Guinea - Socio-economic Development Support Project

Document of The World Bank FOR OFFCIAL USE ONLY Rept No. P-49)3-GUI MEMORANDUM AN-J 'ECOMMENDATION OP THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 6.9 MILLION TO THE REPUBLIC OF GUINEA FOR A SOCIO-ECONOMIC DEVELOPMENT SUPPORT PROJECT MARCH 6, 1989 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency and Equivalent Units Currency Unit - Guinean Franc (GF) (Annual Average - Guinean francs per US dollar) 1986: SF 345 1987: GF 428 1988: GF 475 Weights and measures: Metric system ABBREVIATIONS AND ACRONYMS AfDF African Development Fund BARAF Bureau d'aide a la reconversion des agents de la fonction publique CCEF Comite de Coordination Economique et Financiere CENDID Centre national de documentation et d'information pour le developpement CNPS Commission Nationale de Politique Sociale DEIP Division des Enquates et Indices de Prix CIDA Canadian International Development Agency DNIP Direction Nationale des Investissements Publics DNP Direction Nationale du Plan DNSI Direction Nationale de la Statistique et de l'Informatique DRHPS Division des Ressources Humaines et de Politique Sociale FY Fiscal Year IDA International Development Association MPCI Ministare du P`in et de la Cooperati_a Internationale MSPP Ministare de la Sante Publique et de la Population HSF Medecins Sans Frontieres NGO Non-Governmental Organization NPTF National Poverty Task Force PAGEN II Second Economic Management Support Project Pilot Program Pilot Program of Sub-Projects for Socio-Economic Development PIP Public Investment Program PPF Project Preparation Facility PPMU Pilot Program Management Unit SAL Structural Adjustment Credit SDA Social Dimensions of Adjustment SDR Special Drawing Rights SED Secretariat d'Etat a la D6centralisation SEDSP Socio-Economic Development Support Project SFA Special Facility for Africa SSA Sub-Saharan Africa TAF/AfDF Technical Assistance Fund of tne African Development Fund UNDP United Nations Development Programme UNICEF United Nations Children's Emergency Fund Fiscal Year: January 1 - December 31  FOR OFFICIAL USE ONLY REPUBLIC OF GUINEA SOCIO-ECONOMIC DEVELOPMENT SUPPORT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Guinea Implementing Agency: Ministere du Plan et de la Coop4ration Internationale (MPCI) Amount: SDR 6.9 million (US$ 9.0 million) Terms: Standard IDA with 40 year maturity Financing Plan: US$ million Z IDA 9.00 67 AfDF 1.86 14 CIDA 0.84 6 Government 0.58 4 NGOs 1.20 9 Total 13.48 100 Economic Rate of Return: Not applicable Staff Appraisal Report: No. 7448 - GUI Map No. 21360 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  INTERNATIONAL DEVELOPMENT ASSOCIATION MEHORANDUH AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF GUINEA FOR A SOCIO-ECONOMIC DEVELOPMENT SUPPORT PROJECT 1. The following memorandum and recommendation on a proposed IDA credit to the Republic of Guinea for SDR 6.9 million (US$ 9.0 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms and would help finance a Socio-Economic Development Support Project consistent vith ongoing structural adjustment operations. Additional funds would be provided by the Technical Assistance Fund of the African Development Fund (US$1.9 million), Canadian International Development Association (US$0.8 million), the Government of Guinea (US$0.5 million), and NGOs and local communities (US$ 1.2 million). 2. Background. The regime which took office in Guinea in April 1984 inherited a country which was in acute economic crisis. Guinea is one of the poorest countries in the world. Per capita income in this country of 5.6 million inhabitants (1986) is less than US$300 (1986). Living standards are uniformly poor, as reflected in key social indicators: life expectancy is 41 years, infant mortality is approximately 160 per thousand, more than 80 percent of the population lacks access to safe water, and 80 percent of the population is illiterate. 3. In an effort to reverse the longstanding detulioration of the economy and redress financial imbalances, the new leaders launched a far- reaching stabilization and adjustment program in late 1985. This program was supported by an IDA structural adjustment credit, and other international financing. Based on a drastic reduction of the public sector deficit, the program centered on reducing the state's role, by reducing controls and encouraging a free-market economy. Specific measures to meet these broad objectives were designed to: (i) correct the serious overvaluation of t'-; currency; (ii) establish a new, reliable, banking system to replace the defunct state banks; (iii) introduce institutional reforms to promote private sector savings and investment; (iv) decontrol prices; (v) liberalize internal and external trade; (vi) reduce the scale and improve the efficiency of the public sector by lowering public employment and withdrawing from commercial and industrial activity; and (vii) reorient public investment toward supporting the directly productive sectors. 