Senegal - Technical Assistance Project For Economic and Financial Planning

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 10865 PROJECT PERFORMANCE AUDIT REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (CREDIT 1061-SE) AND SECOND PARAIUBLIC TECHNICAL ASSISTANCE PROJECT (CREDIT 1398-SE) JUNE 30, 1992 Operations Evaluation Department 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 EQUIVALENTS Currency Unit: CFA francs (CFAF) (annual averages) 1980 US$1 - CFA 211 1986 US$1 - CFA 346 1981 US$1 - CFA 272 1987 US$1 - CFA 301 1982 US$1 - CFA 329 1988 US$1 - CFA 298 1983 US$1 - CFA 381 1989 US$1 - CFA 319 1984 US$1 - CFA 437 1990 US$1 - CFA 272 1985 US$1 - CFA 449 1991 US$1 - CFA 282 ABBREVIATIONS AND ACRONYMS ACC Agent Comptable Central des Etablissements Publics BOM Bureau Organisation et Méthodes CCP Cellule des Contrats Plan CEP Cellule des Etablissements Publics CESAG Advanced Management Studies Center CFP Contrôle Financier de la Présidence CNCA Commission Nationale des Contrats de l'Administraion COF Contrôleur des Opérations Financières CSP Cellule du Secteur Parapublic (MEF) CVCCEP Commission de Vérification des Comptes et de Contrôle des Etablissements Publics DDI Direction de la Dette et des Investissements DRSP Délégation à la Réforme des Entreprises Publiques DTAI Direction du Traitement Automatique de l'Information ESGE Enterprise Management Institute GDP Cross Domestic Product IDA International Development Association IMF International Monetary Fund MEF Ministère de l'Economie et des Finances MPC Ministry of Planning and Cooperation OED Operations Evaluation Department PCR Project Completion Report PE Public Enterprise PMU Project Management Unit PPAR Project Performance Audit Report SAL Structural Adjustment Loan TA Technical Assistance FISCAL YEAR July 1 - June 30 FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director*Cemiral Operatins Evaatim. June 30. 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Senegal - Technical Assistance Project for Economic and Financial Planning (Credit 1061-SE) and Second Parapublic Technical Assistance Project (Credit 1398-SE) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Senegal - Technical Assistance Project for Economic and Financial Planning (Credit 1061-SE) and Second Parapublic Technical Assistance Project (Credit 1398-SE)," prepared by the Operations Evaluation Department. Yves Rovani by H. Eberhard K6pp Attachment 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. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE_AUDIT REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (Credit 1061-SE) and SECOND PARAPUBLIC TECHNICAL ASSTSTANCE PROJECT (CrSdLt 1398-SE) TABLE OF CONTENTS Page No. Preface . . . . . . . . . . . . . . . . . . . . . . . . . Basic Data Sheet . . . . . . . . . . . . . . . . . . . . . . . . . Evaluation Summary . . . . . . . . . . . . . . . . . . . . . . . . ix PROJECT PERFORMANCE AUDIT REPORT I. INTRODUCTION............... ..... . . . 1 II. OBJECTIVES AND DESIGN.............. .... . 4 A. Objectives................ ..... . 4 1. Economic and Financial Planning Project . 4 2. Second Parapublic TA Project. ......... . 5 B. Design.................. ..... . 6 1. Economic and Financial Planning Project . 6 2. Second Parapublic TA Project. ........ . . 7 III. IMPLEMENTATION.............. ..... . . . 7 A. Economic and Financial Planning Project . . 7 B. Second Parapublic Project. ........... . . . 9 IV. RESULTS **.*.'.*...........*.*.*................ . ... 12 A. Economic and Financial Planning Project. ... . . . .12 B. Second Parapublic TA Project. ......... . . .14 V. SUSTAINABILITY............. ..... . . .16 A. Technical Assistance Project for Economic and Finance Planning.......... ..... . .16 B. Second Parapublic Technical Assistance Project . . . 16 VI. LESSONS OF EXPERIENCE......... .... . . . . . .17 ATTACHMENT: Telex from the Director of Debt and Financial Cooperation, MEFP . . . . . . . . . . . . . . . . . . . . 21 This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization. Table of Contents (cont'd) Pame No. PROJECT COMPLETION REPORT - Second Parapublic Technical Assistance PART I: THE PROJECT FROM THE BANK'S PERSPECTIVE 1. Project Identity........ ..... . . . . . .25 2. Background............ ..... . . . . .25 3. Objectives and Description. ......... . . . .26 4. Design and Organization.. ........... . .28 5. Implementation........... ..... . . . .29 6. Results.............. .... . . . . . .30 7. Sustainability.......... ..... . . . . .32 8. Bank Performance......... ..... . . . . .32 9. Borrower Performance...... ..... . . . . . .32 10. Project Relationships........... .... . .33 11. Consulting Services........ .... . . . . . .33 12. Project Documentation and Data. ...... . . . . . .33 ATTACHMENT: Impact of the PE Reform Program on the Sector as a Whole 34 PART III: SUMMARY OF STATISTICAL DATA Tables: 1. Related Bank Loans or Credits . . . . . . . . . . . . 41 2. Project Timetable . . . . . . . . . . . . . . . . . . 42 3. Cumulative Estimated and Actual Credit Disbursements 43 4. Project Costs and Financing . . . . . . . . . . . . . 44 5. Status of Covenants . . . . . . . . . . . . . . . . . 45 6. Use of Bank Resources . . . . . . . . . . . . . . . . 48 7. DRSP Personnel, by Source of Financing . . . . . . . . 50 8. Nonpersonnel Expenditures . . . . . . . . . . . . . . 50 9. Vehicle Procurement . . . . . . . . . . . . . . . . . 51 10. Use of Long-Term Consultants. . ......... . .52 11. The SIGASP Project (Parapublic Sector Computerized Management Information System) . . . . . . . . . . . . 53 Recent Trends in the Senegalese Rardublic Sector 12. Recent Trends in the Parapublic Sector. .... . . . .55 13. Government Support for Public Enterprises and Agencies 56 Table of Contents (cont'd) Page No. 14. Cost to the Government of the Parapublic Sector . . . 57 15. Government Operating Subsidies to the Parapublic Sector 57 16. Summary of the Seven 1989-90 Contrats-Plan..... . .58 17. Status of Public Enterprise Privatization . 59 18. Financial Results of Privatization Operations . . . . 60 PROJECT PERFORMANCE AUDIT REPRT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (Credit 1061-SE) and SECOND PARAPUBLIC TECHNICAL ASSISTANCE PROJECT (Credit 1398-SE) PREFACE 1. This is a Project Performance Audit Report (PPAR) on the Economic and Financial Planning Project, involving IDA Credit 1061-SE, and on the Second Parapublic Technical Assistance Project, involving IDA Credit 1398-SE. The first Credit in the amount of US$5.3 million equivalent was approved in August 1980. The Credit was closed on December 31, 1987 and the last disbursement was on June 8, 1988. All but US$0.03 million was disbursed. 2. The second Credit, in the amount of US$11 million equivalent, was approved in July 1983. The Credit was closed on June 30, 1990 and the last disbursement was on December 30, 1990. All but US$0.06 million was disbursed. 3. The PPAR consists of the Project Performance Audit Report prepared by the Operations Evaluation Department (OED) and the Project Completion Reports (PCRs) prepared by the Africa Region of the Bank. The PPAR is based on the PCRs, the President's Reports, sector and economic reports, the credit documents, the summary of the Board's discussions, study of the project files, and discussions with Bank staff. The PPAR is also based on a Case Study prepared for the OED Study "Free Standing Technical Assistance for Institutional Development in Sub- Saharan Africa." On that occasion an OED mission visited Senegal and discussed the effectiveness of the Bank's assistance with Government officials. Their kind cooperation and valuable assistance in the preparation of this report is gratefully acknowledged. 4. The PCRs provide a good account and assessment of the project experience with regard to the implementation of the various components, credit administration and the Bank's and Borrower's performance. The PPAR portrays the critical issues of concern that led to requests for technical assistance for public and parapublic sector management, evaluates the progress and results achieved by the agreed upon activities and ascertains the key factors that determined the projects' outcome and the sustainability of the capacity building reforms. The PPAR then draws lessons from the projects' experience. 5. The draft PPAR was sent to the Borrower for comments. A copy of the telex from the Director of Debt and Financial Cooperation, Ministry of Economy, Finance and Planning, is reproduced as an Attachment in the PPAR. - 111 - PROJECT PERFORMNCE AUDIT REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (Credit 1061-SE) BASIC DATA SHEET CREDIT POSITION (Amounts in US$ Million) As of April 30, 1992 Credit Original Disbursed Cancelled Repaid Outstandin 1061 5.30 4.581' 0.03 0.08 5.51 I1 Discrepancies between original and disbursed amounts are due to fluctuations in the exchange rate of the US$ in relation with SDRs in wich the IDA Credit was expressed (SDRs 4.1 million). CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS FY81 FY82 FY83 FY84 FY85 FY86 Yf87 FY88 Appraisal Estimate (US$M) 0.60 2.20 1.50 1.00 Actual (US$M) - 0.72 0.56 0.84 0.47 0.66 0.79 0.54 Actual as % of Appraisal (%) - 0.33 0.37 0.84 - - - - Date of Final Disbursement: June 8, 1988 PROJECT DATES Original Actual Identification 11/79 11/79 Appraisal -- 03/04/80 Negotiations 05/80 05/80 Board Approval 06/80 08/26/80 Credit Agreement -- 10/27/80 Credit Effectiveness 01/26/81 01/09/81 Project Completion 12/31/83 06/30/87 Credit Closing 06/30/84 12/31/87 - iv * STAFF INPUTS (staffreeke) Fiscal Year Preappraisal Apraisal Negotiation Supervision Other Total 1980 2.4 12.1 .8 15.3 1931 2.2 1.1 6.8 10.1 1982 11.5 11.5 1983 9.1 9.1 1984 23.8 23.8 1985 7.2 7.2 !986 10.3 .0 10.4 1987 5.7 5.7 1989 3.8 3.8 1990 12.0 12.0 1991 .1 .1 1992 1.1 1.1 Total 2.4 14.3 1.9 91.4 .0 110.0 MISSION DATA No. of No. of Staff Month/Year Weeks Persons Weeks Identification 11/79 N/A N/A N/A Appraisal 3/80-4/80 2.6 3 7.8 Supervision I 01/81 1.0 2 2.0 Supervision II 11/81 0.4 2 0.8 Supervision III 06/83 1.0 3 3.0 Supervision IV 12/83, 01/84 1.4 3 4.2 Supervision V 06/84 2.0 2 4.0 Supervision VI 05/85 2.0 3 6.0 Supervision VII 03/86 2.0 2 4.0 OTHER PROJECT DATA Borrower/Executing Agency: Government of Senegal Related TA Credits Project: First Parapublic Sector Technical Assistance Credit No.: 764-SE Amount: US$6.30 million Board Date: 01/19/78 Project: Firt Structural Adjustment Credit Credit No.: 1084-SE Amount: US$30.0 million Board Date: 12/18/80 -V- Project: Second Parapublic Sector Technical Assistance Credit No.: 1398-SE Amount' US$11.0 million Board Date: 07/07/83 Project: Second Structural Adjustment Credit Credit No.: 1656-SE Amount: US$20.0 million Board Date: 02/04/86 Project: Third Structural Adjustment Credit Credit No.: 1802-SE Amount: US$50.5 million Board Date: 05/21/87 Project: Development Management Project Credit No.: 1910-SE Amount: US$17.0 million Board Date: 05/24/88 - vi - PROJECT PERFORMANCE AUDIT REPORT SENEGAL SECOND PARAPUBLIC TECHNICAL ASSISTANCE PROJECT (Credit 1398-SE) BASIC DATA SHEET CREDIT POSITION (Amounts in US$ Million) As of April 30, 1992 Credi& Original Disbursed Gncelled RepAi Outstanding 1398 11.00 12.471' 0.06 ** 13.90 11 Discrepancies between original and disbursed amounts are due to fluctu&tions in the exchange rate of the US$ in relation with SDRs in which the IDA Credit was expressed. GUMULATIVE ESTIM,ED AND ACTUAL DISBURSEMENTS Y81FY84 Z8 fS EZ FY88 FY89 EQ Appraisal Estimate (US$M) 0.80 3.00 5.80 8.40 10.30 11.00 -- -- Actual (US$N) 0.67 1.44 2.63 4.34 7.83 10.24 12.11 12.47 Actual as % of Appraisal (%) 0.84 0.48 0.45 0.52 0.76 0.93 -- -- Date of Final Disbursement: December 20, 1990 PRJEQ DATES original Actual Identification 05/24/82 Preparation 03/25/83 Appraisal 11/82 10/83 Negotiations 03/83 05/83 Board Approval OP113 07/07/83 Credit Agreement 08/10/83 Credit Effectiveness 01/30/84 08/12/83 Project Completion 06/30/87 06/30/90 Credit Closing 12/31/87 12/20/90 *vii STAFF INPUTS (otaftweeks) Fiecal Year Peappraisal Amratsal Neottation Supervision tjer Total i984 68.5 0.6 69.1 1985 31.9 31.9 1986 24.1 24.4 1987 29.2 29.2 1988 16.8 0.2 17.1 1989 13.0 13.0 1990 13.0 13.0 1991 12.5 12.5 1992 2.8 2.8 Total 211.7 0.9 212.6 MISSION DATA No. of No. of Staff Month/Year Weeks Persons Weeks Supervision I 02/84 2 1 2 Supervision II 05/84 5 5 25 Supervision III 07/84 2 1 2 Supervision IV 11/84 1 1 2 Supervision V 03/85 2 1 2 Supervision VI 05/85 2 1 2 Supervision VII 09/85 2 1 2 Supervision VIII 03/86 4 3 12 Supervision IX 06/86 3 3 9 Supervision X 06/87 3 2 6 Supervision XI 10/87 2 2 4 Supervision XII 12/87 3 3 9 Supervision XIII 03/88 1 1 1 Supervision XIV 05/88 1 1 1 Supervision XV 11/88 1 1 1 Supervision XVI 07/89 3 2 6 Supervision XVII 05/90 2 1 2 Supervision XVIII 12/90 2 1 2 - viii - OTHER PROJECT DATA Borrower/Executing Agency: Government of Senegal Related TA Credits: Project: First Parapublic Sector Technical Assistance Credit No.: 764-SE Amount: US$6.30 million Board Date: 01/19/78 Project: Economic and Financial Planning Credit No.: 1061-SE Amount: US$5.30 million Boird Date: 08/26/80 Priject: First Structural Adjustment Credit Credit No.: 1084-SE Amount: US$30.0 million Board Date: 12/18/80 Project: Second Structural Adjustment Credit Credit No.: 1656-SE Amount: US$20.0 million Board Date: 02/04/86 Project: Third Structural Adjustment Credit Credit No.: 1802-SE Amount: US$50.5 million Board Date: 05/21/87 Project: Development Management Project Credit No.: 1910-SE Amount: US$17.0 million Board Date: 05/24/88 - ix - PROJECT PERFORMANCE AUDIT REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (Credit 1061-SE) and SECOND PARAPUBLIC TECHNICAL ASSISTANCE PROJECT (Credit 1398-SE) EVALUATION SUMMARY Introduction 1. Two technical assistance programming and to reform the public projects were financed by IDA Credits enterprise sector (para. 1.2). in 1980 and in 1983 to provide assistance to the Senegalese Obiectives Government in improving public and parapublic sector management. The 3. While both Credits 1061 and 1398 first Credit amounting to US$5.3 aimed at helping reform public million equivalent has been primarily enterprises and strengthening the used to identify and support key Government's ability to supervise policy reforms under ongoing SAL them, Credit 1061 also attempted to operations, including, in particular, rationalize public investment a reform of the public investment selection, strengthen economic programming mechanism and the analysis and project evaluation rehabilitation of the external debt capacities of the Ministry of Planning monitoring system. The second Credit and improve debt reporting and of US$11 million equivalent has investment programming in the Ministry supported the preparation and of Finance. Thus, two different lines implementation of the Government's of actions were simultaneously parastatal sector reform which led to pursued: (a) in the Government the rehabilitation and privatization services proper (Planning and of a number of public enterprises Finance), improve the inadequacy of (para. 1.1). the systems of evaluating and programming and (b) in the RaraRublic 2. These projects were prepared at sector proper, restructure and/or the time when the Government had privatize public enterprises while initiated a vast program of reforms to streamlining government agencies deal with the crisis that the economy control functions (para. 2.1). was experiencing in the late 1970s. They were carried out in the 1980s, a 4. Through Credits 1061 and 1398, period when Senegal implemented a the Bank sought to contribute to series of adjustment programs modernize the Government's modus involving a wide range of structural operandi and modernizing management and financial policies with a view to not only of the public enterprises strengthen public investment but, also, and above all, of the Administration itself (para 2.2). -x - Implementation 9. The Ministry of Economy and Finance was little involved in the two 5. The projects experienced serious TA projects, except as regards public delays and both lasted three years debt management. This was unfortunate more than originally planned (para. since the Ministry has an important 3.1). impact on public enterprise performance through budgetary 6. There were three main reasons provisions and subsidies (para. 3.26). for delays in disbursing Credit 1061: (i) lengthy disbursement and Results procurement procedures partly due to difficulties between the Project 10. The Economic and Financial Management Unit located in the Management Proiect (Credit 1061) did Ministry of Planning, while other yield some results, but at the cost of beneficiaries were the Finance some skewing of its objectives. Ministry and the Prime Minister's Project selection and evaluation Office; (ii) longer time needed to techniques have been improved in build an effective public dcbt system recent years in the Planning Ministry. in the Ministry of Finance when the The Ministry of Finance exercises duration of the consultant services better control on Senegal's debt and was as long as seven years; and (iii) financial data have been computerized, need to be redesign the project due to furnishing valuable data in a field coordination problems between various that had been particularly obscure in divisions in the Planning Ministry and the past. However, analytical to reorient the project towards better capacity of the Senegalese staff is investment budgeting and programming still limited (paras. 