Document of

The World Bank Group

FOR OFFICIAL USE ONLY

Report No. 104616

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION

INTERNATIONAL FINANCE CORPORATIONAND

MULTILATERAL INVESTMENT GUARANTEE AGENCY

PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY

FOR

THE FEDERAL REPUBLIC OF NIGERIA

FOR THE PERIOD FY14-FY17

August 24, 2016

Nigeria Country Management Unit, AFCW2International Finance CorporationMultilateral Investment Guarantee Agency

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 Group authorization.

The date of the last Country Partnership Strategy was April 24, 2014

CURRENCY EQUIVALENTS Exchange Rate Effective as of July 31, 2016

SDR1 = US$1.39US$1 = Naira319

GOVERNMENT FISCAL YEAR

January 1 – December 31ABBREVIATIONS AND ACRONYMS

AF Additional FinancingAFD French Development Agency (Agence Française de Développement)AfDB African Development BankASAAT and CCACADPCBN

Advisory Services and AnalyticsAggregate Technical and CommercialCurrent AccountCommercial Agriculture Development ProjectCentral Bank of Nigeria

CIT Corporate Income TaxCPFCPSCRR

Country Partnership FrameworkCountry Partnership StrategyCash Reserve Requirement

DFP Development Finance ProjectDBN Development Bank of NigeriaDFID Department for International DevelopmentDISCO Distribution CompaniesDPFDPO

Development Policy FinancingDevelopment Policy Operation

EU European UnionFCMB First City Monument BankFMOF Federal Ministry of FinanceFY Fiscal YearGDP Gross Domestic ProductGHG Greenhouse GasGHS General Household SurveyGoN Government of NigeriaHA HectareHRP Humanitarian Response PlanIBRD International Bank for Reconstruction and DevelopmentICR Implementation Completion ReportIDAIDPIFC

International Development AssociationInternally Displaced PersonInternational Finance Corporation

IMF International Monetary FundINDC Intended Nationally Determined Contribution

IOMIPPISR

International Organization for MigrationIndependent Power ProducersImplementation Status Report

KM KilometerLGA Local Government AreaLQAS Lot Quality Assurance Sampling SurveysLTR LiterMFI Microfinance InstitutionsMIGA Multilateral Investment Guarantee AgencyMPR Monetary Policy RateMSMEs Medium, Small and Micro EnterprisesMVA Mega Volt AmpNE North EastNEWMAP Nigeria Erosion and Watershed Management ProjectNMRC National Mortgage Refinancing CompanyNNPC Nigeria National Petroleum CompanyNPLNWPFM

Non-Performing LoanNorth WestPublic Finance Management

PLR Performance and Learning ReviewRAMP Rural Access and Mobility ProjectRPBA Recovery and Peace Building AssessmentSCDSCPZSEEFORSEPIPSMESOEs

Systematic Country DiagnosticStaple Crop Processing ZoneState Employment and Expenditure for ResultState Education Program Investment ProjectSmall and Medium EnterprisesState Owned Enterprises

The Bank TSAUNVATWAAPPWASH

World Bank Treasury Single AccountUnited NationsValue-Added TaxWest Africa Agriculture Productivity ProjectWater, Sanitation, and Hygiene

WBG World Bank Group

World Bank IFC MIGAVice President: Makhtar Diop Snezana Stoiljkovic Karin Finkelston

Country Director: Rachid Benmessaoud Vera SongweDan Biller (Co-Acting)Yasser Ibrahim (Co-Acting)

Task Team Leader: Indira Konjhodzic Eme Essien Stephan Dreyhaupt

THE FEDERAL REPUBLIC OF NIGERIA

PERFORMANCE AND LEARNING REVIEW

TABLE OF CONTENTS

I. Introduction.....................................................................................................................1

II. Main Changes in Country Context.................................................................................1

A. Political Environment........................................................................................1

B. Security..............................................................................................................2

C. Recent Economic Developments and Outlook..................................................3

D. Poverty Reduction and Shared Prosperity.........................................................6

E. Emerging Priorities and Government’s Agenda................................................8

III. Summary of Program Implementation..........................................................................9

A. Portfolio Performance and Issues......................................................................9

B. Partnerships and Leveraging............................................................................11

C. Progress toward CPS Outcomes......................................................................11

IV. Emerging Lessons........................................................................................................15

V. Adjustments to the Country Partnership Strategy............................................................16

A. Relevance of the Current Strategy...................................................................16

B. Modification of the Results Framework..........................................................17

C. Indicative WBG Program................................................................................17

D. CPS Program Adjustments..............................................................................17

VI. Risks to CPS Program.................................................................................................23

VII. Annexes......................................................................................................................25

Annex 1. Updated CPS Results Matrix........................................................................25

Annex 2. Matrix of changes to original CPS Results Matrix......................................36

Annex 3. Matrix summarizing progress toward CPS Objectives................................44

Annex 4. Drivers of Conflicts and Fragility in Nigeria...............................................60

Annex 5. Learning by Doing in Nigeria......................................................................63

Annex 6. The North-East Nigeria Recovery and Peace Building Assessment............65

List of Figures and Tables:

Figure 1. NE Nigeria: Conflict fatalities by Local Government Area and displacement by ward..67

Table 1. Selected Macroeconomic Indicators for Nigeria.................................................................6

Table 2. Proposed Lending Support (US$ million).........................................................................22

Table 3. Proposed Non-Lending Support – ASAs...........................................................................22

Table 4. Summary of Risks to the WBG Program..........................................................................24

Table 5. Overall Recovery and Peace Building Needs by Component...........................................66

I. INTRODUCTION 1. This Performance and Learning Review (PLR) assesses progress to date on the World Bank Group’s (WBG) Country Partnership Strategy (CPS) for the Federal Republic of Nigeria for the period of fiscal year (FY) FY14-FY17 discussed by the Board of Directors on April 24, 2016. The CPS’s objectives are: (a) promoting diversified growth and job creation by reforming the power sector, enhancing agricultural productivity, and increasing access to finance; (b) improving the quality and efficiency of social service delivery at the state level to promote social inclusion; and (c) strengthening governance and public sector management, with gender equity and conflict sensitivity as essential elements of governance.

2. The PLR confirms the alignment of the CPS objectives with Nigeria’s development goals, but finds mixed progress towards achieving the CPS outcomes. Two out of seventeen CPS outcomes have been achieved while eight are on track to be achieved during the CPS period. However, it will take longer than expected – beyond this CPS period – to achieve some of the remaining seven outcomes. Two risks that were identified in the CPS significantly materialized: (1) macroeconomic risks; and (2) intensified security challenges. These developments are respectively discussed in detail in section II.C on Recent Economic Development and Annex 4 on Drivers of Conflict and Fragility in Nigeria. Macroeconomic difficulties and intensified security challenges, along with the longer than expected period of political transition and institutional weaknesses at subnational and national level slowed down the progress.

3. The PLR proposes to adjust the CPS to Nigeria’s emerging new development priorities. The 2015 elections brought to power the opposition party which took office in a context of marked security challenges and a severely weakened economy. The new administration has requested the WBG’s support in addressing macroeconomic challenges. The PLR thus proposes the addition of a new cross-cutting/foundational cluster – Restoring Macroeconomic Resilience Cluster (CPS Cluster 4) – for the remainder of the CPS period. The Government of Nigeria (GoN) has also requested additional WBG support in some prioritized areas such as North East (NE) recovery; diversifying the economy; enhancing climate resilience; and safeguarding social expenditures at a time of fiscal crunch while improving the efficiency and effectiveness of those expenditures. The PLR proposes to integrate this additional support in the three original CPS clusters.

4. A Systematic Country Diagnostic (SCD) will be prepared in FY17 to provide a knowledge platform for addressing Nigeria’s development challenges in the current changing context. The SCD will serve as the basis for the Country Partnership Framework (CPF), covering FY18-FY20.

II. MAIN CHANGES IN COUNTRY CONTEXTA.Political Environment

5. The 2015 elections marked, for the first time in Nigeria’s history, a peaceful transfer of power between two political parties . Since 1999, Nigeria had been governed by the People's Democratic Party. In March 2015, General Muhamadu Buhari, the candidate of

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the All Progressives Congress, won the presidential election, marking a critical juncture in Nigeria’s democratic transition.

6. The new cabinet was sworn into office seven months after the elections, in November 2015, reflecting the complexities of forming the new coalition government. Decision making mechanism under the new GoN calls for subtle political and regional trade-offs in a political environment whose stability rests on an elaborate system of power sharing at the federal level.

7. The new authorities reconfigured the federal Government. The number of ministries was reduced from 32 to 24. Budget responsibility was transferred from the Federal Ministry of Finance (FMOF) to the Ministry of Budget and Planning. In addition, the office of the Vice President was given a much stronger coordinating role in economic and other affairs. The President took on the role of the Minister of Petroleum.

8. The sharp decline in oil revenues has rekindled the debate on fiscal federalism. The considerations how to unlock the economic potentials of subnational levels of government has rekindled calls to devolve more powers for economic development to the states.

B.Security

9. The security situation in Nigeria continues to be influenced by terrorism, armed conflict and general crime. The Boko Haram insurgency in the North East (NE) has proved a considerable challenge to the country’s security forces and has led to the loss of more than 20,000 lives, the displacement of 2 million people, and has negatively affected the livelihoods of 6 million more people.1 The impact of the insurgency has transcended the geographic borders of the country, imposing economic and security costs on neighboring countries. In parallel, the attacks by Fulani herdsmen on farmers have intensified as they move south across Nigeria’s “middle belt” as the Sahel encroaches their pastures. Other security challenges include crime and kidnapping, particularly in urban areas, attacks on oil and gas infrastructure, and threats of renewed militancy in the Niger Delta. There is also some simmering discontent in Biafra in South East. At the root of the security challenges are high levels of poverty, joblessness, growing numbers of frustrated youth, as well as natural resources degradation and climate stressors (see Annex 4 for details).

10. President Buhari has acted decisively to tackle the challenges of insecurity. Steps have been taken to build a more efficient and effective coalition with Nigeria’s neighbors against Boko Haram. An offensive in late 2015 drove Boko Haram from much of the territory it held in Northeast Nigeria. However, the militants have since struck back with suicide bombings and attacks on civilians. The GoN’s response to the crisis in the NE has focused largely on security, humanitarian support, and service delivery. At the developmental level, the federal and state governments have formulated two regional initiatives, the Presidential Initiative for the NE, and the NE States Transformation Strategy. Complementing these are strong efforts to reach a regional solution to the shrinkage of Lake Chad, which has resulted in increased social conflicts and high rates of internal and cross-border migration. The critical and immediate challenge facing the GoN is to ensure the welfare of internally displaced people (IDPs), the host communities, and the population in the NE.

11. The intensified attacks by militants on oil and gas infrastructure in Niger Delta are affecting Nigeria’s oil and gas output. The attacks by the militant group – Niger Delta Avengers

1 In March 2015, Boko Haram became the first extremist group in sub-Saharan Africa to pledge allegiance to the Islamic State.

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– since early 2016 have brought Nigeria's oil output to a 20-year low2. The GoN has been seeking solution by extending the Presidential Amnesty Program, followed by the scaling down of the military campaign and engaging in a dialogue with the Niger Delta Avengers.

C.Recent Economic Developments and Outlook

12. Recent Economic Developments : Three major economic transitions – the slowdown and rebalancing of the Chinese economy; lower commodity prices, especially the sharp drop in oil prices; and tightening financial conditions and risk aversion of international investors – have had a significant impact on the Nigerian economy. These shocks have compounded an already challenging development environment.

13. The fall in oil prices in 2014 found Nigeria in a position of weakness. Economic management during the latter part of 2014 and 2015 was prudent, but mostly consisted in running down buffers such as the Excess Crude Account and international reserves, and critical structural reforms were not undertaken as the country prepared for Presidential elections in 2015. Economic management during the run-up to the 2015 elections focused on short term stabilization policy but key structural reforms – non-oil revenues, quality of expenditure especially on oil subsidy and state owned enterprises (SOEs) governance reforms – were not addressed.

14. The Buhari administration took office on May 2015 in a context of a severely weakened economy, large infrastructure gaps and poor service delivery that accumulated over the years. Further decline in oil prices and a resulting decline in revenues, enhanced security challenges, and the overall uncertain global environment all manifested with force in Nigeria. Revenues which were already low at 10.5 percent of Gross Domestic Product (GDP) in 2014 declined to 7.8 percent of GDP – all of it on account of the decline on oil revenues – with an even more negative outlook for 2016. Oil exports almost halved from US$76.5 billion in 2014 to US$44.4 billion in 2015.

15. The collapse in oil prices unmasked another weakness in public finance institutions, namely the rules governing the intergovernmental fiscal relationship. Similar to the federal government, states and local government budgets are also dependent on oil. However, the structural weakness went unaddressed given the buoyant liquidity during boom years. In 2013, oil revenue represented 73 percent of total revenue of the states. The collapse of oil prices and the liquidity crunch revived tensions on the burden of the adjustment between federal government and subnational governments that ended in a state bailout in July 2015. In May 2016, the liquidity situation had gotten worse given the drop in oil production due to the insurgent attacks on the oil and gas pipelines. Salary arrears have continued growing as the bail-out fund was not used for payment of salary arrears as intended, and debt service associated with the first bail-out increased resulting in negative federal account allocation for some states. Hence an extension of the bailout was agreed in 2016 under the Fiscal Sustainability Plan that includes 22 point reform agenda to rationalize expenditure, increase internally generated revenue, strengthen public financial management, increase transparency and accountability, and ensure fiscal and debt sustainability.

16. In 2015 the collapse of Nigeria’s terms of trade resulted in Nigeria being for the first time in decades a net importer of savings from the rest of the world. From generating an average Current Account (CA) surplus of 3.5 percent of GDP in 2012-2014, the CA deficit reached

2 1.69 million bpd per day in May 2016.

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around 3 percent in 2015 and is expected to remain at that level in 2016 and decrease gradually to a deficit of 1 percent of GDP by 2020.

17. An evolving monetary policy coupled with a fixed exchange rate in the period 2014 – Quarter 1 of 2016 exerted additional pressure on the external accounts and on the real sector. The Central Bank of Nigeria (CBN) reacted to a growing gap since late 2015 between the official exchange rate, the interbank rate, and the market cash rate, and pressure on reserves by tightening administrative controls. These measures include directing limited CBN forex offerings on the interbank market to higher priority transactions; a ban on use of either export proceeds or forex markets for financing the importation of goods from 40 categories of items that are deemed of relatively low importance or seen as candidates for import substitution. In June 2016, the market exchange rate exceeded by 60 percent the official rate and lack of access by banks to foreign exchange has become a significant detriment to private sector activity and growth.

18. Inflation has been accelerating and reached 16.5 percent in June 2016 (year-on-year). While the initial rise in inflation was partly due to the currency depreciation and pre-election spending, the recent acceleration has been due to a combination of factors, mainly higher electricity tariffs, increased prices of all fuels3, low food supplies at the beginning of the planting season, and a scarcity of foreign exchange.

19. Due to significant exposure to the oil and gas sector (26 percent of the loan book), the quality of assets in the banking sector has deteriorated. According to recent Financial Stability Report, the Non-Performance Loan (NPL) ratio deteriorated from 2.9 percent in December 2014 to 4.9 percent in December 20154. It is estimated that the NPL ratio for the Nigerian banking sector would reach 12.5 percent by end-20165.

20. In this context, GDP growth fell from 6.3 percent in 2014 to 2.7 percent in 2015, and further went into negative territory, -0.4 percent in Quarter 1 of 2016 . The macro instability generated initially by external shocks was compounded by a combination of policy responses and outcomes, such as pegging the exchange rate, rationing the foreign currency, implementing a stop-go-stop monetary policy and delaying the execution of the budget. This growth rate is significantly below the historical standards, and below the potential growth rate of the economy even at low commodity prices. There is evidence that countries which grow fast and suddenly fall into a growth trap, i.e. growth below potential have two things in common: macro instability and lack of progress in institutional reform. Hence, the government’s program, and the proposed revision of the PLR, are oriented to supporting this reform agenda.

