRIEVANCE REDRESS SERVICE ....................................................................................... 13

VI. SUMMARY TABLE OF CHANGES .................................................................................... 15

VII. DETAILED CHANGE(S) .................................................................................................... 15

VIII. RESULTS FRAMEWORK AND MONITORING ................................................................... 19

ANNEX 1: NOUADHIBOU ECO-SEAFOOD CLUSTER PROJECT BACKGROUND ........................... 31

ANNEX 2: DETAILS OF NESC PROJECT RESULTS AS OF MARCH 31, 2019 ................................. 32

ANNEX 3: DETAILED PROPOSED ADDITIONAL FINANCING DESCRIPTION ............................... 34

ANNEX 4: TECHNICAL AND FINANCIAL ANALYSIS ON SUGGESTED INFRASTRUCTURE AT EPBR 42

ANNEX 5: SYNERGIES WITH IFC AND WB DPO OPERATIONS ................................................. 48

ANNEX 6: REVISED COST ALLOCATION BY COMPONENT AND SOURCE .................................. 49

ANNEX 7: REVISED PROCUREMENT PLAN ............................................................................. 50

ANNEX 8: THEORY OF CHANGE NESC ADDITIONAL FINANCING ............................................. 53

ANNEX 9: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS ...................... 54

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The World Bank Nouadhibou Eco-Seafood Cluster Project AF (P163645)

BASIC INFORMATION – PARENT (Nouadhibou Eco-Seafood Cluster Project - P151058)

Country Product Line Team Leader(s)

Mauritania IBRD/IDA Cristina Navarrete Moreno

Project ID Financing Instrument Resp CC Req CC Practice Area (Lead)

P151058 Investment Project Financing

GFCAW (9277) AFCF1 (6550) Finance, Competitiveness and Innovation

Implementing Agency: Nouadhibou Free Zone Authority, NESC - Project Coordination Unit ADD_FIN_TBL1

Is this a regionally tagged project?

Bank/IFC Collaboration Joint Level

Yes Complementary or Interdependent project requiring active coordination

Approval Date Closing Date Original Environmental Assessment Category

Current EA Category

24-Mar-2016 01-Nov-2020 Partial Assessment (B) Partial Assessment (B)

Financing & Implementation Modalities Parent

[ ] Multiphase Programmatic Approach [MPA] [ ] Contingent Emergency Response Component (CERC)

[✓] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-Linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster

[ ] Alternate Procurement Arrangements (APA)

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The World Bank Nouadhibou Eco-Seafood Cluster Project AF (P163645)

Development Objective(s) The objective of the proposed project is to support the development of a seafood cluster in Nouadhibou that promotes sustainablemanagement of fisheries and generates value for the communities.

Ratings (from Parent ISR) RATING_DRAFT_NO

Implementation Latest ISR

29-Jun-2016 29-Dec-2016 13-Jul-2017 28-Feb-2018 05-Sep-2018 12-Mar-2019

Progress towards

achievement of

PDO S

S

S

S

S

S

Overall

Implementation

Progress (IP) S

S

S

S

MS

MS

Overall

Safeguards

Rating S

S

S

S

S

S

Overall Risk S

S

S

S

S

S

BASIC INFORMATION – ADDITIONAL FINANCING (Nouadhibou Eco-Seafood Cluster Project AF - P163645) ADDFIN_TABLE

Project ID Project Name Additional Financing Type Urgent Need or Capacity Constraints

P163645 Nouadhibou Eco-Seafood Cluster Project AF

Restructuring, Scale Up

Financing instrument Product line Approval Date

Investment Project Financing

IBRD/IDA 14-May-2019

Projected Date of Full Disbursement

Bank/IFC Collaboration Joint Level

01-Nov-2021 Yes Joint Project - involving co financing with IFC (loan, equity, budget, other) or

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The World Bank Nouadhibou Eco-Seafood Cluster Project AF (P163645)

staffing

Is this a regionally tagged project?

No

Financing & Implementation Modalities Child

[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-Linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster

[ ] Alternate Procurement Arrangements (APA)

[ ] Contingent Emergency Response Component (CERC)

Disbursement Summary (from Parent ISR)

Source of Funds Net

Commitments Total Disbursed Remaining Balance Disbursed

IBRD

%

IDA 7.75 5.93 1.87

76 %

Grants

%

PROJECT FINANCING DATA – ADDITIONAL FINANCING (Nouadhibou Eco-Seafood Cluster Project AF - P163645)

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFi n1

SUMMARY (Total Financing)

Current Financing Proposed Additional

Financing Total Proposed

Financing

Total Project Cost 9.25 9.00 18.25

Total Financing 9.25 9.00 18.25

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The World Bank Nouadhibou Eco-Seafood Cluster Project AF (P163645)

of which IBRD/IDA 7.75 8.00 15.75

Financing Gap 0.00 0.00 0.00

DETAILSNewFinEnh1- Additional Financing

World Bank Group Financing

International Development Association (IDA) 8.00

IDA Grant 8.00

Non-World Bank Group Financing

Counterpart Funding 1.00

Borrower/Recipient 1.00

IDA Resources (in US$, Millions)

Credit Amount Grant Amount Guarantee Amount Total Amount

National PBA 0.00 8.00 0.00 8.00

Total 0.00 8.00 0.00 8.00

COMPLIANCE

Policy

Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [ ✔ ] No

Does the project require any other Policy waiver(s)?

[ ] Yes [ ✔ ] No

INSTITUTIONAL DATA

Practice Area (Lead)

Finance, Competitiveness and Innovation

Contributing Practice Areas

Environment & Natural Resources

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The World Bank Nouadhibou Eco-Seafood Cluster Project AF (P163645)

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

PROJECT TEAM

Bank Staff

Name Role Specialization Unit

Cristina Navarrete Moreno Team Leader (ADM Responsible)

Private Sector Development GFCAW

Alexandre Hugo Laure Team Leader Private Sector Development GFCME

El Hadramy Oubeid Team Leader Governance GGOAW

Brahim Hamed Procurement Specialist (ADM Responsible)

Procurement GGOPF

Fatou Fall Samba Financial Management Specialist (ADM Responsible)

Financial GGOAW

Melissa C. Landesz Environmental Specialist (ADM Responsible)

Environment GENA2

David Theodore Anthonioz Team Member Investment Climate GFCA2

Diana Hristova Team Member M&E specialist GFCMT

Faly Diallo Team Member Financial WFACS

Ganna Musakova Team Member Operations Ananlyst GFCAW

Irene Marguerite Nnomo Team Member Program Assistant GFCAW

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The World Bank Nouadhibou Eco-Seafood Cluster Project AF (P163645)

Ayinda-Mah

Julien Emmanuel Galant Team Member Public Private Partnership (legal), Regulation

GMTRI

Laurent Olivier Corthay Team Member Private Sector Development, Investment Climate

GFCAW

Maimouna Toure Team Member Program Assistant AFMMR

Mamadou Moustapha Ndoye

Social Specialist Social Specialist GSU01

Niamh O'Sullivan Team Member Gender GFCAW

Raquel De La Orden Lopez Safeguards Advisor/ESSA Infrastructure GIPGF

Richard A. Claudet Team Member Public Private Partnership GFCAW

Sophie Martine Olivia Wernert

Team Member Legal LEGAM

Wolfgang Mohammad Taghi Chadab

Team Member Finance WFACS

Extended Team

Name Title Organization Location

Benjamin Herzberg Senior Private Sector Specialist GFCMW Washington DC

Berengere Prince Lead Natural Resources Management Specialist

World Bank Group

Sachiko Kondo Natural Resources Mgmt. Spec. World Bank Group

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I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING

A. Country Context

1. Mauritania is a large,1 sparsely-populated, arid and resource-rich country with a per capita GDP of US$ 1,136 (2017), straddling North Africa and sub-Saharan Africa both geographically and culturally.2 Just 0.5 percent of Mauritanian land is arable, and with a population of 4 million people, 3 the country’s density of 3.9 inhabitants per km2 makes it the fourth-least densely populated country in Africa. Driven by a thriving extractive sector and high international commodity prices, Mauritania achieved lower-middle-income status in 2014.

2. In the aftermath of the commodity price shock, economic activity finally rebounded in 2017, driven by improved private consumption and a gradual recovery of iron ore and copper prices. GDP growth stood at 3.5 percent in 2017, up from 2.0 percent in 2016 and 1.4 percent in 2015. Nonetheless, recovery remains fragile given liquidity constraints, the lack of effective monetary policy and slow fiscal consolidation. The fiscal deficit fell from 3.4 percent of GDP in 2015 to 0.5 percent in 2016, as a result of fiscal restraint, reduced public investment, revenue measures which raised VAT, customs and fishing-license fees, as well as improved tax administration. As fiscal consolidation continues, and commodity prices recuperate, external pressures have eased recently. In a new context of low international commodity prices, Mauritania is now presented with both the opportunity and challenge of transforming its extractive-driven and state-dominated development model into one that leverages the country’s natural endowments – mining and gas, but also fisheries and agro-pastoral resources – and promotes private sector-led diversification and sustainable job creation.

3. Progress has also been made with respect to inequality, vulnerability, poverty reduction and non-monetary measures of wellbeing. Mauritania’s performance on poverty elasticity to GDP growth was the fourth-best in Africa in 2016 after South Africa, Madagascar, and Botswana. The poverty rate, meanwhile, fell from 44.5 percent to 33 percent4

between 2008 and 2014, and the rate of extreme poverty halved (from 10.8 percent to 5.6 percent), based on the poverty line of US$ 1.90. Inequality, as measured by the Gini Index, also declined from 35.7 in 2008 to 32.6 in 2014. This strong decline in poverty has been primarily driven by the income/consumption growth of the bottom 40 percent of the population in rural areas, who benefited from price increases for primary goods.

4. Despite progress in poverty reduction and inequality, unemployment and labor force participation remain

major challenges, particularly among youth, with a national unemployment rate of 10 percent that rises to as high as

17 percent in urban areas. The gender gap in employment is particularly severe, with men holding three out of four jobs,

despite women representing 55 percent of the working-age population. The 2014 female labor force participation rate

of 22 percent (down from 28 percent in 2008) is also well below the sub-Saharan African (SSA) average of 64 percent.

1 Just over 1 million km2 2 WBG Country Partnership Framework for the Islamic Republic of Mauritania for the period FY18-FY23 (2018). 3 The 2013 census (Recensement Général de la Population et de l’Habitat, RGPH 2013) counted 3.54 million people living in Mauritania. Per official projections (Projections démographiques, National Statistics Office, 2016), the Mauritanian population will reach 3.98 million in 2018 and 4.17 million in 2020. In 2020, the urban population will outnumber its rural counterpart (total urban population will be 52.8 percent in 2020 compared to 48.3 percent in 2013). 4 Based on the national poverty line of MRO 177,200.

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B. Sectoral and Institutional Context

5. Fisheries have substantial macroeconomic significance for Mauritania, representing approximately 6 percent of GDP5 and contributing to wealth and job creation, public revenue, foreign exchange availability, the trade balance and food security. Recent studies by Mauritanian Institute of Oceanographic and Fisheries Research (IMROP) estimate fisheries’ contribution to national GDP at 6 percent - an evaluation based solely on captures and therefore excluding indirect economic effects derived from post-harvest activities. Public revenue from fisheries stands at nearly US$ 200 million, based primarily on fishery agreements with the EU, Russia and Senegal, among others. The commercial balance of fish is heavily focused on exports. Between 2008 and 2011, fish exports represented between 20 and 28 percent of total exports (US$ 438.5 million), contributing significantly to Mauritania’s foreign exchange supply. The sector employs over 55,000 people (representing roughly 3 percent of the active population), with 30 percent of this employment being indirect. Women occupy roughly 30 percent6 of this indirect activity – numbering around 4,600 total across the country.

6. Mauritania has one of the most productive fishing waters in the world, with an estimated annual total catch potential of between 1.5 and 1.8 million tons, valued at US$ 1.4 billion.7 The country also has an Exclusive Economic Zone (EEZ) of 200 nautical miles - a surface area of 234,000 km,2 a sixth of which (39,000 km2) is located along a large continental plateau. This EEZ is known for the abundance, diversity and commercial significance of its fisheries resources. These rich resources are the result of highly favorable hydro-climatic conditions and, in particular, the region’s permanent upwelling. 600 distinct species have been identified in Mauritanian waters, 200 of which can be commercially exploited. Taking into consideration the variability of oceanographic conditions and the strong marine current emanating from the Canary Islands, recent estimates place the total catch potential at between 1.5 and 1.8 million tons per year, including shellfish (300,000 tons), which is currently not being exploited.

7. Established in 2013, the Nouadhibou Free Zone is Mauritania’s main fisheries center, accounting for 80 percent of the value of all fish caught nationwide. Managed by the Nouadhibou Free Zone Authority (ANZF), this Special Economic Zone (SEZ) is designed to encourage job creation, promote greater business activity and promote innovation and competitiveness in the local fisheries sector. In addition to its natural deep seaport, which facilitates landing for fishing boats, Nouadhibou is ideally located for external trade.

8. Mauritania has failed to reap the full economic and employment benefits associated with its exceptional fish resources, susceptible to overexploitation and climate change threats. According to recent estimates, between 300,000 and 400,000 tons of fish are currently landed in Mauritania, which represents just 20 percent of total catches under the country’s jurisdiction, thereby limiting local employment opportunities onshore. This is primarily due to the limited available landing infrastructure. Most landed fish are small pelagic, which represent 91 percent of all catches in Mauritania, followed by demersal and cephalopods. Surprisingly, however, demersal and cephalopods contribute almost 40 percent of total revenues in the sector despite representing just 9 percent of total catches. Over the past decade, there has been a significant increase in total captures of small pelagic due to the expansion of fishmeal factories, with recent data suggesting almost 100,000 tons in 2017. In Nouadhibou alone, the number of fishmeal factories has increased by 51 percent since 2008, with 31 factories currently in operation.