4.1-4.3). (rather than towards better project evaluation and selection techniques), 11. By concentrating responsibility in accordance with new SAL for selecting major investments in the conditionalities (para. 3.1). Planning Ministry without close coordination with the sectoral 7. The Parapublic Project (Credit ministries and local authorities, the 1398) experienced difficulties in project involved a risk of aggravating implementation because Project the already considerable Management did not have enough centralization of the Senegalese political clout to get the job of administration. In addition, the reforming public enterprises done. project contributed little to There was a strong tendency in the improving the management of the public early years towards pro-forma and enterprises. Agreements (1contrats- unenthusiastic completion with the TA plan") were signed between the project as well as SAL Government and the enterprises setting conditionalities (para. 3.14-3.15). out performance targets for the enterprises with reciprocal government 8. Substantial work was done in the commitments on tariffs, managerial area of enterprise audits and autonomy, and investment support. accounting assistance. Training However, agreements were reached on efforts were limited and fell short of only six, rather than the ten the project estimates (this proved originally planned, and brought little also true for Credit 1061) (para. improvement in the relationship 3.20). between the concerned public - xi enterprises and the Government. The have been small and fell short of the latter was not always able to fulfil project estimates. its financial obligations and was, therefore, in a weak position when it Sustainability came to sanctioning company management for failing to meet its production 16. The sustainability of the targets (para. 4.3). Economic and Financial Management Projects is uncertain and depends on 12. Knowledge of the current debt the results of the Development situation is now available. However, Management Project, a technical maintenance of the computerized debt assistance project approved in 1988 monitoring system still requires and which is expected to be closed in short-term consultancy services so as 1994. This project supports the to avoid risks of breakdown (para. expansion of a three-year rolling 4.3). investment program to cover project selection and evaluation. Credit 1061 13. The Parapublic TA Project already supported actions in rhis (Credit 1398) helped prepare several field with positive but still limited "contrats-plan" which appear to have results. Similarly, the Development been taken more seriously than earlier Management Project has aimed to ones. Government subsidies to the further improve and consolidate the parapublic sector have decreased. management of public debt. Credit However, the degree to which the 1061 was mainly used to computerize Government is committed to the debt data with limited results "contrats-plan" is still comparatively regarding strengthening analytical uncertain in light of its own cash capacity of Senegalese staff (paras. flow problems. Moreover, it is still 5.1-5.2). too soon to assess the willingness of the heads of public enterprises to 17. The Parapublic TA project has implement the rehabilitation policy produced some sustainable results as with the necessary firmness and regards improved auditing and tenacity (para. 4.5). accounting capacity as well as increased awareness by enterprise 14. Other results of the project managers and Government officials of were: (i) financing of audits which the need for reforms in the parapublic made positive contributions to the sector. Sustainability of this progress of the parapublic sector; project was strengthened by the policy (ii) less substantial work in the area leverage of successive SALs to back it of accounting assistance; (iii) up (paras. 5.3-5.4). extensive support in recent years to privatization (although this was not Lessons of Experience part of the initial objectives of the project); and (iv) a computerized 18. The following are the principal parapublic sector information system lessons that can be drawn from the has been put in place (paras. 4.4- Bank's technical assistance to the 4.5). public and parapublic sector in Senegal (para. 6.1). 15. Few enterprises prepared detailed training plans and five i The Borrowers full commitment seminars only were held. As in the was not obtained at the identification case of Credit 1061, training results and design stage of the projects. To - xii - strengthen the borrower's commitment, projects and policy reform vehicles the identification and preparation of such as SALs, can be and should be TA projects should take place jointly mutually supportive. However, the between the borrower and the Bank. precise content and timing of TA The partial failure to execute certain projects would need to be better components and the diversion of others defined at the identification and in an unforeseen direction pose the design stage through detailed studies problem of properly assessing the and in-depth dialogue between parties assistance need. The following involved. For example, the timing of requirements must be met to ensure the SALs and supporting TA projects was success of TA operations: not harmonized (for instance Parapublic II was approved in 1983 * The borrower's true needs, while SAL I and 11 were approved in expressed by the borrower and on the 1980 and 1986). Similarly, the short- basis of his own experience, must be and medium-term policy objectives of identified; the SALs have to be made more consistent with longer-term * Account must be taken of the institutional development objectives prevailing political, economic and of TA projects. cultural environment; (v) Technical assistance can be * The TA project must be meant to be an activity ancillary to identified and prepared jointly by the or supportive of major structural borrower and the Bank. adjustment operations, designed primarily to create an environment (ii) The Senegalese Ministry of (for example an administrative Economy and Finance was little environment) favorable to those involved in the preparation and operations or to provide funds to implementation of the project (except finance studies required by SAL for the public debt management conditionalities. But it may also be component). Public sector management regarded as a separate and independent TA projects should systematically effort designed to improve the involve this Ministry which plays an functioning and management of the important role in everything affecting public enterprises and the central the Administration itself as well as government agencies. In the case of the parapublic sector. It can be Senegal, it is the former concept that expected that this would motivate it generally prevailed, particularly in more strongly to commit itself to the recent years. For the future, it reform process. would appear that rather as appearing to be a mere adjunct of SALs, (iii) Project Management units technical assistance projects should should not be an "enclave" but an be "refocussed" on the transfer of integral part of ministries or knowledge and experience to Senegalese agencies involved. Attention to officials and enterprise managers so proper location of such units is that they can durably improve their essential to avoid difficulties when a working methods and improve their number of different, separate efficiency. Such "refocus" should be ministries ai e involved with the TA organized around the key concepts of project. capacity building and training. (iv) An important lesson of the (vi) Training can be described as Senegalese experience is that TA the cornerstone of technical xiii- assistance. However, the training perfectly understandable. But the component of both TA projects had only essential task of these experts is to limited results. This situation is transmit their knowledge to their all the more regrettable in that local counterparts, not to perform training activities -- particularly permanent functions. Their main task those organized locally, even if should therefore be training and foreign experts happen to participate transfer of expertise, and in them -- are relatively inexpensive prolongation of experts during several compared with recruitment of long-term years may be unadvisable. if it is consultants. One reason for the lack found necessary to use consultants, it of success in training activities was is generally preferable (except for the failure to prepare detailed and certain precisely defined executive realistic training programs at the implementation tasks) to use them for design stage of the projects. This short periods, in principle of less should be a major preoccupation in than a year. A great deal of future projects. In addition, greater knowledge can be transmitted through attention should be devoted to the brief operations, possibly repeated development of training sessions and several times, by experienced experts. seminars on public and parapublic sectors management issues, held in the (viii) Systematic long-term country itself, and assigning a key recruitment out of technical role to enterprise managers. The assistance project funds of local latter as well as concerned government personnel enjoying salary premia to officials could also be sent on short strengthen government agencies should term missions abroad to visit be avoided. The effect is to create a enterprises and agencies. two-tier agency, something that can be resented by other staff and be (vii) The Senegalese authorities' tolerated only for short periods. interest in retaining the services of Experience teaches that it is foreign experts for a long period, difficult to get rid of the system so when they are competent, effective created which tends naturally to and, because of their extended stay, perpetuate itself. very familiar with the country, is PROJECT PERFORMANCE AUDIT REPORT SENEGAL TECHNICAL ASSISTANCE PROJECT FOR ECONOMIC AND FINANCIAL PLANNING (Credit 1061-SE) and SECOND PARAPUBLIC TECHNICAL ASSISTANCE PROJECT (Credit 1398-SE) I. INTRODUCTION 1.1 Two technical assistance projects were financed by IDA credits in 1980 and in 1983 to provide assistance to the Senegalese Government in improving public and parapublic sector management. The first credit amounting to US$5.3 million equivalent has been primarily used to identify and support key policy reforms under ongoing SAL operations, including, in particular, a reform on the public investment programming mechanism and the rehabilitation of the external debt monitoring system. The second credit of US$11 million equivalent has supported the preparation and implementation of the Government's parastatal sector reform which led to the rehabilitation and privatization of a number of public enterprises. 1.2 These projects were prepared at a time when the Government had initiated a vast program of reforms to deal with the crisis that the economy was experiencing in the late 1970's. Senegal's economic performance in the period 1960-1980 had been poor -- GDP annual growth was estimated at about 2 percent, way below the 3 percent annual population growth rate. Other indicators of socio-economic progress (life expectancy, primary school enrolment rate, and infant mortality) during this period showed that Senegal was falling behind the generally poor levels recorded for Sub-Saharan Africa as a whole. In 1980, GDP per capita was estimated at US$450, lower than in C6te d'Ivoire or Cameroon. Economic development during this period was influenced by three factors apart from rainfall. The loss of preferential treatment of Senegalese exports to the EEC in 1966 was an initial shock which was compensated for by increased external grants and borrowing. There was then a short-lived commodity boom (1976-78) which was followed by the second oil price shock of 1979. Between 1975 and 1980 disbursed public debt on commercial terms increased more than twofold to US$452 million. 1.3 After independence in 1960, the Government sought ownership of productive activity for a number of reasons: to establish national control over important natural resources (groundnut processing and phosphates), infrastructure, and essential services; to promote development in promising areas (tourism, cotton) where private initiative appeared insufficient; and to attempt to increase management and employment opportunities for Senegalese nationals. State ownership expanded rapidly during the mid-1970s when exceptional revenues from phosphate and groundnut exports and borrowings on the international money market enabled the Government to acquire majority share in more than 40 (mainly foreign-owned) companies. In 1971, 68 wholly or majority Government-owned companies represented an estimated 20 percent of modern sector GDP, and employed - 2 - 44,000 workers (approximately 25 percent of modern wage employment). There also was a portfolio of minority participation in approximately 120 other enterprises. 1.4 Until the late 1970s, the aggregate performance of the sector was fairly good. By the end of the decade, however, declining commodity prices and a series of poor harvests, changed the situation dramatically and increasingly exposed the weakness of public enterprise performance. Aggregate net income for the parapublic sector became negative, dividends distributed were negligible, few companies could finance any portion of their new investment, and parapublic companies generated only a small portion (around 10 percent) of total government tax receipts. 