21. Outlook : Over the medium term, economic recovery is likely to be modest. Growth in 2016 is expected to contract by -1.5 percent although the economy is expected to stop contracting in the third and fourth quarters if the militant attacks on oil and gas infrastructure can be halted and production restored to normal levels. In 2017, growth is projected to recover to 1 percent as recent initiatives start to bear fruit. These include adoption of a flexible exchange rate and improved governance in the oil sector which should facilitate an expansion in production, while the greater clarity in regulation and the gradual rebound in international oil prices should result in renewed investment6. The general government deficit is projected to widen in 2016 before improving in 3 Kerosene, petrol and diesel. 4 CBN regulations stipulate that banks cannot have a NPL ratio that is above 5 percent of gross loans.5 Estimate by Agusto & Company (Nigeria’s foremost credit rating agency).6 The revised Petroleum Industry Bill (PIB), currently under discussion in the National Assembly, could help to attract significant investment in the oil and gas sector, although the impact could occur over time.

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2017, while the external CA deficit is likely to decrease gradually. The reduction in the deficit will result from slightly higher projected oil prices and production levels and increased non-oil revenues largely on account of increased efficiency in the value-added tax (VAT) collection.

22. Nigeria remains at low risk of debt distress under various scenarios, but will continue to face the challenge of a high debt service-to-revenue ratio. Mostly domestic and maturing in the medium term, the public debt-to-GDP ratio is forecast to increase from 14.4 percent in 2015 to 25 percent in 2021, largely driven by larger than historical deficits, stemming primarily from lower oil revenues due to the recent drop in prices. The contribution of growth to debt reduction will not be large enough to offset adverse dynamics from real interest rates. Gross financing needs in percent of GDP are projected to increase to above 7 percent over the medium term. Though declining, public debt service will continue to represent a considerable share of general government revenue, remaining above 50 percent over the medium term. Nigeria’s debt remains sustainable but with increased vulnerability in the context of a shock to the non-interest CA – given the structure of Nigeria’s trade this can be interpreted as a decline in oil exports of substantial magnitude. In such context, the external debt-to-GDP ratio would more than double relative to the baseline. This assumption is based on the historical volatility of Nigeria’s CA balance due largely to fluctuations in oil prices. A combined (interest rate, growth, CA) shock would have a similar impact on debt, driven by the CA dynamics. Debt dynamics are also worsened under a one-time real depreciation of 30 percent, given the lower base of GDP in US Dollars.

23. To revive growth in the short term, reforms aimed at restoring macroeconomic stability will be critical. These would include measures to increase non-oil revenues and to stimulate demand-driven growth, including through sub-national government spending. At the same time, measures are needed to remove supply-side policy bottlenecks and improve predictability of the policy environment, such as through the removal of exchange controls and real exchange rate realignment.

24. With oil prices projected to remain low, a new growth strategy for the post-oil economy will need to be adopted. A new growth strategy would need to be based more on productivity growth than on capital accumulation. This will require greater emphasis on regulatory reforms to improve the business environment, and on governance reforms to improve the efficiency of the public expenditures. The new growth strategy will also need to enhance diversification by addressing sector-specific challenges, particularly in agriculture, manufacturing, and mining, as part of a medium- to long- term agenda to increase competitiveness and promote inclusive growth.

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Table 1. Selected Macroeconomic Indicators for Nigeria2014 2015 2016 2017 2018Act. Prel. Projections

National Income and Prices Annual percentage change, unless otherwise indicatedReal GDP (at 2010 market prices) 6.3 2.7 -1.5 1.0 2.5Nominal GDP at market prices (trillions of naira) 90.1 95.2 103.3 113.1 127.2Real GDP (trillions of naira) 68.0 69.8 68.7 69.4 71.2GDP deflator 4.7 5.0 10.0 8.5 10.0Consumer price index (end of period) 8.0 9.6 19.0 10.0 9.5Production of crude oil (million barrels per day) 2.2 2.1 1.9 2.2 2.2Ave. oil price (US$ per barrel) 100.4 53.0 42.0 52.0 58.0

     Fiscal Account Percentage of GDP, unless otherwise indicatedRevenues 9.5 6.8 5.8 6.8 7.0 Oil, gas and mineral revenue 4.5 3.0 2.4 3.7 3.8 Non-oil revenue 4.9 3.8 3.4 3.1 3.2Expenditures 11.0 9.6 9.7 10.0 9.9 Capital expenditure 2.9 1.2 1.8 2.1 2.2 Recurrent expenditure 8.1 8.3 7.6 7.9 7.7Overall balance -1.6 -2.8 -3.9 -3.2 -2.9Debt-GDP ratio (%) 12.5 13.2 15.1 16.8 18.1

Selected Monetary Accounts Change in percent of broad money at the beginning of the period, unless otherwise indicated

Broad money (percent change; end of period) 20.4 -2 19.5 18.7 15.7Net foreign assets -10.9 -6.8 3.6 3.5 4.5Net domestic assets 31.1 4.8 15.9 15.1 11.2o/w claims on consolidated government 16 8 19.1 12 9.2Credit to the private sector (y-o-y, %) 32.5 -13.5 15.6 14.8 12.5Velocity of broad money (ratio; end of period) 4.2 4.9 4.6 4.4 4.4

Balance of Payments Percentage of GDP, unless otherwise indicatedCA balance 0.2 -3.2 -2.4 -1.2 -1.3Trade balance 3.7 -1.3 -1.9 -0.2 -0.1

Imports -10.8 -10.7 -10.2 -12.2 -12.3Exports 14.5 9.4 8.3 12.0 12.4

Capital and financial accounts 0.8 -1.4 -1.4 -0.2 -0.2Change in reserves (excl. reserves and errors & omissions) -1.5 -1.2 -1.2 1.2 1.3Change in reserves (US$bn) -8.5 -5.9 -4.9 4.7 4.2Gross international reserves (US$bn) 34.2 29.1 24.2 28.9 33.1

In months of imports of G&Ss (months) 4.8 4.9 5.3 5.8 6.2

Source: Nigerian authorities, IMF and The World Bank staff estimates and projections, 2016.

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D.Poverty Reduction and Shared Prosperity 25. While the poverty rate in Nigeria declined by about 10 percent between 2004 and 2013, the number of poor didn’t decrease. A recent World Bank (the Bank) poverty assessment finds that poverty rates in Nigeria are significantly lower than official estimates. At the national level per capita terms, poverty rates declined from 46 percent in 2004 to 35.6 percent and 36.1 percent in 2011 in 2013, respectively. The official estimates were indicating a decline of only 2 percent from 64 percent to 62 percent between 2004 and 2010. However, given the rate of population growth (nearly 3 percent) between 2004 and 2011, the total number of poor did not vary. The trend also indicates that while there was some reduction in poverty between 2004 and 2011, the stagnation in the poverty rate and the increase in population between 2011 and 2013 offset each other.

26. Poverty reduction was not commensurate with the strong GDP growth. For every 1 percent growth in GDP per capita, poverty declined by only 0.6 percent. Nigeria’s growth elasticity to poverty is half of the Sub Saharan Africa average and only one-fourth of that of Lower Middle Income countries. Three factors determined this low responsiveness. First, high growth rates have been accompanied by comparatively high population growth (2.7 percent per year). Second, Nigeria’s labor market shows a low capacity to absorb large numbers of new entrants. Third, inequality in terms of income and opportunities has been growing rapidly and has adversely affected poverty reduction; only half of the consumption per capita growth translated into poverty reduction. If inequality had not increased, poverty would have dropped by 18 percentage points rather than 10.

27. The low elasticity of poverty reduction to growth can be attributed to the performance of NE and North West (NW) zones. Together these two zones experienced a stagnation in poverty rates while those were reduced in other zones. In 2004, the number of poor people residing in the NE and NW was 29 million and it increased to 37 million. The large poverty differential between the Northern and Southern regions of the country reflects a growing gap in various socioeconomic indicators and in economic opportunities.

28. The overall picture is further complicated by divergent economic and social conditions in states. The coastal parts of the South West and South-South states can be considered middle-income economies that achieved important results with regard to poverty reduction but are facing the typical challenges of this group of countries such as urbanization, unmatched demand for quality services, and an unfavorable business climate. In contrast, the upper Northern states keep experiencing deep poverty, sluggish growth, and limited access to basic services and infrastructures.

29. A set of policies will be needed to address structural challenges, such as combining distribution-blind interventions and poverty-targeted interventions. Distribution-blind interventions should give priority to diversifying the Nigerian economy away from oil. The poverty-targeted interventions can help reduce the gap between the Southern and Northern regions. Nigeria, in particular its Northern region, needs to enact policies, such as to improve access and quality of education, to obtain the kind of demographic dividend that has played an important role in the growth of East Asian and other economies. Reducing the North-South divide requires a renewed effort to provide greater access to basic social and infrastructure services. Finally, a well-targeted, national social protection system can help reduce the inefficiencies in the allocation of

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resources and boost the productive potential of individuals and communities by breaking the vicious circle that links inequalities in income and opportunity across generations.

30. The current economic crisis has substantially reduced growth and has further limited the trickle down of growth to other regions in the country . Furthermore, the conflict in the NE and part of NW has aggravated the conditions facing the local population and thereby worsened many socio economic indicators. The new situation calls for additional analytical work to clarify the implications of these poverty dynamics for the CPS.

E. Emerging Priorities and Government’s Agenda

31. The GoN seeks to implement stabilization and recovery measures while addressing the medium and long-term development agenda, including efforts to improve security and combat corruption. The stabilization and recovery measures focus on (a) restoring macroeconomic resilience and growth; and (b) improving security in the NE and Niger Delta. Restoring macroeconomic resilience and growth will be critical not only for Nigeria but for West Africa as a whole, given the strong links between Nigeria and neighboring countries in trade and capital flows. The medium and long-term agenda is to promote job creation and build an economy led by a strong and responsible private sector; provide physical and economic infrastructure; enact social policies that would increase opportunities for the poor and vulnerable; and address climate change and other stressors.

32. The GoN has shown commitment to improving governance. The financial and operational books of the Nigeria National Petroleum Company (NNPC) are open and momentum is building to press ahead with new legislation for the petroleum sector to increase its transparency and make it more competitive and attractive for investment. Financial audits of various agencies have been commissioned, while the Economic and Financial Crimes Commission has stepped up its investigations of alleged cases of fraud and corruption.

33. The authorities have taken a number of institutional policy reforms for restoring macroeconomic resilience and growth. The introduction of a flexible exchange rate system on June 20, 2016, is expected to improve the supply of foreign exchange which had become a key bottleneck to non-oil growth. Additional measures have also been undertaken to increase non-oil revenues and control expenditures7.

34. On the expenditure side, efforts are made to reorient towards capital expenditures, which were severely cut in 2015, as well as social sectors. The introduction of an Integrated Payroll and Personnel Information System is expected to help control the wage bill. The subsidy for kerosene has been eliminated and a rule-based pricing system for fuel has been introduced with no subsidy allocation in the budget8. An Efficiency Unit has been established in the FMOF in order to reduce overhead expenditures.

35. Going forward, the GoN will need to deepen these stabilization and institutional reforms. While important fiscal measures underway both on the revenue and expenditure sides,

7 The Fiscal Responsibility Act is being enforced; all agencies are asked to limit their operating expenses to 75 percent of their gross revenues and remit 80 percent of their operating surpluses; collection of Corporate Income Tax has intensified and institutional reforms are being implemented to increase compliance and efficiency in the collection of taxes.8 Nigeria spent an estimated average of US$7 billion annually (equivalent to 1.3 percent of GDP) in fuel subsidies between 2010 and 2014. The subsidy was not targeted and of limited benefit to the poor. Moreover, much of the subsidy was captured by importers and traders who collected them and did not respect administered prices especially in more remote areas.

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recent results, especially on revenue generation, indicate that these are not sufficient. Additional measures are needed, including increasing the VAT tax rate and removing some of the tax waivers and exemptions. A comprehensive and coherent framework for monetary, fiscal, and structural policy reforms will help Nigeria restore its macroeconomic resilience and growth.

36. Medium and long-term agenda for boosting non-oil growth and job creation. Agriculture, mining, infrastructure are key vehicles for increasing non-oil revenues, diversifying the economy and generating jobs. The Agriculture Promotion Policy (2016-2020), building on the Agriculture Transformation Agenda of the previous GoN, aims to increase agricultural productivity, drive job growth, and increase non-oil revenues. An overhaul of the mining sector is expected to reposition the sector as a major contributor to the Nigerian economy once commodity prices recover. The planned multi-billion-dollar infrastructure upgrade is expected to revive economic growth and help create jobs. Capital expenditure as the share of total budget has been increased to more than 30 percent in the 2016 budget. The emphasis is also on creating an enabling environment for industry, trade and investment; championing the cause of Nigeria’s micro, small and medium enterprises (SMEs) as a means of creating jobs and achieving inclusive growth; attracting long-term investment; and integrating into global value chains.

37. The authorities attach strong importance to enhancing social inclusion. The draft National Social Protection Policy seeks to strengthen the role of social protection programs in distributing resources. In the health sector, the emphasis is on primary health care, particularly maternal and child health, and on reducing the vast inequities in terms of access and quality of services in the sector. The National Strategic Health and Development Plan is under review, and a new health policy is under preparation.

38. Climate change agenda. Nigeria’s response to climate change is focused on (a) building a green economy and creating jobs (resuscitate the Great Green Wall, revive coastal economies and wetlands, waste-to-wealth initiatives, invest in national parks and green spaces); (b) taking climate action (reducing gas flaring9, developing renewable energy, recycling); (c) protecting the environment (reducing pollution, addressing soil degradation and deforestation); (d) addressing environmental governance (integrate environmental sustainability in development planning, implement its Intended Nationally Determined Contribution (INDC), develop participatory accountability mechanisms; and (e) building capacity.

III. SUMMARY OF PROGRAM IMPLEMENTATION A.Portfolio Performance and Issues

39. The Bank support to Nigeria has grown since the start of the CPS period, with net International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) commitments totaling US$7.7 billion compared to US$5.24 billion of IDA commitments at end FY13. The significant increase in the commitment value was accompanied by a moderate increase in the number of projects (from 26 at end FY13 to 30 in FY16), reflecting efforts to consolidate portfolio and deliver fewer, larger projects.

40. Nigeria represents International Finance Corporation (IFC)’s fifth largest global country exposure, with a committed volume of US$1.8 billion. Nigeria has been one of IFC’s

9 The GoN has endorsed the ‘Zero Routine Flaring by 2030’ Initiative.

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fastest growing portfolios (13 percent Compound Annual Growth Rate since FY06) due to its steady growth of exposure to the financial markets. Successful engagement during FY14 and FY15 led to a growth in IFC’s yearly commitments to Nigeria to more than US$1 billion, as concerted efforts to rebalance the portfolio towards the real sector resulted in new exposures in gas, chemicals and electric power.

41. Project implementation slowed in the period prior to and following the elections. The FY16 disbursement ratio was only 13 percent, compared to 19 percent in FY15 and 21 percent in FY14. The political transition impacted portfolio performance, notably at the state level, where about 54 percent of the Bank portfolio is implemented and where 21 out of 36 states have new governors, many of whom are engaging with the WBG for the first time. Portfolio implementation was also affected by delays in providing counterpart funding, weak capacity, and, in some instances, fiduciary challenges. The introduction of a Treasury Single Account (TSA) delayed disbursements due to time needed to clarify the impact of these new arrangements on the Bank’s projects. The political transition also caused delays in undertaking proactivity actions to address problem projects. The situation has begun to improve and the planned proactivity actions are expected to accelerate program implementation.