5 Ministry of Fisheries and Marine Economy, Strategie Nationale de Gestion Responsible pour un Développement Durable des Pêches et de l’Economie Maritime 2015-2019, 2015, Nouackchott, Mauritania. 6 World Bank, Developing Women’s Engagement in Fisheries in the Nouadhibou Free Zone: Entrepreneurship and the Path to Economic Development, 2018, Nouakchott, Mauritania. 7 Ministry of Fisheries and Marine Economy, Rapport Final sur le Cadre d’Investissement pour le Developpement Durable des Pêches en Mauritania 2015-2020, 2015, Nouakchott, Mauritania.

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9. The Artisanal and Coastal Fisheries (PAC) sector, which is characterized by a low level of professionalization and high informality, has significantly expanded over the past few years. Industrial fisheries continue to dominate the sector, nevertheless PAC has undergone strong progress in recent years - from 5 percent of total Mauritanian catches in 2006 to 16 percent in 2011 (an increase of 432 percent). This is especially true for Nouadhibou, where 49 percent of the country’s artisanal fisheries activity is concentrated. Due to inadequate incentives, coupled with a lack of adequate landing infrastructure and access to services, the artisanal fisheries sector remains unprofitable, with over 90 percent of activity focused on octopus - a resource that has been overexploited for the last 30 years. The coastal fisheries sector has significantly increased over these last few years including around 374 vessels targeting small pelagic - a resource that is also overexploited with some species on the verge of extinction. PAC’s need for infrastructure development has been highlighted in both the National Sector Strategy 2008-2012 and the PAC Management Plan. The sector’s financial challenges must therefore be addressed, first of all by integrating resource management needs.

10. In relation to Mauritania’s private sector development, the country’s traditional state-driven model has not sufficiently encouraged private investment, limiting competition and crowding out new entrants. Mauritania’s private sector is concentrated around a limited number of large groups which dominate the trade, banking and government procurement markets with an absence of a strong and formal “middle class” of micro, small and medium enterprises (MSMEs). New and independent firms face challenges competing with these larger conglomerates that often have their own banks or state-owned enterprises. This has discouraged local suppliers and international investors, as well as penalizing the poor and vulnerable by increasing the price of basic commodities while limiting job and livelihood opportunities.

11. Thanks to recent efforts by the Government of Mauritania (GoMR) to improve the business environment and open up private investment opportunities, the private sector’s participation in the economy has started to increase. Mauritania has emerged as a major reformer in investment climate policy in the last few years, climbing an impressive 20 places in the World Bank Doing Business rankings in just two years – from 168th in 2016 to 148th in 2019. In addition to the important business reforms it has undertaken, the GoMR has started to engage the private sector through public private partnership (PPP) arrangements, thereby closing the gap in investment capital, technology and know-how that are necessary to improving the efficiency and delivery of public services. Overall, private sector investment growth - critical to growth, poverty reduction, income generation and employment opportunities - has been slow but steady in recent years. Private investment has slowly increased since 2014, representing around 47.5 percent of GDP in 2017.8 Mauritania’s foreign direct investment (FDI) has also been gradually increasing (from 5.7 to 9.2 percent of GDP between 2016 and 2017), benefiting from recent investments in the telecommunications, mining and oil (exploration) sectors. Nevertheless, FDI remains relatively low and is primarily driven by extractive industries, compared to regional neighbors.

12. A transition towards a strong and diversified private sector-led growth will be critical to poverty reduction, income generation and employment opportunities. Building on recent macroeconomic achievements, Mauritania has the potential to increase private sector growth and transform the country’s current extractive-driven model for economic development. Nonetheless, overcoming constraints to private sector development will require the GoMR to address the investment climate, economic diversification in high-growth value chains such as fisheries and support needed to generate MSME growth, among others.

C. Consistency with the CPF

13. The original project and the proposed Additional Financing (AF) are fully aligned with the current Country Partnership Framework (CPF) for Mauritania (FY18 – FY23) discussed by the Board of Executive Directors on July 12,

8 World Bank, WDI. 2018.

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2018. Activities to be financed by the proposed AF will contribute to Focus Area One - Promote Economic Transition for Diversified and Resilient Growth, specifically the strategic objective of increasing production value in the fisheries sector; and Focus Area 3 - Strengthening Economic Governance and Private Sector-led Growth, specifically the strategic objective of improving private sector participation in economic activities. Finally, activities will contribute to the maximizing finance for development approach as the AF will address key binding regulatory constraints for private sector development and support the Government’s engagement to support economy-wide private sector development.

D. Parent Project Background

14. The original Project grant (Grant No. D104-MR) for an amount of SDR 5.60 million (US$ 7.75 million equivalent) was approved on March 14, 2016 and became effective on July 6, 2016. The original closing date is November 1, 2020.

15. The Project Development Objective (PDO) is to support the development of a seafood cluster in Nouadhibou that promotes the sustainable management of fisheries and generates value for the communities. The project contributes to the Government’s competitiveness agenda (fisheries, Free Zone development and national private sector development strategies and investment frameworks) addressing four binding constraints that inhibit the competitiveness of the seafood industry in Nouadhibou: (a) excess fishing efforts that threaten the sustainability of raw material supplies and the profitability of the fishing industry; (b) insufficient coordination among actors and insufficient product diversification; (c) inadequate fish landing infrastructure as well as lack of private initiative in developing and managing shared facilities (including storage) and handling services; and (d) limited linkage effects with the rest of the economy. In response, the project included two components aimed at achieving the project development objective (PDO): (a) developing a sustainable seafood cluster in Nouadhibou, and (b) increasing the value of seafood products produced and marketed in the seafood cluster with the participation of local actors in Nouadhibou (see Annex 1 for more details on original Project).

E. Status of Implementation

16. The implementation of Nouadhibou Eco-Seafood Cluster Project (NESC) is proceeding satisfactorily, with progress toward the achievement of the PDO and the overall implementation progress (IP) both consistently rated as “Satisfactory” and “Moderately Satisfactory” since Project’s inception.” All key aspects of the project are rated “Moderately Satisfactory” (Financial Management and Monitoring and Evaluation) or “Satisfactory” (Procurement, Safeguards and Project Management) except for the mobilization of counterpart financing, which is rated “Unsatisfactory”. The delay in mobilization of counterpart funding has not negatively impacted project implementation nor achievement of results. The Project has also demonstrated substantial compliance with key loan covenants, apart from those related to counterpart funds.

17. Two years after grant effectiveness, the project has disbursed 75 percent and 85 percent is expected to be committed by the end of Fiscal Year 2019. The project is likely to achieve its development objectives. The Project has disbursed a total of US$ 5.93 million from the IDA grant as of March 31, 2019 representing 76.02 percent. Several PDO indicators and intermediate results indicators have achieved their 2016 and 2017 targets and are on track (investments generated, fresh fish exports, commercial viability studies, citizen engagement) or have even already exceeded end targets (investment climate reforms) for 2018. There are only two important activities remaining to be implemented in 2019, namely: (a) the construction of a refrigerated warehouse for fresh fish exports at Nouadhibou’s airport9, and (b)

9 The construction of the refrigerated warehouse is part of the Parent Project, already included in the social and environmental assessments conducted.

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the delivery of a training program for local actors, including women. The following table summarizes progress towards the achievement of PDO indicators (see Annex 2 for more details on Project results thus far):

PDO Indicators Baseline (2015) Target (2020) Target ( 2018) Status (March 2019)10

Investments generated (US$ million) 0.0 80.0 40.0 49.17

Fresh fish exports (Tons/year) 936.0 2600.0 1800.0 7086

Direct project beneficiaries (Number) 0.0 6000.0 1500.0 818.00

Female beneficiaries (Percentage) n.a. 30.0 20.0 16.00

F. Rationale for Additional Financing, Project Restructuring and Additional Benefits

18. Based on the project’s satisfactory progress and performance and the Government’s desire to scale up specific activities, the GoMR officially requested an AF for the project in November 2017. Given the current disbursement ratio and project ratings, the requirements for additional financing are met. As per World Bank Policy/Directive: Investment Project Financing, this AF will: scale up original activities and implement new activities to enhance development impacts. More specifically, the proposed AF will support scale up activities in the scope of the ongoing project including: (a) the implementation of investment climate (IC) reforms; (b) operationalization of the PPP law and decrees with the establishment of a PPP Unit and support for the execution of pilot PPP projects. The AF will also implement new activities related to: (c) stimulating greater value chain inclusion and implementation of priority recommendations of the Nouadhibou Eco-Seafood Cluster Strategy. The proposed AF will also provide the opportunity to effectively align the results framework with project activities. The closing date of the Parent project is November 1, 2020.

II. DESCRIPTION OF ADDITIONAL FINANCING

19. The proposed AF will support the development objectives of the original project, however the PDO, activities and intermediate indicators are being adjusted to reflect results outside of the fisheries sector, especially to account for PPP and investment climate activities that are not strictly related to the development of Nouadhibou’s eco-seafood cluster. This AF will also include a Level One Restructuring with changes captured in subsequent sub-sections. With these agreed changes and additions, the counterparts and the Bank task team are confident that the new PDO can be achieved within the new timeframe. Scope of the Additional Financing- Changes to the PDO 20. The proposed AF will enhance the current PDO to better capture objectives related to private sector development at the national level. To this extent, the suggested revised version of the PDO will be as follows: “to support the development of a seafood cluster that promotes the sustainable management of fisheries and creates value for communities in Nouadhibou and to improve the business environment to boost private sector development in Mauritania.” With this proposed modification to the PDO, reforms to improve the business regulatory environment and provide the building blocks for an economy that leverages private investment and job creation will become an integral part of the Project’s objective. Annex 3 provides details on how these components and activities were selected and how

10 Results correspond to latest ISR from March 12, 2019.

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all proposed activities contribute to the implementation of an Eco-Seafood Cluster Strategy in Nouadhibou and the private sector development agenda moving forward. Changes in Project Components 21. Component 1: Developing a Sustainable Seafood Cluster in Nouadhibou. Some activities initiated under this component, including the recruitment of an agency to produce a marketing video and the development of a website for the Nouadhibou Eco-Seafood Cluster, will be dropped, as these have already been covered by the communications agency hired for a parallel activity. In addition, remaining activities to improve the investment climate and operationalize the recently-adopted nationwide PPP framework will be shifted to the new component 3. Finally, the proposed additional grant and restructuring will enable the project to finance additional requests from ANZF regarding the implementation of the Eco-Seafood Cluster Strategy. New activities will include: under Component 1.111 (i) technical assistance to ANFZ to support the operationalization of the PPP law in the Free Zone; (ii) construction of an Eco-Seafood Cluster governance unit building; and under Component 1.212 (iii) further supporting a responsible investment promotion strategy at the Free Zone; and (iv) ensuring the adoption of better environmental, social and governance practices at ANZF through the hiring of experts in fisheries and conducting research on how to organize the collection and disposal of used oils and lubricants in the Cluster.

22. Component 2: Increasing the Value of Seafood Products Produced and Marketed in the Seafood Cluster with the Participation of Local Actors. The proposed restructuring will also involve changes to activities under Component 2. Sub-component 2.1: Improving the handling of landed catch and promoting the export of fresh fish at the Nouadhibou

Seafood Cluster

23. Existing activities under sub-component 2.1 will be adjusted. For example, activities related to the development of operating plans for the commercial and artisanal ports in Nouadhibou (PAN and EPBR respectively), as well as TA to the Nouadhibou airport, will be dropped, since these have already been covered in the Eco-Seafood Cluster Strategy published in 2017. Dropping these activities will serve to fund cost overruns incurred during the preparation, consultations and design of the Eco-Seafood Cluster Strategy. In addition and following-up on recommendations from the Eco-Seafood Cluster Strategy, this sub-component will finance key priority infrastructure to enhance landing logistics, improve product traceability and increase production value in the artisanal fisheries sector. 24. Infrastructure investments include a pumping station at the EPBR and PAN (two in total)13 and a fish hall for cephalopods at the EPBR. The pumping stations will allow for (a) better traceability of the pelagic resources, ensuring compliance with fishing quotas, (b) improved product quality, supporting divestment from fishmeal and promotion of human consumption, and (c) a new revenue source for EPBR, supporting the improvement of its current financial distress. The fish hall, meanwhile, will support the development of the cephalopods and crustaceans’ sector, which represent one of the most relevant and high-valued growth opportunities for the artisanal segment, given that most species (cuttlefish, squid, shrimp, lobster and shellfish) are currently underexploited or non-exploited and have greater export potential in highly profitable markets (e.g. South Korea, EU).

11 Component 1.1 as stated in parent project: promoting PPD in order to develop a vision of a sustainable seafood cluster in Nouadhibou and accelerate nationwide reforms of structures impeding its development. 12 Component 1.2 as stated in parent project: generating responsible investments in Nouadhibou Seafood Cluster. 13 Infrastructure investment in small pelagic will be accompanied by policy dialogue through the WARFP project regarding the achievement of sustainable harvest levels for this resource.

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Sub-component 2.2: Building local suppliers’ and vulnerable groups’ capacity to capture greater benefits from productive

and inclusive seafood value chains

25. This sub-component will follow-up on key findings from the report “Developing Women’s Engagement in Fisheries in the Nouadhibou Free Zone: Entrepreneurship and the Path to Economic Development” published in 2018 and financed by the Competitive Industries and Innovation Program (CIIP), by providing organizational support and improving access to markets for women operating in the artisanal fisheries sector and other small-scale activities in Nouadhibou. Proposed interventions under the Additional Financing include: (i) providing marketing and organizational support to local women’s cooperatives operating in Nouadhibou; (ii) supporting productive alliances with larger players, who can act as intermediaries and help accelerate small producers; (iii) sponsoring study trips to countries in the sub-region to promote new export markets for women; (iv) supporting the certification of artisanal salt (produced by local women actors) by the National Inspection Agency (ONISPA); and (v) supporting an awareness campaign to promote the local consumption of products made by women. This sub-component will be complemented with a second phase of CIIP funding (see Annex 5 for details on synergies with WBG projects).