1.5 Some of the reasons for poor enterprise performance which recurred throughout the parapublic sector were: unclear or conflicting objectives and priorities; shortages of managerial and technical personnel, overstaffing, and poorly deployed staff; investments which were ill-designed or expensively financed; inadequate cash flow and working capital, due to controlled tariffs or output prices and poor recovery of direct billings; cumbersome government administrative and financial controls. Despite these problems, almost all of the public enterprises had been pressed to expand their personnel and operations; as a result, operational efficiency had continued to decline, maintenance of existing plant was often extremely poor, and the financial structure of many enterprises was dangerously unstable. 1.6 An increasing awareness of the parapublic sector's poor performance produced a significant shift in Senegalese Government policy regarding state ownership of productive activity. In 1980, public enterprise reform was accepted as one of the major elements of the first SAL (approved on December 18, 1980 for US$30 million). By 1983, 20 companies were in liquidation, four had been transferred to private ownership, and increased private sector participation was being actively sought for a number of other ventures, notably in tourism and commerce. As a result of these actions, the parapublic sector accounted for a significantly lower share of GDP and total wage employment that it did in 1976. 1.7 In 1980, for the companies remaining in the parapublic sector, the Government began to establish "contrats-plan." The contrats-plan (of which five were concluded in 1980-83) set out performance targets for the enterprises over a three-year period and reciprocal Government commitments (on tariffs, managerial autunomy, and investment support, for example). 1.8 However, there were a number of weaknesses in the process. First, the enterprises were responsible for drafting their contrats-plan, with little or no outside assistance, or background analysis, and considerable variation in the technical quality of financial and production estimates had resulted. Second, the initial institutional arrangement on the Government side -- a single advisor to the Prime Minister to oversee the process (such advisor being financed from 1980-1983 by Credit 1061-SE) -- proved insufficient to handle an increased volume of negotiations. The Government also made a number of financial commitments without systematically aggregating and reviewing these in light of Senegal's public finance constraints, and ensuring that subsidies were budgeted accordingly. However, the Government remained strongly committed to the contrat- plan process as a vehicle for public enterprise reform, and requested Bank Group -3- technical assistance to help extend the accomplishments, and to address the limitations described above. As indicated, Credit 1061 financed the s-v%ice of a high level advisor to the Prime Minister responsible for overall policy regarding public enterpr: ,es and for overseeing the negotiation of contrats-plan while Credit 1398 provided enlarged resources to the reform of the parapublic sector. 1.9 Since 1983, Senegal has implemented a series of adjustment programs, involving a wide range of structural and financial policies with a view, in particular, to strengthen public investment programming and to reform the public enterprise sector. These programs have been supported by successive stand-by arrangements from the IMF, as well as arrangements under the structural adjustment facility (SAF) and the enhanced structural adjustment facility (ESAF), and three structural adjustment credits from the Bank in 1986 (US$64 million), in 1987 (US$85 million) and 1990 (US$11.5 million). 1.10 Senegal's economic and financial policies, together with favorable external developments, contributed to a revitalization of economic activity, the dampening of inflationary pressures, and the strengthening of the external sector position. After a drought related decline in economic activity in 1983/84- 1984/85, real GDP grew at an average annual rate of 3.1 percent in 1985/86- 1988/89, slightly above the rate of population growth. The rate of inflation, as measured by the GDP deflator, declined from 11.1 percent p.a. in 1983/85 to 2.3 percent in 1988/89. The external current account deficit, excluding official transfers, narrowed from 21.7 percent of GDP in 1982/83 to 9.6 percent in 1988/89. The ratio of public and public guaranteed debt to GDP fell from a peak of 90 percent in 1984/85 to about 80 percent in 1988/89. Economic activity rebounded again in 1990 (real GDP grew by 4.5 percent), inflation has remained low (at less than 3 percent) and the external situation has continued to improve (the current account deficit, excluding grants, fell to 7.8 percent of GDP in 1990, from 9.6 percent in 1988/89). 1.11 However, revenue performance relative to GDP has declined in recent years, partly due to high transfers and subsidies to public enterprises and weaknesses in public investment budgeting and programming. The Government's objective is to achieve a higher rate of growth commensurate with sustainable fiscal and external account deficits. This objective will be achieved in particular through controlling growth in public spending which implies continuing the reform of public enterprising sector through rehabilitation, privatization and liquidation and improvement in the efficiency of public resource management through better budgeting and programming. II. OBJECTIVES AND DESIGN A. ObJectives 2.1. While both Credits 1061 and 1398 aimed at helping reform public enterprises and strengthening the Government's ability to supervise them, Credit 1061 also attempted to rationalize public investment selection, strengthen economic analysis and project evaluation capacities of the Ministry of Planning and improve debt reporting and investment programming in the Ministry of Finance. Thus, two different lines of actions were simultaneously pursued: (a) in the Government services proper (Planning and Finance), improve the adequacy of the systems of evaluating and programming and (b) in the parapublic sector proper, restructure and/or privatize public enterprises while streamlining government agencies control functions. 2.2 Through Credits 1061 and 1398, the Bank sought to modernize the Government's modus operandi and modernize management not only of the public enterprises but also, and above all, of the Administration itself. 1) Economic and Financial Planning Project 2.3 The project concerned essentially the central government agencies (Planning and Finance Ministries) and assigned priority to strengthening the Ministry of Planning, which had a decisive role in the preparation of development projects. When the project was prepared in 1979, Senegal had undertaken a stabilization plan which suffered from a number of constraints. One was the inability of the Ministry of Planning to conduct in-depth analysis and selection of the investment projects to be financed by the donors. In addition, a number of important aspects of financial policy, notably public debt management, were poorly managed because the agencies were not in a position to predict and effectively control the development of the resulting changes on the public finances. Finally, the institution of "contrats-plan" in the parapublic sector could not be accomplished without giving the Government the means to oversee the negotiation of contrats-plan as well as to define the overall policy regarding public enterprises. Under these circumstances, and faced with a real and urgent need, Senegal requested the Bank, in November 1979, to finance a technical assistance project for economic and financial planning. 2.4 The overall project objectives were: (a) to increase the benefits of development projects by improving project preparation, selecting better and more directly productive projects and improving project implementation; and (b) to improve the process of Government financial control. 2.5 Specifically, the project's objectives were: (i) To improve the effectiveness of the Ministry of Planning and Cooperation (MPC) throughout the entire cycle of identification, Felection, preparation, evaluation and implementation of major projects. -5- (ii) To speed up project implementation by, inter alia, upgrading the Commission Nationale des Contrats de 1'Administration (CNCA), within the Office of the Secretary General of the Presidency which was responsible for contract review and processing for approval; (iii) To assist the Ministry of Economy and Finance (MEF): (a) to support the operations of the reorganized department of Debt and Investments (DDI) in order to provide timely historical and projected information on debt statistics and Senegalese funds provided for projects financed by Government or external sources; and (b) to strengthen the departments of Budgeting and Forecasting; and (iv) To assist the Prime Minister's Office in the preparation of contrats-plan for the parapublic sector. 2) Second Parapublic TA Project 2.6 The project was signed in August 1983 and provided for total expenditure of US$12 million, of which US$11 million was to be financed by an IDA credit. It supported a parapublic technical assistance project which followed a first TA project for Senegal's parapublic sector (Credit 704-SE for US$6.30 million) which was completed in December 1982. It was decided to extend Bank's assistance for two reasons: (i) the public sector burden on the budget, far from declining, was rising continuously, and rehabilitation of the public sector was more than ever on the agenda and the focus of increased interest on the part of the Government; and (ii) the first parapublic sector technical assistance project in Senegal had not been a great success. It had focused mainly on the various government agencies responsible for supervising and monitoring the parapublic sector, and not on the enterprises themselves. The overall performance of the parapublic sector had not improved, and had even deteriorated during the project period. There was still a need for cnntinued efforts at reform of the sector and technical assistance was needed to support this. 2.7 The central purpose of the project was to support the Senegalese Government's efforts to reform the parapublic sector and to strengthen the contrat-plan process as a vehicle for improving public enterprise performance. 2.8 Specifically the project objectives were: (i) to provide 12 key enterprises with the necessary technical assistance to develop rehabilitation programs and prepare contrats-plan with the Government; -6- (ii) to provide technical assistance to four central government agencies responsible for monitoring the parapublic sector and developing government policies toward the sector (these agencies were: Agent Comptable Central des Etablissements Publics [A('], Bureau Organisation et M4thodes [BOM], Contr6le Financier de la Pr4sidence [CFP] and Direction du Traitement Automatique de 1'Information [DTAI]). Each of these agencies was to be helped by a specialist whose main role was to be training; (iii) to help public enterprises to finance audits and accounting assistance; (iv) to train enterprise personnel and government controllers in preparing and implementing the enterprises' rehabilitation plans; (v) to finance studies relating to the scope, organization and management of the parapublic sector. B. Design 1) Economic and Financial Planning Project 2.9 The Economic and Financial Planning Project was expected to be implemented over a three-year period (1980/81 to 1983/89). Each ministry was to be responsible for the implementation of its components. But the overall administration of the project was to be coordinated by a Project Management Unit (PMU) located in the Division of Programming and Monitoring (DPM) of the Department of Planning of the MPC. 2.10 Five long-term expatriate consultants were to be recruited (three in MPC, one in MEF (Debt Division] and one in the Prime Minister's Office to supervise contrats-plan). Short-term consultants were also to be provided, in particular to organize seminars in project analysis and planning. Out of a total US$5.3 million project costs financed by Credit 1061, US$2.3 million were allocated for experts and consultants, US$2.4 million for studies and US$0.3 million for equipment while US$0.3 million remained unallocated. The Planning and Monitoring Division in the MPC had the overall responsibility for carrying out the studies related to development projects and thus help in establishing a pipe-line of well-prepared and directly productive projects which could be submitted to donors, including the Bank, and lead to the more efficient use of domestic and external resources. 2.11 The design of the project had three major flaws. First, it set up the PMU in the Planning Ministry while the Finance Ministry and the Prime Minister's Office were also involved with the Project -- this was bound to create coordination problems between the three beneficiaries. Second, the project concentrated on the Division of Programming and Monitoring (DPM) in the MPC while in fact several other departments and divisions in MPC should also have been involved and DPM was given too many tasks to handle alone. Third, the management of the parapublic sector was to be affected only indirectly, through the contrats-plan formula. As the Parapublic TA Project II was near completion in - 7 - 1980/81, and the Third Parapublic TA Project was not yet approved (1983), the Bank used Credit 1061 to respond to the Government's request for assistance in developing further the contrats-plan approach and setting out responsibilities, commitments and expectations of both parties (enterprise and Government), particularly those relating to management's objectives and government financial obligations. However, this was to be done through the appointment of a single high level advisor to the Prime Minister's Office without guarantee that this formula would bring positive results. 2) Second Parapublic TA Project 2.12 This project was expected to be completed in five years (1983 to 1987). The PMU was attached to the office of the President of the Republic and was known as the Contrats-Plan Unit, or Collule des Contrats Plan (CCP). In 1988, it became the Delegation for Parapublic Sector Reform (DRSP). 2.13 The five main components were long-term consultants (US$2.2 million of which $ 1.8 million for four long-term experts for technical assistance to Government agencies [ACC, DTAI, CEP, BOM]); equipment for technical assistance to the public enterprises (US$1.75 million); audits and accounting assistance to public enterprises (US$1.75 million) and studies on the parapublic sector (US$0.8 million). The training component was relatively small and defined only in general terms. 