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Implementation Completion Report (ICR) Review - Financial/Private Sector Capacity Building Project

1. Project Data:   
ES Date Posted:
Project Name:
Financial/Private Sector Capacity Building Project
Project Costs(US $M)
 7.92  6.12
Loan/Credit (US $M)
 7.2  6.12
Sector, Major Sect.:
Business Environment,
Private Sector Development
Cofinancing (US $M)
 0.7  0.7
L/C Number:
C2730; CP799      
Board Approval (FY)
Partners involved
Closing Date
12/31/1999 05/31/2000
Prepared by: Reviewed by: Group Manager: Group:  
Fareed M. A. Hassan
Alice C. Galenson Ruben Lamdany OEDCR

2. Project Objectives and Components:

a. Objectives
The objective of this TA project was to promote private sector activities particularly in mining and fishing areas through: (i) reforming the regulatory framework, (ii) strengthening institutional capacities, and (iii) enhancing the financial sector.

b. Components
The project overextended itself by suggesting three to seven interventions in each of the following four sectors. First, financial sector reform (US$1.1 million) consisted of the following subcomponents: upgrading credit risk information, training in banking, and formulation of a strategy for financial sector development. Second, private sector institutional and regulatory framework component (US$3.5 million) included strengthening of legal and judiciary reform, upgrading accounting and audit framework, and providing support for the Chamber of Commerce reform. Third, mining sector development (US$1.1 million) encompassed a strategy formulation, reorganization, and staff training. Fourth, fishing sector reform (US$0.5 million) covered a survey, establishing a monitoring system for foreign exchange flows in and out of the sector, and capacity building. At the Mid-Term Review, support for the start-up of a microfinance scheme was added (US$0.4 million). Also, provision was made to support : (a) privatization of Air Mauritania, (b) the preparation of a land transport study, and (c) the electronic archiving of important project documents pertaining to private sector development. The survey of fisheries resources was abandoned because it was already being conducted with other resources.

c. Comments on Project Cost, Financing and Dates
The loan was closed in May 2000, five months behind schedule. A small undisbursed balance was canceled. This TA supported a parallel private sector development program being carried out under a structural adjustment credit (Cr. 2726-MAR) which became effective in June 1995, three months before this TA. The SAC objectives are similar to this TA, including improving the investment incentive structure and developing the financial, mining, and fisheries sectors.

3. Achievement of Relevant Objectives:

The project was successful in creating and/or strengthening several institutions that contributed to enhancing the environment for private sector development. First, the financial sector component achieved almost all of its objectives including (a) upgrading credit risks and borrower arrears information database, (b ) a banking training center, providing professional training to bank employees, and (c) preparation of the regulatory framework and the support to microfinance institutions expansion. However, the financial sector study, completed in 1997, was unsatisfactory in terms of meeting the challenge of suggesting solutions for expanding the coverage of the financial system to include small and medium enterprises. Second, the private sector institutional and regulatory framework component was achieved, including (a) a one-stop center, simplifying the investment procedures, (b) a business information flow to and from the private sector, (c) modernization of accounting and audit framework and of business legislation, and (d) legal and judiciary reform consisting of revising various codes such as the commercial code and the obligation and contract code. Third, the mining sector objectives consisting of: (a) preparation of a sector strategy paper, (b) adoption of a new mining code and a tax code, and (c) granting licenses to about 12 international companies to explore various minerals, were fully achieved. Fourth, the fishing sector component was unsatisfactory: Bank support to the national oceanographic and fisheries research center on environmental capacity building and quality control did not materialize. Finally, the three objectives added at the Mid-Term Review were achieved with the exception of the transport study which was financed under the parallel Public Resource Management Credit (Cr. 2887-MAR).

4. Significant Outcomes/Impacts:

Improved access to detailed information on the credit standing of borrowers and on arrears through revamping the Credit Risk and Borrower Arrears Information Database has contributed to managing the risk exposure and improving the credibility and soundness of banking operations. Over 3,000 borrowers were listed in the database, substantially in excess of the appraisal estimate of 1,100 borrowers.

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

The scope of this project was very ambitious, involving too many activities and institutions, and hence some of them were uncompleted by the closing date. For example, the reform of the Chamber of Commerce was not completed, and the strengthening of the fishing sector remained below expectations. On the other hand, many laws and codes were enacted just a few months before the closing date. The modification of the Chamber's legal status was adopted by Parliament in January 2000, however, implementation decrees have not yet been adopted. The commercial law was only enacted in January 2000 and expected to become effective in 2001.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Institutional Dev.:
Bank Performance:
    The Bank managed to compensate for the project's complexity with quality supervision.
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

The legal reform process takes a great deal of time and effort; a consensus-building process including the stakeholders had to be carried out before the laws could be finalized, adopted and effectively implemented.

8. Audit Recommended?  Yes

Consider auditing in the future as a cluster with two parallel projects, Private Sector Development Credit (Cr.2726-MAR) and Public Resource Management Credit (Cr.2887-MAR). As indicated in Section 2, this TA and the Private Sector Development Credit have common objectives.

9. Comments on Quality of ICR:

The ICR is of satisfactory quality. It covers almost all relevant aspects of an ambitious project.

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