26. Further to the modification and addition of activities proposed for components 1 and 2, the proposed AF will also include the following two additional components:

27. Component 3: Strengthening the Enabling Environment for Private Sector Development. A new project component will be introduced to integrate ongoing and additional activities aimed at addressing core constraints to the business environment and developing a strong PPP program in Mauritania. Component 3 will thus consist of two subcomponents that together will scale up two nationwide agendas that have been successfully supported and piloted through the Project: sub-component 3.1 – Improving the Investment Climate; and sub-component 3.2 - Supporting the Operationalization of the Government’s PPP agenda.

Sub-component 3.1: Improving the Investment Climate

28. Building on the strong support provided to investment climate reforms since the Project’s inception, the AF will continue to provide technical assistance and financial support aimed at addressing core constraints to the business environment in Mauritania. These will include: (a) investment in key physical infrastructure such as the upgrading and digitization of central and local Business and Collateral Registries in Nouakchott and Nouadhibou, and the renovation of a building in Nouakchott to host the Commercial Tribunal, including the Business and Collateral Registries; and (b) provide TA and training to the recently established public-private technical committee for monitoring and implementation of investment climate reforms. This sub-component will build on ongoing complementary efforts of IFC’s Advisory Service Investment Climate and Entrepreneurship project (# 601022) and Mauritania First Competition and Skills DPO (P167348). Sub-component 3.2 Supporting the Operationalization of the Government’s PPP agenda 29. In recent years, the PPP agenda has experienced renewed interest from the Mauritanian Government, which is mirrored by the Project. The AF will continue to provide technical assistance to the Government of Mauritania to develop a strong PPP program. This assistance will primarily be provided through the following three major activities: a) financial support for the PPP Unit’s operations, including recruitment of PPP Unit local consultants and one international expert for a maximum of two years of operations to ensure effective implementation, development of their strategies and action plans, as well as the identification of viable projects; b) technical and financial assistance for investment promotion and communication initiatives supporting dialogue between public and private stakeholders; and c) finance further feasibility assessment and facilitation of the execution of two or three pilot PPP projects based on existing PPP pipeline projects.

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The AF will not fund PPPs directly. A report by Mott MacDonald dated April 2017, prepared under the Bank-executed, PPIAF-funded PPP capability-building advisory project (P151058, TF0A2677) identified 11 potentially-viable candidate PPP projects in sectors including water, roads, cold storage, ports, and waste management. The refrigerated warehouse at the airport in Nouadhibou and a solid waste management project in Nouakchott are currently the most promising candidates, however the final 2-3 projects to be supported will be chosen in consultation with Government and with the newly established PPP cell. The project will also coordinate these activities with relevant programs of other donors. For example, French Development Agency (AFD) is assisting in the development of small-scale power generation projects, potentially as PPPs.

30. Component 4: Project Management. Activities under this component will include support to procurement, financial management (FM), safeguards management, monitoring and evaluation through the Project Implementation Unit (PIU), as well as offering a platform for collaboration and cooperation among relevant Government agencies. Given the scope of new activities proposed at the national level, it has been deemed necessary to create a separate component for project management to oversee implementation and handle financial and administrative management, as well as collaborate and coordinate with other relevant entities involved in the project for the successful implementation of the project.

Changes in Closing Date 31. The proposed AF and restructuring will extend the closing date of the parent Project by 12 months from November 1, 2020 to November 1, 2021. The financing agreement of the Project will be amended accordingly. This extension will allow for the completion of additional activities under the above-mentioned components, including the rehabilitation of the commercial justice building and works proposed at the EPBR and PAN. Changes in Results Framework 32. The Results Framework will be adjusted to reflect these changes and the impact of project activities under the proposed components. A new PDO indicator (transaction requests increased from an enhanced collateral and business registry) and four intermediate result indicators (business and collateral registries computerized, sustainable management practices enhanced, landing infrastructure facilities for improved traceability of fish products built and Women-led MSMEs in Nouadhibou) have been added to capture the results of activities financed by Component 3 on private sector development and new works and TA financed under Component 1 and 2. The rest of the PDO and intermediary indicators have been reviewed and udpated to fit with proposed project components, have more appropiate targets and match the new project end-date. See Section VIII for details on proposed changes to the Results Framework and Annex 8 for the AF Theory of Change. Revised Financing Plan 33. The proposed restructuring will involve a reallocation of funds under the original Project to reflect those activities that have already been completed and the discrepancy between planned expenditure versus actual expenditure.

34. The AF will be an opportunity to reallocate counterpart funding to finance or co-finance specific activities, which were not specified in the original Project. The counterpart funding of the AF (US$ 1m) will be also allocated to specific activities, in particular the funding of all new activities under sub-component 2.2 for a total amount of US$ 500,000; and counterpart funding of the technical assistance to the Public-Private Investment Climate Technical Committee under sub-component 3.1 for a total amount of US$ 500,000.

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35. The proposed AF will have a total cost of US$ 9 million and will be financed via two sources: (a) an IPF in the form of an IDA grant14 amounting to US$ 8 million equivalent and (b) counterpart financing by the Government amounting to US $1 million. A separate treasury account or bank account designated for the additional financing will be opened at the Central Bank of Mauritania and two Project Mirror Accounts in local currency will be opened in a commercial bank in Nouakchott and Nouadhibou on terms acceptable to the World Bank. The separate treasury account should be open for a period not less than eight months after the project closing date for the purpose of depositing funds provided by the Client for counterpart funding.

36. The accompanying revised Procurement Plan can be found in Annex 7. The indicative financing plan by component is detailed in Annex 6.

Institutional Arrangements

37. The proposed additional grant will be implemented using the institutional framework and disbursement arrangements in place under the parent Project, all of which are working well and have the capacity to absorb additional funds. The preparation and implementation will be provided by the PIU of the Project anchored in the Free Zone Authority of Nouadhibou. The PIU will be reinforced with an additional accountant responsible to liaise and support Component 3 activities.

III. KEY RISKS

38. Based on the Systematic Operations Risk-rating Tool (SORT), the overall risk of the proposed Project is Substantial. This is consistent with the original Project. Two key risks remain relevant to the proposed AF: i) the political and governance risk; and ii) the institutional capacity for implementation and sustainability. 39. Political and governance (Substantial). Political developments could alter the Government’s priorities surrounding the Nouadhibou Free Zone, given that the operation may be perceived as a threat to entities with vested interests in the seafood and/or other industries. An upcoming Presidential election in June 2019 may exacerbate tensions in the country’s political context, as well as shifting certain vested interests in the fisheries and seafood sector or the private sector in general who may not share the current Government’s commitment to private sector development. In addition, there may be political tensions and discrepancies between the ANZF and the Ministry of Economy and Finance over fiduciary and project beneficiaries’ activities. Finally, important risks exist regarding the governance in fisheries sector in relation to management of small pelagic resources. The AF will be designed to mitigate political and governance risks by considering: (a) key principles of good governance (for example, transparency, accountability and participation and inclusiveness); (b) results from analyses by political economists and stakeholders in the seafood sector; (c) upfront agreements on fiduciary and activity implementation responsibilities between the two main project beneficiaries; and (d) close collaboration and dialogue with the WB West Africa Fisheries program (PRAO) project and donors working to strengthen the governance and management of targeted fisheries. 40. Macroeconomic risks (Substantial). This is due to large public debt stock, the potential for unidentified fiscal risks emerging from the broader public sector, and monetary policy constraints in managing liquidity and minimizing financial sector risks. Exogenous shocks affecting any of these variables could prevent the Government from meeting its fiscal

14 Mauritania is IDA grant eligible since it is an IDA country that is at high risk of debt distress, according to the latest joint IMG-WBG DSA (debt sustainability analysis).

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objectives or maintaining adequate foreign exchange reserves. This will derail the structural reforms agenda, erode fiscal space, and weakens the appetite for private sector investment, which jeopardizes the expected results from the Project.

41. Sector Strategies and Policies (Substantial). Sector governance is weak. This risk is rated substantial since there are important challenges of overexploitation of fishing resources. The Project addresses these weaknesses with the following mitigation measures: (a) TA to sector actors with a view to defining and implementing a clear strategy derived from a scientific diagnostic aiming at recommending the most relevant institutional, legal, and financial framework and tools; implementation support for investment promotion and after-care to ensure consistency from upstream sector policies on sustainable fisheries management plans to robust follow-up in their appropriate compliance by private sector operators; (b) works that will leverage sustainable seafood exports and provide further control on fisheries resources quotas; and (c) capacity building for all cluster actors so that they integrate sustainability with the fisheries resources as the priority objective of the operations of the cluster, uplift industry norms, and improve their post-harvest practices. 42. Institutional capacity for implementation and sustainability (Substantial). Project implementation will involve several agencies (ANZF, the Ministry of Economy and Finance, Ministry of Justice) and activities in several locations (primarily Nouakchott and Nouadhibou). Although the related government authorities have some in-house capacity, the innovative aspects of the activities will require external consultants to play an important role in the realization of project objectives. In response, several mitigation measures will be put in place: (a) a training program as part of implementation support will be discussed and agreed upon; (b) complementary Bank-executed trust fund for additional implementation and technical support (Investment Climate and Entrepreneurship IFC Advisory services); and (c) facilitate the hiring of key technical experts to strengthen the technical capacity of government authorities in aspects such as PPP transaction, commercial justice and the seafood sector. Putting in place of appropriate incentives and disincentives will be key to ensure the correct implementation of sustainability aspects.

43. Fiduciary (Substantial). Fiduciary risk is rated high since procurement and FM risk are high in the countries. Specific FM issues include insufficient human resources with the required qualifications, lack of an adequate monitoring of budget variance and existing shortfalls in implementing recommendations from external auditors. Mitigations measures to be put in place are: a) finalize the recruitment of a full-time internal auditor; b) recruit an accountant to support new activities under component 3; c) update the existing financial management manual of procedures, and clearly define roles and responsibilities for component 3. Further details concerning the risks and mitigation measures are discussed in Annex 9.

44. Stakeholders (Substantial). This risk is rated substantial, since donors are not fully coordinated, and such initiatives could be supported that may lead to redundancies or duplication of efforts. In addition, project activities could lead to opposition to the operation from stakeholders - including civil society, the private sector, and government entities, whose stakes are mostly in the frozen and processed seafood value chains and could be against prioritization or further investments for the benefit of fresh fish export or higher value processing seafood , for example - can have a negative impact on the achievement of the PDO, and the likelihood and impact of this opposition may be substantial. The operation’s objectives are widely discussed but not always accurately represented and understood. In response, mitigation measures include bringing on board and working with all seafood actors, including those who could disrupt the operation (through the Seafood taskforce) to take into account their perspective. Another mitigation measure that is key to project success is to help stakeholders, particularly those driving reductions in post-harvest losses to improve their practices so that landed catch achieves higher value and therefore does not have to automatically become raw material for low-value processing plants. Finally, the project will foster greater collaboration within the World Bank’s project portfolio as well as with donors such as the EU, AECID, KFW and JICA.

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Risk Categories Rating (H, S, M or L)

Political and Governance Substantial

Macroeconomic Substantial

Sector Strategies and Policies Substantial

Technical Design and Project or Program Moderate

Institutional Capacity for Implementation and Sustainability

Substantial

Fiduciary Substantial

Environmental and Social Moderate

Stakeholders Substantial

Other

Overall Substantial

IV. APPRAISAL SUMMARY

A. Economic and Technical Analysis

45. The objectives and overall design of this Additional Financing are mostly the same as those of the parent Project. The additional activities included are mainly a scaling-up of the existing activities. Main changes under this AF include a new component 3, focusing solely on the private sector enabling environment, and new follow-up activities of successful results from the parent Project. These comprise the implementation of key recommendations from the Eco-Seafood Cluster Strategy, implementation of proposed IC and PPP reforms, further TA to local economic operators and institutional capacity-building (for more information, see Annex 2). Therefore, the economic, financial, technical, institutional, fiduciary, environmental and social focus of activities remains the same.

46. The technical design of AF activities has been done in compliance with international best practices in all fields, while considering country-specific needs in terms of institutional capacity, business environment and physical infrastructure. For components 1 and 2, the proposed infrastructure investments and capacity-building activities build on recommendations from the Eco-Seafood Cluster Strategy, which aimed to align the traceability, product value-added and resource management standards of the Nouadhibou Eco-Seafood Cluster to those in more advanced fisheries clusters (e.g. Namibia, Japan, Spain, etc.). For component 3, the proposed IC and PPP reforms aim at boosting private sector development by enhancing the business enabling environment of Mauritania, following successful lessons learned in neighboring peer countries.

47. The expected impact of AF activities is well-documented in its Theory of Change (see Annex 8). Key outcomes include: (i) Increased client capacity through deeper institutional know-how in environmental, social and governance (ESG) practices, stronger internal governance structures, and increased commercial opportunities available to the artisanal fisheries sector, especially women; (ii) More infrastructure available, including new landing infrastructure at EPBR and PAN, a new Commercial Registry building in Nouakchott, and a new building to host the Seafood Cluster governance council in Nouadhibou; (iii) Increased product value-added due to improved product traceability and divestment from low value-added sectors (e.g. fishmeal); (iv) Enhanced business environment resulting in improvements in the absolute Doing Business score; and (v) Fostering of PPPs through improved PPP management, an enhanced PPP project portfolio, and support to the creation of partnerships between the government and private sector operators. These outcomes will contribute to the ultimate development impact objectives of this Additional Financing, which include

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(a) support to the development of a Seafood Cluster in Nouadhibou that promotes the sustainable management of fisheries and generates value for communities, and (b) improve the business environment to boost private sector development in Mauritania, as measured by an increase in investments generated by responsible investors, an increase in fresh fish exports, enhanced capacities of local operators and improved capacities at the Business and Collateral Registry.

