Projet de développement des entreprises et d'investissement en Haïti

Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005761 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H8650) ON A GRANT IN THE AMOUNT OF SDR 13.4 MILLION (US$ 20 MILLION EQUIVALENT) TO THE Republic of Haiti FOR A Haiti Business Development and Investment Project February 13, 2023 Finance, Competitiveness And Innovation Global Practice Latin America And Caribbean Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective {February 13, 2023}) Currency Unit = Haitian Gourde (HTG) 149.81 HTG = US$1 US$ 1.337 = SDR 1 FISCAL YEAR October 1 - September 30 Regional Vice President: Carlos Felipe Jaramillo Country Director: Lilia Burunciuc Regional Director: Robert R. Taliercio Practice Manager: Yira J. Mascaro Task Team Leader(s): Emiliano Duch Navarro, Mariana Vijil ICR Main Contributor: Katie Kibuuka ABBREVIATIONS AND ACRONYMS AM Aide Memoire BDS Business Development Services CCAH Chambre de Conciliation et d'Arbitrage d'Haiti CFI Centre de Facilitation des Investissements CPF Country Partnership Framework CRI Competitive Reinforcement Initiative DALA Damages and Losses Assessment ERR Economic Rate of Return ESMF Environmental and Social Management Framework FCV Fragile, Conflict and Violence FY Fiscal Year GDP Gross Domestic Product GoH Government of Haiti IADB Inter-American Development Bank ICR Implementation Completion and Results Report IDA International Development Association IEZs Integrated Economic Zones IRM Immediate Response Mechanism ISM Implementation Supervision Mission ISR Implementation Supervision Report M&E Monitoring and Evaluation MCI Ministry of Commerce and Industry MEF Ministry of Economy and Finance MSMEs Micro, Small, and Medium Enterprises MTR Mid-Term Review NPV Net Present Value PAD Project Appraisal Document PDNA Post-Disaster Needs Assessment PDO Project Development Objective PIU Project Implementation Unit PSJET Private Sector Jobs and Economic Transformation SAE Services d’Appui aux Entreprises TTL Task Team Leader UCP L’Unité de Coordination de Projet WBG World Bank Group WEF World Economic Forum TABLE OF CONTENTS DATA SHEET ................................................................... ................................................... .... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 6 A. CONTEXT AT APPRAISAL .........................................................................................................6 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ................................................................9 2 OUTCOME .................................................................................................................... 11 A. RELEVANCE OF PDOs ............................................................................................................11 B. ACHIEVEMENT OF PDOs (EFFICACY) ......................................................................................12 C. EFFICIENCY ...........................................................................................................................15 D. JUSTIFICATION OF OVERALL OUTCOME RATING ....................................................................17 E. OTHER OUTCOMES AND IMPACTS .........................................................................................17 3 KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 19 A. KEY FACTORS DURING PREPARATION ...................................................................................19 B. KEY FACTORS DURING IMPLEMENTATION .............................................................................20 4 BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 22 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................22 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE .....................................................23 C. BANK PERFORMANCE ...........................................................................................................24 D. RISK TO DEVELOPMENT OUTCOME .......................................................................................25 5 LESSONS AND RECOMMENDATIONS ............................................................................. 26 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 28 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 37 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 40 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 41 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 45 ANNEX 6. SUPPORTING DOCUMENTS .................................................................................. 48 The World Bank Haiti Business Development and Investment Project (P123974) Page 1 of 53 DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P123974 Haiti Business Development and Investment Project Country Financing Instrument Haiti Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Republic of Haiti Ministry of Commerce and Industry Project Development Objective (PDO) Original PDO The objective of the Project is to assist the Recipient in: (a) improving the conditions for private sector investment andinclusive growth; and (b) improving its capacity to respond promptly and effectively to an Eligible Emergency. The World Bank Haiti Business Development and Investment Project (P123974) Page 2 of 53 FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing IDA-H8650 20,000,000 15,714,719 13,579,933 Total 20,000,000 15,714,719 13,579,933 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 20,000,000 15,714,719 13,579,933 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 21 - May - 2013 11 - Nov - 2013 14 - May - 2018 31 - May - 2018 30 - Nov - 2021 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 12-Sep-2013 0 24-Dec-2015 5.07 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule 02-Aug-2016 6.05 Other Change(s) 07-Dec-2017 8.08 Change in Results Framework Change in Components and Cost Reallocation