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Implementation Completion Report (ICR) Review - Ci: Post-conflict Reconstruction And Recovery Grant (pcrrg)


  
1. Project Data:   
ICR Review Date Posted:
11/06/2013   
Country:
Cote d'Ivoire
Is this review for a Programmatic Series?
 No
First Project ID:
P122800
Appraisal
Actual
Project Name:
Ci: Post-conflict Reconstruction And Recovery Grant (pcrrg)
Project Costs(US $M)
 150  150
L/C Number:
Loan/Credit (US $M)
 150  150
Sector Board:
Economic Policy
Cofinancing (US $M)
   
Cofinanciers:
Board Approval Date
  09/15/2011
 
 
Closing Date
09/30/2012 09/30/2012
Sector(s):
Central government administration (44%), Crops (24%), Coal Mining (11%), Energy efficiency in power sector (11%), General finance sector (10%)
Theme(s):
Public expenditure financial management and procurement (30%) Export development and competitiveness (25%) State-owned enterprise restructuring and privatization (25%) Other environment and natural resources management (20%)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Carla Lizette Pazce
Clay Wescott Christopher D. Gerrard IEGPS2

2. Project Objectives and Components:

a. Objectives:

The objective of the program is “to support the government’s effort to promote efficiency, transparency and accountability in the use of public resources through enhanced public financial management and governance in the energy, cocoa and financial sectors” (Program Document [PD], p. 33); in other words: “to provide a rapid response to a new government in dire financial straits while supporting essential reforms to improve governance, transparency and efficiency in public expenditure management and in the key sectors of cocoa, energy and finance” (PD, p vi). The objective is not defined in the Financing Agreement.


    The wording of the previous statements is similar but this review will use the second phrasing of the objective because it better describes the expected outcomes. IEG will break down the objective into two sub-objectives: (i) Improve governance, transparency and efficiency in public expenditure management; and (ii) Improve governance, transparency and efficiency in the key sectors of cocoa, energy and finance.

b. If this is a single DPL operation (not part of a series), were the project objectives/key associated outcome targets revised during implementation?
No

c. Policy Areas:

The single tranche operation had two main pillars:

1. Improve governance, transparency and efficiency in public expenditure management. The focus was on deepening policy reforms to improve planning and implementation of the budget in the key social sectors of health and education by adopting medium-term expenditure frameworks; improving accountability in budget execution by publishing and discussion of relevant information and reports; and reducing corruption in public procurement by raising awareness and assisting in the development of a complaints hotline.

2. Improve governance and efficiency in the key sectors. The focus was on deepening policy reforms in the cocoa, microfinance and energy sectors. In the cocoa sector, the aim was to improve the well-being of farmers through reduction in taxation and conversion to ad valorem rates; and to make cocoa entities more transparent through the publication of audits. In microfinance, the focus was on reforming and improving the net worth of the National Union of Savings and Credit Cooperatives (UNACOOPEC) through changes in its governance body, cutting overhead costs, and closing some cooperatives. In the energy sector, the operation focused on confirming government’s commitment to become a member of the Extractive Industries Transparency Initiative (EITI).

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates

The grant was approved on September 15, 2011 for SDR 93.9 million (US$150 million equivalent), fully disbursed upon effectiveness (December 1, 2011), and closed on schedule on September 30, 2012.


3. Relevance of Objectives & Design:

a. Relevance of Objectives:

Substantial. In the aftermath of the post-election conflict, the project supported the incoming government by providing emergency financial assistance urgently needed to restore the provision of services and consolidate peace. The project built on reforms initiated under previous Bank operations and is aligned with the new government strategy that highlights the need for greater accountability and stronger institutions. The program helped pave the way for Cote d’Ivoire reaching the Highly-indebted Poor Country (HIPC) completion point in end-2012. The key areas of the program were largely relevant to the operation’s objectives. It was necessary to bring transparency to the cocoa and energy sector –oil and gas- which provided 17% and 7% of government revenue, respectively. Transparency and accountability in these sectors would strengthen government credibility. According to the Country Assistance Strategy Completion Report and Bank analytical work, reducing cocoa taxation would bring industry tax incidence to international levels, bringing more efficiency to the sector while improving rural incomes. Similarly improving the efficiency in the microfinance sector, specifically in UNACOOPEC, would make a more efficient use of public resources and improve access to finance of low income families and consequently contribute to reducing poverty. The objectives are consistent with the second strategic outcome of the Poverty Reduction Strategy for 2009-2015, which is to transform Cote d’Ivoire into an emerging economy. Similarly, the objectives are consistent with the strengthening governance and institutions objective of the Country Partnership Strategy for fiscal years 2010-2013.

