Modification of the Results Framework

16.CPS Program Adjustments

To emphasize the critical importance of adjustments to new fiscal realities for Nigeria’s short-, medium-, and long-term development agenda, the PLR proposes to introduce the new foundational and cross-cutting cluster – CPS Cluster 4 on Restoring Macroeconomic Resilience. Macroeconomic stability is essential for growth and job creation along with an enabling business environment, investments in human capital, the rule of law, and respect for property and personal rights. In Nigeria, fundamentals also include efficient, accountable, and transparent public sector management, i.e., good governance (CPS Cluster 3). With the addition of the Restoring Macroeconomic Resilience Cluster, the CPS structure will have two cross-cutting/foundational clusters, both of which support the objectives of promoting diversified growth and job creation (CPS Cluster 1), and improving the quality and efficiency of social series delivery at state level to promote social inclusion (CPS Cluster 2).

17.Adjustments to the Cluster 1: Federally Led Structural Reforms for Growth and Job Creation

Diversification. To support the GoN’s efforts to diversify sources of revenue and economy, the Bank will reengage in the mining sector, and engage with the authorities on economic corridor approach recognizing the importance of urban growth, private sector development, and connectivity for reducing poverty and boosting shared prosperity in Nigeria. Additional ASA and lending support will be initiated to apply an economic corridor approach to unlock the growth potential within and between urban centers, and between urban and rural areas¹⁶. This will be complemented by knowledge work to help the authorities fine tune policies and measures to restore growth in the short-term and put Nigeria on a more sustainable growth path in the medium-term. Analytical work will include the on-going Growth and Trade diagnostic and a planned SCD. The analytical work will help fill knowledge gaps on the role that state governments can plan in restoring growth.

IFC will continue to support the diversification agenda through (a) mainstreaming financial inclusion; (b) unlocking the potential of agribusiness; and (c) bridging the infrastructure gap. However, IFC will more actively explore opportunities to create value from Nigeria’s gas supply. For example, IFC support for the Dangote fertilizer project will increase Nigeria’s exports from a locally sourced gas feedstock, and help Nigeria earn foreign exchange while providing low-cost fertilizer to support the development of Nigeria’s agriculture sector.

In the agriculture sector, the Bank will reinforce its support to the NE through AF for the Fadama 3 (FY16) to help address the emergency needs of farmers. In addition, the proposed SCPZ project and ongoing ASA will support private sector-led inclusive value chains development in rural areas.

IFC will intensify efforts to develop innovative solutions to strengthen the integration between large agro-processors and agricultural SMEs as well as smallholders, and it will focus on (a) unlocking the provision of agricultural inputs by the private sector; (b) providing access to finance to SMEs along the agricultural value chain; and (c) supporting collection and commercialization in order to develop agro-processing¹⁷.

Energy. The Bank’s support during FY16-FY17 will focus on (a) guarantee support to upstream gas investment (for the gas sales agreement between Accugas Limited and Calabar Power Plant) and for the next batch of IPP transactions and support to renewable energy IPPs (Power Sector Guarantees Project II); (b) improving capacity and efficiency of transmission networks (Nigeria Electricity Transmission Project); and (c) building comprehensive data for planning purposes through the national energy audit and two separate but interlinked surveys. The first survey covers Kano and Kaduna states while the second survey will provide a national baseline of energy access and consumption data.

IFC, which increased its target to support an additional 2.5 Gigawatt of generation capacity to the national grid, will focus more on a value-chain approach-from gas production to transmission to distribution infrastructure and services. Successful implementation will depend on IFC’s ability to build on the momentum of the Azura Edo IPP project to the next wave of IPPs in the country, and capitalize on recent developments in the energy sector (tariff increase and gas development) to attract additional private investment.

Climate change action. The WBG is increasing its engagement in the climate resilience agenda in Nigeria by supporting the authorities in crafting and implementing regional responses to the West Africa coastal erosion and water/climate/conflict challenges in the Lake Chad Region, as well as through IFC’s advisory activities in sustainable energy provision (Lighting Africa) and finance (First City Monument Bank (FCMB) III Sustainable Energy Finance Advisory). A series of outreach/training events on climate change will be organized in Nigeria to highlight opportunities for climate change adaptation and mitigation in the context of national development priorities and the country’s INDC. Component 3 of the NEWMAP project is being reorganized to target climate resilience needs and land degradation issues in northern Nigeria. This will also support preparation of a multi-sectoral plan to integrate climate change in development planning as part of an IDA17 policy commitment taken by the Bank management. A regional investment program in support of the Niger River Climate Resilience Investment Plan is being prepared, which will include investments in Nigeria (and other Niger Basin countries).

