D. Project Description

6. Following the Government’s request letter dated July 17, 2019, the proposed AF was designed to support the
government’s effort to improve the investment climate. This will also scale up the country's recent positive performance
under the original loan. This AF will provide resources to component 1 (Enhancing competition in the business
environment) and component 4 (Project implementation and M&E) of the original loan. A new component 5 (Contingent
Emergency Response Component) will also be added as part of the AF.
Component 1: Enhancing competition in the business environment (U$8.5million AF).

7. The AF will expand its support to the investment climate reform program. Under the original loan, the investment
climate program provided support to four areas: (i) trading across borders, (ii) dealing with construction permits, (iii)
registering a property, and (iv) resolving insolvency. The AF will continue to provide support to these four areas. In
addition, the AF will provide TA to new investment climate areas: (i) paying taxes, (ii) getting credit, (iii) starting a business,
(iv) enforcing contracts, (v) getting electricity, and (vi) protecting minority investors. The AF support to the reform
program is expected to be complemented by an IFC technical assistance (TA) currently under preparation.

8. The AF will also finance communication and sensitization campaigns as needed for all investment climate reforms.

9. The AF will also finance TA to expand the activities started under the original loan to improve market penetration
through expansion of the Export Max III. This is intended to support SME expansion into global markets and develop
linkages through capacity building, market penetration, mentorship and digitization support. These will be accompanied
by a new Business Linkages Policy and a National Supply Chain and Market Penetration Strategy.

10. Lastly, under component 1, the AF will provide TA to scale support to investment facilitation in line with the
government’s effort to attract Foreign Direct Investments.
Component 4: Project implementation and M&E (US$ 1.5 million AF).

11. The AF will provide resources to component 4 to continue to fund all the management and operational costs
associated with the project and its implementation arrangement (US$1 million). These costs will include technical and
fiduciary staff at PIOJ under the Project Implementation Unit (PIU) and routine project audit and evaluation expenses. As
part of the agenda to promote gender equality, this component will also finance a study to help address, among others,
employment of women in MSMEs, new business licenses granted to women, understanding sectoral differentiations,
male/female access, and ownership to assets and credit (constraints). Finally, as part of the citizen engagement agenda,
this component will finance an impact evaluation study to collect data on impact of regulatory reforms on firm
performance.

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