b. Relevance of Design:

Substantial. The key reform areas described in Section 2(c) above, and their related prior actions, are clearly linked to the operation's objectives of improving governance, transparency and efficiency in public expenditure management and in the key sectors of cocoa, energy and finance. The project was modest in its approach and selectively addressed few policy actions in areas where the Bank was previously engaged through analytical work and financing. The modest approach was needed given the post-conflict context at the time, and the government’s need for quick-delivery support. The political and security risks among others were clearly identified. The program was well integrated with operations from other development partners.


4. Achievement of Objectives (Efficacy) :


(i) Improve governance, transparency and efficiency in public expenditure management
Three prior actions related to this objective were implemented. The government adopted medium-term expenditure frameworks for the health and education sectors. The draft budget execution laws for 2007 and 2008 were finalized and submitted to the Council of Ministers; and the Chambre des Comptes issued and published the corresponding budget execution reports and declarations of conformity. The budget execution law for 2009 was published and discussed in the National Assembly and the media. The National Procurement Regulatory Authority issued a code of ethics for public procurement and opened a hotline to combat fraud and corruption in public procurement. The National Procurement Regulatory Authority registers and investigates all complaints received. The investigation results are published weekly in the procurement bulletin.

Regarding the medium-term expenditure frameworks, the outcome target was to increase the share of education and health in the budget from 28% to 29% from 2010 to 2012. Instead, the share declined from 28% to 25%, although education and health spending did increase 18 percent from 2011-2012.

Efficacy in achieving this sub-objective is rated Modest.

(ii) Improve governance, transparency and efficiency in the key sectors of cocoa, energy and finance

Cocoa Sector
Two prior actions in this area were implemented. By the start of the 2010/2011 crop season, all export taxes on cocoa were converted to an ad valorem rate of no more than 22 percent of the CIF price. The Ministry of Economy and Finance published the summaries of the external financial and organizational audits of the four cocoa entities on its website. As recommended by the audits, the government adopted a new institutional framework and created the Coffee-Cocoa Council, a single institution in charge of the overall management and regulation of the cocoa sector.

Energy Sector
One prior action was implemented. The government submitted its EITI validation reports for 2006 and 2007 to the International Secretariat of EITI and reconfirmed its commitment to early compliance with the conditions required for full membership of EITI. Cote d’Ivoire did not obtain EITI compliance by the time the project closed because the 2011 report on payments made to the government by extractive industries and revenue received from these industries was not available. However, Cote d’Ivoire was certified as conforming to EITI as of May 2013, eight months after the project closed.

Microfinance Sector
One prior action was implemented. The government initiated the implementation of UNACOOPEC restructuring plan by renewing UNACOOPEC’s Board of Directors, reducing staff levels in the head office, and closing at least 10 cooperatives. UNACOOPEC annual losses increased from CFAF 5.8 billion in 2009 to CFAF 11 billion in 2011. The target of reducing losses by at least 80% was not met. In 2010, UNACOOPEC reduced its annual losses by more than the target (CFAF 2.2 billion) but the following year losses increased due to the pillaging of its branches across the country that ensued after elections. However, due to measures taken in 2012, the preliminary financial result shows a reduction in the loss to CFAF 1.04 billion at end November 2012.

Efficacy in achieving this sub-objective is rated Substantial.