B. Financial Management

48. The Financial Management of this AF will be based on existing arrangements under the parent Project. Therefore, the Project Implementation Unit for the Nouadhibou Eco-Seafood Cluster project will be in charge of the overall FM for this AF. However, given the important weight of day-to-day activities in Nouakchott managed by the Ministry of Finance (MEF), the PIU will be required to rely on an additional accountant fully supporting MEF activities. The interim un-audited financial reports for the on-going project have been submitted on time with acceptable quality; the financial management system operates satisfactorily, and auditors have issued an unqualified opinion on the 2017 financial statements. Further to a FM review undertaken in January 2019, the overall FM performance of the parent Project changed from Moderately Satisfactory to Moderate. The assessment revealed FM issues related to the number of staff, monitoring practices and team capacities, such as (i) absence of internal auditor; (ii) lack of qualified FM staff based in Nouakchott for MEF-operated activities; (iii) insufficient monitoring of budget variance; (iv) shortfalls in implementing recommendations from external auditors; and (v) absence of an updated FM manual acknowledging the specificities of new activities under this AF. 49. As a result of above-mentioned FM issues, the PIU should implement external audit recommendations and undertake regular budget monitoring variance analysis. In addition, the following mitigation measures should be implemented not later than four months after effectiveness:

• Finalize the recruitment of the full-time internal auditor with experience and qualification satisfactory to the bank;

• Update the existing financial management manual of procedures, and clearly define roles and responsibilities for MEF activities;

• Recruit an accountant with experience and qualification satisfactory to the bank for MEF activities.

The MEF activities will be handled by the PIU in Nouadhibou until completion satisfactory to the World Bank of the above-mentioned mitigations measures

50. The conclusion of the FM assessment is that existing financial management arrangements meet the World Bank’s minimum requirements under OP/BP 10.00. However, mitigation measures listed above should be implemented. The residual FM risk rating for NESC will be Moderate after implementation of these measures (see Annex 9 for financial and auditing arrangements details).

C. Procurement

51. The AF will be subject to the new Procurement Policy. Therefore, the PIU has prepared the Procurement Strategy (PPSD) for the 18 first months of the Parent Project and the AF. The PPSD has been validated by IDA.

52. After conducting an evaluation of procurement capacity, it appears that the team in charge of procurement can execute the awarding of contracts provided for under this AF. The PIU has a manual of procedures that lays out

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procurement procedures; however, this manual should be updated to reflect the new institutional framework resulting from the recent reform of public procurement and new institutional arrangements. In accordance with the Client's regulations, the procurement structures will be:

− Free Zone Procurement Commission, which will be in charge of executing procurement procedures estimated at a minimum of MRU 1.5 million (approximately US$ 42,000);

− Internal Procurement Commission (CIMAC), which will take care of procedures estimated to be less than MRU

1.5 million (approximately US$ 42,000).

53. The updated procedure manual should define the composition and modalities of meetings and decision-making of the Internal Procurement Commission.

D. Social and Environment (including Safeguards)

54. Social impact. OP 4.12 is not triggered because the project is working on known and already delimited sites. No impact on community assets, resources or livelihoods is expected. At the social level, the project emphasizes the empowerment and integration of local stakeholders, especially vulnerable groups, to improve their skills in the management of fisheries and financial resources and promote their full participation in economic life. 55. Environmental Impact15. There are no significant or irreversible adverse environmental impacts expected from the implementation of activities that would be financed under the proposed AF. Most of the potentially adverse environmental and social impacts associated with these investments would be small in scale and site specific, typical of a Category B project, and therefore either avoidable or easily manageable in terms of mitigation. 56. Safeguard Policies and Instruments. The project's EA category remains B (Partial assessment). The AF physical activities are similar to the ones implemented under the original project and will not trigger any other safeguard policy than the two policies (OP/BP 4.01 Environmental Assessment and OP/BP 4.11 Physical Cultural Resources) triggered by the original project. As the exact physical locations of future investments are known, the Borrower prepared 2 ESIAs, one for the activities in the artisanal port in Nouadhibou and the other for the building construction in Nouakchott. The ESIAs have been consulted upon and validated at the national level. They have been cleared by Regional Safeguards Advisor and disclosed in-country and at the Bank. The two ESIAs were conducted incorporating mitigation measures to address the influx of labor, gender-based violence, sexual abuse and child labor and to promote local labor recruitment. ESIAs incorporate a grievance redress mechanism to deal efficiently with cases that will be involved in the work. Consultations with local communities and stakeholders are under way and will continue during the infrastructure works and operation phase.

57. The PIU’s safeguards team for the original project will cover the activities of the AF as well. The safeguards team was strengthened recently with the addition of a new environmental and social expert.

V. GRIEVANCE REDRESS SERVICE

58. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress

15 The AF was prepared using WB safeguards policies. The new WBG Environmental and Social Framework (ESF) does not apply as it applies to all projects with a concept note review meeting after October 1, 2018.

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Service (GRS). The GRS ensures that complaints received are promptly reviewed to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, because of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

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VI. SUMMARY TABLE OF CHANGES

Changed Not Changed

Project's Development Objectives ✔

Results Framework ✔

Components and Cost ✔

Loan Closing Date(s) ✔

Reallocation between Disbursement Categories ✔

Implementing Agency ✔

Cancellations Proposed ✔

Disbursements Arrangements ✔

Safeguard Policies Triggered ✔

EA category ✔

Legal Covenants ✔

Institutional Arrangements ✔

Financial Management ✔

Procurement ✔

Other Change(s) ✔

VII. DETAILED CHANGE(S)

PROJECT DEVELOPMENT OBJECTIVE

Current PDO

The objective of the proposed project is to support the development of a seafood cluster in Nouadhibou that

promotes sustainablemanagement of fisheries and generates value for the communities.

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Proposed New PDO

The objective of the proposed project to support the development of a seafood cluster that promotes the

sustainable management of fisheries and creates value for communities in Nouadhibou and to improve the

business environment to boost private sector development in Mauritania

COMPONENTS

Current Component Name Current Cost (US$, millions)

Action Proposed Component Name

Proposed Cost (US$, millions)

Developing a sustainable seafood cluster in Nouadhibou

5.97 Revised Developing a sustainable seafood cluster in Nouadhibou

7.17

Increasing the value of seafood products produced and marketed in the seafood cluster with the participation of local actors

3.28 Revised Increasing the value of seafood products produced and marketed in the seafood cluster with the participation of local actors

5.88

0.00 New Strengthening the enabling environment for private sector development

4.70

0.00 New Project management 0.50

TOTAL 9.25 18.25

LOAN CLOSING DATE(S)

Ln/Cr/Tf Status Original Closing

Current Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal Applications

IDA-D1040 Effective 01-Nov-2020 01-Nov-2020 01-Nov-2021 01-Mar-2022

REALLOCATION BETWEEN DISBURSEMENT CATEGORIES

Current Allocation Actuals + Committed Proposed Allocation Financing % (Type Total)

Current Proposed REALLOCATION NEW

IDA-D1040-001 | Currency: XDR

iLap Category Sequence No: 1 Current Expenditure Category: GOOD, WRK, CONS, NCS, OP COST, TR

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4,675,443.43 2,614,197.69 4,675,443.43 100.00 100.00

iLap Category Sequence No: 2 Current Expenditure Category: PPF REFINANCING

924,556.57 924,556.57 924,556.57

Total 5,600,000.00 3,538,754.26 5,600,000.00 Expected Disbursements (in US$) DISBURSTBL

Fiscal Year Annual Cumulative

2016 0.00 0.00

2017 4,346,580.76 4,346,580.76

2018 1,054,987.89 5,401,568.65

2019 2,300,000.00 7,701,568.65

2020 2,500,000.00 10,201,568.65

2021 4,000,000.00 14,201,568.65

2022 1,548,431.35 15,750,000.00

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Latest ISR Rating Current Rating

Political and Governance ⚫ Substantial ⚫ Substantial

Macroeconomic ⚫ Substantial ⚫ Substantial

Sector Strategies and Policies ⚫ Substantial ⚫ Substantial

Technical Design of Project or Program ⚫ Moderate ⚫ Moderate

Institutional Capacity for Implementation and Sustainability

⚫ Substantial ⚫ Substantial

Fiduciary ⚫ Substantial ⚫ Substantial

Environment and Social ⚫ Moderate ⚫ Moderate

Stakeholders ⚫ Substantial ⚫ Moderate

Other

Overall ⚫ Substantial ⚫ Substantial

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LEGAL COVENANTS2

LEGAL COVENANTS – Nouadhibou Eco-Seafood Cluster Project AF (P163645)

Sections and Description Schedule 2 I B (1) and (2), 1. The Recipient shall: (a) open a separate treasury account or bank account (“Project Account”) for a period of not less than eight (8) months after the Closing Date, for the exclusive purpose of depositing funds provided by the Recipient for the financing of the Project (“Counterpart Funding”); (b) transfer to the Project Account an amount not to exceed one million United States Dollars (US$ 1,000,000) equivalent over the life of the Project; (c) designate the amount representing the Recipient’s counterpart contribution for the Project in the annual national budget consistent with the AWP&B; and (d) ensure that such designated amounts shall be used exclusively for the purposes of defraying the cost of expenditures incurred for the execution of Part 2.2(d), (e) and (f) and Part 3.1(b) of the Project, and not otherwise financed out of the proceeds of the Financing. 2. The Recipient shall: (a) not later than April 1, 2020, deposit the sum of four hundred thousand United States Dollars (US$ 400,000) equivalent in the Project Account; and (b) not later than April 1, 2021, deposit the remaining equivalent of the Counterpart Funding in the Project Account. Schedule 2 IV A (1). No later than four (4) months after the Effective Date, the Recipient shall ensure that: (a) the financial management manual, including roles and responsibilities for the implementation of Part 3 of the Project, has been updated to the satisfaction of the Association; (b) an accountant to be based in Nouakchott to support Part 3 of the Project has been recruited with experience and qualification satisfactory to the Association; and (c) a full-time internal auditor has been recruited with experience and qualification satisfactory to the Association

Conditions

Type Description Effectiveness Recipient has adopted the Project Manual in form and substance satisfactory to

the Association Type Description Disbursement Schedule 2 III. B. (1). Notwithstanding the provisions of Part A above, no

withdrawal shall be made for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed two hundred thousand United States Dollars (US$ 200,000) may be made for payments made prior to that date but on or after July 1, 2018, for Eligible Expenditures under Category (1).

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VIII. RESULTS FRAMEWORK AND MONITORING

Results Framework

COUNTRY: Mauritania Nouadhibou Eco-Seafood Cluster Project AF

Project Development Objective(s)

The objective of the proposed project to support the development of a seafood cluster that promotes the sustainable management of fisheries and creates value for communities in Nouadhibou and to improve the business environment to boost private sector development in Mauritania

Project Development Objective Indicators by Objectives/ Outcomes

RESULT_FRAME_T BL_ PD O

Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4 5

Support the development of a seafood cluster

Investments generated from responsible investors (Amount(USD))

0.00 20,000,000.00 20,000,000.00 40,000,000.00 60,000,000.00 80,000,000.00 100,000,000.00

Action: This indicator has been Revised

Fresh fish export (Metric tons/year)

936.00 1,000.00 1,800.00 3,400.00 4,000.00 5,600.00 5,600.00

Action: This indicator has been Revised

Direct project beneficiaries (Number) 0.00 100.00 300.00 1,500.00 3,000.00 6,000.00 6,000.00

Action: This indicator has been Revised

Female beneficiaries (Percentage)

0.00 15.00 20.00 20.00 25.00 30.00 30.00

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RESULT_FRAME_T BL_ PD O

Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4 5

Action: This indicator has been Revised

Enhanced collateral and business registry (Action: This Objective is New)

Transaction requests increased from an enhanced Collateral and Business Registry (Number)

0.00 1,000.00

Action: This indicator is New

PDO Table SPACE

Intermediate Results Indicators by Components

RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4 5

Developing a sustainable seafood cluster in Nouadhibou

Strategic cluster framework documents (consistent with WARFP program objective) adopted and published (Yes/No)

No No Yes Yes

Action: This indicator has been Revised

Tripartite PPD stakeholders (public, private, and civil society) reporting satisfaction with their

0.00 30.00 40.00 50.00 60.00 70.00 70.00

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RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4 5

involvement in the design and implementation of the cluster strategy (Percentage)

Action: This indicator has been Revised

Sustainable management practices enhanced (Number)

0.00 3.00

Action: This indicator is New

Increasing the value of seafood products produced and marketed in the seafood cluster with the participation of local actors

Cold storage capacity for fish products built (Metric ton)

0.00 0.00 0.00 0.00 0.00 30.00 30.00

Action: This indicator has been Revised

Landing infrastructure facilities for improved traceability of fish products built (Number)

0.00 3.00

Action: This indicator is New

Client days of training provided (number) (Number)

0.00 200.00 400.00 1,200.00 2,000.00 3,000.00 3,500.00

Action: This indicator has been Revised

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RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4 5

Client days of training provided - Female (number) (Number)

0.00 75.00 250.00 625.00 975.00 1,225.00 1,500.00

Action: This indicator has been Revised

Entities reporting improved performance (for example, improvements in business strategy, access to market, or revenue generation) (Number)

0.00 0.00 1.00 2.00 4.00 5.00 5.00

Action: This indicator has been Revised

Women-led MSMEs in Nouadhibou (Percentage) 0.00 10.00

Action: This indicator is New

Rationale:

Increase in the share of MSMEs led by women in Nouadhibou will capture the rise of women operating in identified lucrative/key activities

Strengthening the enabling environment for private sector development (Action: This Component is New)

Investment climate reforms implemented (Number) 0.00 0.00 1.00 2.00 2.00 5.00 10.00

Action: This indicator has been Revised

Business and collateral registries computerized in Nouadhibou and Nouakchott (Yes/No)

No Yes

Action: This indicator is New

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RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4 5

PPP policy framework adopted (Yes/No)

No No Yes Yes Yes Yes Yes

Action: This indicator has been Revised

Commercial viability studies for PPP conducted (Number)

0.00 1.00 1.00 2.00 2.00 2.00 2.00

Action: This indicator has been Revised

Commitments by investors and private partnerships signed (Number)

1.00 0.00 1.00 2.00 3.00 4.00 5.00

Action: This indicator has been Revised

IO Table SPACE

Monitoring & Evaluation Plan: PDO Indicators Mapped

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Investments generated from responsible investors

Amount of direct financing (in the form of equity or debt) mobilized by private entities through public private partnerships or/and in the Nouadhibou seafood cluster from responsible investors whose investments contribute, for

Annual

ANZF’s One Stop Shop. Post January 2013 investment agreement(s) Agreements reported as operational in

Disaggregated data on amount and type of investment will be collected from the one stop (guichet unique) at Nouadhibou Free Zone Authority. Data will be validated through field visits, telephone

ANZF

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example, to the implementation of fisheries management plans and only use fish from fisheries that are sustainably managed. Investments in ancillary sectors contributing to the realization of the fisheries management plans and compliance with TAC will also be considered. Each new investment plan will be reviewed to ensure it qualifies as responsible from an environmental (i.e. with at least 60% of fish resource used not coming from over-exploited fish resource) and transparency (i.e. with key company information updated and published on OSS) point of view.

annual report

interviews and desk research to ensure it have been effectively invested and it validates as a responsible investment from an environmental and transparency point of view.