between Disbursement Categories 23-Feb-2019 9.10 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule 30-Nov-2021 14.75 Change in Results Framework Change in Components and Cost Cancellation of Financing Reallocation between Disbursement Categories The World Bank Haiti Business Development and Investment Project (P123974) Page 3 of 53 KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs No. Date ISR Archived DO Rating IP Rating Actual Disbursements (US$M) 01 04-Aug-2013 Satisfactory Satisfactory .43 02 06-Apr-2014 Moderately Unsatisfactory Moderately Satisfactory 2.21 03 31-Oct-2014 Moderately Unsatisfactory Moderately Satisfactory 2.37 04 05-May-2015 Moderately Unsatisfactory Moderately Satisfactory 3.05 05 14-Aug-2015 Moderately Unsatisfactory Moderately Satisfactory 3.49 06 23-Oct-2015 Moderately Unsatisfactory Moderately Satisfactory 4.81 07 04-Jan-2016 Moderately Satisfactory Moderately Satisfactory 5.07 08 30-Jun-2016 Moderately Satisfactory Moderately Satisfactory 5.75 09 29-Dec-2016 Moderately Satisfactory Moderately Satisfactory 6.42 10 06-Jul-2017 Moderately Satisfactory Moderately Satisfactory 7.17 11 04-Jan-2018 Moderately Satisfactory Moderately Satisfactory 8.08 12 25-Jul-2018 Moderately Satisfactory Moderately Satisfactory 8.64 13 27-Feb-2019 Moderately Satisfactory Moderately Satisfactory 9.10 14 23-Oct-2019 Moderately Satisfactory Moderately Satisfactory 10.50 15 17-Jul-2020 Moderately Satisfactory Moderately Satisfactory 10.80 16 02-Mar-2021 Moderately Satisfactory Moderately Satisfactory 12.74 17 29-Nov-2021 Moderately Satisfactory Moderately Satisfactory 14.75 The World Bank Haiti Business Development and Investment Project (P123974) Page 4 of 53 SECTORS AND THEMES Sectors Major Sector/Sector (%) Social Protection 3 Social Protection 3 Industry, Trade and Services 97 Agricultural markets, commercialization and agri - business 18 Public Administration - Industry, Trade and Services 41 Other Industry, Trade and Services 38 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 78 Business Enabling Environment 57 Regulation and Competition Policy 57 Enterprise Development 21 MSME Development 21 Finance 22 Financial Infrastructure and Access 21 MSME Finance 21 Finance for Development 1 Disaster Risk Finance 1 Urban and Rural Development 3 Disaster Risk Management 3 Disaster Response and Recovery 1 Disaster Risk Reduction 1 Disaster Preparedness 1 The World Bank Haiti Business Development and Investment Project (P123974) Page 5 of 53 ADM STAFF Role At Approval At ICR Regional Vice President: Hasan A. Tuluy Carlos Felipe Jaramillo Country Director: Alexandre V. Abrantes Lilia Burunciuc Director: Marialisa Motta Robert R. Taliercio Practice Manager: Subrahmanya Pulle Srinivas Yira J. Mascaro Task Team Leader(s): Juan Buchenau Emiliano Duch Navarro, Mariana Vijil ICR Contributing Author: Katie Kibuuka The World Bank Haiti Business Development and Investment Project (P123974) Page 6 of 53 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Country Context 1. Haiti was emerging from economic turmoil caused by multiple shocks over previous years, including the 2010 massive earthquake. At appraisal, emergency response and early reconstruction activities related to the 2010 earthquake are phasing out. Despite the challenges posed by successive shocks that had hit the country in previous years, the macroeconomic outlook for FY13-15 was expected to be favorable, due to substantial externally financed investments in reconstruction and the government's strong focus on promoting economic growth and investment. Under the right conditions, Haiti could capitalize on its location near major markets, its preferential trade agreements with the US, Canada and Europe, and its comparative advantages in several sectors, such as agribusiness, apparel, tourism and, potentially, light manufacturing. However, to increase foreign and local private investment and achieve high levels of inclusive and sustained growth and job creation, the country needed to address longstanding structural problems, with special attention to the business environment, the investment framework and the performance of micro, small and medium enterprises (MSMEs). Sectoral and Institutional Context 2. Although Haiti presented a number of comparative advantages and a significant potential for growth in certain sectors, the country also faced a number of constraints. These included: (i) a chronically poor business environment marked by contradictory and outdated regulations, (ii) an atomized MSME sector, which lacked skills, access to finance, and links to stable value chains; and (iii) poor physical infrastructure, to name some of the most relevant. 3. At the time, the World Economic Forum (WEF) reported that the country was one of the least competitive in the world, ranking 142nd out of 144 economies in the 2012-13 Global Competitiveness Index. Notably, Haiti's availability and affordability of financial services and the ease of access to loans was among the worst. According to the 2012 World Bank Financial Inclusion Index, only 8% of the adult population had received a loan in 2011 and just 22% had an account at a formal financial institution. The regulatory framework was particularly challenging for firms: Haiti was ranked 174th out of 185 countries on the ease of doing business. Finally, within-sector competition was very weak due to the lack of a comprehensive policy to govern these practices. 