42. The strategy for improving the IDA/IBRD portfolio performance and achieving faster delivery of results has centered on three elements:

Portfolio management. Briefings and engagements with new governors, enhanced portfolio support jointly with the FMOF, and close collaboration between the Implementation Support Team in the Bank Office in Abuja and project teams to unlock bottlenecks. Strong efforts are being made to address the problem projects. Public Private Partnership Project is being restructured to reflect a substantial partial cancellation. The Bank is discussing with the GoN a possible restructuring of the Nigeria Electricity and Gas Improvement Project (in problem status due mainly to delay in executing guarantees in support of gas supply agreements). Implementation of the Growth and Employment Project and Development Finance Project (DFP) is picking up. The Mid-Term Review of the Nigeria Erosion and Watershed Management Project (NEWMAP) undertook a number of actions leading to accelerated implementation, and the project is expected to move out of the problem status shortly. Nigeria Urban Water 3 project is being restructured.

Leadership and knowledge sharing. The Nigeria Leadership Program supports project teams in creating a working environment that supports collaboration, innovation, stakeholder engagement and knowledge sharing, while applying sound technical approaches. The Knowledge Sharing Program seeks to identify, capture and share local solutions to development challenges, and apply them across states10.

Application of governance, gender and conflict filters in project design and implementation, thanks to a grant from the UK Department for International Development (DFID). The filters seek to ensure a full understanding of local context and key binding constraints to progress.

43. To improve portfolio quality, IFC will leverage its strong and diversified client network to ensure swift commitments/disbursement rates while maximizing its development impact through projects in power, agriculture and the financial sector. In FY16, as a result of the

10 For example, the learning event in November 2015 focused on internally generated revenue. The event was organized in partnership with UK Aid under the auspices of the Nigeria Governors’ Forum.

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current macroeconomic turmoil, IFC portfolio quality deteriorated slightly, with a number of downgrades and restructurings across various sectors. Within this context, IFC experienced a slowdown in direct investment opportunities and client engagement in FY16.

B.Partnerships and Leveraging

44. The WBG is an active partner in donor coordination and collaborated with other partners in engaging with the new authorities. The WBG and development partners prepared and delivered five joint policy notes to the new administration (Strengthening the Use of Evidence in Policy Formulation and Implementation in Nigeria; Deepening Federal-State Coordination in Economic Policy; Addressing Regional Inequalities; Creating Jobs for Shared Prosperity; and Delivering Macroeconomic Stability).

45. Over the last two years, the Bank has established the strong collaboration with DFID on several agendas. DFID provided important support for the Recovery and Peace Building Assessment (RPBA), institutional self-assessment tool for federal agencies, collaboration with the Presidency Delivery Unit, technical assistance on state-level Public Finance Management (PFM), Doing Development Differently agenda, and poverty analysis including a database on conflict and poverty.

46. Through its partnership efforts, WBG has successfully leveraged resources from the private sector and other partners. The Development Finance Institution project has helped to mobilize more than US$1.3 billion of approved debt and equity commitments in support of lending to Medium, Small and Micro Enterprises (MSMEs)11. The two IDA-supported Public Finance PFM operations have leveraged over US$150 million from European Union (EU). In the water (Urban Water 2 and 3) and transport (Rural Access and Mobility Project 2) sectors, IDA leveraged in total US$138 million from French Development Agency (AFD) and US$200 million from African Development Bank (AfDB).

47. The WBG Joint Energy Business Plan has played an important role in leveraging private investment in the sector. For the Azura Edo Independent Power Producer project, IFC is providing loans of US$80 million and mobilized US$213 million of third-party direct foreign investment loans; IBRD is providing up to US$245 million in guarantees (debt and liquidity), and Multilateral Investment Guarantee Agency (MIGA) is providing US$492 million in guarantees to cover commercial bank debts, equity, and interest rate hedging. IFC has also invested in domestic gas producer Seven Energy (equity of US$75 million and anchor investor in a US$500-million bond) and MIGA is providing US$200 million guarantee to Seven Energy for its investment into Accugas Ltd.

C. Progress toward CPS Outcomes

48. Activities under the strategic clusters of the CPS are being implemented as envisaged, although at a slower pace due to the elections and other factors noted earlier. The knowledge program has made significant contributions to the policy dialogue and to implementation of the reform agenda.

11 The project is also supported by AfDB, European Investment Bank, the German Development Bank, and the AFD.

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49. Within the three strategic clusters, two outcomes are achieved, while eight out of seventeen outcomes are on track. Out of total thirty eight indictors, seven are fully achieved while nine are on track. The Annex 3 details progress achieved on each outcome.

CPS Cluster 1: Federally-led Structural Reform Agendas for Growth and Jobs

50. This cluster seeks to foster diversified growth and job creation by addressing the key constraints of power sector and access to finance; and by targeting agriculture as one of the key drivers of the economy.

51. Power sector – The progress has been varied. Parallel to positive institutional and policy initiatives such as successful unbundling and privatization of utilities, there are still challenges such as the sufficiency of gas supply to increase power generation, the scaling-up investment in the transmission and distribution networks, and pending decisions regarding (a) the commercial framework for gas-to-power; (b) the governance and ownership structure of the transmission network; and (c) support to the privatized distribution sector to ensure financial viability in the overall sector value chain. These shortcomings are reflected in the progress towards achieving the CPS outcomes. While the outcomes related to increasing transmission capacity and reducing losses of privatized distribution companies are on track, there has been no progress in increasing generation capacity mainly due to delays in executing guarantees in support of gas agreements. Given delays in decision making regarding the transmission network, delivery of the proposed Transmission Project (US$364 million) has been postponed to FY17. The Federal High Court recently annulled the recent end user tariff increase, which is likely to hamper further progress in this outcome area. After a delayed start, the Lighting Africa Nigeria Program is now accelerating; it has reached about 14 million people through consumer education campaigns with the goal to expand the retail channel for off-grid solar products and facilitate access to consumer loans for purchase of solar lanterns/home systems through microfinance institutions (MFIs).

52. Financing for development – There has been little progress. The macroeconomic climate has hampered IFC progress on loans available to MSMEs with the exception of providing financial services to micro-entrepreneurs12. Bureaucratic delays in making the DFP fully operational have delayed the start of delivering critical financial support to the MSMEs at a time of increasing economic hardship. Though project implementation has recently gained in momentum, the targeted increase in long term financing to private sector will be achieved only during the next CPF. In the context of a joint the Bank-IFC approach to affordable housing, IFC will complement the Bank’s support to the National Mortgage Refinancing Company (NMRC) through technical assistance. The IDA supported Housing Finance project, which is facing challenges associated with weakened demand due to the ongoing economic crisis, is not likely to achieve the targeted increase in the share of housing loans in the financial sector by the end of this CPS.

53. Agriculture/Climate resilience – The progress has been mixed. Fadama 3, Commercial Agriculture Development Project (CADP), and West Africa Agriculture Productivity Project (WAAPP) have supported farmers’ access to improved technology and markets as well as facilitated aggregation of agricultural products and farmers’ linkages to off-takers through horizontal coordination of framers. The WAAP supported adoption of early maturing and drought-resistant crop varieties, water management technologies and green energy (biogas). The First Agriculture Development Policy Operation (DPO) supported the establishment of the 12 Performance in this area was stronger than expected demonstrating the resilience of microfinance to shocks in the overall economy.

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Environment and Climate Change Unit within the Federal Ministry of Environment and the preparation and adoption of a National Agriculture Resilience Framework to strengthen the enabling environment for effective coordination of climate smart investment. The First Agriculture DPO also helped to strengthen the policy environment and institutional capacity to enhance agricultural productivity and market access among farmers13. Less progress has been achieved in improving irrigation and connectivity of rural roads, in part due to security challenges in some of the areas where the CPS program is implemented. IDA support to enhancing Nigeria’s preparedness to respond to natural hazards, climate risks and natural disasters suffered from implementation delays under the NEWMAP. Concerning the planned lending program, Staple Crop Zone Processing Project (SCZP) (US$200 million) has been delayed to FY17 due to the political transition and disengagement of the anchor private sector agro-processor, while the planned lending support to climate change/disaster risk management agenda will need to be confirmed and defined in dialogue with the new GoN.

CPS Cluster 2: Quality, Effectiveness, and Efficiency of Social Services Delivery at the State Level for Greater Social Inclusion

54. Progress under this cluster has been more pronounced. The CPS outcome for increasing access of poor and vulnerable to social and economic services has already been achieved. Similarly, all but one outcome related to improved coverage and quality of health service delivery are achieved. The program is on track to achieve the targeted results for improved learning environment and management, learning outcomes, and strengthened responsiveness of public and private training institutions to skill demands. Strides have been made in embedding institutional strengthening in sector engagements. Creation of a Unified Registry of Beneficiaries under the Youth Employment and Social Support Operation will help improve targeting of the poor. Health centers benefiting from the results-based financing support in three states are demonstrating improvements in most indices. Yet, as was the case in earlier CPSs, the program continues to experience challenges in improving efficiency of water supply networks.

55. IFC’s work on health regulatory reform, and investments in innovative education and training delivery has proven fruitful. On the back of a broad advisory program through Health in Africa14 and emerging investment prospects, IFC expects to deepen its engagement in private health delivery moving forward. The recent investment in Hygeia Nigeria Limited, the country’s leading private healthcare company, will lead to construction of a new private hospital adding 100 beds to complement the public healthcare system. IFC investments in Bridge International Academy helped set up five institutions in low income areas of Lagos15. IFC’s investments in Andela contributed to increased youth training programs in software development space, improving the responsiveness of private training institutions to skill demands.

13 The Government withdrew from direct procurement and distribution of fertilizer, made the input subsidy program more effective and reduced corruption and leakages in the program. The National Policy on Staple Crop Processing Zones was adopted and the Nigeria Agricultural Insurance Corporation was restructured for better service delivery and the level of protection for rice was reduced.14 The Health in Africa Initiative links governments with the private sector in order to improve the quality of healthcare with a focus on nine countries. 15 Bridge pupils on average gain an additional 0.32 standard deviations on core reading skills and 0.51 standard deviations on math skills translating into 252 and 288 additional days of learning contributing to the number of schools demonstrating improvements in learning outcomes.

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CPS Foundational/Cross-Cutting Cluster 3: Governance and Public Sector Management

56. Progress under this cluster has been mixed. There has been no progress in improving statistical capacity as the dialogue on a proposed statistics operation has been stalled by the political transition. Key results of support to twenty one states in PFM and economic governance include: (a) harmonization of the budget, accounting and reporting classification methodologies across an increasing number of states; (b) linking budgets to sector strategies in six states, although the reliability of these linkages is unclear in the absence of realistic costing of the strategies that feed into the budgets; (c) improved timeliness in producing fiscal and financial reports across all states, although much remains to be done to streamline audit methods and reporting quality consistent with the standards of the International Organization of Supreme Audit Institutions; (d) slow but steady progress towards improved cash management systems; (e) strong progress in deploying Integrated Financial Management Information System across the federal government and an increasing number of states; and (f) enactment of laws across states to facilitate improved financial management. With the growing fiscal pressures on state governments, the activities under this cluster are gaining momentum.

57. The Bank has continued to support the Nigerian Extractive Industries Transparency Initiative (NEITI). Prior to October 2015, when NNPC began publishing monthly financial and operational performance reports, NEITI’s audit reports were the only source of detailed information on analysis of oil and gas data submitted by oil companies. To date, however, NEITI has not been able to publish audit reports within two years by the end of each FY (maximum amount of time allowed for publication) in part because its board – which needs to approve the audit reports before they can be published – was dissolved in July 2015 and not reconstituted until February 2016. The long delay in publication have prevented NEITI from contributing to investigations into allegations of billions of dollars missing from the oil sector. The new requirement for transparency in NNPC underscores the need for timely publication of audit reports in order for NEITI to have an impact on sector governance.

58. Gender as a cross-cutting theme. Measures have been taken to mainstream gender dimensions in new operations by applying a gender filter. It highlights issues to be taken into account during project design to ensure that women are further empowered or not disadvantaged. The Gender Dimension in Agriculture Policy Brief identified obstacles that women face in agriculture, and helped inform the design of Fadama 3 Additional Financing (AF) by specifically identifying female farmers as one group of targeted beneficiaries. The Rural Access Mobility Project 2 provides women in project areas with employment opportunities through minor road works. In collaboration with partners such as United Nations (UN) Women and DFID, the Bank has also provided support to mobilize the Gender Equality Community of Practice for Finance Ministers in Africa.

Knowledge Program

59. The knowledge program was designed to contribute to the policy dialogue around Nigeria’s development challenges and provide a platform for engagement with the new authorities in the following areas:

Influencing policy dialogue and the reform agenda. The Jobs Report (2015) recommended that in order to create an inclusive jobs market offering gainful employment to women and youth, Nigeria needs to improve skills, enhance agricultural productivity and

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improve its business climate. The Gas Sector Policy Note (2015) provided timely and cutting-edge knowledge to the new GoN to help inform its strategy for the gas sector. The Nigeria Economic Report (2015) focused on the macroeconomic situation, including an analysis of fuel subsidies. Other knowledge work carried out in 2015 included the Financial Inclusion Report; Assessment of the Investment Climate in Nigeria; State Water Agencies in Nigeria: A Performance Assessment; Skills for Competitiveness and Employability; Governance and Financing of Basic Education in Nigeria; and Urbanization Report.

Analyzing situational factors affecting reforms. In addition to regular learning through Implementation Status Reports (ISRs) and Implementation Completion Reports (ICRs), the Bank-prepared case studies have helped to deepen our understanding about what works in the Nigerian context (see Annex 5 for more details).

Understanding conflict and its impact. The ongoing North Policy Dialogue Advisory Services and Analytics (ASA), supported by DFID, and the recently completed West Africa Lake Chad Basin Forced Displacement report helped to inform the Bank’s understanding of drivers and impact of conflict in Northern Nigeria and the Lake Chad Basin.

IV. EMERGING LESSONS60. The CPS program was designed with flexibility for a mid-term adjustment to account for FY14-FY15 diagnostic work; for engagement with the new GoN in 2015; and responses to Nigeria’s changing circumstances. However, the risk of program slowdown caused by the election cycle was not factored into the CPS design. The lesson learned is the need for greater alignment between the CPS period and the country political cycle.

61. The WBG joint approach has a strong leveraging impact. The Joint Energy Business Plan involving the entire WBG in the frontrunner Independent Power Producers (IPP) sent a powerful market signal resulting in fair, balanced and bankable contracts which will inform future projects. It was also important for the GoN to signal to the market that all the products of the WBG are available during the nascent stage of power market development. The joint approach enabled information-sharing across the teams (and thereby improved efficiency) while remaining sensitive to issues of conflict of interest and confidentiality. This highlights the importance of WBG teams communicating to stakeholders the distinct roles of the different institutions within the WBG.

62. Weak capacity, especially at the sub-national level, and institutional weaknesses continue to pose challenges to program implementation. This reconfirms that capacity and institution building take time and call for sustained engagement. Given the inherent weaknesses in fiduciary controls at both program and project levels, and consequent instances of fraud and corruption, the Bank’s PFM engagement needs to give greater support to institutional and capacity building to improve expenditure effectiveness. Added to this is the urgent need to reinforce transparency and accountability of SOEs. A number of these SOEs (particularly those in which the GoN maintains a controlling interest) pose fiscal risks to the GoN because their operations are generally not audited and the public is uninformed of their financial and operational performances. This calls for strengthening fiscal transparency, accountability and oversight and regulatory mechanisms, both at the federal and state levels.