5. Efficiency (not applicable to DPLs):

6. Outcome:


Both the relevance of objectives and design were substantial. In terms of efficacy, there is a mixed balance. In a difficult political context, the program did help generate important political reforms which contributed to generate more transparency in the use of public resources at the central level and in key sectors of cocoa, finance and energy. Progress in reaching the targets of government’s pro-poor spending fell short, while political instability after the elections hampered the reduction of losses in the microfinance sector. Similarly, there were delays in the attainment of EITI compliance. Despite the shortcomings, the reforms are headed in the right direction and progress was made in each area.

a. Outcome Rating: Moderately Satisfactory

7. Rationale for Risk to Development Outcome Rating:

The country security situation has improved since the election unrest in 2011 but some fighting continues in the western part of the country. With United Nations and French support, the pace of reform of the security sector has picked up after establishing the National Security Council and the Disarmament, Demobilization, and Reintegration Authority and the Center for Coordination of Operational Decisions in 2013. Although it is unlikely that Cote d’Ivoire returns to a state of full-scale civil conflict, a worsening security situation would hamper investment and economic recovery. In addition, there is no indication that the country has improved institutional mechanisms to a level necessary to sustain the reforms and therefore governance risks are still present. For instance, the International Country Risk Group indicates that corruption scores 1.5 out of 6 , categorized as very high risk; while the score in accountability is 2.5 out of 6, also very high risk. The World Governance Indicators, Transparency International's Corruption Perception Index, and the Bank's Country Policy Institutional Assessment confirm the assessment.

a. Risk to Development Outcome Rating: Significant

8. Assessment of Bank Performance:

a. Quality at entry:

By project approval, the economy was severely affected by the political conflict but medium-term prospects were positive. The expected rebound of the economy –given continued stability and pace of reforms- would boost revenues and result in a sustainable fiscal position. Yet in the short term, the incoming government needed immediate financing and the Bank –in close collaboration with the IMF and other partners- responded quickly. In order to reduce macroeconomic risks, the project supported advances in the implementation of medium term expenditure frameworks -also a central element in IMF support-, and in the fulfillment of HIPC completion point conditions while both institutions closely monitored Cote d’Ivoire’s macroeconomic performance. The project scope was kept modest by limiting the number of prior actions, focusing on areas of previous engagement, and by aiming for attainable results given the timeframe of the project. The program was based on extensive analytical work and benefitted from complementary projects in the portfolio, covering governance and institutional development, youth employment, electricity rehabilitation, and small and medium enterprise revitalization. The risk assessment acknowledged the political and security risks and their impact on project objectives. The Bank stated that these risks fell outside the scope of the operation but emphasized the mitigating potential of the transparency and accountability aspects of PCRRG and other Bank projects. In the event, the security risk materialized and limited the loss reduction of UNACOOPEC.

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:

The Bank communicated closely with the Ministry of Economy and Finance and monitored progress regularly. The Implementation Status and Results Report could have elaborated more on the reasons for slow progress in achieving expected results, and on additional measures that could be taken. There could have also been more evidence of mitigating the substantial fiduciary risks acknowledged at the design stage of the operation.

Quality of Supervision Rating: Moderately Satisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
In spite of difficult political circumstances, the government showed strong commitment to the reform program and the fulfillment of the project’s prior actions. At the time, the government needed the funds urgently, showed strong commitment to attaining HIPC completion point –some of the conditions of which overlapped with PCRRG-, and was cognizant of stakeholders' strong support for reform in the key sectors, especially in the cocoa sector. The new government had a strong economic team in the Ministry of Economy and Finance that had a proven track record in economic management from the previous administration. While there was much progress, some results were not achieved, including share of health and education in the budget, and hoped-for reduction of UNACCOPEC’s losses. Cote d’Ivoire maintained an adequate macroeconomic framework since project approval. Growth in 2012 exceeded expectations (9.8 percent); inflation remained low (1.3 percent), while the fiscal outcome was better than programmed (deficit was 3.4% of GDP compared to the expected 4.3%) as a result of good tax revenue performance, spending control and better than expected growth.

Government Performance Rating: Moderately Satisfactory

b. Implementing Agency Performance:

The Ministry of Economy and Finance was responsible for the implementation of the overall program. The economic team in this ministry had a strong track record in implementing reforms. Regarding PCRRG policy areas, the Ministry of Economy and Finance had full responsibility for public financial management reforms while the rest of the areas were coordinated by an Inter-ministerial Committee. This group was also in charge of monitoring the program results. This arrangement had proved successful in previous Bank development policy operations and the experience gained was expected to improve the monitoring efforts. The Ministry of Economy and Finance, the Inter-ministerial Committee, and the implementing units in different line ministries and agencies were committed to achieving the objectives despite constrained administrative capacity.