4. In countries like Haiti, where the business environment and uncertainties about land ownership may discourage investors, there was a strong motivation to attract investment to specific zones with clear land tenure, basic infrastructure, as well as policies that are conducive to investment. Integrated Economic Zones (IEZs) therefore presented a viable mechanism to achieve these objectives. As such, the Government of Haiti (GoH) announced its intention to establish at least two new IEZs over the following three years, as a key platform to facilitate private investment and help it achieve its goal of creating 500,000 jobs. 5. Further opportunities for jobs and growth could emerge if MSMEs could be supported to become suppliers of IEZs and other value chains, by improving the quality of their goods and services and achieving economies of scale. However, in order to rise to this challenge, MSMEs in particular would require support to finance smaller fixed assets, for which loans are not available in the market, and to enhance their business skills The World Bank Haiti Business Development and Investment Project (P123974) Page 7 of 53 Theory of Change (Results Chain) 6. The Project was approved before presentation of a Theory of Change in the Project Appraisal Document (PAD) became mandatory, and consequently, the PAD did not contain a diagrammatic representation. Figure 1 represents the Theory of Change implicit in the project description and results framework in the PAD. Figure 1. Theory of Change at Appraisal 1.1 Business Environment Reforms Improve regulatory frameworks governing business activities, related procedures, and capacity of implementing institutions. 1.2 Investment Generation Foster local and international private sector investment growth through development and strengthening of Integrated Economic Zones (IEZs). 2. Business Development Services (BDS) for MSMEs Build capacity of MSMEs in selected value chains 4. Immediate Response Mechanism (IRM) Support to respond to an eligible emergency. • Design and implementation of economy-wide business environment reforms, including implementation of detailed action plan; updated and streamlined licensing and inspection regimes in selected industries • Strengthened institutional capacity to develop and implement competition policy, including Competition Assessments, Action plan for further competitiveness improvement • Updated IEZ legal and investment incentive framework • Improved capacity of IEZ implementing agency • Development of MSME support ecosystem, including MSME needs assessment, value- chain diagnostics, market data development, improved MCI capacity • Enhanced MSME capabilities, including improved access to finance • Improved emergency response capacity • Improved Business environment • Increased private investments and job creation • Growth of supported MSMEs within selected value chains • More prompt and effective Emergency response Activities Outputs Outcomes Resources: $20 million The World Bank Haiti Business Development and Investment Project (P123974) Page 8 of 53 Project Development Objectives (PDOs) 7. The objective of the Project was to assist the Recipient in: (a) improving the conditions for private sector investment and inclusive growth; and (b) improving its capacity to respond promptly and effectively to an Eligible Emergency. There were no changes to the PDOs during implementation. Key Expected Outcomes and Outcome Indicators 8. The following outcome indicators were designated to measure the achievement of the PDOs. Figure 2 summarizes the outcome indicators included in the original Results Framework. (a) Business environment reforms: initially, the improved business environment will be assessed by improvements in four to five measures that assess the quality of the business environment. The number and volume of loans secured with moveable assets will measure the impact of reforms to secured transactions and insolvency frameworks. (b) Investment generation: The completion of at least one feasibility study for IEZs is a process indicator. Increased private investments and job creation in two to three key sectors (agribusiness, apparel, or tourism), measured by the number and volume of additional investments and jobs (disaggregated by gender) created therein, facilitated by the Project, is an expected outcome. (c) Business development services: growth of supported MSMEs linked to value chains in key sectors, measured by the number of additional full-time jobs in MSMEs supported by the Project, disaggregated by gender. Components 9. The Project was originally designed with the four components and estimated costs detailed below. Changes to components and costs are detailed in Section 1.B. See Annex 6 for a detailed project design description. Component 1: Business Environment and Investment Generation (US$ 10 million equivalent) 1.1 Business Environment Reform: 10. This subcomponent focused on the design and implementation of economy-wide business environment reforms, as an improved business environment is correlated with higher private sector growth. Activities comprised: (a) Support to the design and implementation of economy-wide business reforms; (b) Strengthening institutional capacity of MCI; and Strengthening entities under MCI and coordinating entities responsible for the legal reform and/or improvement of the business environment. 1.2 Investment Generation: 11. This subcomponent focused on fostering local and international private sector investment growth through support to MCI to develop and strengthen IEZs. Component 2: Business Development Services for MSMEs (US$ 7 million equivalent) The World Bank Haiti Business Development and Investment Project (P123974) Page 9 of 53 12. This component focused on building capacity of MSMEs in the tourism value chain and to enter the supply chain of IEZs supported by the Project, principally in the agribusiness and apparel sectors. Activities comprised: (a) Technical Assistance to MCI to better promote and support MSME development; (b) Providing BDS to MSMEs, including provision of matching grants to MSME beneficiaries; and (c) Enhancing the capacity of MCI central and regional offices Component 3: Project Implementation, Evaluation and Monitoring (US$ 2.5 million equivalent) 13. This component focused project management, monitoring, and evaluation of the project through support to MCI and MEF. Component 4: Immediate Response Mechanism (US$ 0.5 million equivalent) 14. This component focused on the provision of support to respond to an Eligible Emergency through a benefits scheme for eligible beneficiaries. This component was implemented through a mechanism designed by the GoH. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION 15. The Project underwent a total of five restructurings. Significant changes are outlined below: 16. Restructuring from Integrated Economic Zones (IEZs) to Value Chain Development (December 2015) : This level 2 restructuring proposed significant changes to the project design, notably the elimination of the IEZs subcomponent and a focus on value chain development. The shift in project design was requested by the Ministry of Commerce and Industry (MCI) based on recommendations from a 2014 WBG demand study that highlighted weak private sector demand for IEZs and a preference for locating in the capital city area (which explained a slower than expected uptake of the Caracol Industrial Park). The MCI believed that a value chains approach focusing on MSMEs would more likely achieve the PDO than originally planned activities related to IEZ development. Remaining activities in subcomponent 1.2 were cancelled and funds reallocated to Component 2 to fund the following: (i) expanding the support provided by the MCI’s enterprise support services teams, from 1 to 10 regional offices; and (ii) aggregating the Matching Grants from individual beneficiary subsidies to common services benefiting a group of Micro, Small and Medium Enterprises (MSMEs), and increasing the total envelope for Matching Grants from US$4 million to US$8 million. This major restructuring reset the clock for project implementation when it was approved on December 24, 2015 and became effective on September 2, 2016. 17. Restructuring to respond to Hurricane Matthew (December 2017) : This level 2 restructuring was prepared in response to the MCI’s requests to trigger the Project’s Immediate Response Mechanism (IRM) by reallocating grant funds to assist victims of Hurricane Matthew, which hit Haiti on October 4, 2016. The hurricane affected MSMEs previously registered by the Project within in the coffee, vetiver, and honey value chains (Departments of Grand’Anse and Southeast, South Department and Nippes Department respectively). 18. Restructuring due to Aggravation of Social and Political Situation (November 2021) : The social and political situation in Haiti deteriorated significantly in August 2021, with the assassination of President Moïse and the earthquake of August 14th, 2021. This new country context posed significant challenges to the completion of certain project activities, namely: i) the new Apparel Fast Response Hub contract (US$1.5 million) was cancelled; ii) the contract for four mobile packing units for mangoes and avocados (US$2.3 million) was delayed and ultimately transferred to the The World Bank Haiti Business Development and Investment Project (P123974) Page 10 of 53 Haiti Private Sector Jobs and Economic Transformation (PSJET) project; iii) the matching grants provided to producers of the coffee, cocoa and avocado value chain (US$2.9 million) could only cover one harvest season. This restructuring cancelled approximately US$6 million ahead of the closing date given limited absorptive capacity in the remaining implementation timeline and the GoH request to reallocate project funds (where possible) to the 2021 post-earthquake recovery efforts. 19. Extension of Project closing dates : The Project’s original closing date of May 31, 2018 was extended twice. First, during the December 2015 restructuring, the closing date was revised to November 30, 2019. Second, during the November 2019 restructuring, the closing date was further extended to November 30, 2021. 20. Changes in Results Framework : The Results Framework was also adjusted on several occasions to reflect the changes introduced by the project restructurings as well as changes in the implementation landscape. In December 2015, indicators were modified to reflect changes in Project Design. In December 2017, indicators were adjusted to capture results more accurately, notably: i) to better measure impact on women, and ii) to capture the results expected from the IRM Component. In November 2019, indicators were changed to reflect the difficulty of approving laws due to increased political uncertainty. Finally, in November 2021, indicators were changed to reflect the impact of country context on implementation and the cancellation of activities. Despite numerous restructurings, the theory of change underlying the project remained the same. 21. The original PDO indicators were revised or deleted in favors those listed below: (i) Private sector investment in supported value chains (ii) Increased value added of supported MSMEs in the selected value chains – Disaggregated by income level (iii) Number of MSMEs that receive cash or in-kind assistance to continue or restart productive activity in their value chain – disaggregated by gender 22. The original intermediate indicators were mostly dropped, and a few were refined to better capture implementation progress. The revised indicators are as follows: (i) Number of recommended laws, regulations, amendments, codes presented to the Parliament (ii) Number of MSMEs registered in the electronic moveable registry who are able to secure loans – disaggregated by gender (iii) Electronic moveable collateral registry (to secure loans) system available for use by MSMEs (iv) Number of pre-bidding conferences on the value chain tenders (v) Number of firms providing new services in selected value chains (vi) Number of MSMEs registered in the MCI project database – disaggregated by gender (vii) Firms benefiting from private sector initiatives - disaggregated by gender and location (viii) Number of participants in public consultations – disaggregated by gender (ix) Number of Haitian public servants that have satisfactorily completed the Value Chain Strategic Analysis Program (x) Number of completed value chain diagnostics 23. Project Beneficiaries: The December 2015 restructuring also changed the project beneficiaries. Component 1: Public-sector institutions and coordinating entities responsible for business environment reform. Public sector institutions and coordinating entities responsible for IEZ development were no longer included. The World Bank Haiti Business Development and Investment Project (P123974) Page 11 of 53 Component 2: MSMEs within value chains supported by the project. As selected value chains were within the agricultural sector, the beneficiaries not only included eligible 1 MSMEs working within these value chains, but also individual farmers or producers working within these value chains. MSMEs in the tourism sector and not in the selected value chain as well as those in IEZs value chain were no longer included. Component 4: Project beneficiaries affected by an eligible emergency. Specifically, beneficiaries of component 2 that were considered eligible by the IRM operating manual. Table 1. Reallocation of Costs and Disbursements Project Component Original Project Design Revised Project Design Allocation (US$ million) Allocation (US$ million) Disbursement (US$ million) 1. Business Environment and Investment Generation 10 1.7 1.7 1.1 Business Environment Reform 2 1.69 1.69 1.2. Investment Generation 8 0.01 0.01 2. Business Development Services for MSMEs 7 9.8 9.23 3. Project Implementation, Evaluation and Monitoring 2.5 2.5 2.5 4. Immediate Response Mechanism* 0.5 0.25 0.14 20 14.55 13.58** * This component is typically set to $0, and funds are allocated when an emergency occurs. However, given the recurrent nature of emergencies in Haiti, this component was allocated costs at the outset of the project design. ** Disbursement ratio of over 90%. The undisbursed amount of US$0.6 million was largely due to procurement delays and increased implementation risks. As the country's situation deteriorated, some project activities were curtailed. It should also be noted the there is a discrepancy between the operations portal report and the final restructuring report, which revised the allocation for component 2 down from US$13.8 million to US$9.8 million. 2 OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 24. Relevance of the PDO is rated as Substantia l . The PDO was consistent with, and fully aligned with, the GoH’s goals for private sector development and emergency response. In addition, the PDO built on work initiated by the GoH to 1 As defined by the project PAD and the safeguard The World Bank Haiti Business Development and Investment Project (P123974) Page 12 of 53 further these agendas. The PDO was also in line with the WBG Country Partnership Framework ( CPF ) for FY16 to FY21, in particular with the focus area on inclusive growth. The PDO supported new legislation and policy reforms that directly improved the business environment and helped to strengthen commercial disputes resolution as well as the understanding of competition policy. More specifically, the PDO helped to prove that inclusive growth is possible in Haiti with results exceeding targets for number of beneficiaries and their value addition. With regards to improving emergency response, despite having disaster assessments on losses and damages completed in a record time, the IRM was too bureaucratic and slow to respond during the two emergencies faced during the project. 25. During project implementation, country circumstances changed significantly increasing risks and causing delays. During the project lifespan, Haiti endured a series of shocks that adversely affected the prevailing country context at project appraisal, including further challenging the private sector. These shocks included: i) Hurricane Matthew in October 2016; ii) the deterioration of the social, political and security situation - starting with large and violent demonstrations in 2018, leading to several episodes during 2019 of complete economic paralysis (peyi lòk), and escalating violence and insecurity culminating in the assassination of the President in July 2021; iii) successive health crises linked to the Zika, Chikungunnya and the COVID-19 epidemics, and iv) a magnitude 7.2 earthquake struck the southern coast on August 14, 2021. Bank implementation support was responsive with multiple formal restructurings to ensure that project activities and the results framework remained achievable and relevant to the project objectives. The restructuring also enabled the use of more effective solutions to address emerging challenges, e.g., employing an innovative approach to value chain development. While these efforts helped to ensure results, implementation timelines were shortened by delays due to changes in project activities and accompanying procurement challenges. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 26. The overall Efficacy is rated as Substantial . The project objectives were mostly achieved and most of the results indicators were met or exceeded. The project assisted with business environment reforms, particularly during the early phases of implementation until the sociopolitical crisis significantly stalled momentum. In addition, the project provided proof of concept that an innovative approach to value chain development can contribute to inclusive growth in Haiti. Lastly, the project helped to provide emergency response following Hurricane Matthew and the August 2021 earthquake. Although the IRM implemented to improve capacity during emergencies was not particularly effective during Hurricane Matthew response, the task team deployed an alternative approach following the August 2021 earthquake that was more efficient in reaching beneficiaries. See the Table on Key Outputs in Annex 1.B for a detailed listing of achievements. 