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63. Understanding the local context is critical for providing effective development support. Leadership is crucial, and in the Nigerian context of variable institutional capacity, the role of top leaders is more pronounced than in settings with higher overall institutional capacity. While leadership is critical, by itself it is insufficient to promote and execute reforms. The federated structure of governance in Nigeria calls for consensus building among a wide range of stakeholders and decision making as reforms can easily be stalled by veto players within the system. In addition, the sustainability of reforms depends on inclusive coalitions as well as institutions and rules so as to consolidate and implement change. In Nigeria, the priority given to institutional development has often lagged behind political initiatives, and momentum tends to lag as leaders shift their commitments or leave office.

64. The Bank has taken steps to enhance its poverty effectiveness. The 2016 Poverty Portfolio Review assessed the extent to which the Bank’s operational portfolio over the period 2010-15 has contributed to accelerating poverty reduction in Nigeria. Lessons include:

Maternal and child health engagement is positioned to be a highly effective element of the poverty strategy, given pro-poor results from the pilots and the willingness of champions in the new GoN to scale up these interventions.

The Bank should remain engaged in social protection and youth. Efforts should be made to systematically link targeted households to exit strategies which are supported by other sectors, especially agriculture.

Agricultural policy reform has significant potential to reduce poverty. For rural development, the Bank teams need to identify ways of providing better

coordinated efforts in poorer regions. State-level DPOs remains a good model for scaling up poverty reduction efforts, as the

dialogue can have a focus beyond fiscal issues, and include other state-level issues such as employment and migration.

65. From an IFC perspective, client-focused approaches have proven instrumental. Successful IFC private sector engagement has been possible through consistent client engagement, flexible solutions and adequate resource allocation. IFC’s advisory solutions have had a catalytic role in deepening reach and impact, especially for the financial sector. Meanwhile, the most recent headwinds have revealed that macroeconomic vulnerabilities can substantially hamper project operations and lead to a deterioration of portfolio quality. Moving forward, a more active portfolio management will help navigate economic challenges. In addition, closer engagement with IMF will ensure a more coordinated and sequenced approach to supporting the financial sector, particularly given the current macroeconomic turbulences.

V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP STRATEGY

A.Relevance of the Current Strategy

66. The PLR confirms the relevance of the CPS objectives to Nigeria’s development priorities. It also proposes to expand WBG support in addressing the two emerging priorities of (a) restoring macroeconomic resilience; and (b) reducing the service delivery gap and livelihood deficits in conflict-affected states in the NE.

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67. The PLR also proposes alignment with the Nigeria political cycle . A SCD will be prepared in FY17 to provide a knowledge platform for addressing Nigeria’s development challenges in the current changing context. The SCD will serve as the basis for the CPF. The next general and Presidential elections are due in the first half of the calendar year 2019, and a new GoN is likely to take office in FY20. As such, the PLR proposes that the next CPF covers FY18-FY20, spanning the period until the next political transition. The full alignment with the Nigeria political cycle will be achieved by a subsequent CPF for the period FY21-FY25.

B.Modification of the Results Framework

68. The PLR introduces selected modifications to the results framework to reflect the addition of the new CPS Cluster (see section D). It also proposes to (a) revise targets for selected CPS outcome indicators downwards to reflect the realities of a weakened economy and slower-than-anticipated progress; (b) replace CPS outcome for “Improved supply of longer term financing” with “Improved institutional infrastructure for long term financing”; (c) update the CPS baselines where better quality data are now available; (d) add new outcomes on improved financial infrastructure with new indicators for selected IFC supported activities; and (e) drop the statistics-related CPS outcome. As the bulk of the lending support provided during FY16-FY17 will generate results beyond this CPS period, the PLR captures only selected outcomes of the proposed Federal Development Policy Financing (DPF) support. Details on the proposed changes are presented in Annex 2.

C. Indicative WBG Program

69. The actual IDA and IBRD envelopes available for the FY14-FY15 period were about US$3.05 billion and US$1.2 billion, respectively. As of end FY15, new IDA and IBRD commitments during the CPS period totaled, respectively, US$2.69 billion and US$895 million. The program for FY16-FY17 had not been defined, leaving decisions about the final two years of programming to be consulted with the new GoN. For FY16-FY17, Nigeria has an IDA allocation equivalent to about US$2.26 billion and an IBRD allocation of about US$3.0 billion. The instrument mix will continue to include investment lending, guarantees, development policy lending, and results-based lending whose share will increase in line with the CPS emphasis on results based approach to lending.

70. 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 remaining CPS period with continued efforts to rebalance the portfolio towards energy, agribusiness, manufacturing and services.

71. Moving forward, the engagement will build on lessons learned. Specifically, programmatic engagement will increase as a way of providing sustained Bank support, allowing for a focus on step-by-step policy and institutional reforms and capacity building. Greater efforts will be made to strengthen cross-sectoral synergies and the synergy of WBG support at the state level.

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D.CPS Program Adjustments

72. The CPS program during FY16-FY17 responds to the current environment, notably the need to restore macroeconomic resilience and growth; enhance engagement in the conflict-affected NE; advance structural reforms for private sector-led, non-oil growth; and increase opportunities for youth, women, and the poor, particularly in marginalized areas.

73. 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).

74. CPS Foundational/Cross-Cutting Cluster 4 on Restoring Macroeconomic Resilience: Support will be provided to restore macroeconomic resilience through development policy financing, performance-based lending, and ASA. Development policy financing will support federal reforms for macro-fiscal stabilization, building on the analytical work that has already done and the planned federal-level Public Expenditure Review. The support will focus on a reform program that seeks to build effective institutions for responsible fiscal and macro policy. Trust funds will be mobilized to provide the technical assistance for building such institutions. Work at federal level will be complemented by an emphasis on supporting states towards greater fiscal sustainability. A policy note on the fiscal arrangements and sub-national conditions will be prepared and discussed at a workshop with federal and state authorities. These discussions will feed into performance based lending support to states for improved fiscal sustainability in FY18. This support is critical in the current context of macro and fiscal imbalances in which the financial situation of states is severely weakened and delivery of social services is at risk.

75. The PLR also enhances the Bank’s engagement in the NE of Nigeria to help the authorities address service delivery gaps, livelihood deficits, and social cohesion issues created by the protracted crisis in that region. At request of the GoN, the RPBA was carried out jointly with the EU and UN (see Annex 6 for details). Following the completion of the RPBA, the authorities requested post-RPBA support to develop an action plan and road map for implementing the RPBA recommendations and deliver a multi-sector Emergency Crisis Recovery Project (FY17) and AF interventions on agriculture, health, education and social protection (FY16). The enhanced support to the NE is fully integrated with the three original CPS clusters.

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

76. 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.

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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.

77. 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.

78. 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.

79. 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.

80. 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.

81. 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.

82. 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 16 An economic corridor strategy encompasses a set of coordinated actions that ensure a critical mass of public and private investments with the ability to transform the region, integrating “hard” (infrastructure) and “soft” investments (such as policy and regulatory framework, institutional strengthening and capacity building) to unleash private investments. 17 Examples of such support include investments in Primera Foods’s green-field instant noodle processing factory and the Boulos food and beverages processing company’s expansion into fruit juices/drinks and milk products.

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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).

83. 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.

84. 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.

85. 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.

86. 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.

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

87. 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.

88. 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.

89. 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.

18 Bridge is a data-driven, technology-enabled company targeting the needs of families living on less than US$2 per day. It uses smartphones and digital tablets to monitor student and teacher performance and to ensure that teaching materials can be revised and improved.

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

90. 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.

91. 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.

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

Table 2. 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

22

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 3. Proposed Non-Lending Support – ASAs

Activities Cluster Activities ClusterMining 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

93. 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.

VI. RISKS TO CPS PROGRAM 94. The risks identified in the CPS remain valid for the balance of the strategy period but with heightened following risks: protracted security challenges, weak federal/state collaboration, deteriorating macroeconomic framework, fragile consensus on key reforms, and ineffective implementation capacity. As depicted in Table 4, the overall risk rating for the CPS program is high.

23

95. Protracted security challenges: In the NE, where the transition from conflict to peace remains particularly fragile, the implementation of the CPS program is expected to face a number of challenges. The CPS implementation involves many nonconventional stakeholders with different priorities and interests, and coordination among these entities will be extremely difficult. This risk will be mitigated through regular information sharing processes among stakeholders, including counselling and awareness sessions, to apprise them of the available support under the CPS program, including improved governance and service delivery as important components of long-term development in the region. The Bank foresees difficulties in direct monitoring and supervision in the field and other security-related risks in the NE, which may interfere with the achievement of intended outcomes. Despite these risks, the flexible design of the CPS support and experience in quick mobilization will allow adjustments in response to the changing environment. The GoN will ensure that repatriation of IDPs is announced only for areas cleared by the army and declared safe.

96. Federal/State collaboration: Nigeria’s overall stability, prosperity and business environment is determined at the state level as much as by national-level decision making. Accordingly, progress in implementing the CPS program could be impeded by weak collaboration between the federal and state governments. In the health sector, this risk is being mitigated by the Performance for Results approach, which aims to stimulate improved delivery of health services at the state level through federal transfers. In the agriculture, water, environment, and social protection sectors, the CPS program seeks to foster platforms for policy/results dialogue between the federal and state governments. In the NE, the RPBA is establishing itself as a collaborative and organizing platform for joint federal and state efforts to provide support. In the macro-economic category, the CPS program includes knowledge support to federal/state dialogue and efforts to improve fiscal sustainability of states, as well as starting to prepare performance based lending support to that end (FY18).

97. Macro-economic framework and consensus on key reforms: There is a risk that the DPF may not materialize if the GoN is unable to put together a strong enough program to underpin the operation or if the macro policy framework remains inadequate. The risks of a worsening macroeconomic situation, especially with regard to fiscal sustainability, external imbalances, financial sector vulnerabilities, and sub-national fiscal sustainability, could make it difficult to attain the high-level strategic objectives of growth and job creation by negatively impacting public and private sector investment and consumption. These risks will be mitigated by a joint engagement with the IMF in fiscal policy planning, along with lending and non-lending support to implementing reforms in fiscal management, public sector governance and financial sector supervision. The current macroeconomic challenges are threatening the health of the banking sector and thus may impair the ability of IFC’s commercial bank clients to deliver the development outcomes. 98. Ineffective implementation capacity: Weak capacity, especially at the sub-national level, and institutional weaknesses continue to pose challenges to successful implementation of the program. This reconfirms that capacity and institution building take time and call for sustained engagement. The Bank will continue providing knowledge and learning support to respective project teams, whilst reinforcing institutional and capacity building support to improve expenditure effectiveness. The Bank will also mobilize trust fund resources for capacity building efforts in growth and competitiveness categories. In addition, to address the potentially fiduciary risks, an enhanced accountability framework has been put in place. It introduces a Fiduciary Alert System

24

Tracker (FAST), which enables the Bank to flag fiduciary issues to the highest level of government in a timely and simplified manner.

Table 4. Summary of Risks to WBG Program

________________________________________________________________________Risk categories Ratings1. Political and governance S2. Macroeconomic H3. Sector strategies and policies H4. Technical design of project or program M5. Institutional capacity for implementation and sustainability S6. Fiduciary M7. Environment and social S8. Stakeholders S9. Other (security/conflict) HOverall High______________________________________________________________________________Ratings are high (H), substantial (S), moderate (M), low (L). The risk assessment applies to the remainder of the CPS period and is based on the Systematic Operations Risk-Rating Tool.

25

VII. ANNEXESAnnex 1. Updated CPS Results Matrix (basis for Completion and Learning Review

self-evaluation)

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Strategic Cluster 1: Federally-led Structural Reform Agendas for Growth and JobsEngagement Area: Power Sector Reform Outcome 1: Increased power generation and transmission capacity

1.1: 16 percent increase in generation capacity supported by the WBG interventions by 2017.

Megawatt 6000 in 2012 6960 by 2017

PROJECTS:Ongoing

Nigeria Power Sector Guarantees Project (P120207)

IFC Azura Edo IPP (32859)Pipeline

Power Sector Guarantees Project II (P155000)

1.2: 8 percent increase in transmission capacity.

Mega Volt Amp

8588 MVA on 330kV level in

2013

9275 MVA on 330kV level in

2017

PROJECTS:Ongoing

Nigeria Electricity and Gas Improvement Project (P106172)

Pipeline Nigeria Transmission Project (P146330)

Outcome 2: Improved the efficiency of electricity delivery2.1: Aggregate Technical and Commercial losses (AT and C) of privatized distribution companies (DISCOs) supported by the WBG. EBP reduced by 8 percentage points from 25% in 2013 to 17% in 2017.

Percentage 45% in 2014 37% in 2017

PROJECTS:Ongoing

Nigeria Electricity and Gas Improvement Project (P106172)

26

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Outcome 3: Improved access to modern lighting for the base-of-the –pyramid through supporting the value chain of procuring and distributing solar products such as lanterns and cook-stoves

3.1: 1 million solar lanterns distributed. Million 0 in 2013 0.74 in 2017

PROJECTS:Ongoing

IFC Advisory Services – Lighting Nigeria Project

3.2: 5 million people with improved energy services (assumes industry estimate of 5 people per household).

Million 0 in 2013 3.7 in 2017

PROJECTS:Ongoing

IFC Advisory Services – Lighting Nigeria Project

3.3: 100,000 tCO2 being GHG avoided (Key assumptions: (i) kerosene lamp emission factor (t/Coe/ltr) =0.0026 (ii) kerosene consumption per year for a lantern = 55 ltrs (iii) solar lantern to kerosene lamp displacement factor = 70%).

Metric tons CO2/Year 0 in 2013 74,000 in 2017

PROJECTS:Ongoing

IFC Advisory Services – Lighting Nigeria Project

Engagement Area: Agriculture Productivity and Climate Change (Resilience)Outcome 4: Improved access of small farmers to inputs and technology, and increase in their average income

4.1: Increased effectiveness of publicly supported seed and fertilizer distribution systems as measured by the increased number of farmers benefiting from those programs.

Million 1.2 in 2012 5 in 2017

PROJECTS:Closed during the CPS Period

Agriculture DPO 1 (P130012)Ongoing

Fadama 3 (P096572) Commercial Agriculture Development

Project (P096648) West Africa Agriculture Productivity

Project (P117148)

4.2: Additional 20,000 hectares of improved irrigation in North and North-West areas.

Hectare 26,000 ha in 2014 46,000 ha in 2017

PROJECTS:Ongoing

Transforming Irrigation Management in Nigeria Project (P123112)

Fadama 3 (P096572)

27

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

4.3: Rural households in supported Fadama areas reporting 40% increase in average household income.

Naira 184,240 in 2013 257,937in 2016PROJECTS:Ongoing

Fadama 3 (P096572)Outcome 5: Improved horizontal coordination of small farmers

5.1: Number of farmer associations and or marketing cooperatives supported in (projects) intervention areas.

Number 0 in 2013 6,000 in 2017

PROJECTS:Ongoing

Fadama 3 (P096572) Commercial Agriculture Development

Project (P096648) Growth and Employment (P103449)

Pipeline Staple Crop Processing Zone Project

(P148616)Outcome 6: Improved road transportation connectivity of rural markets

6.1: Additional 2,000 km or rural roads rehabilitated and maintained in supported states.

Kilometer 0 in 2013 2,000 in 2017

PROJECTS:Closed during the CPS period

Rural Access and Mobility Project 1 (P072644)

Ongoing Rural Access and Mobility Project 2

(P095003) Commercial Agriculture Development

Project (P096648) Fadama 3 (P096572)

6.2: Additional 2 million people in rural areas gained access to an all-season road in supported states.

Million 0 in 2013 2 in 2017

PROJECTS:Closed during the CPS period

Rural Access and Mobility Project 1 (P072644)

Ongoing Rural Access and Mobility Project 2

(P095003) Commercial Agriculture Development

Project (P096648)

28

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Outcome 7: Enhanced country’s preparedness to respond to natural hazards, climate risks and natural disasters (resilience)

7.1: # ha of land treated for erosion. Hectare 0 in 2013 2,800 in 2017

PROJECTS:Ongoing

Erosion and Watershed Management Project (P124905)

7.2: % of upgraded or new HydroMet stations providing data that are published annually and uploaded to the web.

