Sierra Leone Productive Social Safety Nets and Youth Employment Project Additional Financing

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Sierra Leone’s sustained economic growth has been constrained by (i) exposure to multi-dimensional exogenous shocks (economic, epidemic, climatic); (ii) fragile institutions; and (iii) limited fiscal space. Agriculture and mining account for two-thirds of all economic output. Since the 2010s, the economy has been affected by back-to-back crises, interspersed with periods of short-lived recovery: the Ebola epidemic (2014-16), the collapse in global commodity prices (2015-16), the mudslide in Freetown (2017), the COVID-19 pandemic (2020), and the implications of the war in Ukraine (March 2022 onwards). During 2021, the economy grew by 4.1 percent, supported by a recovery in agriculture, mining and private consumption demand. During 2022, headline inflation accelerated to a decade-high of 30 percent (year-on-year) by July, compared to an average of 12 percent during 2021. High food and fuel inflation has had significant social impacts. According to the World Food Programme (2022), about 73 percent of Sierra Leoneans are food-insecure. Using the 2017 PPPs (at $2.15/day), the poverty rate is estimated to have increased during the pandemic in early 2020. Fiscal pressures have intensified. In response to COVID-19, the deficit rose from 3.1% of GDP in 2019 to average 6.2% of GDP during 2020-21. During 2022, inflationary pressures have prompted authorities to increase energy subsidies and cash transfers to vulnerable households, slowing the planned fiscal consolidation. Social protection (SP) is a critical policy instrument in Sierra Leone to address the multiple risks and vulnerabilities faced by citizens. Despite the efforts by the government in recent years, gaps in coverage of SP programs remain a concern, with COVID-19 further leading to stagnation in poverty reduction - including leaving more than 40 percent of the extreme poor households without any support. Moreover, the country has high proportion of youths who are Not in Education, Employment or Training (NEET), with female youth suffering high NEET rates compared to male youth. The share of youth who are NEET is considerably higher for youth (18 percent) compared to non-youth (13 percent) and NEET rates are particularly high among female youth (19 percent) and urban youth (22 percent). High NEET rates among female youth particularly arise from two main sources: (i) lack of access to financial resources; and (ii) domestic responsibilities. Women and Persons With Disabilities (PWDs) face a number of other constraints in the Sierra Leone labor market. A review of current programs that aim to advance the agenda of youth employment in the country identified gaps that the proposed project will address, especially with regards to inclusion of participants from outside of Freetown and of women and PWDs.The Government of Sierra Leone ( GoSL) has also taken important steps to improve the coordination of the SP sector. It has also taken important strides toward improving youth employment outcomes in recent years and has established the Ministry of Youth Affairs (MoYA) and the National Youth Commission (NaYCOM) to implement policies on youth empowerment. Several government and donor agencies are also working on advancing the issue of youth employment. Several Bank supported complementary projects are also supporting the SP, youth, inclusion, and climate change related agenda in the country.Building on the successes of the existing Social Safety Nets (SSN) project, the proposed project will supportparent PSSNYE project supports the government of Sierra Leon GoSL e to: (i) scale up the existing cash transfers support to extreme poor households who are more likely to reside in areas disproportionately affected by climate-induced disasters due to overexposure, vulnerability, and lower ability to cope and recover; (ii) introduce an integrated package of livelihood services to support build a foundation towards transition the extreme poor households out of poverty; (iii) provide productive public works opportunities to the growing number of youth in the country that not only to support them with short-term employment opportunities but also cater to the needs of the environment and help in climat e change mitigation and adaptation; (iv) introduce support to the urban youth to support strengthen or create new entrepreneurship through business grants and training; (v) establish a platform that connect youth with employment, empowerment, and training opportunities; and (vi) continue to build the capacity of implementing agencies for future implementation of social protection and jobs related programs in the country through institutional strengthening, coordination and capacity building. The parent project and the proposed AF is fully aligned with the objectives of the Government of Sierra Leone as well as the World Bank Sierra Leone Country Partnership Framework (CPF) for the years FY21-FY26 . The CPF aims to support the GoSL’s human capital-driven model of development and growth strategy by focusing on economic diversification to reduce the volatility and vulnerability of the economy. In line with the jobs focus of the CPF, the PSSNYE project targets individuals and households, particularly vulnerable youth, to provide them with a coordinated set of interventions including cash transfers, skills training, mentoring, access to finance, and links to market to help boost their income and employability. The AF activities target individuals, particularly vulnerable youth in urban areas, to provide them with short-term employment opportunities and digital skills training to help boost their income and employability. The AF activities are highly relevant to the GoSL’s Medium-Term National Development Plan 2019–2023 (NDP) , which establishes climate change as a core element of its program, with a goal to increase climate and disaster resilience.The AF retains the original Project Development Objective of the parent PSSNYE project, i.e., "to improve access to social safety nets and income generating opportunities for targeted beneficiaries". The PSSNYE project aims to tackle key constraints faced by different segments of the Sierra Leonean population. Component 1 of the PSSNYE targets extreme poor households, who constitute about 12.8 percent of Sierra Leone’s population, and mostly reside in rural areas. Component 2 targets eligible youth aged 18-35 from extreme poor and poor households in rural areas and poor households in urban areas to provide income and employment support through public works activities that are aimed at supporting initiatives related to climate adaptation and mitigation. Component 3 targets eligible youth aged 18-35 in urban areas from poor and non-poor households with some level of education to provide them business training and grants, and to connect them with relevant opportunities for employment and empowerment through a youth portal. Component 4 provides support on project management and on strengthening of institutions and systems. Finally , Component 5 targets the segment of the population that are increasingly vulnerable to climate-change induced natural disasters and other types of shocks and supports them through emergency cash transfers through the CERC Component. The proposed additional financing (AF) will enable the Government of Sierra Leone (GoSL) to continue to strengthen the social protection system’s responsiveness to shocks, building on activities carried out under the Social Safety Net (SSN) project (P143588). Activities to be supported under the AF include: a. piloting of a digital public works (DPW) program, which aims to offer youth in urban areas short term employment to collect actionable climate risk data through mobile devices; b. operationalization of data-driven triggers to inform preparedness and faster response to disaster; c. expansion of the social registry of potential beneficiaries - building on data collected through the disaster-prone area registra