2.14 The project inherited weaknesses in design from Parapublic I. They included the continued support for an overly complex institutional structure for monitoring the parapublic sector (too many agencies), the continued inclusion of a relatively ireffective training component, an overreliance on long-term expatriate experts, the absence of support for key divisions in the Finance Ministry whose operations had an important impact on public enterprises performance and monitoring, and a relatively weak project management unit (CCP) which had to be strengthened later on (PCR, para 4.01). III. IMPLEMENTATION A. Economic and Financial Planning Project 3.1 Credit 1061 was closed three-and-a-half years later than originally planned. In all, the project planned for three years lasted seven years. The last disbursement date was June 8, 1988 There were three main reasons for such delays: (i) lengthy disbursement and procuroment procedures; (ii) longer time needed to build an effective public debt maragement system in MEF where the duration of the consultant services was seven years; and (iii) need to redesign the project due to coordination problems between various divisions in the Planning Ministry and time spent on implementation of a 1986 study which recommended to reorient the project towards better investment budgeting and programming, in accordance with SAL conditionalities. -8- 3.2 Problems occurred due to the poor relationship between the PMU located in MPC, with other beneficiaries in MEF and in the Prime Minister Office. This led to procurement problems and delays in disbursements. 3.3 The Division of Programming and Monitoring (DPM) which was the target of the project support in the Ministry of Planning was involved in too many tasks without assigned priorities. As a result the staff of DPM spent a relatively small part of its time on the primary function of project evaluation due to the competing demands on their time. 3.4 Long-term consultants remained in place much longer than anticipated with the result that project funds were seriously overspent for this category (US$3.4 million instead of US$2.3 million originally estimated). Moreover the work done by these experts proved to be uneven. Differences of ru,thod and doctrine on project evaluation between Canadian and French experts sometimes caused confusions. The training work they did was judged to be inadequate. Finally, some of them lacked professional conscienciousness although one expert at MPC and the debt management expert performed satisfactorily. 3.5 The training effort attained on average only 40 percent of the projected level. This was bitterly resented by the MPC staff who were supposed to benefit from it. A true VFC staff personnel training plan was not designed and implemented. 3.6 Up to 1985, the studies initiated did indeed concern the various sectors in which investment projects could be considered: stockraising, groundnuts, peat, urban sector, small industries, etc. However, delays took place in implementing these studies and the funds allocated under the project were not fully spent. 3.7 From 1986, a new kind of study was undertakrn, mainly linked to priorities set by the new SAL approved in February 1986. The SAL effectively used unallocated funds in the project to perform tasks which were judged essential to the success of the adjustment program. Studies concerned the preparation of an input output table, diagnostic study of the investment programming system and of the need to reorganize MPC and MEF, study of productivity and employment, etc. 3.8 The Diagnostic Study recommended: (a) the separation of the planning functions from investment programming (the plan should focus on strategy and not include the list of projects selected for financing); (b) the establishment of a three-year rolling investment program (including public sector projects selected on the basis of objectives coherent with the plan objectives); (c) linking the investment program with the national budget to ensure that selected projects can be realistically financed by the Ministry of Finance; and (d) clarification of task allocation within the Ministry of Plan and the Ministry of Finance and also between these two ministries (PCR, para. 15). 3.9 As a result the Planning Ministry was reorganized and a new Committee was made up of the representatives of the Ministry's Directorates and of the Prime Minister's Office. This Committee was responsible for the selection of projects once they were evaluated by the Evaluation Division. In the Ministry - 9 - of Economy and Finance, the Department of Public Debt and investments (DPI) was also reorganized. 3.10 All these changes meant that the closing date for the project was postponed three times (June 1985, June 1986, and December 1986). The initial postponement followed a pivotal reorganization of project activities and allowed more time to reorient the planning component in support of Senegal's presentation to the First Consultative Group meeting and preparation of the new Seventh Four- Year Plan. The first extension also permitted rationalization and gradual overhaul of the investment planning and budgeting process, in line with the project reorganization. 3.11 The senond postponement allowed continuation of the investment programming and budgeting reforms, preparation of several donor meetings, and preparation of the Government's medium-term structural adjustment program, for which a SAL totalling US$70 million was approved in February 1986. 3.12 The third and last postponement financed the continuation of activities linked to the Government's implementation of the structural adjustment program, i.e preparation of the first three-year public investment program (PIP), computerization of physical/financial monitoring of public investments, review of the Government's special agreement with large enterprises, studies on labor legislation and wages in the context of an industrial reform package, and extension of the debt management experts' mandate in DDI to cover grants and subsidies, onlending and domestic debt. B. Second Parapublic Project 3.13 The Project was closed in June 1990, i.e three years later than originally planned. The project planned for five years was completed in eight years. The last disbursement was made on December 20, 1990 and an undisbursed balance of SDR 52,416 was canceled. 3.14 Difficulties in implementation resulted from weaknesses in the PMU which was entrusted to the Contrats-plan Cell (CCP) set up within CFP in the Office of the President of the Republic. Although the CCP was strategically located and able to use data on the parapublic sector already gathered by CFP in earlier years, CCP did not have enough political clout to get the job done and it was eventually upgraded and transformed into the DRSP (D616gation A la RWforme du Secteur Public) in 1987. 3.15 Government was slow to give sufficient power to the PMU and there was a strong tendency in the early years towards pro-forma and unenthusiastic compliance with project and SAL conditionalities. There was initially little follow-up action taken on the recommendations of project-financed studies. However, the situation improved later on with the upgrading of the CCP to the DRSP and the appointment of a high level, technically competent individual with ministerial rank to manage the project. Project accounts and auditing were of acceptable standard throughout. Government fulfilled its commitments to provide counterpart funds. - 10 - 3.16 The Project provided for 126 months of consultants for the 12 public enterprise rehabilitation operations and contrats-plan preparation. Another 144 months were allocated for four experts for three years in four central supervisory agencies. However, funds spent on consultants amounted to US$8.7 million compared to US$4.2 million originally planned. The main overruns related to long-term consultants. This was due to the large number of consultants hired and the length of their contracts (although origirally planned for two to three years, they were often longer). From 1983 to 1989, six individual long-term consultants were employed in public enterprises or in CVCCEP (a central supervising agency -- cf. para. 3.20) and eight consulting firms provided long- term experts in public enterprises or in central government agencies (CFP, CEP, BOM, Contrats-Plan Unit). In 1988, it was decided to eliminate the hiring of long-term consultants and by June 30, 1990 no such consultants were being funded under the Project. 3.17 During the course of preparing the rehabilitation program, the public enterprise teams were supposed to identify operational bottleneck or other pressing problems that could be resolved with small immediate expenditures. To enable the enterprises to quickly implement some of the consultants' recommendations and realize possible significant performance improvements, the project included a provision of US$1.5 million to fund urgently-needed spare parts and other equipment. A list of the most immediate spare parts requirements for each enterprise was to be prepared by the consultants and submitted to IDA for approval at the same time as the draft rehabilitation programs were submitted. It was anticipated that IDA would prepare a follow-on parapublic project to help finance the implementation of enterprise rehabilitation programs, conditional upon achievement by the enterprises of performance objectives established in their contrats-plan. 3.18 The US$1.5 million provision for equipment of public enterprises was not used. Eight first-generation contrats-plan (1984-88) were prepared but they did not put an end to the continuing financial difficulties of most enterprises and were not taken seriously by either the public enterprises themselves or by the central administration. 3.19 In 1989-90, attempts were made to strengthen the contrats-plan policy by imposing financing discipline in the allocation of resources through the performance contrats-plan and in ensuring that financial commitments within the contrats-plan were honored. In this respect the seven second generation contrats-plan signed in 1989-90 reflected considerable progress (PCR, para 16). However, the degree to which the Government is financially committed to the contrats-plan is still comparatively uncertain, in light of its own cash flow problems. In addition, it is still to soon to assess the real willingness of the heads of public enterprises to implement the planned rehabilitation policy with the necessary firmness and tenacity. 3.20 Substantial work was done in the area of enterprise audits, although only 70 percent of the originally planned provision of US$1.75 million was used. The Audit Commission (Commission de Vrification des Comptes et de Contr6le des Etablissements Publics, CVCCEP) monitored a number of audits performed by accounting firms to ensure that enterprises progressively implemented the auditors' recommendations. Audits were done of ten enterprises at a relatively - 11 - low cost. They have produced a more accurate picture of their accounting situation and greatly clarified knowledge of Senegal's parapublic sector. 3.21 A less substantial effort (improvement of accounts presentations and consistency) was also accomplished for about ten other public enterprises under CVCCEP supervision. 3.22 The CVCCEP has in addition substantially expanded its assistance to the accounting profession in Senegal: 12 auditors have received assistance to prepare for the French accounting diploma, and six other have made auditing study visits to firms of accountants in Paris. 3.23 The strengthening of four central oversight agencies was to be accomplished through training provided by advisers assigned to each of them. For CFP (Contr6le Financier de la Prdsidence), actions of training abroad was limited and study assignments to enterprises very rare. The Organization and Methods Office (BOM) was to draw up ambitious training plans for the public enterprises, tailored to their own needs and personnel. The project made an expert available to BOM for three years. But only three enterprises prepared training plans and only five seminars were held. Training results have been small and fell far short of the project estimates. It appears that BOM did not display sufficient dynamism. 3.24 However, an important step forward was taken with the establishment in Dakar of an Enterprise Management Institute (ESGE) which later became the African Management Studies Center (CESAG). 3.25 The project provided limited assistance to two other agencies: the Central Accounting Agency (ACC) and the Controller of Financial Operations (COF). The functions of these two agencies, which included a priori control of enterprises' expenditures, have been practically eliminated since emphasis is now placed on the transfer of financial responsibilities to public enterprise managers. 3.26 The project had little effect on the Ministry of Economy and Finance which was unfortunate since the latter had an important impact on public enterprise performance monitoring. The Parapublic Cell (CSP) of the MEF received limited support (one consultant in the Public Enterprises Center, one vehicle, and some items of office equipment). A major disadvantage of the supervisory structure for the parapublic sector has arisen from the low degree of involvement of the MEF. Within the latter, CSP is performing a useful role with limited resources in the evaluation and cancellation of reciprocal debts between the Government and public enterprises. CSP is now beginning to identify and canceling the cross debt owed to one another by the public enterprises themselves. This is an example of the project resources being used to implement one of SAL IV (1990) conditionalities: that special efforts be devoted to calculate reciprocal debts, in order to reduce accumulated arrears on both sides. 3.27 Only 58 percent of funds allocated to studies have been utilized, i.e. US$466,000. There were interesting sectoral studies (energy, railways, Dakar- Marine, banking system) while other useful studies concerned problems of general government policy (divestiture, financial relations between the Government and - 12 - the public enterprises, parapublic sector service tariffs, government subsidies, etc.). 3.28 The 1988/89 and 1989/90 budgets for the 1398-SE Project allocated funds to the preparation and acquisition of a computerized parapublic sector information system (SGASP) which is financed by IDA for about US$160,000 (60 percent under Credit 1398 and 40 percent under Credit 2090, a TA project approved in 1988). Regularly updated, the system can provide data on Government divestiture and equity investments. 3.29 Originally, privatization was not one of the activities supported by Parapublic II. In 1988, it was decided that much of the remaining proceeds of Parapublic II would be devoted to privatization. In 1989-90, a small DRSP privatization team devoted considerable efforts to preparations, surveys and negotiations. Of the total of 17 enterprises scheduled under SAL IV letter of development policy of December 1989, 16 had been offered for sale by December 1990 and nine had been sold. In addition, seven public enterprises have been dissolved. IV. RESULTS A. Economic and Financial Planning Project 4.1 Overall, the Project did yield some results, but at the cost of some skewing of its objectives. 