Percentage 0 in 2013 60 in 2017

PROJECTS:Ongoing

Erosion and Watershed Management Project (P124905)

Engagement Area: Financing For DevelopmentOutcome 8: Expanded financing opportunities for SMEs

8.1: Additional 60,000 loans outstanding to SMEs by 2017 by IFC. Number 0 in 2013 60,000 in 2017

PROJECTS:Ongoing

IFC – GTB IFC – Diamond Bank IFC – Access Bank IFC – Ecobank IFC – FCMB

8.2: Additional 2 million micro entrepreneurs provided with financial services by IFC.

Million 0 in 2013 2 in 2017

PROJECTS:Ongoing

IFC – Access Bank IFC – Accion IFC – Diamond Bank IFC – Microcred IFC – Lapo IFC – Grooming

Outcome 9: Improved institutional infrastructure for long term financing

9.1. New wholesale financial institutions are established and operational. The institutions are the DBN and Nigeria Mortgage Refinance Company (NRMC).

Yes/No No in 2014 Yes in 2017

PROJECTS:Ongoing

Development Finance Project (P146319) Housing Finance Development Project

(P131973)

29

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

ASA:Delivered

Boosting Financial Inclusion in Nigeria (P147939)

Inclusive Markets (P147941) Investment Climate Assessment

(P147940)Ongoing

Programmatic Approach to Financial Sector Development (FY16-FY18)

Outcome 10: Improved financial infrastructure

10.1: Value of financing facilitated through WBG-supported financial infrastructure. Million 0 in 2013 1,634

PROJECTS:Ongoing

Nigeria Credit Reporting Project (IFC)

10.2: Value of securities transactions. Million 0 in 2013 332PROJECTS:Ongoing

Nigeria – STCR (IFC)Strategic Cluster 2: Quality, Effectiveness and Efficiency of Social Service Delivery at State Level for Greater Social Inclusion

Engagement Area: Strengthening Community Driven Mechanisms for Social Inclusion, and Effectiveness of Social Protection Programs

Outcome 11: Improved targeting of social protection and increased employment readiness of youth in supported states.

11.1: Improved targeting of social protection programs in states as measured by the # of states using the unified registry of beneficiaries and common targeting mechanism.

Number 0 in 2013 10 in 2017

PROJECTS:Ongoing

Youth Employment and Social Protection Project (P126964)

Community and Social Development (P090644)

National Social Safety Nets Project (P151488)

ASA:Delivered

Sharing Prosperity in Nigeria: An Analytical Work Program on Jobs and

30

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Social Protection (P146872) Improving Governance in Social Sectors

(P132571) Poverty Work Program (P157742)

Ongoing Programmatic Poverty Work (P160999) Developing National Social Protection

Platform (P154830)

11.2: Enhanced resilience of the youth participating in workfare programs in supported states as measured by the number of youths who received orientation and life skills training.

Number 0 in 2013 100,000 in 2017

PROJECTS:Ongoing

Youth Employment and Social Protection Project (P126964)

Community and Social Development (P090644)

National Social Safety Nets Project (P151488)

State Expenditure Effectiveness for Results (P121455)

11.3: Increased in % of poor beneficiaries (lowest quintiles) from targeted poor households receiving cash transfers.

Percentage 0 in 2013 40% by 2017

PROJECTS:Ongoing

Youth Employment and Social Protection Project (P126964)

National Social Safety Nets Project (P151488)

Outcome 12: Increased Access of Poor and Vulnerable to Social and Economic Services12.1: 50 percent increase in the # of poor households with access to social and livelihood support services through community development plans in supported areas (baseline: 900,000 in 2012).

Number 900,000 in 2012 1,350,000

PROJECTS:Ongoing

Community and Social Development (P090644)

Engagement Area: Coverage and Quality of Health Services

31

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Outcome 13: Improved coverage and quality of health service delivery

13.1: The share of child deliveries that are assisted by trained health personnel in 3 states increases to 43 % by 2017 (baseline: 33% in 2013; delivered by the results-based financing of health services in 3 states).

Percentage 33% in 2013 43% by 2017

PROJECTS:Ongoing

States Health Program Investment Project (P120798)

ASA:Ongoing

Health Financing Systems Assessment (P159450)

HRITF Impact Evaluation (P128175) Healthy Mothers and Healthy Babies

(P152756)Pipeline

Nigeria Demographics and Nutrition ASA

13.2: The share of children 12-23 months old who are fully immunized in 3 states increases to 45.4% by 2017.

Percentage 25.4% in 2013 45.4% by 2017

PROJECTS:Ongoing

States Health Program Investment Project (P120798)

13.3: % of under-5 children sleeping under insecticide treated net the night preceding the survey increased from 44.6 % in 2010 to 60%.

Percentage 44.6% in 2010 60% by 2017PROJECTS:Closed during the CPS period

Malaria Booster Project (P097921)

13.4: At least 80 % coverage with oral polio vaccine sustained in every state. Percentage

December 2012, 90% coverage (8 endemic states

average)

80% by 2017PROJECTS:Ongoing

Polio Eradication Support (P130865)

13.5: 40,000 of pregnant women living with HIV who receive annually a complete course of antiretroviral prophylaxis to reduce the risk of mother to child transmission.

Number 26,133 in 2010 160,000 by 2017

PROJECTS:Ongoing

HIV/AIDS Program Development Project II (P102119)

13.6 Additional in- and out-patients in private hospital facilities to complement Patients 148,268 in 2013 2,000,000 by 2017 PROJECTS:

Ongoing

32

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

public healthcare delivery. IFC – Hygeia

Engagement Area: Efficiency, Equitable Access and Quality of Education Services

Outcome 14: Improved learning environment and management

14.1: 10,000 additional teachers in rural areas. Number

31,243 in 2013, delivered by the

results based financing of education

services in 3 states

41,243 in 2017

PROJECTS:Ongoing

State Education program Investment Project (P122124)

14.2: 50% of supported schools demonstrate improvements in learning outcomes.

Number

4,000 supported schools in 2013, delivered by the

results based financing of education

services in 3 states

2000 schools improved

PROJECTS:Ongoing

State Education program Investment Project (P122124)

Lagos Eko Secondary Education Project (P106280)

ASA:Delivered

Governance and Financing of Basic Education in Nigeria

Skills for Competitiveness and Employability (P148688)

14.3: Number of students at IFC-supported education institutions. Number 3,850 in 2013 5,000 by 2017 IFC

Outcome 15: Strengthened responsiveness of public and private training institutions to skills demand

15.1: Increased # of states with approved Strategic Plan for improving quality and relevance of TVE (Baseline 4 in 2013; Target 10 by 2017).

Number 4 in 2013 10 by 2017

PROJECTS:Ongoing

State Education program Investment Project (P122124)

ASA:Delivered

33

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Skills for Competitiveness and Employability (P148688)

Engagement Area: Coverage and Efficiency of Water Supply ServicesOutcome 16: Improved coverage and efficiency of water supply service in selected states

16.1: # of people with access to improved water supply increased by 4 million (baseline: 6.2 million in 2013, target: 7.5 million in 2017).

Million 6.2 in 2013 7.5 in 2017

PROJECTS:Closed during the CPS period:

National Urban Water Sector Reform Project II (P071391)

Ongoing National Urban Water Sector Reform

Project III (P123513)ASA:OngoingNigeria WASH Poverty Diagnostics (P158634)

16.2: Cost recovery for operation and maintenance increased in average by 25 percent in supported states by 2017.

Percentage

Lagos 25% in 2012; Cross

River 50% in 2012

25 % increase on average

PROJECTS:Closed during the CPS period:

National Urban Water Sector Reform Project II (P071391)

Ongoing National Urban Water Sector Reform

Project III (P123513)ASA:Delivered

State Water Agencies in Nigeria: A Performance Assessment – Economic Aspects of the Urban Water Sect (P150244)

Ongoing Nigeria WASH Poverty Diagnostics

(P158634) Foundational/Cross Cutting Cluster 3: Governance and Public Sector Management

Outcome 17: Enhanced transparency on budget execution in targeted states and at Federal level

34

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

17.1: # states and the Federal GoN with an integrated fully functioning financial information system producing and publishing consolidated quarterly financial statements within 14 days of end of each fiscal quarter.

Number 0 in 2012Federal GoN and 8 supported states in

2017)

PROJECTS:Ongoing

Public Sector Governance Reform and Development Project (P097026)

State Employment and Expenditure Project (P121455)

Edo State Fiscal Improvement and Service Delivery Operation (P151480)

Lagos State DPO 3 (P151947)

17.2: # of states that have adopted procurement law increased from 24 in 2013 to 30 in 2017.

Number 24 in 2013 27 in 2017

17.3: % of public procurement contracts above threshold awarded through open competition in 12 states increased from 30 % in 2013 to 75% in 2017.

Percentage 30% in 2013 75% in 2017

Strategic Cluster 4: Restoring Macroeconomic ResilienceOutcome 18: Increased share of non-oil revenues in total revenues of the federal government

18.1: Non-oil revenue growth. Percentage 2% between 2014 and 2015

8% between 2015 and 2017

PROJECTS:Pipeline

Nigeria Federal Development Policy Financing (P155951)

ASA:Ongoing

Tax Expenditure and VAT study Growth and Trade Study (P158156) Programmatic Approach to Financial

Sector Development (FY16-FY18)Pipeline

Systematic Country DiagnosticOutcome 19: Reduction in growth of high pressure recurrent expenditures

19.1: Real wage bill growth of the government at federal and state levels. Percentage 3.4% between

2014 and 20150.5% between 2015

and 2017

PROJECTS:Pipeline

Nigeria Federal Development Policy Financing (P155951)

ASA:

35

Indicator Unit of Measurement Baseline Value End Target Value WBG Program

Pipeline Public Expenditure Review (federal) Systematic Country Diagnostic Sub-national Fiscal Framework Policy

Note and Peer Learning

36

Annex 2. Matrix of changes to original CPS Results Matrix

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

Strategic Cluster 1: Federally-led Structural Reform Agendas for Growth and JobsEngagement Area: Power Sector Reform Outcome 1: Increased power generation and transmission capacity1.1: 16 percent increase in generation capacity supported by the WBG interventions by 2017. Megawatt 6000 in 2012 6960 by

2017 No Change

1.2: 8 percent increase in transmission capacity.

Mega Volt Amp

8588 MVA on 330kV

level in 2013

9275 MVA on 330kV level in 2017

No Change

Outcome 2: Improved the efficiency of electricity delivery

2.1: AT and C losses of privatized DISCOs supported by the WBG. EBP reduced by 8 percentage points from 25% in 2013 to 17% in 2017.

Percentage 45%in 2014

37%in 2017

Revised: Baseline and target values of Indicator 2.1 were revised following the post privatization verification. Baseline for losses was adjusted to 45% from 25%; Target was increased from 17% to 37%, based on the revised baseline.

Outcome 3: Improved access to modern lighting for the base-of-the –pyramid through supporting the value chain of procuring and distributing solar products such as lanterns and cook-stoves

3.1: 1 million solar lanterns distributed. Million 0 in 2013 0.74 in 2017

Revised: The target value is revised from 1 to 0.74 to account for the start of the program in 2015.

3.2: 5 million people with improved energy services (assumes industry estimate of 5 people per household).

Million 0 in 2013 3.7 in 2017 Revised: The target value is revised from 5 to 3.7 to reflect slower than anticipated progress.

3.3: 100,000 tCO2 being GHG avoided (Key assumptions: (i) kerosene lamp emission factor (t/Coe/ltr) =0.0026 (ii) kerosene consumption per year for a lantern = 55 ltrs (iii) solar

Metric tons CO2/Year 0 in 2013 74,000

in 2017

Revised: The target value is revised from 100,000 to 74,000 to reflect slower than anticipated progress.

37

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

lantern to kerosene lamp displacement factor = 70%).Engagement Area: Agriculture Productivity and Climate Change (Resilience)

Outcome 4: Improved access of small farmers to inputs and technology, and increase in their average income4.1: Increased effectiveness of publicly supported seed and fertilizer distribution systems as measured by the increased number of farmers benefiting from those programs.

Million 1.2 in 2012 5 in 2017 No Change

4.2: Additional 20,000 hectares of improved irrigation in North and North-West areas. Hectare 26,000 ha in

201436,000 ha in 2017

Revised: End of Target value revised from 46,000 to 36,000 to reflect delays in the project implementation caused by the political change and security challenges in the North of Nigeria.

4.3: Rural households in supported Fadama areas reporting 40% increase in average household income.

Naira 184,240 in 2013

257,937in 2016 No Change

Outcome 5: Improved horizontal coordination of small farmers

5.1: Number of farmer associations and or marketing cooperatives supported in (projects) intervention areas.

Number 0 in 2013 7,400 in 2017

Revised: The indicator reformulated to ‘Number of farmer associations and or marketing cooperatives supported in (projects) intervention areas’ to better capture the support provided under Fadama, WAPP and CADP projects to (1) establishing such associations, and (2) supporting the existing ones for access to markets and services. End target value is revised from 7,400 to 6,000 to reflect the delay in the program implementation.

Outcome 6: Improved road transportation connectivity of rural markets6.1: Additional 2,000 km or rural roads rehabilitated and maintained in supported states.

Kilometer 0 in 2013 2,000 in 2017 No Change

6.2: Additional 2 million people in rural areas Million 0 in 2013 2 in 2017 No Change

38

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

gained access to an all-season road in supported states. Outcome 7: Enhanced country’s preparedness to respond to natural hazards, climate risks and natural disasters (resilience)

7.1: # ha of land treated for erosion. Hectare 0 in 2013 2,800 in 2017 No Change

7.2: % of upgraded or new HydroMet stations providing data that are published annually and uploaded to the web.

Percentage 0 in 2013 60 in 2017 No Change

Engagement Area: Financing For DevelopmentOutcome 8: Expanded financing opportunities for SMEs

8.1: Additional 60,000 loans outstanding to SMEs by 2017 by IFC. Number 0 in 2013 100,000 in

2017

Revised: IFC Financial Institutional Group (FIG) has stopped tracking the indicator ‘loans disbursed’ as a standard SME financing indicator as of 2015. The indicator is therefore reformulated to ‘loans outstanding to SMEs’. The target is also revised from 100,000 to 60,000.

8.2: Additional 2 million micro entrepreneurs provided with financial services by IFC. Million 0 in 2013 2 in 2017 No Change

Outcome 9: Improved institutional infrastructure for longer term financing (Changed from “Improved supply of longer term financing”)

9.1: New wholesale financial institutions are established and operational. The institutions are the DBN and NRMC.

Yes/No No in 2014 Yes in 2017

New indicator: This new indicator reflects the institution building effort related to establishment of the DBN and NMRC which are prerequisite for facilitating improved supply of longer term finance. It is introduced to acknowledge delays associated with political transition, and the impact of deteriorating macroeconomic conditions and resulting banking sector vulnerability. The next CPF will include target values of the support to MSMEs

39

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

as facilitated by the DBN and Number of housing loans supported by the NMRC.

9.2: Percentage of long term financing > 24 months of outstanding private sector credit increased to 5% of the total private sector credit.

Percentage

22% (long term

financing > 2 years) of

total credit in 2013

? in 2017 Dropped: See above

9.3: Percentage of housing finance loans in the financial sector increased to 5% of the total loans.

Percentage 0.13% in 2013 5% in 2017 Dropped: See above

9.4: Volume of corporate bond issues increased on average to 2 issues every year. Number 0 in 2013 8 in 2017

Dropped: This indicator was supported by IFC instruments but was eventually dropped/not monitored.