Financial sector. In the remaining CPS period, the Bank will provide non-lending support to strengthening financial sector stability and enhancing financial inclusion. The Programmatic ASA, supported by Financial Sector Reform and Strengthening Initiative, aims to help the authorities realizing their financial sector goals. This ASA will also reinforce the current Bank financial support in Nigeria (Housing Finance Project and the Development Finance Project) and help address key obstacles to financial sector development. Both the Housing Finance and Development Finance projects are dependent on effective regulatory supervision, further development of the financial infrastructure, and instilling a responsible finance agenda. As earlier discussed, the results associated with the Development Finance and Housing Finance projects are not likely to be achieved during this CPS period. It is, therefore, proposed to replace the Outcome 9 “Improved supply of longer term financing” with “Improved institutional infrastructure for long-term financing”. This new outcome will reflect required institution building efforts to the Development Bank of Nigeria (DBN) and Nigeria Mortgage Refinancing Company (NMRC) which are directly supported by the Development Finance and Housing Finance projects. The original Outcome 9 will be part of the new CPF.

IFC will deepen its engagement in the financial inclusion agenda through support to six microfinance banks. The projects support geographic expansion and growth of loan portfolio, and have a disproportionate impact on women, who often represent over 70 percent of the micro entrepreneur beneficiaries. In addition, IFC plans a bond program that will provide local currency funding to private sector projects and support bond market development in Nigeria.

To support financial sector modernization and inclusion, the PLR proposes to add a CPS outcome on financial infrastructure, including credit bureaus and collateral registries. There are two main projects to support financial infrastructure: (a) the Nigeria Credit Reporting Project; and (b) the Nigeria Secured Transactions and Collateral Registry Project. The first project supports the CBN and key stakeholders, i.e. private credit bureaus and lenders to address key constraints to the system's performance. The Nigeria Secured Transactions and Collateral Registry Project tackles underlying institutional deficiencies by building the collateral regime necessary to increase access to finance for MSMEs while maintaining a strong prudent lending policy.

The PLR proposes to maintain flexibility under this Cluster to allow its alignment with emerging priorities and request for support in the oil and gas sector. The Bank has established a good relationship with the Ministry of Petroleum Resources, and has had extensive discussions on its new proposed gas policy with the new Minister of State. Opportunities for collaboration on policy and capacity issues are being explored. This will be a new area of engagement for the Bank in Nigeria, which may require strengthening our knowledge base on that sector.

18.Adjustments to the Cluster 2: Quality, Effectiveness and Efficiency of Social Service Delivery at the State Level for Greater Social Inclusion

The focus of new lending support under this cluster is on improving the quality and efficiency of public expenditures for social services delivery and intensified support to the NE. At the country-wide level, the Nigeria Social Safety Net Project assists the GoN in providing poor and vulnerable households with access to targeted transfers under an expanded national social safety nets system. The proposed Education Program-for-Result operation will help safeguard education expenditures at times of fiscal crunch whilst in parallel improving the efficiency and effectiveness of public expenditures on education. The Bank is scaling up its support to social services delivery in NE Nigeria through the package of five AF operations (AF to the Community and Social Development Project, the Youth Employment and Social Support Operation, the National State Health Investment Project, the Polio Eradication Support Project, and the State Education Program Investment Project). In addition, the Bank will support Nigeria’s participation in the Regional Disease Surveillance System Enhancement Program, which aims to help develop a well-functioning regional disease surveillance system in West Africa, including Nigeria.

ASA work will continue to be an important element of the Bank’s engagement in the health, education and water sector. In the health sector, the focus is on demographics, which is new and ongoing Health Financing System Assessment. The Assessment will recommend options in the current fiscal constrains context for strengthening health systems for improved performance and accelerated and sustained progress towards Universal Health Coverage. In the education sector, an ASA will be provided, jointly with DFID, to the Universal Basic Education Commission to enhance its efficiency in disbursing funds to the states. The evolving policymaking and capacity needs in the water sector will be supported by a multi-year ASA program, including Water, Sanitation and Hygiene Poverty Diagnostic.