Fresh fish export

Amount of fresh fish exported through Nouadhibou's international airport.

Annual

Direct measurement of exports from Nouadhibou International Airport and the PK55

Data will be collected from ONISPA. Data validation will be then conducted to ensure export of fresh fish corresponds to species not consider as over-exploited.

ANZF Central Bank Customs

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border post Data triangulation based on data from ONISPA

Direct project beneficiaries Direct beneficiaries from project interventions

Annual

Records of project activities Beneficiary count

ANZF

Female beneficiaries

Based on the assessment and definition of direct project beneficiaries, specify what percentage of beneficiaries are female

Annual

Records of project activities

ANFZ

Transaction requests increased from an enhanced Collateral and Business Registry

Number of information requests processed at the business and collateral registry in Nouakchott and Nouadhibou

Annual

Data will be directly collected by PIU team from collateral and business registries at Noaudhibou and Nouakchott

ANFZ

ME PDO Table SPACE

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Monitoring & Evaluation Plan: Intermediate Results Indicators Mapped

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Strategic cluster framework documents (consistent with WARFP program objective) adopted and published

Strategic documents related to the Eco-Seafood Cluster adopted and published, such as the cluster’s legal framework, the cluster’s financing plan, and the cluster’s charter for responsible operators.

Annual

Online publication Review of documents before their approval

ANZF

Tripartite PPD stakeholders (public, private, and civil society) reporting satisfaction with their involvement in the design and implementation of the cluster strategy

Tripartite PPD stakeholders (public, private, and civil society) reporting satisfaction with their involvement in the design and implementation of the cluster strategy

Annual

Surveys

Annual or bi-annual surveys from PPD participants

ANFZ

Sustainable management practices enhanced

Regulations and legal framework enhanced at the Eco-Seafood Cluster level to improve sustainability, such as stricter environmental and social regulation, and improved resource management standards. The indicator will capture new measures put forward by the Free Zone Authority

Annual

ANFZ

ANFZ

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to further support sustainable management practices

Cold storage capacity for fish products built

Cold storage warehouse built for a capacity of thirty tons of fish products in accordance with project specifications and safety standards

Annual

Handover of infrastructure Project inspection at completion of works

ANFZ

Landing infrastructure facilities for improved traceability of fish products built

Delivery of two new pumping stations for small pelagic at PAN and EPBR, and conversion of the existing fish hall at EPBR into a new fish hall for cephalopods and crustaceans.

Annual

Handover of infrastructure, Project inspection at completion of works

ANFZ

Client days of training provided (number)

This indicator measures the number of client days of training provided i.e. the number of clients who completed training multiplied by the duration of training expressed in days.

Annual

Project records on activities / Reported in the annual report

ANZF MEF FNPM

Client days of training provided - Female (number)

This indicator measures the number of client days of training provided i.e. the number of clients who completed training

Annual

Project records on activities / Reported in the annual

ANZF MEF FNPM

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multiplied by the duration of training expressed in days.

report

Entities reporting improved performance (for example, improvements in business strategy, access to market, or revenue generation)

Seafood cluster entities are expected to improve their overall performance as a result of: (a) direct impact of training provided in Component 2 (that is, on trade facilitation, fisheries management plans, certifications, and post-harvest losses); and (b) indirect impact of improvements in post-harvest facilities management.

Annual

Project records of activities Surveys of individuals trained

ANZF FNPM

Women-led MSMEs in Nouadhibou

small, medium and large companies, cooperatives or any other type of legally registered private entity led by women operating in fisheries or related activities in Nouadhibou

Annual

One stop shop and fisheries associations.

ANFZ

Investment climate reforms implemented

Investment climate legislations enacted or investment climate policies adopted as a result of project activities.

ANZF MEF

Adoption of legislation and effective implementation Official publication

Annual

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and beneficiary feedback survey on the effectiveness of the reform

Business and collateral registries computerized in Nouadhibou and Nouakchott

Computerization of business and collateral registries done in Noaudhibou and Nouakchott

Annual

Delivery of software, Project inspection at completion

ANFZ

PPP policy framework adopted MEF

Adoption of the policy framework by the parliament

Annual

Commercial viability studies for PPP conducted

ANZF

Submission letter to the Government with study attached Review of studies

Annual

Commitments by investors and private partnerships signed

ANZF MEF MPEM

Project records of activities Formal commitments documented in annual report

Annual

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ME IO Table SPACE

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Annex 1: Nouadhibou Eco-Seafood Cluster Project Background

1. The original objective the Nouadhibou Eco-Seafood Cluster (NESC) Project is to support the development of a seafood cluster in Nouadhibou that promotes the sustainable management of fisheries and generates value for the communities. The project includes two components aimed at achieving the PDO: (a) developing a sustainable seafood cluster in Nouadhibou, and (b) increasing the value of seafood products produced and marketed in the seafood cluster with the participation of local actors in Nouadhibou.

2. Component 1. Developing a sustainable seafood cluster in Nouadhibou.

• Subcomponent 1.1. Support to the Recipient to develop a framework for a sustainable seafood cluster in

Nouadhibou through PPPs and through capacity building to foster reforms at local and national levels, to lower

barriers to investment and clarify the institutional operation of a functioning seafood cluster through: (a)

development of a competitiveness diagnostics for the seafood cluster; (b) development of a Robust Cluster

Strategy; (c) development of an adequate legal and institutional framework and required Operational Tools

for the formal establishment and management of the NESC; (d) technical assistance to the MAED to establish

a strong track-record in investment climate reforms; (e) support to a functioning public private dialogue (PPD)

Process; and (f) establishment of a PPP Framework.

• Subcomponent 1.2. Support to the Recipient to generate responsible investments in NESC and to build

capacity among Nouadhibou Free Zone stakeholders through (a) the carrying out of a Commercial Viability

Assessment to enable the mobilization of private sector and institutional investor capital; (b) targeted

Investment Promotion Activities; and (c) skills training and technical assistance required to generate,

negotiate, facilitate, monitor and retain responsible investments.

3. Component 2. Increasing the value of seafood products produced and marketed in the seafood cluster with the participation of local actors.

• Subcomponent 2.1. Support to the Recipient to improve handling of landed catch and promote the export of fresh fish at the seafood cluster through: (a) provision of consultants’ services to strengthen the organization and management of the PAN, the EPBR and the Nouadhibou International Airport, and to improve the handling of landed fish and reduction of post-harvest losses; (b) works to build a refrigerated warehouse freight terminal at Nouadhibou International Airport; and (c) the provision of technical assistance to modernize trade services and regulations and increase fresh fish exports via ground transport.

• Subcomponent 2.2. Support to the Recipient to build local suppliers’ and vulnerable groups’ capacities to benefit from productive and inclusive seafood value chains through the carrying out of capacity-building activities to: (a) support the transition of private enterprises to the new fisheries management regime and rationalize their processing and harvesting efforts; (b) support industries and institutions to comply with internal product quality control procedures and acquire Key Certifications; and (c) reduce post-harvest losses by promoting good fishing and improved management practices.

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Annex 2: Details of NESC Project Results as of March 31, 2019

1. Implementation of Component 1 is “Satisfactory”.

• Eco-Seafood Cluster Strategy. The most noteworthy progress relates to the development, consensus-building and dissemination of the Eco-Seafood Cluster Strategy; a collection of ten deliverables including a competitive diagnosis of the fisheries sector, as well as a technical, financial and legal assessment of priority infrastructure investments at the PAN (commercial port) and EPBR (artisanal port), some of which are already underway (a refrigerated warehouse,16 and a wastewater treatment plant17). A committee presided by the General Secretary of the Free Zone has been put in place to operationalize and disseminate the Eco-Seafood Cluster Strategy among the Ministry of Fisheries, the Ministry of Employment and the Ministry of Commerce. In addition, two commercial viability studies for a deep-water port18 and a new airport were also supported.

• Investor Monitoring System (IMS). The project funded an IT application to track investors in the Free Zone and gather key investment information, such as actual amounts invested per sector.

• Seafood Task Force. Another important milestone is the establishment of the first functional PPD mechanism in Mauritania, the so-called Seafood Taskforce. This tripartite platform enjoys the representation of 12 key actors from the: i) public sector, including members of both ports - PAN and EPBR - and the ANZF; ii) private sector; and iii) civil society. Its objective is to establish continuous dialogue on promoting better conditions for private sector development, improving the investment climate and reducing poverty through objective alignment and operational transparency. Since inception, seven meetings have taken place, with a significant revamp of activities since September 2017.

• Investment Climate reforms and PPP reforms. Other notable results include the approval of five investment climate reforms in Doing Business 2018; the approval of the first PPP Law, aimed at defining the legal and institutional framework of PPP contracts in Mauritania; and support to the Free Zone’s investment promotion strategy through the organization of the first two editions of the “Invest In Nouadhibou” forum.

2. Implementation of Component 2 is “Satisfactory.”

• Refrigerated warehouse. The construction of a refrigerated warehouse at Nouadhibou International Airport is now part of a PPP portfolio presented by the Government during the 2017 World Bank Spring Meetings. This infrastructure is critical to bolstering fresh fish exports, thereby promoting human consumption and divestment from low value-added activities. Construction is expected to start in late 2019.

• Skills training and technical assistance to local economic operators. Building on the Eco-Seafood Cluster Strategy, and additional research on local capacity gaps, the project is about to begin skills training to local suppliers and vulnerable groups to reap increased benefits from fisheries and higher value-added chains. After significant administrative delays, and an unsuccessful procurement of the first bidding, the project launched a second bidding process in August 2018, which is currently in its final evaluation phase. This process included enhanced and clearer ToRs on local needs and expected capacity-building activities.

16 ToRs for the Refrigerated Warehouse’ Technical Feasibility Study and Call for Tenders were launched in December 2017. Recruitment for the construction company is expected to be finalized by May/June 2019. 17 The WWTP Pre-feasibility Study was delivered by the hired consultant in January 2019. Results will be presented to the client during an upcoming mission of the

team in March 2019. 18 During the “Invest In Nouadhibou” Forum in April 2018, the President of the AZFN announced that construction works for the new deep-water port in Nouadhibou will start before the end of 2019. Source: Financial Afrik (April 2018). Link: https://www.financialafrik.com/2018/04/05/nouadhibou-bientot-un-port-en-eau-profonde/

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• Knowledge exchange and ANZF capacity-building: The project supported a 12-people knowledge-exchange mission to Walvis Bay, Namibia, in March 2017 to familiarize key stakeholders with: i) sustainable management of fish resources, ii) employment opportunities through higher value-added activities, and iii) international quality standards as a tool to increase competitiveness. Upon arrival, findings were disseminated through a workshop in Nouadhibou. In addition, two workshops given by a Senegalese expert took place in June 2016 to raise awareness of certifications, standards and quality regulations in the fishing industry. Finally, the project supported a seven-person knowledge exchange mission to Busan, South Korea, in June 2018 to deepen ANZF’s know-how in Eco-Industrial Parks, seafood cluster management and the processing of higher value-added products.

3. The proposed AF will follow-up on key successful results from the parent Project:

• Eco-Seafood Cluster Strategy:

− Building an office to host the governing council of the Eco-Seafood Cluster (sub-component 1.1)

− Building on key recommendations regarding the lack of adequate landing infrastructure, by financing two priority infrastructure investments: (a) two pumping stations for small pelagic at the PAN and EPBR, and (b) a fish hall for cephalopods (sub-component 2.1)

− Supporting the construction of a wastewater treatment plant in Nouadhibou through the promotion of the existing PPP project pipeline (sub-component 3.2)

• Investment Climate reforms:

− Supporting the Free Zone’s investment promotion strategy (sub-component 1.1)

− Building physical infrastructure, such as the digitization of the Commercial Registry or the renovation of the Commercial Tribunal building in Nouakchott, to address key business environment constraints (sub-component 3.1)

− Supporting the establishment of a formal institutional framework to implement the Investment Climate agenda (sub-component 3.1)

• PPP reforms:

− Supporting the operationalization of the PPP law in the Free Zone (sub-component 1.1)

− Giving financial support to the first two years of operations of the PPP Unit (sub-component 3.2)

− Sponsoring investment promotion and communication initiatives to bolster PPD (sub-component 3.2)

− Giving financial support to further feasibility studies and implementation of key pilot PPP projects (sub-component 3.2)

• TA to local economic operators:

− Providing organizational support and improving access to markets for women operating in the artisanal fisheries sector (sub-component 2.2)

• ANZF capacity-building:

− Promoting the adoption of better environmental, social and governance practices at ANZF through the hiring of experts in fisheries and other relevant issues (sub-component 1.2)

4. A more detailed description of these follow-up activities, as well as its structuring into the Project components, can be found in Annex 3

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Annex 3: Detailed Proposed Additional Financing Description

1. As mentioned in Annex 2, the proposed AF will scale-up the results of the Nouadhibou Eco-Seafood Cluster project (NESC) by supporting additional activities in the scope of the ongoing project, including (a) Eco-Seafood Cluster Strategy: supporting the activities of its governing council and financing priority landing infrastructure investments at the PAN and EPBR; (b) Investment Climate reforms: continuing the support to investment promotion initiatives, addressing key business environment constraints and supporting the establishment of a formal institutional framework for implementing the IC agenda; (c) PPP reforms: operationalizing the PPP law in the Free Zone, establishing a PPP Unit and supporting the execution of pilot PPP projects, while strengthening the link with the Public Investment Program (PIP); (d) Assistance to local operators: supporting women operating in the artisanal fisheries sector; and (e) ANZF capacity-building: promoting the adoption of better environmental, social and governance practices.