4. A second phase of the reform program, was started in 1988, again with IDA and other international support. In this second phase, the Government is pursuing an adjustment strategy aimed at achieving sustained growth of income over the medium term. At the same time, the Government realizes that growth of per capita income is a necessary but not sufficient  2 condition to alleviate poverty. Its 1988 Declaration of Development Policy, prepared as a basis for the Second Structural Adjustment Program, sets forth the Government's determination to achieve growth with equity, to develop policies and programs to improve the incomes and access to basic services by low-income households, and to assist those groups directly affected by the reform. 5. The Government has adopted a number of transitional measures during the Structural Adjustment process in order to cushion its adverse effects on vulnerable groups in urban areas. These includet (i) addition,i payments to civil servants to partially compensate for increases in the cost of living resulting from the devaluation and other adjustment measures; (ii) continued payment on a temporary basis of salaries to civil servants who benefited from transitory reserve status; (iii) voluntary departure bonuses with access to loans at favorable conditions for civil servants with bankable projects; (iv) advisory services to the retrenched civil servants; and (v) labor-intensive work programs to create employment in Conakry funded in part through the first Urban Project financed by IDA. 6. A National Poverty Task Force (NPTF) was established by the MPCI under the aegis of UNICEF in 1987 to make, with the support of UNDP-financed consultants, an overview of the social sectors. In April 1988, the NPTF produced a report containing a poverty profile of the country, the tentative identification of vulnerable groups in rural and urban sectors and proposals for a series of projects in the areas of basic education, primary health care, nutrition, employment generation, and micro-credit schemes. As a next step, the Government intends to establish a National Commission on Social Policy at the ministerial level, to oversee the development of policies that will achieve the objectives mentioned above, and to reinforce the Ministry of Planning and International Cooperation to enable it to develop effective socio-economic policies and programs to improve the access to employment and basic services of the poor segments of the community. The proposed Project will support these actions. 7. Rationale for IDA Involvement. IDA's important role in the recovery program puts it in a leading position vis-a-vis the donor community in supporting the Government's action to alleviate poverty in a manner consistent with the structural adjustment policies. Additionally, IDAts involvement through this Project will provide the financial and human resources necessary for an efficient coordination of Government and Non- Government social actions which might otherwise tend to be under-funded and fragmented. The Project comes at a crucial time in the adjustment process. 8. Project Objectives. The main objectives of the Project are: (i) strengthening the capacity of the Government in the areas of social policy design, coordination, and implementation; (ii) strengthening the capacity of the Government to identify target poverty groups and to monitor the evolution of living conditions of households throughout the adjustment process and afterwards; and (iii) implementing a priority social action program, based on specific sub-projects aimed at upgrading the living conditions of the poor and disadvantaged groups;  3 9. Prolect Description. The Project will support the implementation of: (i, a program of social policy studies to be conducted within the MPCI to strengthen the Government's capacity to design, coordinate, and implement a comprehensive social policy consistent with the Structural Adjustment Program; (ii) a permanent household survey to identify target groups and to monitor changes in the living conditions of the population; and (iii) a Pilot Program of Socio-Economic Development which will finance, essentially through NGOs, priority projects, directed at the most vulnerable groups in order to mitigate the social costs of adjustment while growth gradually resumes. 10. Project Management. The Project will be managed by the MPCI, and will be integrated into the organizational structure of the Ministry. The Minister will appoint a socio-economic advisor, who will be Secretary of the National Commission on Social Policy, and Coordinator of the Project. He will monitor the several components of the project, administer project funds, ensure the timely participation of the various divisions of the MPCI that will carry out portions of the project, will ensure coordination with sectoral ministries carrying out poverty-oriented programs, and will be responsible for coordination with and among donor agencies. The Pilot Program will finance NGOs atd, exceptionally, public agencies, that will carry out grass-roots interventions that meet agreed criteria and have been approved by IDA. The Pilot Program will be managed by a Pilot Program Management Unit (PPMU) to be establisheJ within the MPCI. The ministry will be assisted in carrying out the three main segments of the Project by internationally recruited advisors, one of whose main functions will be to train Government managers. 