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         Second Telecommunications Project

The Second Telecommunications Project for the Republic of Burundi, supported by Credit 1805-BU for US$4.8 million equivalent, was approved in FY87. The Credit was closed in FY96, two and a half years behind schedule, and US$ 0.7 million was canceled. The project was cofinanced by the Caisse Francaise de Developpment (CFD), the Government of Netherlands and a Dutch commercial bank. The Implementation Completion Report (ICR) was prepared by the Africa Regional Office. The Borrower’s comments are included to the ICR. No contribution was received from co-financiers.

The project was to build on initial progress achieved under the First Telecommunications Project (Credit 1058-BU approved in FY80) in supporting the Government’s main objectives in the sector: (i) expand telephone service, particularly in rural areas; (ii) generate tax revenues while preserving the sector’s financial health; and (iii) strengthen sector institutions in order to improve operational efficiency and quality of service. The physical components of the project included: (a) replacement and expansion of switching and distribution facilities in Bujumbura, for a capacity of 13,800 main lines; (b) installation of a new international transit exchange and satellite earth station; (c) a rural multi-access radio link in rural areas; and (d) maintenance vehicles and equipment. The institutional development component (17 percent of total cost) included: (a) technical assistance and training for the Office National des Telecommunications (ONATEL) in the area of network planning, maintenance, financial control, billing and accounting; and (b) technical assistance, training, vehicles and minor equipment for the Government’s postal services.

The objectives set out for this project were rather modest by current standards but were consistent with the traditional monopolistic approach to public utilities which prevailed at the time it was appraised. The physical objectives were partially achieved, with significant delays due largely to civil unrest in the country. Original connection targets were ultimately reached, but with a delay of several years, and the rural component was only 40 percent completed. The ERR on ONATEL’s overall investment program was recalculated at 20 percent (15 percent at appraisal) —primarily a reflection of the level of current telecommunications tariffs. Achievement of the project’s relatively narrow institutional objectives was similarly partial: ONATEL’s accounting and billing systems improved but Government arrears have remained unacceptably high. And there is no evidence that the Bank-financed postal component had a substantial impact on the efficiency of postal services. During the implementation of the project, there were some attempts by the Government to introduce sector reform and issue new licenses, but they were ultimately unsuccessful due to the lack of a legal framework and to the country’s political instability.

In light of the above shortcomings, the Operations Evaluation Department (OED) rates project outcome as marginally satisfactory (instead of satisfactory in the ICR), and rates institutional development as modest, sustainability as uncertain, and Bank’s performance as satisfactory, consistent with the ICR ratings.

A lesson learned from this project is that close Bank project supervision is critical in countries with an unstable political environment, in order to secure continued Government commitment and ownership.

The ICR is generally satisfactory, although it should have provided a more substantive assessment of the impact of the project’s postal component.

No audit is planned.

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