4.2 The current situation is as follows: - The Ministry of Planning now possesses trained and operational teams with the ability to appraise and prepare investment projects. Thanks to the Project, these teams have been strengthened by several Senegalese University graduates initially recruited as counterparts to the expatriate experts and who now occupy key positions in the Ministry. - The procedure under which projects are presented by the technical ministries, then studied and selected by the Ministry of Planning before being transmitted to the potential donors, is being applied. The "pipeline" is therefore in working order and appears to be effectively delivering projects to the donors; however, some of these projects are not of sufficient economic interest or else have not been really appraised. The Ministry and the Bank agreed that for 1989/90 and subsequent years most projects presented under the three-year investment program were to be evaluated. The Project has also helped design and start implementation of a new system of public investment programming and budgeting. - 13 - Thanks to the assistance furnished by the Bank and other donors, project selection and appraisal techniques have been improved during recent years: standardized appraisal briefs are used, and the dossiers contain a great deal of judgment information, supported by figures, concerning types of products envisaged, external trade and employment; economic and financial rates of return are calculated using standardized methods; and a guide for appraising productive projects has been prepared with the assistance of two reputable economists -- this document, which recommends economic analysis procedures, has proved to be well suited to the purpose in view. Finally, the Planning Ministry produces an annual report on execution and monitoring of the Plan. This report gives copious (but not always absolutely complete) information on the progress of each project. Finally, the Bank's technical assistance has enabled the Debt and Investment Directorate (Ministry of Economy and Finance) to exercise effective control of Senegal's debt and to computerize the corresponding financial data, furnishing very valuable data in a field that had been particularly obscure in the past. 4.3 Despite these accomplishments, the circumstances of execution of the Project were found to be bpen to criticism on a number of points. - Hiring a civil servant within the Ministry of Planning and local consultants remunerated under the project at a much higher level than other Senegalese civil servants has proved rather disturbing. While those staff members paid by the project were competent, such a discrimination was unhealthy and likely to create resentment toward the Bank. However, there was a risk that they would leave the services of the Government if they were not rewarded through better pay. - Complaints have often been heard regarding the unwieldy and sluggish procedures for commitment of expenditures under the Project. However, decentralization to the Bank's Resident Mission in Dakar has now taken place; the lender-borrower dialogue is undoubtedly closer and more fruitful when it is local than when it is remote. - The training effort accomplished under the project has been inadequate and far less than originally planned; the demand for training, 5Oiformation and documentation remains high. - By concentrating responsibility for selecting major investments in the Planning Ministry and appreciably strengthening its resources, the Project involved a risk of aggravating the already considerable centralization of the Senegalese administration. It would have been advisable to strengthen sectoral institutions responsible for project preparation, evaluation and execution (technical ministries, public enterprises, local authorities). Additional efforts are also required to deepen the economic - 14 - justification of projects, to better quantify recurrent costs and assess financing capacity. The Ministry of Economy and Finance found itself rather in the background in relation to the Project, in which it had little interest apart from the public debt issue. In view of the MEF's prime responsibilities, particularly the need for operating expenditures arising out of the projects implemented to be carried on the national budget, an effort should have been made to involve it more, at all levels, in the action implemented. Such effort took place only during the last years of the project. The Project has in the last analysis contributed little to improving the management of the public sector enterprises. For example, selection of public enterprise investment projects was not really tied to the preparation and subsequent conclusion of contrats-plan with the Government. The contrats-plan process was applied to six rather than the ten companies originally planned at appraisal and brought little improvement in the relationship of the concerned public enterprises with the Government. The latter was not always able to fulfil its financial obligations and was, therefore, in a weak position when it came to sanctioning company management for failing to meat its production targets. The Project has enabled Senegal to computerize public debt management. Knowledge of the current debt situation is now available and it has become possible to project the future situation. However, the system was implemented at the heavy cost of seven years of expatriate services, and its maintenance still requires short-term consultancy services so as to avoid risks of breakdown. B. Second Parapublic TA Project 4.4 The Project had some positive results: The Bank's support for the project enabled the Senegalese authorities to put together a small team with responsibility for parapublic sector reform. After 1987, this team was led by a senior official of high caliber who was given the necessary powers to proceed to reorganize the sector and some degree of government divestiture. The technical assistance furnished by the Project to promote analysis of financial conditions of the enterprises through audits has made positive and appreciated contributions to the progress of the parapublic sector. This appreciation extends both to direct financing of audits by the project and the activities of the CVCCEP, whose effectiveness and low cost have to be stressed. - 15 - - The Organization and Methods Office (BOM) training activities proved insufficient although this was partly compensated by technical assistance given to the Senegalese accounting professions by CVCCEP in the form of preparation for the French accountant's diploma and audit fellowships in French firms. A special training effort was also mounted for government controllers responsible for public enterprise supervision in the CEP through an intensive session held in Dakar by a French University. However, very limited training took place in enterprises themselves. Except for valuable training provided by the African Advanced Management Studies Center (CESAG), the training conducted with Parapublic II Project support was geared mainly to supervisory corps (CVCCEP and government controllers). The public enterprises themselves have received little training assistance. - The project financed a number of good quality studies which provided the analytical base for many of the measures included later in the structural adjustment program supported by the Bank (privatization policy, public enterprise tariff policy, level of subsidies to public enterprises, role and structure of central supervisory agencies, etc). - Although this was not originally anticipated by the Project, a privatization program partly supported through consultants, has gained momentum since 1989. A number of enterprises have been put for sale on the market. 4.5 An important objective of the Project was the rehabilitation of 12 public enterprises, through the signing of contrats-plan with the Government and the use of consultants. From 1984 to 1989, eight contrats-plan were prepared but did not put an end to the continuing difficulties of most enterprises and were not taken seriously by either the public enterprises themselves or by the central administration. Eight new contrats-plan were signed in 1989-90 which seem to have been more effective. Government-operating subsidies to the parapublic sector (excluding the groundnut subsector) decreased from CFAF 11 billion in 1987 to CFAF 7.6 billion in 1989 and declined again in 1990/91. However, value added in the parapublic sector has increased little and staffing has only slightly decreased. Although in principle the use of contrats-plan was beneficial, it had two main defects: - The degree to which the Government can be financially committed to the contrats-plan is still comparatively uncertain in light of its own cash flow problems. - It is still too soon to assess the real willingness of the heads of public enterprises to implement the planned rehabilitation policy with the necessary firmness and tenacity (PGR, para. 17). 4.6 In reality, it is impossible to separate the impact of the Project on the public enterprise sector from that of the SALs since they are so closely and interdependent. The SAL measures relating to public enterprise reform have - 16 - benefitted from studies and staffing supported by the technical assistance project but without the SALs conditionalities which captured the attention of decision makers, many of the TA project objectives might not have been achieved. The Second Parapublic Project was approved in 1983 but it is only after two SALs had been sanctioned, in 1986 and 1987, that initial slow progress was partly overcome through strengthening of the Project Management Unit and added impetus to signing of more effective contrats-plan in recent years. 4.7 Thus, there is reason to believe that the Bank's technical assistance for parapublic sector reform has produced some results. However, these are limited, and in-depth reform of the sector continues to belong largely to the future. V. SUSTAINABILITY A. Technical Assistance Project for Economic and Finance Planning 5.1 This project's main results were in the areas of investment programming and budgeting (i.e., three-year rolling program) and of external debt management. The sustainability of these results is uncertain although some progress may have been achieved through a follow-up technical assistance project (Credit 1910-SE approved in May 1988 for a Development Management Project). This project, which is expected to be closed in 1994, aimed at supporting the expansion of the three- year rolling investment programming system to cover project evaluation and selection, as well as physical and financial monitoring. Efforts are also to be made to address the issue of generating feasible project ideas and creating a stock of sound projects from which Government can choose for its investment. As indicated earlier, Credit 1061 had supported actions in this field with positive but still limited results. 5.2 The Development Management Project is also assisting the Debt Division in MEF to further improve and consolidate the management of public debt by: (a) expanding its monitoring systems to cover short-term external public debt, external private debt, domestic public debt, as well as external grants and Government guaranteed debts; (b) increasing its analytical capacity to forecast debt service and commitments; and (c) providing analysis for the formulation of borrowing strategies. As seen above, Credit 1061 had been mainly used to computerize public debt management with limited results regarding strengthening analytical capacity of Senegalese staff. B. Second Parapublic Technical Assistance Project 5.3 Although the results of Parapublic II have been only partially successful, the fact remains that the Government is intensifying its efforts to complete the comprehensive reform of the public enterprise sector supported by the Project and successive SALs in 1986, 1987 and 1990. The reform aims at a reduction in the scope of government participation and the strengthening of the parapublic sector's financial position. The rehabilitation of public enterprises remaining in the public domain will continue to be undertaken in the context of -17- contrats-plan, rehabilitation plans, or restructuring plans. It would thus appear that the Second Parapublic Project results in particular regarding improved Senegalese auditing and accounting capacity and increased awareness by enterprise managers and Government officials of the need for reforms in the parapublic sector are likely to be sustainable. 5.4 It is now perceived that the main task for the future concerns rehabilitation of the public enterprises themselves. If the Bank wishes to support a new technical assistance program for the parapublic sector, the main target group ought to be the public enterprises, with less emphasis on Government administrative a& ..cies than originally planned under the Second Parapublic Project. VI. LESSONS OF EXPERIENCE 6.1 The following are the principal lessons that can be drawn from the Bank's technical assistance to the public and parapublic sectors in Senegal and the suggestions that may be derived from them. (1) While the reform of government services and the parapublic sector affects the entire Administration, it depends to a large extent on the effort and energy of the Ministry of Economy and Finance (MEF). However, the latter was little involved at least initially in the Bank supported technical assistance projects. Yet the MEF plays an important, and sometimes decisive role in everything affecting both the Administration itself and the parapublic sector. It is thus essential that the MEF be involved in the design and implementation of the measures taken for reform of the public and parapublic sectors as a whole; it can be expected that this would motivate it more strongly to commit itself to the reform process. (2) There is a need for strong and efficient Project Management Unit (PMU) in technical assistance projects dealing with numerous and diversified objectives. Such a unit should not be an "enclave" but an integral part of the Ministry or agency involved. The location of the PMU in the Ministry of Planning in the Economic and Financing Planning Project proved to be a wrong decision, detrimental to the success of the project because other ministries were involved and had a poor relationship with the Planning Ministry. The PMU management for the parapublic project was also rather weak and inefficient at least initially. The Contrats-Plan Cell in the Presidency of the Republic was strategically well located but had initially little political clout and it is several years later that it became headed by an official of high rank and caliber. This was made possible through the support of SALs approved in 1986/87. This indicates that Senegalese authorities did not feel entirely committed to the TA project in initial years. The lesson is that without real - 18 - commitment by the borrower at an early stage, TA projects can rarely succeed. (4) To strengthen borrower's commitment, the identification and preparation of TA projects should take place jointly between the borrower and the Bank. The partial failure to execute certain components and the diversion of others in an unforeseen direction pose the problem of properly assessing the assistance needs. The following requirements must be met to ensure the success of TA operations: - The borrower's true needs, expressed by the borrower and on the basis of his own experience, must be identified; - Account must be taken of the prevailing political, economic and cultural environment; - The TA project must be identified and prepared jointly by the borrower and the Bank. (5) The TA projects were prepared and designed independently of SALs. But execution of the