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The Nigeria Telecommunications Project, supported by Loan 3236-UNI for US$225.0 million equivalent, was approved in FY90. The loan was closed in FY96, as scheduled. Only US$19.8 million (9 percent of the loan amount) was disbursed and the balance was canceled at the Bank’s initiative (primarily for lack of due diligence on the Borrower’s part). The Implementation Completion Report (ICR) was prepared by the Africa Regional Office. No contribution was received from the Borrower.

The project's objectives were to: (i) support and strengthen the sector’s institutional and policy framework and to facilitate the commercialization of NITEL (Nigerian Telecommunications Plc.), the state-owned monopolistic utility; (ii) improve the access to and quality of telecommunications services; and (iii) improve NITEL’s financial performance. To this end, the project comprised: (i) a time-slice (1990-1994) of NITEL’s investment plan encompassing, inter alia, the rehabilitation of existing switching facilities, the expansion of its transmission network, and the addition of 200,000 new lines in Lagos and other major cities; and (ii) a broad institutional development program encompassing technical assistance and studies in the area of network planning and organizational development, human resource management, accounting and financial control systems, material and project management, and tariff policy.

Most of the project’s physical, institutional and policy objectives were not met as project implementation suffered from procurement delays caused by NITEL’s weak implementation capacity, excessive Government interference, rapid management turnover and unforeseen events (pull out of key consultants). What little was actually implemented on the institutional front under Bank financing (e.g. studies of accounting and billing systems) had hardly any impact on NITEL’s operations for lack of adequate follow-up. And although NITEL’s finances have improved somewhat as a result of a 1992 Government equity infusion and tariff increases, they have continued to suffer from large Government arrears and a lack of financial autonomy. In contrast with many other countries, the Nigerian Government has to date not taken any serious step towards sector liberalization and some form of private sector involvement, which would be the prerequisite to removing current supply bottlenecks and improving efficiency and quality of service.

The Operations Evaluation Department (OED) rates project outcome as highly unsatisfactory, institutional development impact as negligible and sustainability as unlikely (as in the ICR). The Bank’s performance is rated as satisfactory (as in the ICR) —albeit marginally so— mainly on account of the decisiveness it showed in ultimately canceling the project when it was clear that the absence of basic Borrower commitment would thwart any restructuring attempt. Nonetheless, the Bank clearly overestimated at appraisal NITEL’s capacity to implement such a large project and its performance during supervision suffered from excessive staff turnover and the absence of a full-fledged mid-term review.

Two important lessons can be drawn from this project: (i) corporatization on paper of a state-owned utility is no assurance of real autonomy and the Bank should review carefully the details and implications of any proposal on day-to-day managerial autonomy; and (ii) implementation problems of a systemic nature such as those evidenced in this project are best treated in the context of an overall country portfolio restructuring effort, rather than on a stand-alone (project) basis.

OED rates the ICR as exemplary, as it presents a thorough, candid and perceptive assessment of the experience and lessons of the project.

No audit is planned.

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