2. To better capture objectives related to private sector development at the national level, mainly Investment Climate and PPP reforms, this AF suggests a revised version of the PDO as follows: “to support the development of a seafood cluster that promotes the sustainable management of fisheries and creates value for communities in Nouadhibou and to improve the business environment to boost private sector development in Mauritania.” The proposed modified PDO aims to include reforms related to the improvement of the business regulatory environment and the promotion of an economy leveraging private investment and job creation as an integral part of the Project’s objective.

Project Components 3. Only 20 percent of total captures in the Mauritanian EZZ are currently unloaded at Mauritanian ports, while the rest is either exported directly or unloaded at nearby ports, such as Las Palmas (Canary Islands, Spain). The Government plans to progressively enforce the landing of all fish caught within the North Zone at the ports in Nouadhibou, aiming to reach 100 percent of total volume by 2030. To achieve this goal, it will be imperative to (a) enhance landing infrastructure in Nouadhibou; (b) support private investments in the Free Zone; (c) support better labor, environmental and social practices inspired by sustainable development principles; and (d) stimulate greater value chain inclusion of key vulnerable groups, such as women.

4. Therefore, components 1 and 2 will continue supporting the Eco-Seafood Cluster through: (a) the implementation of priority recommendations from the Eco-Seafood Cluster Strategy regarding infrastructure, cluster management and social inclusion; (b) the support to local economic operators, mainly women in artisanal fisheries; and (c) the support to capacity-building activities promoting better ESG practices at ANZF.

Component 1: Developing a Sustainable Seafood Cluster in Nouadhibou 5. Some activities initiated under this component, including the recruitment of an agency to produce a marketing video and the development of a website for the Nouadhibou Eco-Seafood Cluster, will be dropped, as these have already been covered by the communications agency hired for a parallel activity. In addition, remaining activities to improve the national investment climate and operationalize the recently-adopted national PPP framework will be shifted to the new component 3.

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Sub-Component 1.1: Promoting PPD in Order to Develop a Vision of a Sustainable Seafood Cluster in Nouadhibou and Accelerate Nationwide Reforms of Structures Impeding its Development 6. Public and private companies surveyed during the development of the Eco-Seafood Cluster Strategy agreed that ANZF’s main goals should be to improve available infrastructure, simplify administrative tasks, facilitate investments and structure the fisheries sector. To contribute to the overall competitiveness of the Eco-Seafood Cluster, this sub- component will focus on: (a) supporting the operationalization of the PPP law in the Free Zone; and, (b) building an office to host the Eco-Seafood Cluster governing council.

Sub-Component 1.2: Generating Responsible Investments in the Nouadhibou Seafood Cluster 7. The proposed AF will enable the project to finance capacity-building activities for ANZF related to cluster and resource management, as well as to support its communications and investment promotion strategy. Therefore, this sub-component will focus on: (a) further supporting a responsible investment promotion strategy at the Free Zone; and (b) ensuring the adoption of better ESG practices at ANZF through capacity-building on appropriate incentives to promote sustainability at the Cluster (e.g. compliance with fishing quotas) and the hiring of experts in fisheries. This sub-component will also finance the development of a study focusing on how to organize the collection and disposal of used oils and lubricants in the Cluster.

Component 2: Increasing the Value of Seafood Products Produced and Marketed in the Seafood Cluster with the Participation of Local Actors 8. Existing activities under sub-component 2.1 will be adjusted. For example, activities related to the development and operating plans for PAN and EPBR, as well as TA to the Nouadhibou airport, will be dropped, since these were already covered in the Eco-Seafood Cluster Strategy published in 2017. Dropping these activities will allow for the funding of cost overruns incurred during the preparation, consultations and design of the Eco-Seafood Cluster Strategy.

9. The PAC sector remains unprofitable due to inadequate incentives, coupled with a lack of adequate landing infrastructure and access to services. Given its increasing importance, as measured by its relative percentage of total captures, and its current low level of professionalization and value added, this will be especially critical for the artisanal fisheries sector, 49 percent of which is concentrated in Nouadhibou. Therefore, improving landing logistics at the ports in Nouadhibou will be crucial to realizing the full economic and employment potential of the rich fish resources of the region.

10. To address these challenges, and building on key findings from the Eco-Seafood Cluster Strategy published in 2017, as well as the report “Developing Women’s Engagement in Fisheries in the Nouadhibou Free Zone: Entrepreneurship and the Path to Economic Development” published in 2018 and financed by CIIP, new activities will be added under component 2, including: (i) financing key priority infrastructure to improve landing logistics and increase production value in the artisanal fisheries sector, and (ii) supporting women operating in the artisanal fisheries post-harvest sector in their organization and access to markets.

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Sub-component 2.1: Improving the handling of landed catch and promoting the export of fresh fish at the Nouadhibou Seafood Cluster 11. The artisanal port of Nouadhibou (EPBR) currently suffers from limited landing capacity due to mooring congestion and space saturation. Recent expert evaluations have found a strong degradation of existing infrastructure, as well as an urgency to consolidate ongoing construction projects. To further develop operational capacity at the EPBR, it will be necessary to optimize spatial usage and reorganize the flow of landed products, separating cephalopods from demersal and small pelagic in order to comply with international food security standards. 12. Additionally, small pelagic currently represent 91 percent of all catches in Mauritania; however, their percent of total revenues is only 60 percent. Moreover, over the past decade, there has been a significant increase in total captures of small pelagic due to the expansion of fishmeal factories, which have a very low value added. It is therefore imperative to: (a) increase traceability for this resource to decrease the risk of overexploitation and ensure compliance with sustainable fishing quotas, and (b) promote higher-value added activities, such as local human consumption or fresh fish exports, to support the divestment from fishmeal.

13. In light of the above and following up on key infrastructure recommendations from the Eco-Seafood Cluster Strategy , this sub-component will focus on improving landing logistics in Nouadhibou. Infrastructure investments will include: (i) two pumping stations for small pelagic at EPBR and PAN, and (ii) one fish hall for cephalopods at EPBR.

The pumping stations will allow for (a) better traceability, ensuring compliance with sustainable fishing quotas, (b) improved product quality, supporting divestment from fishmeal and promotion of human consumption, and (c) a new revenue source for EPBR, supporting the improvement of its current financial distress. By installing pumping stations at both ports in Nouadhibou, complete traceability of the pelagic resources will be achieved. In addition, the fish hall will support the development of the cephalopods and crustaceans’ sector, which represent one of the most interesting growth opportunities for the artisanal segment, given that most species (cuttlefish, squid, shrimp, lobster and shellfish) are currently underexploited or non-exploited and that they have great export potential in highly profitable markets (e.g. South Korea, EU). It will also provide a space for product identification, safety and quality controls, cold storage, and sales, ensuring complete traceability of all products and securing higher profits throughout their value chain.

14. Finally, these infrastructure projects at EPBR will complement those under the approved US$ 10 million project of the German Development Bank (KfW), which will finance a fish hall for demersal, paved roads, an internal sewerage network and stores for fishermen at EPBR, as well as TA to support EPBR on its financial skills, business plan anaysis and administrative capacity. By building the pumping stations for small pelagic and the fish hall for cephalopods, this project will ensure that there are renewed logistic product fluxes in place for all species. More information on this can be found in Annex 4.

Sub-component 2.2: Building local suppliers’ and vulnerable groups’ capacities to capture greater benefits from productive and inclusive seafood value chains

15. Sub-component 2.2 will follow up on key findings from the report “Developing Women’s Engagement in Fisheries in the Nouadhibou Free Zone: Entrepreneurship and the Path to Economic Development” published in 2018 and financed by CIIP, by providing organizational support and improving access to markets for women operating in the artisanal fisheries sector. Original funds for the sub-component (approximately US$ 900,000) will be devoted to the training of local actors, including women and other vulnerable groups. For women specifically, the training will be in artisanal processing — the most lucrative of post-harvest activities in the artisanal fisheries sector – to provide women

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with the necessary skills and equipment to penetrate export markets where these products are in high demand, including in the sub-region and in southern Europe. Under the Additional Financing, this technical training in artisanal processing will be reinforced and accompanied by support and capacity-building in basic business management, marketing and organization, including in the socio-emotional skills necessary to overcome obstacles and anticipate challenges. These accompanying interventions are essential if the training is to be sustainable, as many of the difficulties women face when operating in fisheries are related to their lower standing in society – particularly in the economic sphere – rather than a lack of ability or willingness to learn new skills. Indeed, women dominate the postharvest fisheries sector (85 percent of the artisanal fisheries labor force in Nouadhibou), from collecting, processing and selling fish products to producing inputs, including artisanal salt, yet they continue to represent the most vulnerable economic actors in the Free Zone.

16. Field analysis confirms that women’s activities tend to be among the least lucrative (micro-fish trade and small-scale distribution), while they face greater competition from men in artisanal processing. This suggests that women are more likely to be denied access to the activities that have the greatest potential to improve their incomes and standard of living. Despite being outnumbered, men represent 62 percent of employers and business-owners among artisanal processors in Nouadhibou, and 63 percent of men own or run a business, compared to just 12 percent of women.19

Women must also contend with significant challenges while engaging in their activities, often working in poor conditions that prevent them from guaranteeing the quality of their product, while suffering from gender-specific constraints that limit their access to access markets, credit and inputs and therefore any possibility of growing their businesses and contributing to household income and community development. Moreover, since women tend to operate autonomously and informally, their contribution is often ignored by the authorities and is therefore rarely incorporated into policy formulation. As a result, women as a specific group of economic actors receive little if no support from the Government.

17. Considering women’s increased vulnerability and limited access to resources, markets and the most lucrative activities in the Free Zone, proposed interventions under the Additional Financing include: (i) providing marketing and organizational support to local women’s cooperatives operating in Nouadhibou (including training in socio-emotional skills); (ii) promoting the organizing of women’s fisheries activities into larger cooperatives or unions of cooperatives; (iii) supporting productive alliances with larger players, who can act as intermediaries and help accelerate small producers; (iv) sponsoring study trips to countries in the sub-region to promote new export markets for women; (v) supporting the certification of salt by ONISPA; and (vi) supporting an awareness campaign to promote the local consumption of products made by women.

Component 3: Strengthening the Enabling Environment for the Private Sector Development 18. Diversifying the economy away from extractive industries will require a robust and competitive private sector. To enhance the business environment, authorities are taking steps at the upstream of the cascade to improve the business regulatory environment and provide the building blocks for a more modern and transparent economy that leverages private investment for growth and job creation. This includes reforms to promote public-private dialogue, develop a formal PPP framework, increase the efficiency of the justice system and expand credit to the private sector. This new project component will integrate ongoing and additional activities aimed at addressing core Investment Climate

19 Data as of March 2018, collected by IMROP (Mauritanian Institute for Oceanographic and Fisheries Research) in preparation for an upcoming analysis of Mauritania’s artisanal processing sector.

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constraints and developing a strong PPP program in Mauritania. Component 3 will consist of two subcomponents that together will scale-up two nationwide agendas successfully supported and piloted through the parent Project.

Sub-component 3.1: Improving the Investment Climate. 19. Building on the strong support provided to investment climate reforms since the Project’s inception, the AF will continue to provide technical assistance and financial support aimed at addressing core constraints to fostering a better business environment in Mauritania. This will include:

(a) Support to the development of public-private technical committee on investment climate reforms.

20. In order to strengthen the institutional mechanism for coordination of reforms and strategic monitoring, and to ensure the marketing policy and communication on ongoing reforms, the GoMR has just set up an institutional framework for improving the investment climate. Such framework is already in place in many other countries which have implemented major business climate improvement programs (such as Rwanda, Côte d'Ivoire, or Burkina Faso) and it has proven indispensable in setting-up the so-called second-generation reforms, which are generally more complex and longer-term oriented. The current institutional framework in Mauritania is composed of a High-Level Council on improving investment climate reforms chaired by the Prime Minister and composed of key Ministers and the National Employers association (i.e. Patronat). This High-Level Council which was created by decree on February 7th, 2019, will be supported by a public-private technical committee in charge of the day to day implementation, monitoring and coordination of investment climate reforms. This technical committee was set up on March 7th, 2019. The AF will provide the required TA and training for the successful set up and functioning of this structure, this will include: i) providing technical assistance to one or two specific working group(s) of the technical committee such as payment of taxes, getting credit, insolvency or trading across borders where Mauritania is lagging behind regional peers. TA will include support to diagnostic work followed by specific technical assistance. These would provide concrete support to the technical committee that would lead to improvements in the overall investment climate and at the same time help the Technical Committee to begin to demonstrate its impact; ii) following the financing of the investment climate communication strategy by the current project, the AF will support the implementation of the communication and awareness raising strategy such as update of existing website and develop a series of communication materials and tools targeted at private sector actors and other relevant stakeholders; and iii) capacity building of the staff of the investment climate technical committee through study tours and / or specific training or expert support.

(b) Financing of key physical infrastructure essential for modernizing the commercial justice system20 and the commercial registry, such as the upgrading and computerization of the Commercial Registries in Nouakchott and Nouadhibou and the renovation of an existing building which will host the Commercial Tribunal and Commercial Registry in Nouakchott.

21. As part of the ongoing efforts made by the Mauritanian Government in matters of rule of law, including improvement of the commercial justice system in order to improve all citizens’ access to justice, the AF will finance the rehabilitation of a building belonging to the Ministry of Justice, to which the Commercial Tribunal of Nouakchott, the

20 Dollmann, C. (2018). Improving Commercial Justice, Developing Alternative Dispute Resolution Mechanisms, and Modernizing the Commercial

Registry.

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Commercial Registry and a legal documentation center will be transferred. The building will provide all businesses an easy access to a faster and more reliable commercial justice system.