11. Non-governmental Organizations. Non-governmental Organizations have been chosen as the primary implementing agencies under the Pilot Program, given their administrative flexibility and ability to maintain close contacts with low-income groups of the population. There are presently a large number of NGOs, both national and international, working in Guinea. However, some of the national NGOs do not have extensive experience in project design, implementation and supervision. Consequently cooperative arrangements between national and international NGOs and between national NGOs and foreign voluntary organizations will be encouraged. 12. Project Benefits: In the short term, the Project will provide, (i) technical support to strengthen the Government's capabilities in social policy planning; (ii) a statistical base on the level and evolution of household living conditions; and (iii) experience in designing and implementing actions that will improve the access of poor and disadvantaged groups to increased employment opportunities and basic social services. In the medium term, the Project will lay the basis for: (i) refined targeting of vulnerable groups; and (ii) the development of a comprehensive social policy consistent with efficient growth-oriented economic policies. 13. Pro3ect Risks: The first risk of the Project is that there may be delays in implementing the project arising from the inexperience of the government staff that will manage the project. A second risk is that pilot projects selected may not be in conformity with the act'on programs of line  4 ministries, since such programs are still qt an early stage of development. A third risk is that implementation and coordination dirficulties may occur as a result of the complexity of the Project. A fourth and final risk is that one or more of the NGOs implementing sub-projects may not manage project funds efficiently. 14. The first risk would be countered by providing experienced advisors to key project managers, whose main assignment would be to help develop the abilities of those managers. The second risk would be minimized by involving the line ministries concerned in the approval of sub-projects. The third risk would be reduced by appointing a Socio-Economic Policy Advisor and giving a strong project coordination function to the office of the Minister of Planrning. The fourth risk would be reduced by applying appropriate procedures for the selection and supervision of RGOs and by the careful drafting of sub-project agreements, while recognizing that unduly close supervision may impede the work of the NGOs, whose principal advantage lies in their flexibility and ability to reach their beneficiaries through imaginative and unbureaucratic actions. 15. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Washington, DC March 6, 1989  5 SchdIule A REPUBLIC OF GUINEA SOCIO-ECOOISC DEVELOPMENT SUPPORT PROJECT Etimted Costs ad Financing Plan (USe thoueands euivo lnt) Costs Local Foreign tal I Social Policy Planning 807.0 727.0 1034.0 Permanent Household Survey 120670 1241.0 2508.0 Pilot Program Management 190.0 648.0 742.0 Sub-projects 3000.0 3600.0 7200.0 Project Coordination 284.0 21C.0 499.0 Equipmnt for MPCI 0.0 300.0 800.0 Total Base Project Cost 5654.0 6629.0 12203.0 Contingencies Physical 86.0 66.0 151.0 PricT 670.0 370.0 0 (Taxes - p.m.) (216.9) - (216.0) Total Financing Required 6417.0 7065.0 13462.0 Local For isn Total X Ft nancina 7U thousands *qui vos"-V IDA 4622 4876 gm0 67 AIDF 518 1353 16 14 CIDA 106 734 840 o NO0s 6G0 600 1200 9 Government 576 - 570 4 i4T 7ac ism li Schedulo of Estimated Oisburemnt (UN thousans quivalent) Annual Cumulatlv- 1069 600 6o0 1990 1400 2000 1901 1200 8200 1092 150 4700 1998 1500 6200 194 1500 7700 1995 13010 g0  6 11LIC OF UttiA SQCIO-ECONOVIIC gmYtLO P OI Pww RO 1JECT =-UKZNIT Mr.1"Wo (US I thousands) (smunts In parenthoses would be financed by IDA) ICI LCO OTHER NOT APPLCABLE TOTAL Naturo of Cost Long-Term Consultants 1,720 ,20 (1i1) (811) Short-Term Consultnto *U1 68O (170) (170) Equipment, Furniture 876 a] 510 b 84 a] d] 1242 and Vehlels (187) (490) (12) (824) Incrmental Operating 2,J84 d] 2,884 Costs (1,U64) (1,645) PPF Refinancing 150 150 (150) (150) SE3P Sub-Proj3ets 7,200 7,200 (6,000) (6,000) 71 ' 'T,a ' U Tis482 (187) (495) (2,216) (0,150) (9,000) Vehicles and Computing Equlpmnt b Furniture and Other Office Equipment , Vehicle Oporatino Costs (nel. fuel) d] Fo II ow ng Govorrment Procuremnt Procedures  7 Schdulo C REPUBLIC OF GUINEA SOCIAL DEVELOPMENT PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare 18 months (b) Prepared by: Government with IDA, AfDF and UNICEF assistance (c) First IDA mission: September 1987 (d) Appraisal Mission: July 1988 (e) Post-Appraisal mission: N'vember 1988 (f) Negotiations: February 13-17, 1989 (g) Planned date of Effectiveness: June 30. 1989  8 STATUS OF WORLD ANK OPERATIONS IN CUI A. Statemnt of Sank Loons Ond IDA Credits as *1Jnay1 99 (Amont tn US$ million (leos coneol lotions) Loan or Fistca Undle- Closing Credit No. Year eorrower Purpose Sank DA buree Dato Credits 9 Creits(s) closed 109.73 C12340-GUI 1982 WUINEA INDUSTRY REOAM (DFC) 19.00 6.20 12/81/89 (R) C13410-GUI 1983 WUINEA EDUCATION II 11.00 Q.a8 12/31/96 C13820-