27. Achievements towards PDO Objective 1: Improving private sector investment conditions (Component 1) : i) Development of a dozen laws to improve the business climate – some submitted to council of ministers, some approved by Presidential decree only; ii) creation of an electronic online collateral registry to improve access to finance for entrepreneurs - soft launch on October 1st 2021, 30 stakeholders trained, and 91 MSMEs registered; iii) Training and awareness sessions on arbitration provided by Chambre de Conciliation et d'Arbitrage d'Haiti (CCAH); iv) Revision and increased transparency of the investment incentive system by the Centre de Facilitation des Investissements (CFI); v) capacity building workshops on competition policy for relevant policy public institutions The World Bank Haiti Business Development and Investment Project (P123974) Page 13 of 53 28. Achievements towards PDO Objective 2: Improving inclusive growth (Component 2 ): i) Creation of extensive BDS through the establishment of Enterprise support services or les Services d’Appui aux Entreprises (SAEs) in the 10 regions and training about 30 resource staff assigned to these entities; ii) 20 assessments of promising value chains; iii) 7 business improvement plans focusing on export opportunities; iv) Linkages with logistics services for international marketing and export of fresh as well as semi-perishable products (cocoa, coffee, mangoes, avocados) – including development of critical geo-registration database of more than 1000 farmers; v) Revenues increased for small farmers who had direct access for the first time to key export markets (average value added increase 2 : 335% in mango, 376% in cocoa, 312 in coffee). 29. Achievements towards PDO Objective 3: Improving capacity to respond promptly and effectively to an eligible emergency (Component 4): i) Support to project beneficiaries that were affected by Hurricane Matthew; ii) Support to project beneficiaries that were affected by the earthquake of August 14, 2021. 30. Achievements per PDO Indicators: 2 out of the 3 Indicators met or exceeded their end targets. The indicator that missed the end-target on private sector investment still showed a lot of progress, with 90% of the end-target achieved. It should be noted that there was a significant increase in the value of these indicators within the last year of the project largely due to extensive implementation delays that were exacerbated by a difficult, fast-changing context (requiring multiple changes in project activities to ensure implementation progress). Due to these delays, the project was only able to successfully cover 1 harvest season. Despite this implementation shortcoming, this investment yielded remarkable results in value addition. Table 2. Achievement as measured by PDO indicators Objective PDO Indicator Baseline (2013) Actual (Nov 2021) End-Target Revised End-Target Original Improve the conditions for private sector investment and inclusive growth Private sector investment in supported value chains (Amount(USD)) 0 896,155 1,000,000 5,000,000 Increased value added of supported MSMEs in the selected value chains (Percentage) 0 348 50 15 Of which MSMEs in the poorest Departments (poverty rate above 60%) 0 348 50 15 Improve capacity to respond promptly and effectively to an Eligible Emergency Number of MSMEs that receive cash or in - kind assistance to continue or restart productive activity in their value chain 0 1205 1000 260 Of which, are women (Number) 0 560 500 40 31. The end-targets of the PDO indicators were revised in the November 2021 restructuring, which is unusual given the late stage of project implementation. All the targets were revised upwards with the exception of the private sector investment in supported value chains, which was revised downwards (see Table 2). Increases to the end-target reflect positively as they indicate a more ambitious results framework. On the other hand, the end-target reduction reflects a difficult decision that weighs a partial loan cancellation against bank responsiveness ensure that the results framework accurately captured realistic potential achievements. Part of the loan was cancelled given limited absorptive capacity (due to extensive implementation delays) in the remaining project lifespan and the GoH request 2 Value addition increase calculated as the average price increase of the prices received by exporting using the project vs the prices received by using intermediaries. Number of beneficiaries by value chain: Mango – 68 farmers; Coffee – 16 Cooperatives; Cocoa – 784 farmers. The World Bank Haiti Business Development and Investment Project (P123974) Page 14 of 53 to reallocate project funds to the 2021 post-earthquake recovery efforts. These delays were caused by an extensively delayed procurement initiated as an alternative solution to a service provider contract breach in mid- 2020 given force majeure. Ultimately, this decision was approved by the restructuring process, which was informed by the country office reservations about these late-stage changes. 32. Achievements per Intermediate Indicators: 9 of 10 Intermediate Indicators met or exceeded their end targets. The indicator that missed the end-target on Haitian public servants that satisfactorily completed the Value Chain Strategic Analysis Program still showed some good progress, with more than 70% of the end-target achieved despite the socio-political constraints in addition to other changes in the country context. As with the PDO indicators, the value of these indicators significantly increased during the last year of implementation. Due to aforementioned delays, the timeframe to actually implement project activities was shortened but most of these intermediate results were achieved or exceeded. Table 3. Achievement as measured by Intermediate indicators Intermediate Indicator Baseline (2013) Actual (Nov 2021) End Target Component 1 - Business Environment and Investment Generation Number of recommended laws, regulations, amendments, codes presented to the Parliament (Number, Custom) 0.00 5.00 3.00 Number of MSMEs registered in the electronic