22. In addition to physical infrastructure, the commercial registry is a tool that allows the collection and dissemination of information on businesses’ ownership, operations, finances and collateral. Currently, this registry is not centralized and remains manual.21 Many firms created and captured in the registry reflect single transactions, as opposed to firms conducting continuous business. This practice is often used to avoid taxation and operational trails. Moreover, the registry does not allow for the effective exchange and cross-checking of data among key administrations (taxations, customs, CNSS, etc.) due to the lack of a common classification (i.e. nomenclature) of economic activities. As such, the registry does not accomplish its critical mission of providing reliable and transparent information on companies and secured transactions. This function is critical for private sector development, as the availability of such information is the backbone of a collaterals market that can be used by businesses and commercial banks to expand credit to firms. This AF will thus fund the reform, as well as the computerization of the commercial registries to make it a modern and transparent centralized service, thereby allowing the centralization of data from different local registries, the rapid and instant availability of information and other resources, as well as the continuous updating and dissemination of information.

23. These proposed activities will be complemented by an ongoing technical assistance program (IFC Investment Climate and Entrepreneurship Advisory Project #601022), and an upcoming DPO on Competition and Skills (P167348). With the support of the IFC AS, the proposed investment and TA will be accompanied by a major effort to raise awareness among private sector and high-level officials, as well as to build the capacity of key stakeholders with respect to commercial justice and other important IC reforms.

Sub-component 3.2: Supporting the Operationalization of the PPP agenda. 24. In recent years, the PPP agenda has experienced renewed interest from the Mauritanian Government, which is mirrored by the Project. In August 2014, GoMR requested support from the WBG to promote and develop a new approach to attract FDI through the development of a PPP strategy. Responding to this request, PPIAF co-funded along with AfDB a PPP technical assistance in 2014/2015 comprising a PPP workshop and basic training, a PPP legal and institutional Diagnostic Report and the constitution of a PPP Portfolio. This was “Phase I of the overall PPIAF program. The PPP diagnostic report examined key policy, legal, and institutional constraints inhibiting the further development of PPPs in Mauritania as well as examined several promising potential opportunities that could be implemented as PPP transactions with the benefit of additional upstream technical work. The outcome of this technical assistance was positive in the sense that it led public authority to see Public Private Partnerships as an alternative source of financing for infrastructure project in Mauritania. It also set the national agenda as a priority and there is a better understanding of the PPP objective and process. A Phase II was undertaken in coordination between NESC (Parent Project) and a second round of PPIAF funding focusing on drafting a new PPP law and associated texts for enforcement, elaboration of

21 Ouattara, M. (2018). ICT Capacity Assessment for the Computerization of Mauritania's Business Registry.

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operating guidelines22 and procedures for processing PPP projects and evaluation and development of a pipeline of feasible projects.

25. The AF will continue to provide technical assistance to the Government of Mauritania to develop a strong PPP strategy at national and sector levels along with solid institutional capability in the line ministries, PPP Unit and PPP committees, to drive the PPP agenda in Mauritania. This support will be primarily provided through the following three major activities: a) financial support for the PPP Unit’s operations, including recruitment of PPP Unit local consultants23 and one international expert for a maximum of two years of operations to ensure effective implementation, development of their strategies and action plans, as well as the identification of viable projects, b) technical and financial assistance for investment promotion and communication initiatives based dialogue between public and private stakeholders; and c) finance further feasibility assessment and facilitation of the execution of two or three pilot PPP projects based on existing PPP pipeline projects. A report by Mott Macdonald dated April 2017, prepared under the Bank executed, PPIAF-funded PPP capability building advisory project, identified 11 potentially viable candidate PPP projects in sectors including water, roads, cold storage, ports, and waste management. Of these 11 projects, 9 remain potential PPP candidates in the project pipeline. The project will also coordinate these activities with relevant programs of other donors. For example, AFD is assisting in the development of small-scale power generation projects, potentially as PPPs. Furthermore, the team will explore mobilizing funding from other sources such as PPIAF and GIF.

26. Component 4: Project Management. Activities under this component will include support to procurement, financial management (FM), safeguards management, monitoring and evaluation through the PIU as well as offering a platform for collaboration and cooperation among relevant government agencies. Given the scope of new activities proposed at the national level it has been deemed necessary to create a separate component for project management to oversee implementation; handle financial and administrative management, as well as collaborate and coordinate with other relevant entities involved in the project for the successful implementation of the project.

27. The Operational Manual will be updated to reflect the above changes and be a condition of effectiveness for AF.

Coordination and Role with Development Partners 28. Components 1 and 2 will build on upcoming investments from the German Development Bank (KfW), with US$ 10 million for four major infrastructure investments (i.e. a new fish hall for demersal, pavement of internal roads, an internal sewerage network, and new stores for fishermen), as well as technical assistance to EPBR in the definition of its financial and technical strategy, analysis of business plans and its administrative capacities. In addition, US$ 25 million of parallel financing from the European Union’s Emergency Trust Fund for Africa will translate into a national program focused on artisanal fisheries. The program will be implemented by three development agencies: (a) the International Labor Organization (ILO) – US$ 12 million, which will focus on increasing the value-added in artisanal fisheries value chains, improving working conditions for artisanal fishermen, strengthening the capacity of the private sector and vulnerable groups (i.e. women and youth), and improving landing infrastructure outside of Nouadhibou; (ii) the German Corporation for International Cooperation (GIZ) – US$5.5 million, which will work on promoting new market opportunities for small pelagic, implementing product quality standards and reducing product losses; and (iii) the Spanish Agency for International Development Cooperation (AECID) - US$10 million, whose program is currently being

22 All PPP toolkits, updated PPP pipeline, series of training, operations manual and other key information about PPP unit can be found at the following website: www.ppp.gov.mr. 23 Payment of PPP unit local consultants will also include those consultants already hired by the government prior to AF effectiveness

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developed and which will exclusively finance activities in Nouadhibou. Component 3 will also complement ongoing activities under the EU and French Development Agency (AFD) on PPPs for the delegation of public service delivery of water and energy in rural areas, as well as build on a recent economic and technical diagnostic commissioned by AFD for the rehabilitation of the commercial justice building.

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Annex 4: Technical and Financial Analysis on Suggested Infrastructure at EPBR

Functional, Logistic and Financial Review of Existing Port Infrastructure in EPBR

1. According to the Ministry of Fisheries (MPEM), the artisanal and coastal fisheries sector (PAC) has seen an important progression in its proportion of total captures over the past years, from 5 percent in 2006 to 16 percent in 2011. This is especially true for Nouadhibou, where 49 percent of the artisanal fisheries activity is concentrated. A recent study by IMROP24 estimates at 31,607 the number of people working in PAC, representing 74 percent of total employment in fisheries in Mauritania. However, characterized by a low level of professionalization and a primarily foreign workforce, PAC only accounts for 22 percent of the total production value in the Mauritanian Exclusive Economic Zone (EEZ).

2. The artisanal port in Noaudhibou (EPBR) is responsible for managing artisanal fishing activities in Nouadhibou. In its old quay (darker grey), it has: i) mooring pontoons, ii) a fish hall built by the Japanese in 2002, including different storage rooms and ice stations; and iii) a small reparation station for vessels with a boat crane that can support up to 40 tons. A new extension (blue and orange) aimed at solving mooring congestion and space saturation issues, was delivered by the Japanese International Cooperation Agency (JICA) in 2015.

Figure 1: Existing Infrastructure at EPBR

3. Different anomalies and degradations have been observed in existing infrastructure, such as coastal issues due to increasing sea levels, insufficient draft, unfixed pontoons and recurrent silting due to tides. The existing fish hall built by the Japanese also shows heavy signs of deterioration due to inadequate maintenance and alternative usage of space and equipment.

4. As for its financial health, the EPBR is currently undergoing financial stress due to increasingly-high expenses and barely-growing revenue. Revenue grew by US$ 45,000 between 2012 and 2014, while expenses grew by US$ 716,000, mainly due to the increased costs of personnel (on average almost 50 percent of total operational costs), stocking and inventory. As a result, EBITDA decreased by 122.8 percent from US$ 533,000 in 2012 to US$ 122,000 in 2014, while net income decreased by US$ 1.1 million to US$ 746,000 in 201425. Given its low capacity to generate sufficient cash-flow

24 IMROP/APAM/ONS, Enquête sectorielle sur l’emploi dans la Pêche Artisanale, 2014. 25 Norda Stelo, BECR, Axelcium, Odyssée; Stratégie de Développement pour un Pôle de Competitivité Halieutique à Nouadhibou. Livrable 3:Revue Fonctionnelle, Organisationnelle et Financière des Activités et des Parties Prenantes Présentes et Potentielles du PCH; 2017; Paris, France.

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and thereby ensure the sustainability of its own operating costs, investments in the EPBR should be financed primarily through subsidies and grants, avoiding new long-term debt if possible.

5. To further develop operational capacities for PAC in Nouadhibou, it will be necessary to optimize spatial usage and reorganize landed product fluxes at EPBR, separating cephalopods from demersal and small pelagic in compliance with international food security standards. For this, the Seafood Cluster Strategy proposed the following priority infrastructure investments: (a) a pumping station for small pelagic, (b) a new fish hall for demersal at EPBR’s new extension platform, and (c) a renovation of the existing fish hall, which was also financed by JICA in the early 2000s and is currently in a fast degrading status due to misuse and poor maintenance, into a fish hall for cephalopods. Through this logistic reorganization, landing conditions at EPBR will improve drastically. Small pelagic will only be landed through the pumping station, leaving room for the landing of demersal and cephalopods at their respective fish halls, while current product landings directly at factories or at the beach will be prohibited in the short term.

Figure 2: From left to right: priority infrastructure investments and projected evolution of landed volumes at EPBR

6. The German Development Bank (KfW), who actively collaborated in the development of the Seafood Cluster Strategy, is in the process of approving a new US$10 million project at EPBR expected to launch in 2019. The upcoming project will involve four major infrastructure investments (i.e. a new fish hall for demersal, pavement of internal roads, an internal sewerage network, and new stores for fishermen), as well as technical assistance to EPBR in the definition of its financial and technical strategy, analysis of business plans and its administrative capacities. The latter will be particularly key in ensuring that EPBR becomes an efficient and effective service provider for the PAC industry.

7. By financing the remaining priority infrastructure investments at EPBR (i.e. the pumping station for small pelagic and the fish hall for cephalopods), this AF will complement initiatives from other donors (i.e. KfW and JICA, among others), hence maximizing development investment impact, and ensure the achievement of the Seafood Cluster Strategy, including the completion of new logistic fluxes proposed for landed products at EPBR.

Figure 3: Proposed fluxes of landed products;

Fish hall for cephalopods

Pumping station for small pelagic

Fish hall for demersal (KfW)

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from left to right: small pelagic, cephalopods and demersal (red – fresh, blue – processed)

Pumping Station for Small Pelagic

8. Small pelagic currently represent 91 percent of total captures in the Mauritanian EZZ, followed by demersal and cephalopods26. However, they only contribute 60 percent of total revenue in the sector27. Moreover, most revenue currently comes from the fish meal industry, a sector with a relatively small percentage of local value added (approximately 30 percent) and low job creation, which is mostly unqualified and seasonal.

9. This strategic and technological choice for the valorization of small pelagic is based on current sectorial constraints mainly related to (i) breaks in the product’s cold chain due to landing delays and insufficient cold storage capacity, (ii) poor sanitary conditions, and (iii) lack of product traceability, all of which hinder the ability to obtain international certifications, thus limiting export opportunities to highly profitable markets (e.g. Japan, EU).

10. Recent reports by MPEM27,28 agree on the need to progressively redirect small pelagic, particularly sardinella, towards higher-value sectors destined for human consumption. Such a strategy will incentivize higher job creation and PIB contribution, while tackling food security challenges both in Mauritania and neighboring countries, such as Ghana, Ivory Coast and Nigeria, whose fish consumption is mainly based on small pelagic (75 percent, 5 percent and 34 percent respectively) and who are currently unable to self-satisfy their local demand28. An example of the potential positive impact of this strategy can be seen in Senegal, whose artisanal processing industry processes about 150,000 tonnes/year of small pelagic and provides employment to about 50,000 people, mostly women, compared to 300,000 tonnes and 840 jobs in Mauritania.

Figure 4: Projected evolution of the processing industry for small pelagic

11. The Seafood Cluster Strategy’s vision for the sectorial shift of small pelagic can be seen in the graph above. Current fishmeal factories destined for animal consumption will only use waste from other industries, while their total output is gradually reduced over time. New quality and innovative products will be developed, including fish meals destined to

26 MPEM, Stratégie de Gestion Responsable pour un Développement Durable des Pêches et de l’Économie Maritime, 2015 27 MPEM, Rapport Final sur le Cadre d’Investissement pour le Développement Durable des Pêches en Mauritanie, 2015. 28 European Union, Étude sur l’évolution des pêcheries de petits pélagiques en Afrique du Nord-Ouest et impacts possibles sur la nutrition et la sécurité alimentaire en Afrique de l’Ouest, 2014.

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human consumption, as well as pharmaceutical and cosmetic products. In-land cold storage capacities will increase to allow for more frozen small pelagic destined to national and international markets. Finally, new processed products will be developed, such as canned fish, semi-prepared meals and fillets, among others. It is important to note that this strategy will not be based on increased capture levels, but rather on ensuring that exploitation levels respect the Maximum Sustainable Yield of small pelagic species and that foreign vessels land all fish caught within the Mauritanian EZZ at the ports of Nouadhibou by 2030, in accordance with national strategies.

12. To make this sectorial reorientation possible, it will be imperative to improve landing conditions and enhance product quality and traceability. The proposed pumping station at EPBR will improve landing times drastically (up to 200 tonnes/hour) by revamping mooring congestion, thus improving product quality and reducing post-harvest losses, while providing a centralized traceability system, which ensures compliance with international standards and supports high-profit exports.

Figure 5: Example of a pumping station for small pelagic

Fish hall for cephalopods

13. Due to their export potential in highly profitable markets (e.g. South Korea, EU), cephalopods and crustaceans represent one of the most interesting growth opportunities for PAC, particularly cuttlefish, squid, shrimp, lobster and shellfish, which are currently underexploited or non-exploited. However, due to inadequate incentives, coupled with a lack of adequate landing infrastructure and access to services, PAC’s activity has historically been focused on octopus – a resource that has been overexploited during the last 30 years.