projects showed that they became linked directly or indirectly to the SALs: - The very title of Economic and Financial Management Project, linked it to SALs since its purpose was to provide the Senegalese authorities with the technical capacity to prepare investment programs on the terms laid down by the SALs. This link was greatly strengthened from early 1986 when unused TA project funds began to be directly used to meet SAL conditionalities. - Since a top priority of SALs was trimming of the parapublic sector, Parapublic II also adhered to guidelines defined by the SALs. (6) An important lesson of the Senegalese experience is that TA projects and policy reform vehicles such as SALs, can be and should be mutually supportive. However, the precise content and timing of TA projects would need to be better defined at the identification and design stage through detailed studies and in- depth dialogue between parties involved. For example, the timing of SALs and supporting TA projects was not harmonized (for instance Parapublic II was approved in 1983 while SALs I and II were approved in 1980 and 1986). Similarly, the short- and medium-term policy objectives of the SALs have to be made more consistent with longer-term institutional development objectives of TA projects. (7) Technical assistance can be meant to be an activity ancillary to or supportive of major structural adjustment operations, designed primarily to create an environment (for example, an - 19 - administrative environment) favorable to those operations or to provide funds to finance studies required by SAL conditionalities. But it may also be regarded as a separate and independent effort designed to improve the functioning and management of the public enterprises and the central government agencies. In the case of Senegal, it is the former concept that generally prevailed, particularly in recent years. For the future, it would appear that rather as appearing to be a mere adjunct of SALs, technical assistance projects should be "refocussed" on the transfer of knowledge and experience to Senegalese officials and enterprise managers so that they can durably improve their working methods and improve their efficiency. Such "refocus" should be organized around the key concepts of capacity building and training. (8) Training can be described as the cornerstone of technical assistance. However, the training component of both TA projects had only limited results. This situation is all the more regrettable in that training activities -- particularly those organized locally, even if foreign experts happen to participate in them -- are relatively inexpensive compared with recruitment of long-term consultants. One reason for the lack of success in training activities was the failure to prepare detailed and realistic training programs at the design stage of the projects. This should be major preoccupation in future projects. In addition, greater attention should be devoted to the development of training sessions and seminars on public and parapublic sectors management issues, held in the country itself, and assigning a key role to enterprise managers. The latter as well as concerned government officials could also be sent on short term missions abroad to visit enterprises and agencies. (9) The carrying out of audigs, or more generally the effort to gain a more complete and accurate picture of the financial situation and accounts of public enterprises, should be pursued in the future. Actions should be taken to ensure that auditing (progressively financed by the enterprises themselves) becomes customary and regular. Once the true financial situation is regularly known, the various forms of TA to be supported by TA projects can be applied with increasing effectiveness. (10) The Senegalese authorities' interest in retaining the services of foreign experts for a long period, when they are competent, effective and, because of their extended stay, very familiar with the country, is perfectly understandable. But the essential task of these experts is to transmit their knowledge to tkeir local counterparts, not to perform permanent functions. Their main task should therefore be training and transfer of expertise, and prolongation of experts during several years may be unadvisable. If it is found necessary to use consultants, it is generally preferable (except for certain precisely defined executive implementation tasks) to use them early for short periods, in - 20 - principle of less than a year. A great deal of knowledge can be transmitted through brief operations, possibly repeated several times, by experienced experts. (11) Systematic long-term recruitment out of technical assistance project funds of local personnel enjoying salary premia to strengthen government agencies should be avoided. The effect is to create a two-tier agency, something that can be resented by other staff and be tolerated only for short periods. Experience teaches that it is difficult to get rid of the system so created which tends naturally to perpetuate itself. WORL'PANK TMSS - 21 - ATTACHMENT ZZC ýEC012 'CA183 WWB1119 P (EDD2 ****1 I 248423 WORLDBANK WOTYQ MEFDI SG EXPEDITEUR : MADAME FATOU DIAGNE DIRECTEUR DE LA DETTE ET DE LA COOPERATION FINANCIERE MEFP - DAKAR - DESTINATAIRE : MONSIEUR MARK BAIRD7 CHEF DE DIVISION POLITIQUES ECONOMIGUES INDUSTRIE ET FINANCES - BANQUE MONDIALE - WASHINGTON - TELEX NR 248423 OU FAX (202/676-050) DAKAR LE 15 JUIN 1992 TELEX NR 22/MEFP/DDCF EN REPONSE A VOTRE LETTRE DU 22 MAI 1992 TRANSMETTANT RAPPORT D'EVALGUTION RETROSPECTIVE PROJET D'ASSISTANCE DANS LE DOMAINE DE LA PLANIFICATION ECONOMIQUE ET FINANCIERE (CREDIT 1061/SE) ET DU DEUXIEME P'rOJET D'ASSISTANCE TECHNI9UE AU SECTEUR PARAPU- BLIC (CREDIT 1I98/SE( VOUS INFORMONS QUE LE CREDIT 1398/SE ETAIT SUIVI PAR LA PRESIDENCE DE LA REPUBLIQUE STOP. EN CE QUI CONCERNE LE CREDIT 1061/SE VOUS CONFIRMONS NOTRE SATIS- FACTION QUANT AUX RESULTATS ENREGISTRES PAR LA DIRECTION DE LA DETTE ET DE LA COOPERATION FINANCIERE (DDCF) DANS LE CADRE DE L'ASSISTANCE DE CE PROJET STOP. CE PROJET A FACILITER LA MISE EN PLACE D4'UN SYSTEME DE GESTION DE LA DETTE PUBLIQUE - STOP. POUR ASSURER SUC'ES TOTAL AUX PROJETS D'ASSISTANCE TECHNI- QUE VOUS SUGGERONS QUE TRAVAUX D D'IDENTIFICATION ET DE PREPARATION DE CES PROJETS SOIENT EFFECTUES CONJOINTEMENT PAR LE GOUVERNEMENT DU SENEGAL ET LA BANQUE MONDIALE - STOP. WAUTE CnNSIDERATION - STOP ET FIN. 248423 WORLDBANK 21561 MEFDI SG - 23 - The Word Bank FOR OFFICIAL USE ONLY PROJECT COMPLETON REPORT SENEGAL SECONDPARAPUBLIC TECIM(AL ASSISANCE PROJECT (CREDIT 1398-SE) June 23, 1992 Enerpv and Industry Division Country Department V Africa Regional Office CURRENCY EOUIVALENTS Currency Unit = CFA franc (CFAF) USSI.00 = CFAF 295 ABBREVIATIONS AND ACRONYMS ACC Agent Comptable Central des Etablissements Publics BHS Banque de l'Habitat du Sénégal BICIS Banque Internationale pour le Commerce et l'Industrie du Sénégal BOM Bureau Organisation et Méthodes CCP Cellule des Contrats Plan CEP Centre des Etablissements Publics CFP Contrôle Financier de la Présidence COF Contrôleur des Opérations Financières CSP Cellule du Secteur Parapublic (MEF) CVCCEP Commision de Vérification des Comptes et de Contrôle des Etablissements Publics DRSP Délégation à la Réforme des Entreprises Publiques DTAI Direction du Traitement Automatique de l'information HAMO Société des Habitations Modernes MEF Ministère de l'Econonomie et des Finances OPCE Office des Postes -x de la Caisse d'Epargne PCR Project Completion Report PE Public Enterprise PMU Project Management Unit SAED Société d'Aménagement et d'Exploitation des Terres du Delta SAIH Société Africaine Immobiliere et Hôtelière (Meridien Hôtel) SAL Structural Adjustment Loan SEIB Société Electrique et Industrielle du Baol SENELEC Société Nationale d'Electricité SEPFA Société d'Etudes pour la Promotion Financière Agricole SERAS Société d'Exploitation des Ressource Animales du Sénégal SGHCV Société des Grands Hôtels du Cap Vert SIAS Société Industrielle d'Aménagement Urbain SICAP Société Immobilière du Cap Vert SIDEC Société de Distribution et d'Exploitation Cinématographique SIGASP Système d'Information Automatisé du Secteur Parapublic SIPOA Société de Pharmacie de l'Ouest Africain SISAC Société Industrielle du Sac SNCS Société Nationale des Chemins de Fer du Sénégal SNPC Société Nationale de Production Cinématographique SNSSS Société Nouvelle des Salins du Sine Sa!,um SNHLM Société Nationale des Habitations à Loyer Modéré SODEMHE Société de Mise Hors de l'Eau SODEZI Société du Domaine Industriel de Ziguinchor SODIDA Société du Domaine Industriel de Dakar SODIKA Société du Domaine Industriel de Kaolack SODISA Société du Domaine Industriel de Saint Louis SODITH Société du Domaine Industriel de Thies SOMIVAC Société pour la Mise en Valeur de la Cauamance SONACOS Société Nationale de Commercialisation des Olagineux du Séagal SONADIS Société Nationale de Distribution SONATEL Société de Télécommunications du 1négal SONED Société Nationale d'Etudes de Développement SONEES Société Nationale d'Exploitation des Eaux du Sénégal SOTEXKA Société de Textiles de Kaolack SOTRAC Société de Transport en Commun du Cap Vert SPr Société de Publicité et de Tourisme TA Technical Assistance VACAP Vacances Cap Skirring FISCAL YEAR July 1 - June 30 - 25 - SENEGAL SECOND PARAPUBLIC TECHNICAL ASSISTANCE PROJECT (CREDIT 1298-SE) PROJECT COMPLETION REPORT PARTI - THE PROJECT FROM THE BANK'S PERSPECTIVE 1. Project Identity Project Name: Second Parapublic Technical Assistance Project Credit No: 1398-SE Credit Amount: US$11.0 million equivalent RVP Unit: Africa Country: Republic of Senegal Sectors: Public Enterprises 2. Backgund 2.01 The project was prepared and implemented within the context of: - The completion of the IDA First Parapublic Technical Assistance Project (Credit 764- SE) which was launched in 1978, the closing date being 1983. The Project, totaling US$8.2 million, had been granted an IDA Credit of US$6.3 million. It had been intended to help the Senegalese Government in rehabilitating the parapublic sector and involved long-term consultants as well as shorter missions, training and financial audits. - Ongoing structural adjustment efforts in Senegal, supported by four successive IDA Credits. (The last of these, Credit 2090-SE, became effective in January 1990 and is still in operation.) 2.02 According to the 1985 Project Completion Report on the First Parapublic Project, only part of the auditing and training components had been completed. The First Project's activities had focused mainly on the various government agencies responsible for supervising and monitoring the parapublic sector, and not on the enterprises themselves. The overall performance of the parapublic sector had not improved, and had even deteriorated during the project period. The sector's financial cost to the government budget remained high. There was still a need for continued efforts at reform of the sector and technical assistance was needed to support this. 2.03 Parapublic sector reform has been an important part of the structural adjustment program from the outset and indeed the first efforts at parapublic sector reform preceded the adjustment program. The main policy aims of the sector reform program have been to make the sector more efficient and reduce its cost to the public purse. Early measures concentrated on reform of the legal and institutional framework governing the sector, on the strengthening of audit capacity and on training for senior staff of the public Enterprises (PEs) and the supervisory agencies. As the program evolved the emphasis moved towards privatization of selected PEs, direct measures to reduce the budgetary burden and simplification of the supervisory mechanisms. The Second Parapublic Project, although initially conceived as a free standing TA prcject, became increasingly used as a - 26 - means of providing direct support to the parapublic component of the structural adjustment program. This was reflected in the reallocation of the resources of the project on several occasions as the structural adjustment program evolved. 3. Objectives and Description 3.01 The objective of Parapublic U was to increase the efficiency of public enterprises in Senegal, by: - providing technical assistance for the key enterprises; - helping them to perform financial audits and providing accounting assistance; - implementing a training program for enterprise personnel; - increasing the efficiency of the government agencies responsible for the overall supervision of the parapublic sector. - financing studies relating to the scope, organization and management of the sector. 3.02 Parapublic II was intended to provide consultants and training to achieve the above objectives. However, from 1988 the Project underwent several modifications, based on the findings and recommendations of a Bank parapublic sector review which also led to the redesign of the parapublic sector component of the structural adjustment program. 3.03 Parapublic U was the subject of a Credit Agreement dated August 10, 1983. Total project cost was expected to be US$12 million, with US$11 million coming from IDA Credit 1398- SE (i.e., SDR 10.2 million)f and the rest from the Senegalese Government. Originally, the closing date was scheduled for 1988, but the project actually closed two years later on June 30, 1990. 3.04 Specific actions planned under the project included: - establishing (and subsequently expanding) a computerized data base on public enterprises; - training government controllers in preparing and implementing the enterprises' rehabilitation plans; - rehabilitation of 12 public enterprises, through the signing of contrats-plan with the Government and the use of consultants; - technical assistance to the government agencies responsible for monitoring and guiding the sector; i.e., ACC (l'Agent Comptable Central des Etablissements Publics), DTAI (Direction du Traitement Automatique de l'Information), CFP (Contr6le Financier de I/ SDR I = US$1.078 (in 1983). - 27 - la Prdsidence), and BOM (Bureau Organisation et Mdthodes); each of these agencies was to be helped by a specialist whose main role was to be training; - accounting assistance for a number of enterprises, and for the implementation of audits; - external training for enterprises and oversight agencies; i.e., CVCCEP (Commission de Wrification des Comptes des Entreprises Publiques) and BOM (Bureau Organisation et Mdthodes); - studies of the parapublic sector and of factors affecting its management. 3.05 Project costs were divided into the following breakdown of five main categories (in addition to "Reimbursement of project preparation advance" and "Unallocated"): Category SDR US$ (in thousands) (in thousands)s 1. Staff cost and equipment for the 370 400 Project Management Unit 2. Equipment for technical assistance to 1,620 1,750 the public enterprises 3. Consultants and studies 4,620 4,990 4. Audits of public enterprises 1,160 1,250 5. Accounting assistance for public 460 495 enterprises 6. Refunding of project preparation 450 485 advance 7. Unallocated 1,510 1,630 TOTAL 10,200 11,000 3.06 The Project was to be completed in five years (i.e., from 1983 to 1988), with the following expenditure schedule: 1298A 125m28 1282798 15% 25% 26% 20% 14% I/ Exchange rate as of 1983. - 28 - 3.07 The Project Management Unit was attached to the Office of the President of the Republic and was known as the Contrats-Plan Unit, or Cellule des Contrats Plan (CCP). In 1988, it became the Delegation for Parapublic Sector Reform (DRSP). 