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Implementation Completion Report (ICR) Review - Industrial Sector Restructuring Project

1. Project Data:   
Project ID:
Project Name:
Industrial Sector Restructuring Project
Business Environment, Private Sector Development
L/C Number:
Partners Involved:
Prepared By:
Michael R. Lav
Reviewed By:
Alice Galenson
Group Manager:
Ruben Lamdany
Date Posted:

2. Project Objectives, Financing, Costs, and Components:

Objectives: (i) financing the restructuring of existing enterprises to adjust to new industrial sector framework as well as new viable investment opportunities; (ii) supporting programs of assistance for displaced employees to alleviate the social cost of the reform; and (iii) strengthening the institutions involved in the adjustment process, especially those dealing with export promotion. Financing: IDA $33 million, Government $1.2 million, Sub-project Sponsors (APEX) $6.3 million, Sub-Project Sponsors (SSE Lending Scheme) $0.3 million. Costs and Components: Apex line of credit $30.9 million, Retraining and SSE Lending Program $0.3 million, Technical Assistance $3.3 million. The project was approved in February 1988, became effective in October 1988, and closed on schedule in June, 1988.

3. Achievement of Relevant Objectives:

The Project achieved the major objective of financing the restructuring of existing enterprises and viable new investment opportunities, though only after the devaluation and a Private Sector Adjustment project improved the economic and business environment, and after responsibility for reviewing subprojects was taken away from the BCEAO and given to private banks. It created, restructured or expanded 37 enterprises. The supporting program of assistance for displaced employees was dropped after it failed to produce results, as did other technical assistance components. The institutional development component failed to meet its objectives: one agency continues to function at "less than an optimal level" while another was privatized, though this had not been stated as an objective.

4. Significant Outcomes/Impacts:

The project met the need for industrial finance for restructuring and for new viable opportunities after the devaluation, which was important support for the overall adjustment program. While Borrower performance is rated as satisfactory, this is due in large part to the success of the Bank in restructuring the project and reducing BCEAO's role.

5. Significant Shortcomings (include non-compliance with safeguard features):

The project was premature - only after devaluation did it make sense. The worker retraining component was not properly designed and was dropped, while the technical assistance component did not materially improve the agencies to which it was addressed.
6. Ratings:ICROED ReviewReason for Disagreement/Comments
Institutional Dev.:
    The ICR states that the TA/Capacity building component partially achieved its objective. However, the newly created Ministry for Energy and Mines could not use project funds because of procurement and other problems. TA for the Ministry of Commerce, Industrialization, and Handicrafts encountered problems due to "organizational changes in the ministry and delays, in the preparation of procurement, studies, and consultant services". The ICR also states that in the absence of a realistic action plan to restructure ASACE and CICES, these institutions did not use the TA. OED concludes that institutional development rating of negligible is appropriate, since the ICR cites no positive results from the TA
Bank Performance:
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

The role of an industrial finance project in the overall economy needs to be carefully evaluated - this project only made sense after devaluation. Projects should be kept as simple as possible to achieve desired results. The capacity of intermediaries should be realistically assessed by Bank staff, as well as by the intermediaries themselves. Although the ICR reports that the BCEAO should have determined that it lacked adequate capacity to implement the project as originally designed, this also might have been determined by Bank staff.

8. Audit Recommended?  No


9. Comments on Quality of ICR:

The ICR gives a careful and easily useable review.

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