14. As seen in the graph below, the Seafood Cluster Strategy envisions a strategic shift for the cephalopod industry based on sustainable catches and higher value-added activities, such as fresh exports, fillets and semi-prepared meals. As for small pelagic, this graph displays an increase in landed products based on the national strategy aimed at landing 100 percent of the fish caught within the Mauritanian EZZ at the ports of Nouadhibou by 2030.

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Figure 6: Projected evolution of the processing industry for cephalopods and demersal

15. To ensure sufficient product quality for industries focused on human consumption and secure exports to high-profit markets, it will be important to provide a platform that ensures adequate sanitary conditions and complete product traceability. At the fish hall for cephalopods, products will be identified according to official nomenclature, sampled, analyzed for food safety and quality controls, certified, stored in temperature-controlled facilities, and commercialized through different systems, such as pre-sales, private arrangements or auctions.

Conclusions

16. The pumping station and the fish hall for cephalopods are in line with all sectorial strategies developed by MPEM, including those related to sustainable catching, environmental and social impact, food security, and PAC development; as well as the Seafood Cluster Strategy, which was developed in 2017 by a consortium of companies (i.e. Norda Stelo, Axelcium, Odyssée and BECR). These investments will also contribute to the overall NESC PDO, supporting the development of a seafood cluster in Nouadhibou that promotes sustainable management of fisheries and generates value for communities, by increasing the sector’s integration into the local economy through higher value added, stronger PIB contributions, access to foreign currencies and job creation.

Infrastructure at EPBR Estimated Cost (US$)

Pumping station 400 000

Fish hall for cephalopods 1 300 000

Total 1 700 000 Figure 7: Estimated cost of infrastructure investments at EPBR under sub-component 2.1 of AF.

Source: Seafood Cluster Strategy 17. The proposed infrastructure investments under NESC AF are essential for the achievement of the short-term Seafood Cluster Strategy, which focuses on improving the transit, landing and transformation of products by improving logistic product fluxes, reinforcing quality controls, and reducing post-harvest losses.

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18. These investments, along with the fish hall for demersal which will be built by KfW, will complete the new product fluxes proposed for small pelagic, demersal and cephalopods, thereby ensuring compliance with food security standards and higher product value-added.

19. Additionally, this new infrastructure will represent a strong revenue generation opportunity for EPBR, which could turnaround its deficit financial situation and provide a sustainable source of income to self-sustain future investments. In this sense, KfW’s capacity-building on financial and technical skills, along with their support to EPBR’s administrative capacities will be key.

20. Lastly, it is important to note that in order for this infrastructure to be exploited effectively and respecting environmental sustainability concerns, mainly regarding compliance with fishing quotas for small pelagic, an appropriate set of incentives and disincentives will be required at the Nouadhibou Free Zone, both for the public and private sector. This point will be addressed through Component 1 of this AF.

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Annex 5: Synergies with IFC and WB DPO operations

1. The AF will further leverage synergies with the following projects for Component 3:

• IFC Investment Climate and Entrepreneurship Advisory program (#601022, US$ 1.5 m): This IFC technical assistance program will play a major role in mobilizing the private sector, supporting authorities in the consultation process to deepen the public-private dialogue in reform preparation, and building the capacity of key stakeholders. It will provide TA on various ongoing reforms related to the property rights regime, commercial justice and on how to design and run the Inter-Ministerial Public-Private Investment Climate Committee to ensure that reforms meet private sector needs and that their benefits become widely known, understood, and used.

• First Competition and skills development policy financing (P167348). The first operation of a three-year programmatic series (2019-2021) is being prepared with objectives to boost competition and growth. This includes modernizing the business environment for SMEs and boosting access to finance, removing barriers to competition in the internet broadband market, and improving the quality and relevance of skills provided by the education system. The DPO will be supporting the modernization of the business and collateral registry and modernization of commercial justice through a series of proposed reforms.

• Mauritania Growth Study (P168429): A growth study with objectives to examine key constraints and drivers of economic growth in Mauritania and propose policy recommendations for a more diverse and inclusive growth model. This study includes a deep-dive on urbanization, and an analysis of the potential for and benefits from economic diversification.

• Competitive Industries and Innovation Program (CIIP, US$ 200,000): a second phase of CIIP funds will support broadening NESC inclusion activities, specifically by fostering women and vulnerable economic operators' engagement in the Free Zone. This will include a) providing women with capacity-building in non-cognitive skills (personal leadership training) b) piloting a community radio program targeting artisanal fishermen to raise awareness on critical issues, such as the sustainable management of resources, safety at sea and good hygiene practices. These activities are based on diagnostics conducted and financed under the project and previous CIIP funding since 2016.

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Annex 6: Revised Cost Allocation by Component and Source

Table 1: Financing Summary by Component and Source (US$)

Table 2: Allocation of Proceeds AF

Category Amount of the Grant Allocated (expressed in SDR)

Percentage of Expenditures to be Financed (inclusive of Taxes)

(1) Goods, works, non-consulting services, and consulting services for activities under Part 1.1(e)-(f), 1.2(d)-(e), Part 2.1(d), Part 3.1(a), Part 3.2 and Part 4 of the Project

5,580,000 100%

(2) Goods, works, non-consulting services, and consulting services for activities under Part 3.1(b) of the Project

220,000 100%

(3) Goods, works, non-consulting services, and consulting services for activities under Parts 1.1(a)-(b)-(c)-(d), 1.2(a)-(b)-(c), 2.1(a)-(b)-(c), and 2.2(a)-(b)-(c) of the Project

0 100%

TOTAL AMOUNT 5,800,000

Project Cost IDA Financing Government

Component 1: Developing a sustainable

seafood cluster in Nouadhibou 1.2 1.2 0

Subcomponent 1.1 0.6 0.6 0

Subcomponent 1.2 0.6 0.6 0

Component 2: Increasing the value of seafood

products produced and marketed in the

seafood cluster with the participation of local

actors 2.6 2.1 0.5

Subcomponent 2.1 2.1 2.1 0

Subcomponent 2.2 0.5 0 0.5

Component 3: Strengthening the Enabling

Environment for Private Sector Development 4.7 4.2 0.5

Subcomponent 3.1 2.5 2 0.5

Subcomponent 3.2 2.2 2.2 0

Component 4: Project management 0.5 0.5 0

Total 9 8 1

AF

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Annex 7: Revised Procurement Plan

List of Works, Goods, non- consulting services and consulting services under proposed AF

1

Recruitment of a design office for the preparation of the technical studies, the Implementation

File, the bidding documents and the follow-up of construction works of a building for the

governance of the Pole Halieutique de Nouadhibou

0.03Consulting service

QCBS Post National

2Construction of a building for the governance of the Pole Halieutique de Nouadhibou

0.37 Works NCB Post National

3 Fisheries technical assistance to support the ANZF in the promotion of the fishing sector 0.05 Consulting service IC Prior National

4Legal assistance to support ANZF (PPPs)

0.02 Consulting service IC Post National

5 Technical assistance in communication and promotion to support the ANZF in the promotion of

investment in fisheries in Noaudhibou

0.05 Consulting service QCS Post National

6Recruitment of a firm for the organization of Invest'In Nouadhibou Forum (2020 and 2021)

0.2Services except

consultancy NCB Post National

7 Recruitment of a firm to conduct a study on solid waste 0.7 Consulting service QCS Post National

8

Recruitment of a design office for the preparation of the technical studies, the Implementation

File, the bidding documents ( and the monitoring of construction works of two pumping stations

(PAN and EPBR)

0.03 Consulting service QCBS Post National

9 Construction of a pumping station at PAN and EPBR 0.75 Works NCB Post National

10Recruitment of a design office for the preparation of the technical studies, the Implementation

File, the bidding documents ) and the follow-up of construction works of a fish hall for

cephalopods at EPBR

0.035 Consulting service QCBS Post National

11Construction of a fish hall for EPBR cephalopods

1.265 works NCB Post National

12Trainings (several sessions) to local women's marketing and organizational cooperatives

0.15 Consulting service IC Prior National

13 Promotion of the organization of activities in larger cooperatives or the gathering of activities 0.08 Consulting service IC Prior National

Type of procurement Ref. No. Description of Asssignment Estimated Cost (US$)Procurement

Method

Review by

World Bank Approach

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List of Works, Goods, non- consulting services and consulting services under proposed AF (cont’)

14 Support for salt certification by ONISPA 0.09 Consulting service IC Prior National

15 Recruitment of a design office for the preparation of the technical studies, the Implementation File, the bidding documents and the follow-up of the rehabilitation works of the commercial justice building

0.03 Consulting service QCBS Post National

16 Rehabilitation of the Commercial Justice Building 0,77 Travaux NCB Post National

17 Recruitment of a consultant to elaborate the specifications (design) and the supervision of development of the systems for the commercial registers (central register, Nouakchott and Nouadhibou)

0.06 Consulting service QCBS Post National

18 Recruiting a firm responsible for the development (software development, installation and training) of IT solutions for business registers 0,74 Services except

consultancy NCB Prior National

19 Acquisition of office furniture for the benefit of commercial registers (central register, Nouakchott and Nouadhibou) 0.05 Goods NCB Post National

20 Acquisition of computer equipment for commercial registers (central registry, Nouakchott and Nouadhibou)

0,1 Goods NCB Post National

21 Support to the creation and operationalization of the public-private committee responsible for the coordination and supervision of business climate reforms (multiple contracts)

0.75 Consulting service IC Prior National

22 Recruitment of consultants (national and international) to support the PPP unit 0,25 Consulting service IC Prior National

23 Technical assistance on improving public-private dialogue 0,35 Consulting service IC Prior National

25 External auditor 0.02 Consulting service MC Prior National 26 Final evaluation PIU 0.02 Consulting service IC Post National 27 Purchase of consumable goods and services 0.03 Goods RFC Post National

National

Type of procurement

24 Financing of feasibility studies and facilitation of the execution of 2 to 3 pilot PPP projects already identified by the government

1 Consulting service QCBS Post

Ref. No. Description of Assignment Estimated Cost (US$) Procurement Method

Review by World Bank Approach

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Consulting assignments to be dropped from parent Project

Ref. No. Activity Beneficiary Rationale

1 Land tenure study of Seafood Cluster ANZF Dropped following decission of ANZF, beneficiary administration.

2Recruitment of a consultant in communication and computer graphics ANZF

This activity was discontinued following consultation between the

beneficiary and IDA of its lack of relevancy

3Assessment of the sanitation needs of PAN

ANZFThe activity was replaced by the Commercial Viability Assessment and

Prefeasibility Study of a Seawater Desalination Unit.

4 Recruitment Company and AT on land: Implementation of a land management tool of the

Seafood Cluster ANZFDropped following decission of ANZF, beneficiary administration.

5Planning study and Geographic information system of the Seafood Cluster ANZF

Dropped following decission of ANZF, beneficiary administration.

6Acquisition of a van vehicle for the benefit of the PIU

PIU

Dropped activity following the assignment of one of the existing

vehicles for the benefit of "Pool" and missions outside Nouadhibou.

7 Development of Eco-Seafood Cluster Website

ANZF

Dropped activity following its integration as part of the recruitment

activity of a communication and event promotion firm, contract

currently being negotiated.

8Promotion and marketing: recruitment agency for the realization of a promotional video

ANZF

Dropped activity following its integration as part of the recruitment

activity of a communication and event promotion firm, contract

currently being negotiated.

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Annex 8: Theory of Change NESC Additional Financing

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Annex 9: Financial Management and Disbursement Arrangements

1. The following are the financial management arrangements for the project

1. External audit 2. The TOR of the original project will be expanded to include the additional financing activities. Consolidated Audited Financial Statements (original project and additional financing) will be submitted to IDA within six months after year-end. The auditor will issue an opinion on the Audited Project consolidated Financial Statements and in compliance with International Federation of Accountant (IFAC) and a specific opinion on additional activities will be required.

3. The external auditors will prepare a Management Letter giving observations and comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Financial Agreement.

2. Internal control arrangements 4. The recruitment of the internal auditor should be finalized. The existing manual of administrative financial and accounting procedures will be updated to include additional financing activities and clearly defined roles and responsibilities, FM procedures, operations documentation and controls process.

3. Accounting arrangements: 5. The current accounting standards in use in Mauritania for on-going Bank-financed project will be applicable. The existing accounting software in place will be customized to integrate this AF’ accounts. The NESC has a multi-projects computerized accounting system to take into account this additional financing activities. However, the accounting software should be updated and extended to allow recording of MEF activities.

4. Reporting and Monitoring 6. The un-audited Interim Financial Report (IFR) format of the ongoing project will be updated to include the additional financing. It will comprise sources and uses of funds according to project expenditures classification, a comparison of budgeted and actual project expenditures (commitments and disbursements) to date and for the quarter. The PIU will submit the financial reports to the Bank within 45 days following the end of each calendar quarter. The NESC will produce the project’s annual financial statements, which will include the additional financing and will comply with Mauritania standards and World Bank requirements.

5. Budgeting arrangements 7. Periodic reports of budget monitoring variance analysis and recommendations should be prepared by the NESC FM team on a quarterly basis. The budgeting process and monitoring will be defined in the updated Administrative and Accounting Manual of Procedures.

6. Disbursement arrangements and flow of funds 8. Disbursement for the project will follow the existing disbursement arrangements for the original Project. Disbursements will be transactions-based whereby withdrawal applications will be supported with Statement of Expenditures (SOE). Documentation will be retained at NSC and MEF for review by Bank staff and auditors. The DFIL will provide details of the disbursement methods, required documentation, DAs ceiling and minimum application size. These have been discussed and agreed during negotiations of the Financing Agreement. A Designated Account (DA) for the AF will be opened in the Central Bank of Mauritania and two (2) Project Accounts (PA) in local currency will be opened in a commercial Banks in Nouakchott and Nouadhibou on terms and conditions acceptable to the Bank.