IFC will continue its collaboration with the private sector in improving health and education services delivery. Through its investment in Hygeia, IFC is supporting improved healthcare infrastructure and access to quality healthcare services. Other investment opportunities are being actively explored. In the education sector, Bridge International Academies, an IFC client, has opened six schools in Nigeria and plans to open 10 to 20 more academies by September 2016¹⁸.

19.Adjustments to the Foundational/Cross-Cutting Cluster 3: Governance and Public Sector Management

State-level Resource Mobilization. Enhanced revenue mobilization by states is central to the goal of reducing poverty and increasing shared prosperity. The ongoing projects – State Expenditure Effectiveness for Results project, Public Sector Governance Reform and Development Project, and the State and Local Governance Reform Project – have revenue mobilization components that will be reinforced. This support to states is necessary to achieve greater budget credibility and thereby improving the predictability of resource flows to service delivery agencies. The Bank’s ongoing dialogue with the states, using strengthened implementation support for existing projects as the entry point, will help to ensure that states produce better revenue and expenditure forecasts.

Trade and Competitiveness. At the request of the Federal Ministry of Industry, Trade and investment as well as Lagos State, the IFC and the Bank are implementing a Doing Business 2017 action plan which involves a set of incremental reforms, starting with quick wins that have a strong demonstration effect in areas such as (a) starting business; (b) dealing with construction permits; (c) registering property; (d) paying taxes; and (e) trading across borders.

The summary overview of the proposed new lending and non-lending during the FY16-FY17 period is presented below.

Table . Proposed Lending Support (US$ million)

	FY16		FY17
IDA/IBRD in US$ Million	IDA	IBRD	IDA	IBRD
Cluster 1: Federally-led Structural Reforms Agenda for Growth and Jobs
Programmatic Energy Sector Support			*364	305
Mining sector support			150
Agriculture – AF Support to the NE	50
Programmatic Agriculture and Climate Resilience Support			200
Multi-sector Emergency Crisis Recovery Project – the NE			200
Cluster 2: Quality, Effectiveness and Efficiency of Social Services Delivery at State Level for Increased Social Inclusion
Nigeria Social Safety Net	500
Social Protection – AF Support to the NE	175
Education – AF Support to the NE	100
Education results based lending			500
Health – AF Support to the NE and for Polio	250
Health (Regional project)			45
Foundational/Cross-Cutting Cluster 3: Governance and Public Sector Management
Foundational/Cross-Cutting Cluster 4: Restoring Macroeconomic Resilience
Nigeria Federal DPF			350	900
Total (excluding IDA Scale Up Facility)	1,075		1,445	1,205

*IDA Scale-Up Facility

Table . Proposed Non-Lending Support – ASAs

Activities	Cluster	Activities	Cluster
Mining Sector Reform (P132733, FY17)	1	Nigeria Health Result-Based Financing Impact Evaluation (P128175, FY17)	2
Electrification Access Program Development (P147397, FY17)	1	Healthy Mothers and Healthy Babies (P131471, FY17)	2
Growth and Trade Study (P158156, FY16)	1; 4	From Regional Divergence to National Convergence (P152756, FY16)	1; 2; 3
Scaling up Agriculture for Growth and Jobs (P159267, FY16)	1	Health Financing Systems Assessment (P159450, FY16)	2; 3
Niger State, Sub-National Debt Management (P154970, FY17)	4	Developing National Social Protection Platform (P154830, FY16)	2
Federal PER (FY16)	4; 3	WASH Poverty Diagnostics (P158534, FY16)	2
Sub-national Fiscal ASA	3; 4	Nigeria Demographics (FY16)	2
Programmatic Poverty Work (P160999, FY16-FY17)	1; 2	Programmatic Approach to Financial Sector Development (P156379, FY16-FY18)	1; 4

Contingent on favorable market conditions and client engagement, IFC intends to maintain high levels of commitment in Nigeria – between US$500 million and US$1.0 billion across various sectors during the rest of the CPS period.

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