moveable registry who are able to secure loans (Number) (Number, Custom) 0.00 91.00 50.00 Of which, are women (Number) (Number, Custom Breakdown) 0.00 17.00 15.00 Electronic moveable collateral registry (to secure loans) system available for use by MSMEs (Text, Custom) No system System completed System completed Component 2 - Business Development Services for MSMEs Number of pre-bidding conferences on the value chain tenders (Number, Custom) 0.00 15.00 7.00 Number of firms providing new services in selected value chains (Number, Custom) 0.00 12.00 4.00 Number of MSMEs registered in the MCI project database (Number, Custom) 0.00 3,141.00 1,200.00 Of which, are women owned or operated (Number, Custom Supplement) 0.00 610.00 360.00 Firms benefiting from private sector initiatives (Number, Custom) 0.00 1,342.00 700.00 Of which, are women (Number, Custom Breakdown) 0.00 267.00 210.00 Of which, are located in the Southern region affected most by Hurricane Matthew (Number, Custom Breakdown) 0.00 426.00 360.00 Of which, are women (Number, Custom Supplement) 0.00 125.00 50.00 Number of participants in public consultations (Number, Custom) 0.00 1,940.00 1,000.00 Of which, are women (Percentage, Custom Supplement) 0.00 25.00 30.00 Number of Haitian public servants that have satisfactorily completed the Value Chain Strategic Analysis Program (Number, Custom) 0.00 22.00 30.00 Number of completed value chain diagnostics (Number, Custom) 0.00 20.00 20.00 Justification of Overall Efficacy Rating 33. The overall Efficacy is rated as Substantial. The project objectives were mostly achieved and most of the results indicators were met or exceeded despite various challenges. The project assisted with various business environment reforms, particularly during the early phases of implementation until the sociopolitical crisis significantly stalled momentum. In addition, the project successfully demonstrated proof of concept that an innovative approach to value chain development can contribute to inclusive growth in Haiti. Lastly, the project helped to provide emergency The World Bank Haiti Business Development and Investment Project (P123974) Page 15 of 53 response following Hurricane Matthew and the August 2021 earthquake. Although, the mechanism implemented to improve capacity during emergencies was not particularly effective during Hurricane Matthew response, the task team deployed an alternative approach following the August 2021 earthquake that was more efficient in reaching beneficiaries. C. EFFICIENCY Assessment of Efficiency and Rating 34. The overall Effi cien cy is rated as Modest . The economic analysis indicates that the project attained benefits achieved benefits that exceeded end-target expectations with a significantly reduced investment. In addition, the project made a number of achievements, including successfully implementing an innovative approach to value chain development. However, there were challenges with implementation that substantially compromised project efficiency, including a series of natural hazard shocks, including a declining socio-political situation, a partial loan cancellation, extensive procurement delays, and issues with the design and implementation of the IRM. 35. Economic Analysis: This assessment finds that the project attained benefits (outputs and outcomes) at a low cost. Project achieved benefits that exceeded end-target expectations with a significantly reduced investment amount. At appraisal, the Economic Rate of Return (ERR) was estimated at 23%, with net benefits of US$2.6 million (subtracting US$ 3 million of management costs), and a Net Present Value (NPV) was estimated at US$1.03 million. At project completion, the ERR was estimated at about 27%, with net benefits of US$4.3 million (subtracting US$ 2.5 million of management costs), and a Net Present Value (NPV) was estimated at US$2.8 million. 36. At appraisal, the ERR and NPV were calculated assuming a 2% increase in FDI (over 2011 baseline value) and a 5% return on BDS activities over the five-year lifetime of the Project. The ERR of this project, therefore, considers the costs of the project, the expected return from sub-component 1.2 and component 2, the discount rate applied to both costs and benefits (10%), as well as the additional effects expected to take place in the economy as a result of the initial project funds and the increase of firm activity or investment into IEZs, such as increased demand, additional jobs created, and wages spent in the economy. Given the restructured project design, the ERR and NPV at project completion were calculated assuming a 5% return on BDS activities as investment generation activities were not undertaken. So, the project-end ERR considers the same elements as at appraisal, but only the expected return from component 2 and not sub-component 1.2. 37. Efficiency in Component 1 : The project made a number of achievements as mentioned in Section 2.B. However, aspects of project implementation reduced efficiency, notably: (a) Delayed and/or stalled implementation progress due to deteriorating socio-political situation: This was largely due to: i) the inability to enact or implement developed reforms (Parliament ceased operations in January 2020); ii) the lack of high-level political support (e.g. high GoH counterpart overturn particularly at senior levels, especially within the main implementing agency - MCI) affected progress on competition assessments of 2 sectors; and iii) the stalled consolidation of business arbitration chamber. Further, these sociopolitical constraints adversely affected the project’s ability to support institutional strengthening, which remains weak at present. The World Bank Haiti Business Development and Investment Project (P123974) Page 16 of 53 (b) Infrastructure deficiencies : Weak infrastructure in the country hampered the establishment of the collateral registry, specifically connectivity issues affected effective functionality of the collateral registry and prevented its public launch. 