Outcome 10: Improved financial infrastructure10.1: Value of financing facilitated through WBG-supported financial infrastructure. Million 0 in 2013 1,634 New

10.2: Value of securities transactions. Million 0 in 2013 332 New

Strategic Cluster 2: Quality, Effectiveness and Efficiency of Social Service Delivery at State Level for Greater Social InclusionEngagement Area: Strengthening Community Driven Mechanisms for Social Inclusion, and Effectiveness of Social Protection ProgramsOutcome 11: Improved targeting of social protection and increased employment readiness of youth in supported states.

11.1: Improved targeting of social protection programs in states as measured by the # of states using the unified registry of beneficiaries and common targeting mechanism.

Number 0 in 2013 10 in 2017 No Change

40

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

11.2: Enhanced resilience of the youth participating in workfare programs in supported states as measured by the number of youths who received orientation and life skills training.

Number 0 in 2013 100,000 in 2017 No Change

11.3: Increased in % of poor beneficiaries (lowest quintiles) from targeted poor households receiving cash transfers.

Percentage 0 in 2013 40% by 2017 No Change

Outcome 12: Increased Access of Poor and Vulnerable to Social and Economic Services12.1: 50 percent increase in the # of poor households with access to social and livelihood support services through community development plans in supported areas (baseline: 900,000 in 2012).

Number 900,000 in 2012 1,350,000 No Change

Engagement Area: Coverage and Quality of Health ServicesOutcome 13: Improved coverage and quality of health service delivery 13.1: The share of child deliveries that are assisted by trained health personnel in 3 states increases to 43 % by 2017 (baseline: 33% in 2013; delivered by the results-based financing of health services in 3 states).

Percentage 33% in 2013 43% by 2017 No Change

13.2: The share of children 12-23 months old who are fully immunized in 3 states increases to 45.4% by 2017.

Percentage 25.4% in 2013

45.4% by 2017 No Change

13.3: % of under-5 children sleeping under insecticide treated net the night preceding the survey increased from 44.6 % in 2010 to 60%.

Percentage 44.6% in 2010

60% by 2017 No Change

13.4: At least 80 % coverage with oral polio vaccine sustained in every state. Percentage

December 2012, 90% coverage (8

endemic

80% by 2017 No Change

41

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

states average)

13.5: % of pregnant women living with HIV who receive a complete course of antiretroviral prophylaxis to reduce the risk of mother to child transmission increased from 18% to 40%.

Percentage 18% in 2013 40% by 2017

Revised: The indicator has been revised from cumulative to yearly target, so that the revised indicator reads’ 40,000 pregnant women living with HIV who receive annually a complete course of antiretroviral prophylaxis to reduce the risk of mother-to-child transmission’. The cumulative end target for FY14-FY17 period is 160,000. The baseline set in 2010 was 26, 133 women.

13.6: Additional in- and out-patients in private hospital facilities to complement public healthcare delivery.

Patients 148,268 in 2013

2,000,000 by 2017 New indicator (IFC)

Engagement Area: Efficiency, Equitable Access and Quality of Education Services

Outcome 14: Improved learning environment and management

14.1: 10,000 additional teachers in rural areas. Number

31,243 in 2013,

delivered by the results

based financing of education

services in 3 states

41,243 in 2017 No Change

14.2: 50% of supported schools demonstrate improvements in learning outcomes. Number

4,000 supported schools in

2013, delivered by the results

2000 schools

improvedNo Change

42

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

based financing of education

services in 3 states

14.3: Number of students at IFC-supported education institutions. Number 3,850 in

20135,000 by

2017 New indicator (IFC)

Outcome 15: Strengthened responsiveness of public and private training institutions to skills demand

15.1: Increased # of states with approved Strategic Plan for improving quality and relevance of TVE (Baseline 4 in 2013; Target 15 by 2017).

Number 4 in 2013 15 by 2017

Revised: End of project target value revised from 15 to 10 to reflect better the number of states where the Bank is directly involved in the TVET sector (Lagos, 3 SEPIP sates and 4 SEEFOR states).

Engagement Area: Coverage and Efficiency of Water Supply ServicesOutcome 16: Improved coverage and efficiency of water supply service in selected states

16.1: # of people with access to improved water supply increased by 4 million (baseline: 9.2 million in 2013, target: 13.2 million in 2017).

Million 9.2 in 2013 13.2 in 2017

Revised: The initial baseline included results from the urban Water 1 project, which closed in 2013. This is now corrected, and the indicator reflects contributions from the Urban Water 2 & Urban Water 3 (UW3) projects. UW3 appraised plan was to benefit 0.5m people with access to improved water service by 2017 and 0.92 m people by closing in 2020. Due to initial implementation delays, it is estimated that by 2017 UW3 will only have extended service to approx. 0.1m people. The baseline is therefore revised from 9.2m to 6.2m people, and the end target from 13.2m to 7.5m people.

16.2: Cost recovery for operation and Percentage Lagos 55% 25% Revised: The original baseline included data

43

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

maintenance increased in average by 25 percent in supported states by 2017.

in 2012; Cross River

66% in 2012; Kaduna 65%

in 2012; Ogun 56% in 2012; Enugu 65% in 2012

increase on average

from the Water 1 project which closed at end FY13. The baseline is revised to capture the program that was active in FY14 and since then (Water 2 and Water 3 projects). The revised baseline for Lagos is 25% in 2012 and 55% for Cross River in 2012. Kaduna, Ogun and Enugu state are dropped from the baseline. The Water 2 project closed at end May 2015, achieving the average increase of 25%. There has been no progress under the Water 3 project, due to the slow uptake of the implementation. The end target for this indicator is therefore revised downward to 25%.

Foundational/Cross Cutting Cluster 3: Governance and Public Sector ManagementOutcome 17: Enhanced transparency on budget execution in targeted states and at Federal level17.1: # states and the Federal GoN with an integrated fully functioning financial information system producing and publishing consolidated quarterly financial statements within 14 days of end of each fiscal quarter.

Number 0 in 2012

Federal GoN and 8 supported states in

2017

No Change

17.2: # of states that have adopted procurement law increased from 24 in 2013 to 30 in 2017.

Number 24 in 2013 27 in 2017 No Change

17.3: % of public procurement contracts above threshold awarded through open competition in 12 states increased from 30 % in 2013 to 75% in 2017.

Percentage 30% in 2013 75% in 2017 No Change

Outcome 18: Improved quality and accessibility of statistics18.1: Increased availability of official statistics to all users at federal and state level as measured by 40 percent increase in the number of states with State Statistical Yearbook which

Number 14 states in 2013

20 states by 2017

Dropped: This indicator was supported by the SRF Grant that was closed in February 2014. As the planned new intervention did not materialize, this indicator is dropped.

44

Original IndicatorUnit of

Measurement

Baseline Value

End Target Value

Revision

is less than 3 years old.18.2: 40 percent increase in the number of statistical thematic areas where internationally agreed concepts and standards are applied at federal and state level.

Number 7 areas in 2013

10 areas by 2017

Dropped: This indicator is dropped for the same reason as the one above.

Strategic Cluster 4: Restoring Macroeconomic Resilience – new clusterOutcome 19: Increased share of non-oil revenues in total revenues of the federal government

19.1: Non-oil revenue growth. Percentage 2% between

2014 and 2015

8% between 2015 and

2017

New

Outcome 20: Reduction in growth of high pressure recurrent expenditures

20.1: Real wage bill growth of the government at federal and state levels. Percentage

3.4% between 2014 and 2015

0.5% between 2015 and

2017

New

45

Annex 3. Matrix summarizing progress toward CPS Objectives

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

Strategic Cluster 1: Federally-led Structural Reform Agendas for Growth and JobsEngagement Area: Power Sector ReformOutcome 1: Increased power generation and transmission capacity

1.1: 16 percent increase in generation capacity supported by the WBG interventions by 2017.

Megawatt 6000 in 2012 6960 by 2017

PROJECTS:OngoingNigeria Power Sector Guarantee Project (P120207, FY13)IFC Azura Edo IPP (32859, FY15)IFC Seven Energy Project (FY15)

ASA:DeliveredUnlocking Nigeria’s Gas Potential (P151162, FY15)

Off track: There is no additional power generation yet since no new generation has been commissioned under the power sector guarantee supporting the Azura Edo Independent Power Project. The Azura power plant reached financial close in December 2015 and the construction has begun.

1.2: 8 percent increase in transmission capacity.

Mega Volt Amp

8588 MVA on 330kV level in 2013

9275 MVA on 330kV

level in 2017

PROJECTS:OngoingNigeria Electricity and Gas Improvement Project (P106172, FY09)PipelineNigeria Transmission Project (P146330)

On track: The additional transmission capacity has been 360 MVA, representing 4 percent increase since 2014.

Outcome 2: Improved the efficiency of electricity delivery2.1: AT and C losses of Percentage 45% 37% in 2017 PROJECTS: On track: Following the post privatization

46

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

privatized DISCOs supported by the WBG. EBP reduced by 8 percentage points from 45% in 2013 to 37% in 2017.

in 2014

OngoingNigeria Electricity and Gas Improvement Project (P106172, FY09)PipelineNigeria Transmission Project (P146330)

verification, the baseline for losses changed in November 2014 from 25 percent to 45 percent. The latest financial model of the tariff estimates the losses to be 40 percent in 2015 and 32 percent in 2016. EBP was reduced by 5 percent from 45 percent in 2015.

Outcome 3: Improved access to modern lighting for the base-of-the –pyramid through supporting the value chain of procuring and distributing solar products such as lanterns and cook-stoves

3.1: 1 million solar lanterns distributed. Million 0 in 2013 1 in 2017

PROJECTS:OngoingIFC

Off track: The number of quality assured solar lanterns sold is 190,991 or 16 percent of the target as of December 2015. This is in line with budgeted figures. Program was launched in 2015. Experience in other markets (e.g. Kenya) indicates that a market transformation initiative requires a minimum of two years to make appreciable impact. During this period, the program is largely focusing on the foundational development activities that will create a sustainable off-grid market.

3.2: 5 million people with improved energy services (assumes industry estimate of 5 people per household).

Million 0 in 2013 5 in 2017

ASA:OngoingIFC Advisory Services - Lighting Africa Project

Off track: This progress is measured by the number of people with access to modern off-grid lighting. As of December 2015, almost 1 million people have benefited from access to off-grid lighting.

3.3: 100,000 tCO2 being GHG avoided (Key assumptions: (i) kerosene lamp emission factor (t/Coe/ltr) =0.0026 (ii)

Metric tons CO2/Year 0 in 2013 100,000 in

2017

ASA:OngoingIFC Advisory Services - Lighting Africa Project

Off track: Through the transition to cleaner alternatives of kerosene for lighting, an average of 19,098 metric tons Greenhouse gas (GHG) emissions had been avoided per year since 2013. Accumulatively, 19 percent of the target

47

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

kerosene consumption per year for a lantern = 55 ltrs (iii) solar lantern to kerosene lamp displacement factor = 70%).

has been achieved as of December 2015.

Engagement Area: Agriculture Productivity and Climate Change (Resilience)Outcome 4: Improved access of small farmers to inputs and technology, and increase in their average income

4.1: Increased effectiveness of publicly supported seed and fertilizer distribution systems as measured by the increased number of farmers benefiting from those programs.

Million 1.2 in 2012 5 in 2017

PROJECTS:Closed during the CPS periodAgriculture DPO I (P130012, FY14)OngoingFadama 3 (P096572, FY09)Commercial Agriculture Development Project (P096648, FY09)West Africa Agriculture Productivity Project (P117148, FY11)PipelineAgriculture DPO II (P147398) – dropped to be folded into the new Federal DPF (P155951)

Achieved: This indicator was supported by the Nigeria Agriculture Sector DPO that was closed in December 2014. The increased number of famer beneficiaries was 5.65 million according to the project ICR (Implementation Completion Report). For the remaining CPS period, this indicator is continuingly supported by the WAAPP, FADAMA III and CADP. Under FADAMA III, 493,805 farmers have access to the improved seed and fertilizer.

4.2: Additional 20,000 hectares of improved irrigation in North and North-West areas.

Hectare 26,000 ha in 2014

46,000 ha in 2017

PROJECTS:OngoingTransforming Irrigation and Water

Off track: Additional 1795 ha irrigated under Fadama 3 project. The progress in implementing the Transforming Irrigation Management project, now in its second year,

48

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

Resources Management in Nigeria Project (P123112, FY14)

has been slowed down by the political transition, introduction of TSA, and security challenges in some of the project areas. Work at the first site is expected to start at the beginning of 2016 and the results are to be delivered by 2017.

4.3: Rural households in supported Fadama areas reporting 40% increase in average household income (Baseline: N184, 240 in 2013: Target N257, 937 by 2016).

Naira 184,240 in 2013

257,937in 2016

PROJECTS:OngoingFadama 3 (P096572, FY09)

On track: According to the Fadama Interim ICR (midline IE survey), 47.1 percent of the rural households beneficiaries in Fadama areas reported that their real income increased by 40 percent in December 2015.The average income of households in the areas has increased by 19 percent.

Outcome 5: Improved horizontal coordination of small farmers

5.1: Number of farmer associations and or marketing cooperatives established in supported areas.

Number 0 in 2013 7,400 in 2017

PROJECTS:OngoingFadama 3 (P096572, FY09)Commercial Agriculture Development Project (P096648, FY09)PipelineStaple Crop Processing Zones Project (P148616)ASA:DeliveredInclusive Markets (P147941, FY15)Trade in Agricultural Markets (P132218, FY15)

Off track: A total of 632 famer associations or marketing cooperatives had been established in participating states by December 2015, representing 7 percent of the target. Among which, 518 were supported by Fadama 3 and 114 were supported by CADP, respectively.

49

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

Outcome 6: Improved road transportation connectivity of rural markets

6.1: Additional 2,000 km or rural roads rehabilitated and maintained in supported states.

Kilometer 0 in 2013 2,000 in 2017

PROJECTS:Closed during the CPS periodRural Access and Mobility Project 1 (P072644, FY08)OngoingRural Access and Mobility Project 2 (P095003, FY13)Commercial Agriculture Development Project (P096648, FY09)

ASA:DeliveredNigeria Urbanization Review (P143476, FY15)

Off track: A total of 1032 km of roads, or 52 percent of the target, had been rehabilitated and maintained by June 2015. RAMP 1, RAMP 2 and CAPD are the main projects contributing to this indicator. The projects span across last and current CPS. Under RAMP1, a total of 470 km of rural roads have been rehabilitated since 2008, and this should carry over to this CPS period as the rehabilitated roads need to be maintained over time. Similarly, under the RAMP 2, a total of 245 kilometers have been rehabilitated since December 2011. Under CADP, a total of 307 km has been constructed and/or rehabilitated since 2010.

6.2: Additional 2 million people in rural areas gained access to an all-season road in supported states.

Million 0 in 2013 2 in 2017

PROJECTS:Closed during the CPS periodRural Access and Mobility Project 1 (P072644, FY08)OngoingRural Access and Mobility Project 2 (P095003, FY13)

On track: Under RAMP1, there has been a total of 1.6 million rural population with access to an all-season road since 2008. And this result is advised to carry over to this CPS period for the reason mentioned above. The RAMP2 has added 0.015 million people in rural areas for the progress since December 2011. 80.7 percent of the target has been completed.

Outcome 7: Enhanced country’s preparedness to respond to natural hazards, climate risks and natural disasters (resilience)

50

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

7.1: # ha of land treated for erosion. Hectare 0 in 2013 2,800 in 2017 PROJECTS:

OngoingNigeria Erosion and Watershed Management Project (P124905, FY12)

Off track: A total of 110 Ha of targeted sub-watersheds have been treated for erosion with selected measures as of June 2015, representing 4 percent of the target.

7.2: % of upgraded or new HydroMet stations providing data that are published annually and uploaded to the web.