Implementing Agency Performance Rating: Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:

The objectives were clearly specified and the indicators reflected the attainment of the objectives, at the level of intermediate outcomes. One exception is related to the prior action of converting cocoa taxes to ad valorem rates. In this case, the outcome indicator rephrases the prior action and does not measure the desired result. The indicators in the results framework were measurable, and had baseline and quantifiable targets in terms of numbers and time. Building on previous experience, an Inter-Ministerial Committee was responsible for monitoring and evaluation of the project.

b. M&E Implementation:

The Ministry of Economy and Finance regularly monitored the implementation of the program. An Implementation Status and Results report was produced halfway in the project span and reported progress on results for the seven indicators. Then, targets for two of the results indicators were yet to be reached but the supervision report did not elaborate on the extent of the progress, likelihood of achieving the targets, or reasons for slow progress. For example, on the status of UNACOOPEC, a more updated estimate of its losses could have been presented in the supervision report. On the focus on outcomes, the implementation of a public procurement corruption hotline is reported but actual data on the utilization of the system was not provided. On the cocoa institutional setup, there is no report on planned audits and other reporting systems for the newly created agency. After project closing, the ICR did not fill this information gap.

a. M&E Utilization:

Progress reports produced by the Ministry of Economy and Finance were shared with the World Bank team on a regular basis, but it is not known if and how they were utilized.

M&E Quality Rating: Modest

11. Other Issues:

a. Safeguards:
No safeguards policies were triggered by the operation

b. Fiduciary Compliance:

Fiduciary risks were considered substantial at the design stage. Prior to approval of the operation, the authorities had adopted an action plan to strengthen basic fiduciary systems. By mid-2010, some aspects were highly rated, including the timely and participatory nature of budget preparation, access to budget information by the public, transparency in the obligations of taxpayers, and treasury and debt management. There were no fundamental reversals prior to approval. There was some progress in these areas supported by the operation, and with additional support through updating the Public Expenditure Management and Fiduciary Assessment Review in 2011-12, with support from the European Union and the African Development Bank (PD, p. 39, 45).

c. Unintended Impacts (positive or negative):
None

d. Other:
None



12. Ratings:

ICR
IEG Review
Reason for Disagreement/Comments
Outcome:
Moderately Satisfactory
Moderately Satisfactory
 
Risk to Development Outcome:
Moderate
Significant
Although the political and security risks have diminished, they are still present and their materialization would hamper investment and economic recovery. There is no indication that the country has improved institutional mechanisms to a level necessary to sustain the reforms and therefore governance risks are still present. 
Bank Performance:
Satisfactory
Moderately Satisfactory
Bank supervision efforts needed more focus on development impacts. 
Borrower Performance:
Moderately Satisfactory
Moderately Satisfactory
 
Quality of ICR:
 
Satisfactory
 
NOTES:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:

A country emerging from a prolonged and severe crisis can still achieve significant progress as long as its government demonstrates ownership and commitment to reform.
The effectiveness of a Bank development policy operation can be enhanced by its complementarities with other Bank-financed operations and the efforts of other donors in the reform areas.

14. Assessment Recommended?

No

15. Comments on Quality of ICR:

The ICR presented a good description of the country context, the nature of the program and its implementation that is concise and internally consistent. The ICR could have benefited from a greater focus on the achievement of results as opposed to prior actions.The ICR did not explain the reasons why the target for health and education spending was not reached. The ICR could have been more candid, explicitly stating what the actual performance was in certain areas (e.g. indicating the reduction in share of budget for the social sectors) while more information in other areas would have been desirable (e.g. indicating the actual number of complaints received through the procurement hotline that are investigated). The ICR could have also discussed whether the substantial fiduciary risks perceived during the design stage were appropriately addressed during the operation. The lessons outlined in the ICR are appropriate

a. Quality of ICR Rating: Satisfactory

(ICRR-Rev6DPL-Jun-2011)
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