38. Efficiency in Component 2 : The revised project design allowed for a more nimble and innovative approach, through the provision of technical assistance and working capital instead of subsidies, which yielded large impacts and ensured sustainability despite difficult country context. This approach to value chain development used a combination of solutions to alleviate market and coordination failures that prevented MSMEs (including local producers/farmers) from directly accessing lucrative export markets and increasing their value addition. These solutions included: advanced logistics services, extensive business development services, blockchain technology (where possible), and pooled matching grants. With this approach, the target number of small producers in the poorest regions exporting doubled (1,342 vs 700). The value addition achieved was well above the target of 15% (i.e., 262% in mango, 348% in cocoa). However, the following aspects of project implementation reduced efficiency substantially: (a) Partial loan cancellation: This resulted in the partial implementation or cancellation of project activities in the coffee, cocoa, mangos, avocados, and apparel value chains. All together US$6 million was cancelled shortly before the project closure given: i) limited absorptive capacity due to extensive implementation delays that were exacerbated by changes in the country context; and ii) the GoH request to reallocate project funds (where possible) to the 2021 post-earthquake recovery efforts. It should be noted that these delays were caused by an extensively delayed procurement initiated as an alternative solution to a service provider contract breach in mid- 2020 given force majeure. (b) Extensive Procurement delays : Procurement challenges were persistent, both at the client and at the World Bank (WB) side, causing significant implementation delays and resulting in the transfer of the final contract to the new Haiti Private Sector Jobs and Economic Transformation (PSJET) project. These challenges are further elaborated below in the section 3. These delays also affected the ability to fully achieve the end-target of the PDO indicator on Private sector investment in supported value chains. In addition, these delays reduced the implementation timespan, resulting in limited pilot shipments for certain value chains. Despite these delays, outcome results still exceeded the end-targets, but it is clear that timely procurement would have led to even greater results. 39. Efficiency in Component 4 : The project supported some achievements, however design and implementation aspects adversely affected efficiency, in particular: a) procurement and bureaucratic delays experienced after Hurricane Matthew led to a long delay in the issuance of emergency response benefits, resulting in only 53% of beneficiaries collecting benefits 3 . Efforts to contact beneficiaries that did not collect benefits were then affected by 2021 earthquake; and b) high administrative costs - after 2021 earthquake, IRM costs were too high relative to the amount needed for urgent repairs by affected producers within supported value chains (mostly coffee). So instead of utilizing the IRM, the project disbursed benefits electronically to support damaged common processing facilities of value chain cooperatives using mechanisms established by the project. 3 The share of beneficiaries receiving emergency response benefits via similar electronic payments/mobile payments solutions is higher (about 70%) in other WB projects within countries of comparable income levels to Haiti. However, this is largely explained by generally higher level of electronic/mobile payments within these countries compared to Haiti. The current Adaptive Social Protection for Increased Resilience Project (P174111) in Haiti registered even less uptake via electronic payments (about 30%), however cash payments were much higher at about 85%. The World Bank Haiti Business Development and Investment Project (P123974) Page 17 of 53 40. See Annex 4 for a more detailed Efficiency Analysis . D. JUSTIFICATION OF OVERALL OUTCOME RATING 41. The overall outcome is rated Moderately Satisfactory . Despite significant challenges posed by the country context, the project registered a number of achievements and outcomes. Notably, the project demonstrated that inclusive growth is possible in Haiti with results exceeding targets in terms of beneficiaries and their ability to add value. In addition, the project contributed significantly to the strengthening of certain value chains that offer valuable opportunities for the country in terms of investment and export in regional and international markets. Over 3,000 MSMEs (and/or producers) were beneficiaries to project activities that were implemented while a number of legal and regulatory reforms were achieved before escalating sociopolitical tensions stalled progress. However, a partial loan cancellation reduced the number of activities implemented and the total amount invested in the private sector. In addition, multiple implementation and procurement delays shortened implementation timeframe, dampening outcome results. Lastly, although the project supported beneficiaries affected by Hurricane Matthew and the 2021 earthquake, the IRM design was not effective in improving the capacity and pace of responding to an emergency. Table 4. Overall Outcome Ratings Relevance of Objectives Efficacy Efficiency Overall Outcome Substantial Substantial Modest Moderately Satisfactory 42. The above rating accounts for both, the original and the revised outcome targets that were scaled up during various restructurings, and the individual ratings for Relevance, Efficacy, and Efficiency (see Table 4). 43. A split rating was not considered applicable. Although the December 2015 restructuring of the project narrowed the scope of component 1, the scope of component 2 was expanded. As such, the over