4. Design and Organization 4.01 The project was intended to take over from Parapublic I and it had all the elements to be successful. Its major design differences from the earlier project were the inclusion of specific assistance to individual enterprises and a component for sector wide studies. The weaknesses in its design were inherited from Parapublic I. They included the continued support for an overcomplex institutional structure for monitoring the parapublic sector, the continued inclusion of a relatively ineffective training component, an over-reliance on long-term technical assistance, the absence of support for key divisions in the Finance Ministry whose operations have an important impact on PE performance and monitoring, and a relatively weak project management unit. Oa the other hand the audit component, also inherited from Parapublic I, continued to be relatively effective due partially to the competence of the implementing agency for the component (CVCCEP). 4.02 The Second Parapublic project was designed and approved in 1982 and the PCR for Parapublic which underlined some of the above weaknesses in that project was not prepared until 1985. Therefore, it was somewhat impossible to adapt project preparation to lessons of experience. Notwithstanding, some account was taken by the Bank of the PCR findings during implementation in 1986 but it was not until 1987 that the Bank started to make substantial reallocations of project funds and it was after 1988, when the Bank sent a mission to Senegal to review progress in parapublic sector reform, that major changes in resource allocation of Parapublic I were made to correct these weaknesses. In 1988 the implementing agency (DRSP) was strengthened and upgraded. As of 1989 all long term TA was ended, assistance was focussed on only two supervisory agencies, the Parapublic Cell (CSP) of the Finance Ministry (MEF) and the DRSP, and project expenditures were refocussed on privatization and strengthening the ability of these two agencies to monitor the sector by means of a computerized management information system, the SIGASP. 4.03 The 1988 sector mission underlined the perverse effects the overcomplex supervisory structures were having on sector performance and recommended that such supervision be rationalized. This was done with the promulgation of a new parapublic sector law in 1990. This law resulted in far reaching simplification of the supervisory structures for public enterprises. As of 1989 all technical assistance under the project was concentrated in the parapublic cell of the Finance Ministry and in the DRSP. 4.04 The Project, particularly in its earlier years, because of weaknesses in the project management unit (CCP), relied too heavily on long-term consultants. Although qualified outsiders sometimes have to be recruited to help with problems that a government cannot tackle on its own, the role of consultants should be to transfer knowledge and know-how. Experience has shown that this can be better accomplished through shorter visits to the c- try, or even a series of such visits. The excessive use of long-term consultants upset the financial balance of Parapublic II, accounting for 68% of total project expenditures, compared with the 38% originally planned. 4.05 Following the 1988 Sector Review the project funds were redirected toward two priorities: privatization, and the introduction of the SIGASP computerized information system. Privatization is one of the main sub-components of the SAL IV parapublic sector reform component. - 29 - From 1987 to 1990, Parapublic II financed a total of 14 contracts for studies for the privatization of 10 public enterprises, at a cost of over CFAF 300 million. Development of the SIGASP computerization project cost CFAF 43.5 million, 60% of which was financed by Credit 1398-SE, with the balance coming from Credit 2090-SE (SAL IV). 5. Implementation 5.01 The Project Management Unit (CCP) was originally accommodated in the offices of CFP. After many complaints over the years that the CCP did not have enough political clout to get its job done it was eventually upgraded and transformed into the DRSP in 1988. 5.02 The closing date of Parapublic II was June 30, 1990, but payments on commitments already incurred continued to be made after that date. The credit was almost completely disbursed. But implementation was less rapid than planned. It took two additional years (1988-90) to fully commit the project funds. Table 3 in Part III of this report shows the variations between planned and actual expenditures. 5.03 The Government did provide the necessary counterpart funds. As agreed, counterpart funds financed specific expenditure categories (i.e., the salaries of most DRSP personnel, fuel, supplies, and small items of equipment). The Government provided DRSP in FY89/90 with a budget allocation of CFAF 80 million (i.e., SDR 215,633 at the rate of exchange current on June 30, 1990). 5.04 Table 4A in Part III of this report gives the variation between planned and actual expenditures by expenditure category. The following conclusions can be drawn: - Expenditure on the first two categories ("Staff cost and equipment for the Project Management Unit," and "Equipment for assistance to enterprises") was about two thirds of the amounts planned. The Government nd other sources covered a larger percentage of the costs in these categories than was initially planned. As Table 7 shows, Parapublic II was providing finance for only three of the DRSP personnel (out of a total of 38) as of June 30, 1990, while Government counterpart funds provided for 29 persons and French and Canadian bilateral assistance accounted for three. The size of the Senegalese share in the form of counterpart funds was significant. Counterpart funds also financed most of DRSP's operating and equipment costs. Table 8 shows in detail the expenditures (other than personnel costs) covered by Parapublic II from 1983 to 1990. These mainly relate to office equipment and furniture and cars. Table 9 shows that a total of 13 vehicles were purchased under the Project, including five for DRSP itself. - The main overrun relates to long term consultants (80% higher than originally planned). This was due to the la:ge number of long term consultants hired and the length of their contracts (although originally planned for two or three years, they were often longer). A large part of this overrun can be explained by the reliance on external consultants to compensate for weaknesses in the implementation capacity of the project management unit. - 30 - However, there was a considerable shift in the use of consultants in 1988. This followed the upgrading of the PMU and also the reorientation given to the project following the Parapublic Sector Review mission, when it was decided to give priority to expenditures on privatization and also to eliminate the hiring of long-term consultants. By June 30, 1990, no such consultants were being funded under Parapublic H. Table 10 shows a complete list of long term consultants hired under Parapublic 11. It will be noted that none of these served beyond 1989. - Expenditures on studies, audits of public enterprises and accounting assistance were only 56% of the amounts planned. Funding for studies (mainly relating to public enterprise privatization, after 1988) was particularly useful. Audits and assistance for the CVCCEP also had a positive impact, at a relatively low cost. In contrast, training activities were disappointing. BOM did not achieve its aims (as regards scale and consistency of activities), and the results fell far short of expectations. - Particularly in the final years, Parapublic II had to provide DRSP with financing to cover the advertising costs of the privatization process. These costs amounted to CFAF 29,123,426, a modest figure considering the difficulty in getting the privatization program underway. - The 1988/89 and 1989/90 budgets for the 1398-SE Project allocated considerable amounts to the preparation and acquisition of a computerized parapublic sector information system. This system (the SIGASP) is being installed in DRSP, the Parapublic Sector Unit (Ministry of Economy and Finance), and CFP. It will provide valuable data on the position of the public enterprises (consolidated by subsector) and on their financial relationships with the Government and other enterprises. Table 11 describes the SIGASP project in greater detail. 6. ]esults 6.01 The sector-wide impact of the PE reform program is assessed in detail in the attachment to this report. This impact is due not only to the project but also to the SALs which supported the structural adjustment program. It is impossible to separate the impact of the project from that of the SALs since they are so closely related and interdependent. However it is widely accepted that the SAL measures relating to PE reform would have not been as well designed or as well implemented without the support of the project. Equally the policy reform leverage of the SALs captured the attention of the decision makers and gave impetus, that might not have been achieved without the SALs, to the measures supported by the project. 6.02 It was clear from the Sector Review of 1988 that the PE reform measures up to that time had not had a positive impact in quantitative terms on sector performance. This had serious implications since the Bank had been supporting PE reform since 1978 up to that point through two TA projects and three SALs. Mention has already been made of the design shortcomings of Parapublic II which were belatedly corrected. Despite these shortcomings some positive results were noted by the sector review. The audit component was implemented through the CVCCEP. 12 auditors were given help in training for the French accounting diploma and 6 others took study tours - 31 - in French firms. The project also resulted in a significant strengthening of the Senegalese accounting profession and also improved financial management systems in PEs by providing finance for audits of key PEs. 6.03 The preparation of performance contracts continued steadily throughout the project with mixed results and at a slower pace than originally planned. The preparation of rehabilitation plans was planned for three or four large PEs each year, up to a total of 12 rehabilitation plans. These were to lead to the signature of contrats-plan with the Government that would clearly define management objectives and the reciprocal commitments of both parties. The Project was to finance 126 staff-months of consultants' services for preparing the rehabilitation plans and contrats-plan. Eight first-generation contrats-plan (1984-88) were prepared, but they did not put an end to the continuing financial difficulties of most enterprises and were not taken seriously by either the PEs themselves or by the central administration. 6.04 A major conclusion of the 1988 Sector Review mission was that the policy environment affecting the parapublic sector was not encouraging improved performance and that TA and the signature of performance contracts in the absence of the necessary commitment to far- reaching reforms could not be expected to lead to improved performance. Following the Sector Review, in 1989-90, attempts were made to strengthen the contract plan policy by imposing financial discipline in the allocation of resources through the performance contracts and in ensuring that financial commitments within the CPs were honored. 6.05 Up to 1988 under Parapublic II, the monitoring agencies continued to receive technical assistance, even though this support of the over-complex institutional framework had been severely criticized in the Project Completion Report for Parapublic I. 6.06 Training activities continued to be of limited scope. In spite of the appointment of an external consultant, BOM provided only a limited program of short courses, and these were of doubtful effectiveness. In particular, training should have been targeted mainly toward public enterprise managers, in order to strengthen their manaement capability. However, few managers received such training. 6.07 The project financed a number of high quality strategic studies which provided the analytical base for many of the measures included later in the structural adjustment program. These included: - role and structure of the supervisory agencies - privatization policy - PE tariff policy - levels of direct and indirect subsidies to PEs and financial relationships between the PEs and the State - special agreements between the State and selected enterprises - review of the banking sector - 32 - 6.08 Following the recommendations of the Sector Review the project concentrated its support in the last two years of its life on the DRSP and the CSP of the MEF, on supporting privatization and in creating the computerized information system for the sector. Major reforms to the structure and systems for overseeing the PE sector were implemented in 1990 based on the recommendations of the Sector Review and the DRSP. A priori controls on PE expenditures have been abolished, financial discipline in the relations between the PEs and the State has been improved and the supervisory structures have been greatly simplified. Some improvement in sector performance has been registered and the measures being implemented under SAL IV to reduce the direct and indirect budgetary burden of the PEs are beginning to have an effect. 6.09 The privatization program has been gaining momentum since 1989 with the direct support of the project which has financed much of the consulting help needed by the DRSP to implement it. The SAL IV second tranche release conditionality relating to privatization has been satisfied. Of the 17 enterprises to be put up for sale all have been satisfactorily put on the market. 7 have already been completely privatized, 1 partially privatized and 2 liquidated. 7. Sustainability 7.01 Many of the above positive impacts, although relatively late in coming, are potentially sustainable. Important positive impacts have been achieved in terms of the improvement of the information base on the sector, the formulation of policy measures, a greatly increased awareness among PE managers and Government officials alike of the need for PE reforms and the steps necessary to achieve them, and a major strengthening of local audit and management consulting capacity. It took several years for the need for PE reform to become internalized in Senegal but there is now a widespread acknowledgement of this need. The privatized public enterprises are no longer a management or financial burden on Government and sector performance after many years of deterioration has at last begun to improve. The impact on training capacity has been negligible, however, and much of the project efforts, particularly in the earlier years, were wasted on long term consultants who did not effectively transfer expertise to Senegalese counterparts. 