Percentage 0 in 2013 60 in 2017

Off track: There has been no progress so far because the equipment for the stations has not been installed yet. The HydroMet equipment were procured, shipped, and have arrived at the Lagos port for clearance.

Engagement Area: Financing For DevelopmentOutcome 8: Expanded financing opportunities for SMEs

8.1: Additional 100,000 loans provided to SMEs by 2017 by IFC.

Number 0 in 2013 100,000 in 2017

PROJECTS:OngoingIFC – GTBIFC – Diamond BankIFC – Access BankIFC – EcobankIFC – FCMB

Off track: IFC Institutional Group (FIG) has stopped tracking the indicator ‘loans disbursed’ as a standard SME financing indicator as of 2015. The indicator is therefore reformulated to ‘loans outstanding to SMEs’. IFC clients FCMB, SKY Bank, Access Bank and Diamond Bank Projects contribute to this indicator. As of June 2015, there had been 33,700 outstanding loans providing to SMEs.

8.2: Additional 2 million micro entrepreneurs provided with financial services by IFC.

Million 0 in 2013 2 in 2017

PROJECTS: OngoingIFC – MicroCred MFB NigeriaIFC – Advans Nigeria IFC – ABMFB

On track: This indicator is supported by IFC projects MicroCred MFB Nigeria, Advans Nigeria and ABMFB. The total number of current microfinance borrowers at IFC-supported MFIs as of June 2015 is 1.26 million.

Outcome 9: Improved supply of longer term financing9.1: Percentage of long term financing > 2 years of outstanding private sector credit increased to 5% of the total private sector

Percentage 0.13% in 2013 5% in 2017

PROJECTS:OngoingDevelopment Finance Project (P146319, FY15)

Off track: As of June 2015, long term financing which has more than 2 years repayment period accounted for 37 percent of the total credit. This indicator is attributed to the DPF that was approved in September 2014,

51

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

credit.

ASA:DeliveredBoosting Financial Inclusion in Nigeria (P147939, FY15)Inclusive Markets (P147941, FY15)Investment Climate Assessment (P147940, FY15)Nigeria Strengthening Deposit Insurance (P150497, FY16)OngoingProgrammatic Approach to Financial Sector Development (FY18)

although this particular result is not part of the results framework of the DPF.

9.2: Percentage of housing finance loans in the financial sector increased to 5% of the total loans.

Percentage 0.3% in 2013 5% in 2017

PROJECTS:OngoingHousing Finance Development Project (P131973, FY14)

Off track: The percentage of housing finance loans in the financial sector in the financial sector has increased by 0.3 percent since 2013, reaching at 7 percent of the total loans. While this indicator is attributed to the Housing Finance project, the lack of good quality data makes it difficult to assess if the reported increase can be attributed to this project only. Also, the project is facing challenges associated with the weakened demand due to the ongoing economic crisis.

9.3: Volume of corporate bond issues increased on average to 2 issues every year.

Number 0 in 2013 8 in 2017Off track: This indicator is attributed to IFC instruments, but was eventually dropped/not monitored.

52

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

Strategic Cluster 2: Quality, Effectiveness and Efficiency of Social Service Delivery at State Level for Greater Social Inclusion

Engagement Area: Strengthening Community Driven Mechanisms for Social Inclusion, and Effectiveness of Social Protection Programs

Outcome 10: Improved targeting of social protection and increased employment readiness of youth in supported states.

10.1: Improved targeting of social protection programs in states as measured by the # of states using the unified registry of beneficiaries and common targeting mechanism.

Number 0 in 2013 10 in 2017

PROJECTS:Ongoing Youth Employment and Social Protection Project (P126964, FY13)Community and Social Development (P090644, FY09)PipelineNational Social Safety Nets Project (P151488) ASA: DeliveredSharing Prosperity in Nigeria: An Analytical Work Program on Jobs and Social Protection (P146872, FY15)Improving Governance in Social Sectors (P132571, FY14)Poverty Work Program (P157742, FY15)

On track: There had been eight sates using the unified registry for selecting eligible beneficiaries for various interventions as of November 2015.

10.2: Enhanced resilience of Number 0 in 2013 100,000 in PROJECTS: Off track: There is no result yet. The registry

53

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

the youth participating in workfare programs in supported states as measured by the number of youths who received orientation and life skills training.

2017

Youth Employment and Social Protection Project (P126964, FY13)Community and Social Development (P090644, FY09)PipelineNational Social Safety Nets Project (P151488)

for youths to participate the orientation and life skills training has been finished. The intervention is ready to start.

10.3: Increased in % of poor beneficiaries (lowest quintiles) from targeted poor households receiving cash transfers.

Percentage 0 in 2013 40% by 2017

PROJECTS:Ongoing Youth Employment and Social Protection Project (P126964, FY13)Community and Social Development (P090644, FY09)State Expenditure Effectiveness for Results (P121455)PipelineNational Social Safety Nets Project (P151488)

Off track: The households to receive cash transfer have completed the registration process. The intervention is ready to start.

Outcome 11: Increased Access of Poor and Vulnerable to Social and Economic Services

54

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

11.1: 50 percent increase in the # of poor households with access to social and livelihood support services through community development plans in supported areas.

Number 900,000 in 2012 1,350,000

PROJECTS:OngoingCommunity and Social Development (P090644)

Achieved: A total of 1,550,000 households gained access to the social and livelihood support services in November 2015, representing 72 percent increase since 2012.

Engagement Area: Coverage and Quality of Health ServicesOutcome 12: Improved coverage and quality of health service delivery

12.1: The share of child deliveries that are assisted by trained health personnel in 3 states increases to 43 % by 2017.

Percentage 33% in 2013 43% by 2017

PROJECTS:OngoingStates Health Program Investment Project (P120798, FY12)Nigeria Program to Support One Million Lives (P146583, FY15)ASA:DeliveredNigeria Service Delivery Indicators (P145455, FY15)SURE-P MCH Impact Evaluations (P144096, FY15)

Achieved: The results of the annual health household survey in Nigeria (SMART) have been used for monitoring the project progress. According to the latest survey in 2015, the share of child deliveries assisted by trained health personnel in 3 states increased to 54.3 percent, already surpassing the 2017 target of the indicator.

12.2: The share of children 12-23 months old who are fully immunized in 3 states increases to 45.4% by 2017.

Percentage 25.4% in 2013

45.4% by 2017

PROJECTS:OngoingStates Health Program Investment Project (P120798, FY12)Nigeria Program to

Achieved: According to the 2015 SMART survey, the share increased to 53.0 percent, already surpassing the original target.

55

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

Support One Million Lives (P146583, FY15)ASA:OngoingNG-Quality Assessment/Resource Tracking (P132947)Resource Tracking in Health in Nigeria (P152141)

12.3: % of under-5 children sleeping under insecticide treated net the night preceding the survey increased from 44.6 % in 2010 to 60%.

Percentage 44.6% in 2010 60% by 2017

PROJECTS:Closed during the CPS periodMalaria Booster Project (P097921, FY07)ASA:DeliveredNG-Malaria Control Program (P105846, FY16)

Achieved: The main outcome data source is the Lot Quality Assurance Sampling Surveys (LQAS) conducted in 2006, 2010 and 2015. According to the latest LQAS survey, the percentage of children under five who slept under ITN during the previous night in Booster States is 74.4 percent. This has been a 27.8 percentage increase from the 2010 LQAS which showed 47.5 percent utilization.

12.4: At least 80 % coverage with oral polio vaccine sustained in every state.

Percentage

December 2012, 90% coverage

(8 endemic states

average)

80% by 2017

PROJECTS:OngoingPolio Eradication Support (P130865, FY13)

Achieved: According to the two cluster surveys conducted by independent agencies – the Performance Audit for Partnership for Polio Eradication Project and the Performance Audit for Triggering International Development Association (IDA) Buy-down, eight surveyed states achieved 95.6 percent polio coverage in October 2015.

12.5: % of pregnant women living with HIV who receive a complete course

Percentage 18% in 2013 40% by 2017

PROJECTS:OngoingHIV/AIDS Program

On track: According to the 2015 SMART Survey, the percentage has increased to 35.3 percent.

56

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

of antiretroviral prophylaxis to reduce the risk of mother to child transmission increased from 18% to 40%.

Development Project II (P102119, FY09)ASA:OngoingSupport to HPDP2 FSW Implementation (P154218)

Engagement Area: Efficiency, Equitable Access and Quality of Education ServicesOutcome 13: Improved learning environment and management

13.1: 10,000 additional teachers in rural areas. Number

31,243 in 2013,

delivered by the results based

financing of

education services in

3 states

41,243 in 2017

PROJECTS:OngoingState Education program Investment Project (P122124, FY13)

On track: In 2014, all three states have met or surpassed their targets for deploying eligible teachers. Among which, Anambra reached at 2,597; Bauchi at 3,161; and Ekiti at 1,133. Therefore, the total teachers deployed to the rural areas reached at 6,891, or 69 percent of the target in 2014.

13.2: 50% of supported schools demonstrate improvements in learning outcomes.

Number

4,000 supported schools in

2013, delivered

by the results based

financing of

education services in

3 states

2000 schools improved

PROJECTS:OngoingState Education program Investment Project (P122124, FY13)Lagos Eko Secondary Education Project (P106280, FY09)ASA:DeliveredGovernance and Financing of Basic

On track: According to the coordinator of SEPIP, 1,200 schools have improved in the learning outcomes, representing 60 percent of the target. All three participating states (Anambra, Bauchi and Ekiti) have met their targets for measurement of student learning achievement, using approved assessment tools, with support from the Universal Basic Education Commission.

57

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

Education in NigeriaSkills for Competitiveness and Employability (P148688, FY14)

Outcome 14: Strengthened responsiveness of public and private training institutions to skills demand

14.1: Increased # of states with approved Strategic Plan for improving quality and relevance of TVE (Baseline 4 in 2013; Target 15 by 2017).

Number 4 in 2013 15 by 2017

PROJECTS:OngoingState Education program Investment Project (P122124, FY13)

On track: Eight States have achieved this indicator: Edo, Delta, Bayelsa, and Rivers (SEEFOR); Anambra, Bauchi, and Ekiti (SEPIP); as well as Lagos (Eko Project).

Engagement Area: Coverage and Efficiency of Water Supply ServicesOutcome 15: Improved coverage and efficiency of water supply service in selected states

15.1: # of people with access to improved water supply increased by 4 million (baseline: 9.2 million in 2013, target: 13.2 million in 2017).

Million 9.2 in 2013 13.2 in 2017

PROJECTS:Closed during the CPS period:National Urban Water Sector Reform Project II (P071391)OngoingNational Urban Water Sector Reform Project III (P123513, FY14)ASA:DeliveredState Water Agencies in Nigeria: A Performance Assessment - Economic Aspects of the Urban Water Sect

Off track: Under Urban Water 2 project, the number of people in urban areas provided with access to improved water sources had increased by 0.95 million as of November 2014. This indicator is also supported by the Urban Water 3 project with results to be delivered.

58

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

(P150244, FY15)OngoingNigeria WASH Poverty Diagnostics (P158634)

15.2: Cost recovery for operation and maintenance increased in average by 45 percent in supported states by 2017.

Percentage

Lagos 55% in 2012;

Cross River 66% in 2012; Kaduna 65% in 2012;

Ogun 56% in 2012; Enugu 65% in 2012

45% increase on average

PROJECTS:Closed during the CPS periodNational Urban Water Sector Reform Project II (P071391)OngoingNational Urban Water Sector Reform Project III (P123513, FY14)ASA:DeliveredState Water Agencies in Nigeria: A Performance Assessment - Economic Aspects of the Urban Water Sect (P150244, FY15)OngoingNigeria WASH Poverty Diagnostics (P158634)

Off track: Under Urban Water 2 project, the percentage of operation and maintenance costs recovered from revenue in Lagos and Cross Rivers states was 40 percent and 9 percent respectively, averaging 25 percent at end November 2015. This indicator is also supported by the Urban Water 3 project in Ekiti, Rivers and Bauchi states with results to be delivered.

Foundational/Cross Cutting Cluster 3: Governance and Public Sector ManagementOutcome 16: Enhanced transparency on budget execution in targeted states and at Federal level16.1: # states and the Federal GoN with an integrated fully functioning

Number 0 in 2012Federal GoN

and 8 supported

OngoingPublic Sector Governance Reform

Off track: Currently, the Federal GoN and two other States (Edo, supported by SEEFOR and DPF; Lagos, supported by DPF) have made

59

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

financial information system producing and publishing consolidated quarterly financial statements within 14 days of end of each fiscal quarter.

states in 2017

and Development Project (P097026, FY10)State Employment and Expenditure Project (P121455, FY12)Edo State Fiscal Improvement and Service Delivery Operation (P151480, FY15)Lagos State DPO 3 (P151947, FY15)

progress towards the target. Latest ISR for SEEFOR as well as results under Edo and Lagos DPFs indicate that both States have achieved key milestones. The Federal Government has also achieved key milestones under the closed Economic Reform and Governance Project and ongoing Bank dialogue with the authorities. Other six states (supported by SEEFOR and Public Sector Governance Reform and Development Project) have integrated financial management information systems that are functioning sub-optimally and that are capable of producing consolidated monthly and quarterly financial statements within 14 days of end of each month/quarter. But these statements are not routinely generated and published. This area needs to be enhanced by Bank’s intervention.

16.2: # of states that have adopted procurement law increased from 24 in 2013 to 30 in 2017.

Number 24 in 2013 27 in 2017

Off track: Progress was slow due to the change of government in several states. Compared to the baseline in 2013, one more state has adopted procurement law; 3 states are awaiting assent and 4 states are under consideration by the state assembly in February 2016.

16.3: % of public procurement contracts above threshold awarded through open competition in 12 states increased from 30 % in 2013 to 75% in 2017.

Percentage 30% in 2013 75% in 2017

Achieved: The percentage has reached at 85 percent in all 12 states in February 2016. Among which, Edo State reached at 100 percent in December 2013. Although the progress of all the states has surpassed the target, efforts are being made for enhancement and improvement.

Outcome 17. Improved quality and accessibility of statistics17.1: Increased availability of official statistics to all Number 14 states in

201320 states by

2017Off track: This indicator was supported by the SRF Grant that was closed in February 2014.

60

Indicator Unit of Measurement

Baseline Value

End Target Value

WBG Program Status (as of March 2016)

users at federal and state level as measured by 40 percent increase in the number of states with State Statistical Yearbook which is less than 3 years old.

The planned new statistics project did not materialize.

17.2: 40 percent increase in the number of statistical thematic areas where internationally agreed concepts and standards are applied at federal and state level.

Number

7 areas in 2013 10 areas by

2017Off track: The planned new statistics project did not materialize.

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Annex 4. Drivers of Conflicts and Fragility in Nigeria1. Nigeria is facing intensified security challenges. While different in geography, characteristics and manifestations, sub-regional chronic conflict, insecurity and episodic violence in Nigeria should not be seen as unrelated phenomena. The Boko Haram insurgency, the Movement of Emancipation of the Niger Delta, urban crime and violence and conflicts between pastoralists and agriculturalists – as unique as they are, share commonalities in terms of their drivers, dynamics and evolution:

North - The Boko Haram insurgency: Since 2009, nearly 15 million people have been affected by the violence of Boko Haram and the resulting military operations in the NE of Nigeria. The conflict is further exacerbating significant pre-existing development challenges such as lagging development, gender disparities and poor service delivery.

Middle belt - Intercommunal, interreligious and pastoralist-agriculturalist conflicts: Religious, ethnic and resource disputes in the middle belt have led to an estimated 60,000 casualties during the last 15 years. The issue of land is seen as being at the origin of some of the worst violence in the region in recent years, resulting from both competition for scarce grazing land between Fulani pastoralists and farmers from indigenous communities, as well as competition over political power.

