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Morocco: First Telecommunications Project (Loan 2798-MOR)

The Implementation Completion Report (ICR) on the Morocco First Telecommunications project (Loan 2798-MOR, approved in FY87) prepared by the Industry and Energy Department, including the Borrower's contribution, was reviewed by the Operations Evaluation Department (OED). The loan for an amount of US$125 million was approved in April 1987 and closed in December 1994 as scheduled; US$116 million were disbursed, following cancellation of US$9 million in 1988 due to misprocurement.

The project, the first in the sector, aimed at: (i) increasing access to service in urban, rural and isolated areas to meet the large unsatisfied demand; (ii) improving service quality and reliability; and (iii) at maximizing the mobilization of fiscal resources. The project thus comprised: (i) a multi-year program of network expansion and modernization aimed, inter alia, at increasing the number of subscriber lines from 250,000 in 1987 to 820,000 in 1994 (raising telephone density from 1. 1 to 3.9 per 100 inhabitants); and (ii) a comprehensive program of technical assistance to ONPT, the newly-formed post and telecommunication agency, in the areas of personnel management and training, management and financial information systems, and tariff policy.

The project achieved, and in some cases exceeded, most of its physical objectives; in spite of initial delays due to the borrower's lack of familiarity with Bank procurement procedures, about one million lines were in service by end1994 (compared to the 820,000 planned), with average line construction costs about 12 percent below appraisal estimates. Rural penetration was increased, with 65 percent of rural communities having access to telephone service by end-1993. However, improvements in service quality lagged somewhat, with actual call completion rates and speed of fault repairs below the (probably too optimistic) appraisal targets.

On the institutional side, the project helped ONPT transform itself from a Government department into a public enterprise run along commercial lines and, most recently, into two financially independent entities for posts and telecommunications. Staff productivity was improved to 15 employees per thousand lines (from 26 in 1986), which compares favorably with similar countries. Finally, the project prepared the ground for far reaching reform of the sector, including the possible privatization of ONPT, being pursued under the subsequent Telecommunication Restructuring Project approved in FY93. Overall sector finances have remained satisfactory throughout the period and Government arrears, which had been a problem until 1992, have been settled.

On balance, the outcome of the project is rated as satisfactory, its institutional development impact as substantial, and its sustainability as likely. Bank Performance is assessed as satisfactory. These ratings are the same as those provided in the text of the ICR.

Key lessons learned include the importance of: (i) good project preparation (including in particular the need to agree on key bidding documents and terms of reference for technical assistance activities before loan approval), and (ii) Bank staff continuity during project supervision.

Save for an inconsistency in the ratings given in the text and table I of the ICR, the lack of an ICR mission AideMemoire, and the fact that the section on future operation of the project relates instead to the on-going Second Telecommunications Project, the ICR is generally thorough and informative and is thus assessed as satisfactory. No audit is planned.

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