The Niger Delta - Militancy and restiveness: Between 2006 and 2009, the Niger Delta region descended rapidly into a zone of intense conflict and disorder. In recent months, new attacks on the oil and gas infrastructure have taken place, signaling that a new expression of this long-term dynamic is taking place.

Urban areas - Urban fragility, crime and violence: Chaotic and disorganized urban expansion have resulted in the formation of cities characterized by large slum areas, excessive and underserved demands on infrastructure and services, vulnerable forms of livelihood, and fierce competition over limited employment opportunities. Large youthful populations compounds the stressors and tensions within the urban system.

2. The above challenges pose threat to lives and properties, hinder business activities and discourages local and foreign investors, hampering Nigeria’s socio-economic development. The authorities recognize that there cannot be sustainable development without peace and security, and that without development and poverty eradication there will be no sustainable peace. The task at hand is to strengthen the security and development nexus in Nigeria by addressing the drivers of conflict.

3. There are many factors driving fragility and conflict in Nigeria. These may be grouped into three types. While not always visible, structural factors set the foundation for conflict, which is not always violent. More perceptible factors, which can be thought of as intermediate, or proximate drivers can contribute to violent conflict. These tend to exacerbate the structural factors over the medium to long-term and explain why violence emerges. Triggers, which are short-term incidents, are usually sudden or unforeseen events that provoke initial or further outbreaks of violence or an escalation of conflict. In Nigeria, these three types of factors, once elucidated, can together help to explain the emergence of violent conflict. These are presented in the table below, which groups the three types of factors, along with some of the

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emerging conflict dynamics in six ‘fields’: social, governance, security, economic, cultural and environmental.

Structural / Root Factors

Intermediate/ Proxy Factors Triggers Crisis Dynamics

Social Poor social and economic outcomes (poverty, health, nutrition, employment); high inequality; perceived social injustice; lack of social service provision.

Declining trust and eroded social cohesion; political manipulation of society and patronage.

Social polarization; openness to radicalization; revenge.

Changing gender and intergenerational relations; sexual and gender-based violence; displacement; inter-communal violence.

Political/Governance

Elite political settlement excluding majority; historic marginalization of sub- regions;poor performance of government institutions;Low accountability and legitimacy of state.

Accusations of corruption and impunity; non-state actors fill governance and service void (e.g. community and religious associations); traditional institutions eroded.

Parties take to the street in the absence of effective or trusted channels for re-dress, justice, or political change.

Fractured social contract; lack of transparency and poor accountability creates a spiral of violence.

Security Low levels of human security as a result of poorly performing state security services; porous borders in an insecure wider region.

Supply of unemployed and disaffected youth, proliferation of arms create conditions for recruitment and growth of armed groups and criminal opportunism.

Unlawful acts by state and non-state actors; Human rights and humanitarian law violations drive sense of injustice and persecution.

Excessive use of force by elements of the security establishment legitimizing rebellion, vigilante groups fill security vacuum with mixed consequences.

Economic Lack of economic infrastructure, access to markets, and effective policies to support

Lack of jobs and opportunity; large population of unemployed and poorly skilled

Collapse of sub-regional industrial base; recruitment of armed fighters

Military expenditures thwart development spending; Low human development outcomes heighten

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agriculture and industry; high levels and poverty and food insecurity.

youth. from labor force incentivizes violence.

risk of ongoing or renewed conflict.

Cultural/Ideological

Religion as source of political legitimacy; History of (sometimes violent) religious radicalism challenging the state.

Political manipulation of religion; sharia implementation results in disillusion.

Escalating violence and geographic expansion of conflicts.

Religious factionalism and competition; rise and internationalization of conflict.

Environmental

Climate change and environmental degradation: drought, desertification, contraction of Lake Chad Basin.

Lack of demarcated grazing lands, cattle routes and water sources for livestock, agriculture and fisheries.

Competition over land and natural resources, especially between agriculturalists and pastoralists.

Lack of effective natural resources and conflict management.

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Annex 5. Learning by Doing in Nigeria1. The Delivery Case Studies series – part of the Doing Development Differently initiative – aims to generate knowledge on what works in Nigeria and why. The case studies are among a number of instruments being piloted to help the Bank continually improve its effectiveness as a partner to Nigeria. These qualitative case studies offer complementary learning to information to implementation completion reports.

2. In ‘Against the Current: How to Shape an Enabling Environment for Sustainable Water Service Delivery in Nigeria’, a number of obstacles to improving the institutional capacity of the water utilities are identified. The study found that the absence of a culture of staff performance at the state level, together with high management turnover, have undermined reform momentum and eroded citizens’ trust in state services. Coordination problems across government, and between the government and the Bank, have caused delays and impeded accountability for results. Despite water users’ demonstrated willingness to pay for reliable services, the perception that water provided by the Government should be free has hindered water authorities’ ability to operate on a commercial basis. These findings provided valuable lessons on aligning reforms with political incentives, balancing “hardware” investments with the “software” of institutional reforms, changing mindsets, using data, tailoring reforms to each state, and disbursing on results, which have fed into the Urban Water Sector Reform Project III project.

3. In ‘When Institutions Work: Nigeria’s Ebola Response’, the factors behind the country’s successful containment of Ebola are distilled. Nigeria’s response came as a surprise to many observers given the limited progress in improving health outcomes and service delivery in the two decades before. Aside from fear of the rapidly spreading epidemic that new no bounds, Nigeria’s response was motivated by strong technical leadership, the use of creative incentives to mobilize and motivate health workers working within and around the system, operational efficiencies like streamlined procurement and stopgap funding from Lagos State, the repurposing of existing technical assistance resources, and the use of smartphones for real-time reporting, data tracking and course corrections. Importantly, Nigeria’s Ebola response was developed on the basis of pre-existing institutional systems, taking advantage of physical and human resources that were already on the ground, while strengthening this through hybrid innovations and private sector actors. This case study shows that passionate leadership, first-class technical capacity, clear roles and responsibilities, strong internal communication, and freedom from political interference can work together to promote effective delivery in Nigeria.

4. In ‘The Lagos Eko Secondary Education Sector Project: Tailoring International Best Practices to Improve Educational Outcomes at the State Level’ a summary is provided of how international experience was tailored to leverage impact in Lagos State’s public secondary education reforms. The report concluded that a proactive approach in a moment of committed political leadership, targeted program design, thoughtful tailoring, and efforts to foster a culture of performance created the conditions for meaningful, sustainable reform despite demographic pressures and funding constraints.

5. ‘The Nigeria Fadama National Development Series: How to Build a Pilot into a National Program through Learning and Adaptation’ told the story of how a small-scale

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Nigerian agricultural pilot was expanded and adapted over four iterations into a national brand for community-based agricultural development. Using a chronological approach, the study looked at how the Fadama program built on existing knowledge of local conditions to carefully pilot and learn how to tailor its design to different local contexts before scaling up. Global practices were key to changing the debate about community-led development in Nigeria but the pilots were tailored, locally owned and incrementally scaled up to build and sustain important new structures at the local level. The program’s evolution led to impressive income gains for farmers as well as a change in the social contract among farmers, other stakeholders, and different levels of government, shifting how local development works.

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Annex 6. The North-East Nigeria Recovery and Peace Building Assessment

1. On August 21, 2015, the GoN requested assistance in assessing the needs associated with peace building and crisis recovery. Support has been provided in accordance with the 2008 Joint EU – UN – the Bank Declaration on crisis assessment and recovery planning. The RPBA has been prepared and implemented by the Federal Government, led by the Vice President’s Office, and the Governments of the six affected states, with support from the Bank, UN, and EU.

2. The RPBA informs a collective vision and strategy on peace building and recovery, and provides a framework for coordinated and coherent support to assist conflict-affected people in the NE. The assessment covers the six states of Borno, Yobe, Adamawa, Gombe, Taraba, and Bauchi, and provides an overarching framework for stability, peace building, and recovery. The RPBA is founded on the recognition that a durable resolution to the conflict in the NE requires addressing the structural and underlying drivers of violent conflict.

RPBA Recovery Strategy and Framework

3. The RPBA confirmed the need for recovery and peace building efforts, to be carried in tandem with the on-going scaling up of the humanitarian assistance. Therefore, the Recovery and Peace Building Strategy (RPBS) will need to be closely coordinated with the Humanitarian Response Plan (HRP)19 in order to build on the HRP’s achievements and avoid overlaps.

4. Careful and coordinated sequencing of the RBPA and subsequent support will be critical in view of the fluidity of the security environment, and the marked variation in security within and among the six states. Priorities should be carefully assessed on a continuous basis, and adjusted as needed in light of the prevailing situation on the ground. In some areas, a humanitarian response combined with stabilisation will be needed, while in other areas, the context will permit more substantial movement towards recovery.

5. An integrated and balanced approach to recovery is essential. Peace building and social cohesion is the backbone of the assessment. Hence it is crucial to properly balance peace building, stability, and social cohesion interventions with other interventions aimed at reconstructing or rehabilitating social, physical, and productive assets. Peace building, stability, and social cohesion interventions will ensure the sustainability of recovery interventions on the ground and lay the foundation for human security to prevail. The assessment sets out four strategic outcomes for recovery and peace building: 1) Safe, voluntary, and dignified return and resettlement of displaced populations; 2) Improved human security, reconciliation, and violence prevention; 3) Enhanced government accountability and citizen engagement in service delivery; and 4) and Increased equity in the provision of basic services and employment opportunities.

19 The HRP 2016 was prepared by the UN-Nigeria, with the purpose assessing the humanitarian conditions of the Nigerian NE and providing a framework for the continuous national response and early recovery plans and interventions to these needs. For more information, please visit:

https://www.humanitarianresponse.info/en/system/files/documents/files/nigeria_2016_hrp_03032016_0.pdf

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Overview of Overall Impacts and Needs from the Crisis under the RPBA

6. The assessment indicates that the economic impact of the crisis is substantial, reaching nearly US$9 billion. Needs for recovery and peace building are disproportionately concentrated in Borno, followed by Yobe and Adamawa. Two-thirds of the damages (US$5.9 billion) are in Borno, the most affected state; damages in Adamawa and Yobe account for US$1.6 billion and US$1.2 billion respectively. Three-quarters of the overall impacts are on agriculture (US$3.5 billion) and housing (US$3.3 billion). The conflict resulted in more than 400,000 damaged and destroyed housing units, 95 percent of which are located in Borno.

7. The total need for recovery and peace building across the three strategic areas of interventions in both the stabilization and recovery20 phase is US$6.7 billion (Table 5).

Table 5. Overall Recovery and Peace Building Needs by Component

Adamawa Borno Yobe Gombe Taraba Bauchi Federal/Regional

Total

(US$ million)Peace building and social cohesion

27.5 37.8 22.5 13.6 19.4 23.9 5.7 150.5

Infrastructure and social services

594.9 3,933.3 668.3 129.1 144.9 202.9 94.7 6,040.1

Economic Recovery

37.6 68.8 30.7 22.3 27.7 41.4 245 473.5

Total 660.0 4,040.0 721.5 164.9 192.0 268.2 345.4 6,664.1

8. Forced displacement and social cohesion are the most acute impacts of the conflict in NE Nigeria. An estimated 2 million people have been forcibly displaced by the conflict, 1.8 of which are displaced within Nigeria. The burden of displacement is asymmetric across regions and populations. Borno, at the heart of the crisis, hosts 67 percent. The majority of IDPs live in host communities with only 8.5 percent in camps and camp-like sites. Yobe and Adamawa also share large burdens of IDPs, hosting 130,000 and 136,000 respectively, or around 6 percent in each state. Women, children, and the youth bear the brunt of forced displacement, accounting for nearly 80 percent of affected populations. Of the 1.8 million identified IDPs nationally, 53 percent are women, 57 percent are children (of which 28 percent are five or younger) (IOM, 2015).

9. Security remains the main factor preventing an accurate assessment of the extent of needs of displaced population, as well as any attempts of return. Most of Borno and parts of Yobe and Adamawa remain inaccessible due to unstable security conditions. Attempts of return by IDPs have been frustrated due to attacks by Boko Haram, forcing people to displace again. More recently, reports of unexploded ordinance have increased, preventing access to farmlands and limiting the restoration of livelihoods. Displacement has also increased vulnerability in

20 Stabilization generally denotes the period during which initial recovery interventions commence and start taking effect while ongoing humanitarian operations continue. These initial recovery interventions build upon humanitarian interventions, do not duplicate them, and do not address the development deficits existing before the insurgency. Recovery denotes the period during which the initial recovery interventions start galvanizing into concrete recovery outcomes while more medium-term recovery and reconstruction activities take shape, scale up and intensify. The RPBA recognizes that these periods will overlap across the territory, with some areas being ready for recovery efforts sooner than others.

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many ways, including to Sexual and Gender Based Violence. There is evidence from humanitarian agencies that sexual abuse of women and children is widespread. Girls and women who have experienced sexual violence from Boko Haram members are stigmatized by their communities, especially when they become pregnant. Men and boys also confront a range of threats, including violence, abduction, and forceful recruitment by Boko Haram and vigilante groups, and detention on suspicion of militancy sympathies.

Figure 1. NE Nigeria: Conflict fatalities by Local Government Area (LGA) and displacement by ward

10. The rapid deterioration of the conflict, and vacuum of law enforcement mechanisms to contain and control conflict, resulted in widespread levels of suspicion, mistrust and stigma along ethnic, religious, political, and geographical lines. The social fabric in the NE was deeply damaged, eroding social relations between citizens and government, down to ethnic clans, communities and even extended families. Economic, ethnic, religious, political, and geographical divisions have hardened, affecting the way in which any recovery effort is perceived, while new divisions have emerged. The sequentially overlapping phases of humanitarian, early recovery and development assistance need to incorporate confidence and trust-building, collaboration and mutual understanding. Social impacts of efforts are central considerations in all proposed interventions in such a fragile social system.

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Guiding Principles Emerging from the RPBA for Recovery and Peace Building Responses

11. The response to recovery and piece building needs in the NE will require (1) adopting holistic approaches that address the multi-dimensional impacts of the conflict; (2) retaining flexibility for future adjustment in light of post-RBPA delivery mechanisms, financial complementarity, and in-depth assessments; (3) adapting implementation flexibility to the evolving situation around security; and (4) allocating impact-based resources along geographic, demographic and sectoral priorities.

The RPBA indicates that the recovery and peace building of the Nigerian NE calls for a holistic approach that promotes peace, stability, and social cohesion addresses the rehabilitation of infrastructure and services, and also addresses underlying macro-economic issues to overcome the nexus of instability, conflict, and deteriorating development. Throughout this process, principles such as sustainable recovery, do-not harm approaches and building-back-better/smarter standards should be further integrated.

Flexibility in the design of AF project components and operational and implementation modalities greatly facilitates the alignment between the post-RPBA programmatic response and the proposed AF. The RPBA will be followed by a more detailed conflict recovery planning, prioritization and operationalization led by the Federal and State Governments and supported by the EU, UN and the Bank. A formal request of the GoN for support during this phase has been received by partners. This post-RPBA phase will produce with a programmatic response for recovery and peace building of the NE, including duly prioritized plans for recovery at the sector levels as well as institutional arrangements for recovery for the entire recovery program in the six states as a cohesive whole. It is important that AF operations built in enough flexibility as to remain aligned with this programmatic response.

As the situation in the NE remains fluid in terms of security and forced displacement, adaptability is key to ensure positive impacts. Security continues to be the number one reason preventing people from returning or resettling as large part of the NE remain unstable. The RPBA provides a series of recommendations on how to carry out interventions in this context, strongly advising that a series of steps are undertaken as to avoid that any harm is done to the affected populations through operations. Risk associated with return and resettlement of displaced population have been identified as particularly high, and a series of preliminary actions have been identified as critical to ensure their safe, voluntarily and dignified return and resettlement.

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