8. Bank Performance 8.01 The Bank was initially slow to adapt the project to the lessons of experience which had been drawn as early as 1985. There was also, in the early years, an over-reliance by the Bank on long term TA to compensate for institutional weaknesses and lack of political commitment to reform. However the 1988 Sector Review carried out by the Bank recommended far-reaching changes to the adjustment program and to the project which were implemented and which, albeit belatedly, have started to have a positive impact. Supervision throughout the project was adequate. It was closer than with Parapublic I because the increased time allocated to supervising the SALs during the period of Parapublic H permitted more frequent missions for combined supervision of the SALs and the project. 9. Borrower Performance 9.01 Government was slow to give sufficient power to the project management unit and there was a strong tendency in the early years towards pro-forma and unenthusiastic compliance with project and SAL conditionality. There was initially little follow-up action taken on the recommendations of project-financed studies. However the situation improved after 1989 with the - 33 - upgrading of the CCP to the DRSP and the appointment of a high level, technically competent individual with ministerial rank to manage the project. Project accounts and auditing were of acceptable standard throughout. Government more than fulfilled its commitments to provide counterpart funds. 10. Project Relationships 10.01 Close and frequent contacts were maintained throughout the duration of the project between the project authorities and the Bank tusk managers. These close contacts were helped by the intensity of supervision of the SALs which included parapublic components. The project files also reveal close and frequent correspondence contacts and detailed dialogue on substantive policy issues between the Bank Task Managers and the borrower. The high visibility of the SALs also facilitated contacts between Bank staff and other donors who were interested in the adjustment program. The DRSP received TA financed by the French and Canadian Governments, in addition to that financed by the Bank, and the British Government also provided TA in close cooperation with the Bank in the area of privatization strategy. 11. Consulting Services 11.01 Consulting services accounted for most of the project expenditures and the project therefore relied heavily on them. The consultants' performance was mixed. The over-reliance on long term consultants in the earlier years of the project to compensate for shortcomings in local project management has already been described. These long term consultants essentially substituted for Senegalese personnel in strategy formulation as well as ad-hoc studies. Transfer of know-how in the early years was less than hoped for. In the later years of the project the strengthening of the PMU allowed the greater use of short term consultants. Local staff took greater responsibility for the supervision of the consultants and for acting on their recommendations and also benefitted more from the transfer of know-how. 11.02 The use of project-financed consultants over the last two years of the project in the privatization program was short-term and task orieited. It was geared more to implementing the program than to transferring technology or carrying out studies. Many of these consultants were locally recruited Senegalese working hand-in-hand with international consultants. Technology transfer undoubtedly did take place between the internationally recruited and locally recruited consultants. These consultants performed, in general, satisfactorily, as evidenced by the recent successes in privatization. 12. Project Documentation and Data 12.01 The legal agreement and President's report provided an adequate framework for the project as originally conceived. They also provided enough flexibility for considerable reallocation of resources and modification of the project design as the lessons of experience and changing circumstances required. The data required for preparation of the PCR were readily available, either in the field or at HQ. - 34 - ATTACHEME Impact of the PE Reform Program on the Sect(: as aWhole I. Supervision of the Sector 1. Over the last two years of its life Parapublic 1 contributed to the establishment and development of the activities of two Senegalese government units specializing in the supervision of the parapublic sector: DRSP, which is part of the Secretariat General of the Office of the President of the Republic, and CSP, which is responsible for coordinating the various departments of the Ministry of Economy and Finance concerned with public enterprises. In its earlier years it also contributed to the activities of the Financial Controller of the Presidency (CFP), the Central Accounting Agency (ACC), the Office of Organization and Methods (BOM) and the Audit Commission of the Supreme Court (CVCCEP). 2. The scope of the support provided for DRSP must be neither underestimated nor overestimated. Table 7 shows that, as of its closure date, Project 1398-SE was financing only three persons in an agency with a total staff of 38 (although two of these three were high-ranking officials of DRSP), so that most personnel costs were borne by the Senegalese Government. Bank support was more important with respect to operating costs, vehicles, and small items of equipment, with financing for the SIGASP computerization project very largely coming from the Project. Finally, it was because of the Project that the use of consultants and the preparation of studies developed to such an extent. 3. Project support for the Ministry of Finance's CSP was limited (one consultant in the Public Enterprise Center, one vehicle, and some items of office equipment). 4. The establishment of DRSP and CSP has been accompanied by the rationalization of the structures for overseeing the sector. DRSP's location in the Office of the President of the Republic facilitates decision-making on difficult issues. 5. A major disadvantage of the supervisory structure for the parapublic sector has arisen from the low degree of involvement of the Ministry of Economy and Finance. Within the Ministry of Finance, CSP is performing useful work with limited resources in the valuation and cancellation of reciprocal debts between PEs and the State. It is still inadequately staffed to carry out its mandate, however. II. Legal R m 6. Senegal has undertaken an in-depth modernization of the legal framework affecting public enterprises. At an interministerial council on July 20, 1985, the Government defined the new policy that it intended to apply to the parapublic sector; i.e., "girer moins pour g6rer mieux" (manage less in order to manage better). The Government planned to sell off its holdings in many nonstrategic enterprises that could be operated more advantageously by the private sector. The remaining public enterprises were to be rehabilitated by improving their internal management and granting them increased autonomy. The institutional reforms required by the new policy were introduced in two phases. In 1987, two laws (issued on August 3 and 18) defined oversight arrangements for the parapublic sector and authorized the Government to sell its holdings in enterprises other than those to - 35 - be kept within the public sector. A Decree (November 27, 1987) established DRSP, together with two committees, to be responsible for the public sector and for monitoring divestiture. 7. In light of experience acquired during these reforms, and in accorc ace with the conclusions of the 1988 Bank sector review, the Government has just entered a more dramatic stage of institutional reform. Law No. 90-07 of June 26, 1990 confirms that, aside from socidtis nationales and industrial and commercial dtablissements publics, the parapublic sector will henceforth consist only of mixed enterprises in which the Government is a majority shareholder. While the statutes of s.7cidtes nationales and industrial and commercial drablissements publics are set by decree, the mixed enterprises are subject to the ordinary legislation applicable to commercial companies. 8. In addition, emphasis is placed on the transfer of responsibility to managers. To this end, parapublic enterprises have been made exempt from a priori controls on expenditures and are henceforth subject only to ex post monitoring, which has itself been simplified. Dispensing with a priori controls implies the elimination of the Ministry of Finance's Centre des Atablissements Publics (Public Enterprise Center) and its executing agencies, ACC and COF. The joint fund providing financing for the public enterprises as a whole has therefore been dissolved, and from 1991 each enterprise will be required to manage its own cash flow. I. Sector Performan 9. The measures adopted under Parapublic II have produced only small improvements in the public enterprise sector, and the PEs continue to impose a heavy burden on the Government. Table 12 in Part IW of the report shows that, over the last three years, value added in the parapublic sector has increased little in current terms. Staffing slightly increased in 1988, but declined by about 12% in 1989. Overall personnel productivity (measured by the very general "value added/number of personnel" indicator) rose from 3.1 to 4 over three years. 10. The increasing cost of the sector to the Government is still worrying. Two approaches have been used to assess it. First, Table 13 is the list of public enterprises and agencies, receiving direct subsidies from Government, annexed to the SAL IV letter of development policy of December 29, 1989. This was drawn up by the Ministry of Economy and Finance's Budget Directorate, and indicates the amount of government subsidies received by each enterprise over the last three years, the amount of support to be provided under the 1990/91 Finance Act, and the ceiling set by the letter of development policy. As can be seen, total government financial support in 1990/91 will be CFAF 9.3 billion, which is of the same order of magnitude as the ceiling set in the letter (CFAF 9.288 billion), although it is about 20% lower than the figure for FY89/90. If this trend is borne out by budget execution, it would mean a break with the continuous increase in the cost burden to the Government observed over previous years. 11. In addition, Table 13 shows the prominent place occupied among the enterprises and agencies by the universities and the nonacademic facilities they provide. In 1990/91, they account for 78% of all subsidies. As a result, there is a questionable mix of services that a State is expected to provide (i.e., education and training) and various activities performed by the public enterprises. At the very least, trends in government support to the parapublic sector (excluding the universities and their nonacademic facilities) should be regularly monitored. After remaining stable for three years (at about CFAF 6 billion), the Finance Act requires this support to be reduced to CFAF 2.8 billion in 1990/91. - 36 - 12. Tables 14 and 15 in Part WU of the report were based on figures provided by CFP, and represent a further attempt to i6entify trends in the cost to the Government of the parapublic sector. Unfortunately, the preparation for the forthcoming introduction of the SIGASP computerization project has prevented CFP from providing the overall parapublic sector financial tables for FY89, in accordance with its normal practice. However, for the purposes of this report CFP prepared two summaries (for this and previous financial years) relating to groups of enterprises accounting for a substantial proportion (about three fourths) of turnover in the parapublic sector as a whole. Tables 14 and 15 are based on these summaries, and show the following: - Table 14: trends in the cost to the Government of these enterprises (excluding the groundnut subsector); - Table 15: operating subsidies for these enterprises (excluding the groundnut subsector). 13. It seems logical to omit the cost of the groundnut subsector, which should really be classiflea as part of the Government's economic intervention in the agricultural sector. 14. The following conclusions can be drawn from these tables: - In 1989, the cost to the Government of the parapublic sector, which had fallen in 1988, returned to the same level as 1987. Allowing for the revenue derived by the Government from these enterprises in the form of taxes or (in certain cases) dividends, the sector as a whole is no longer in deficit, and showed a small surplus (CFAF 2.86 billion) in 1989.' - Operating subsidies remain large, and have not been reduced for two years (1989 = CFAF 7.632 billion).' 15. Although it must be kept in mind that these figures relate to only a sample of the enterprises (albeit a very large one), they confirm that improvements in the parapublic sector's position are slow in coming, and that the sector is still a considerable drain on public finances. If the projections on which the 1990/91 Finance Act is based are accurate, a more favorable trend is to be expected in the near future. IV. Performance Contracts 16. Parapublic HI has promoted the development of performance contracts in the sector, enabling the objectives set by the Government for public enterprises to be clearly defined, and the necessary resources to be identified. In this respect, the seven second-generation contrats-plan signed in 1989- 90 reflect considerable progress.' They are the result of the rehabilitation plans drawn up for each I/ Part of the explanation for the poor performance of the parapublic sector in 1989 lies in lhe financial problems encountered by some Senegalese banks. I/ They involve the following enterprises: SONATEL (telecommunications), SOTRAC (Dakar mass transportation), Socidtd Nationale des Chemins de Fer du Sinigal, SONEES (water supply), SONATRA (Air-Senegal), the Autonomous Port of Dakar, and the Socidtd Nationate des liLM (the National Public Housing Enterprise). Two other contracts are being prepared - 37 - public enterprise, defining their objectives and defining action to be taken. These contrats-plan are useful management tools for shaping the course of the parapublic sector. 17. Table 16 in Part IW of this report shows the essential provisions contained in the seven second-generation contracts. The following conclusions can be drawn from this Table: - Up to and including 1989, and in spite of the recommendations submitted, there were no real personnel reductions in this group of enterprises. In 1990, a reduction may have begun as a result of the implementation of the plan calling for staff to leave the Civil Service voluntarily; many of these came from the parapublic sector. - The stagnation in personnel numbers is reflected in the low or zero increase in the enterprises' average productivity. Higher productivity indicators are expected only at the end of the contrats-plan periods. - In the case of two enterprises (SNCS and SOTRAC), obligations to provide public services (entailing low tariffs and the continued operation of unprofitable activities) are identified and compensation is provided separately by ihe Government. For each enterprise, thorough studies should be made of such obligations. - Three enterprises (SNCS, SONEES and the Autonomous Port of Dakar) have succeeded in obtaining preferential tax and customs treatment as part of their contrats-plan, and the railway enterprise is even to be granted a preferential rate for fuel. Such practices should be repudiated, because they distort competition and lead to revenue losses for the Government. The necessary amendments should be made to the contrats-plan to correct this. Although in principle the use of contracts is beneficial, it has the following two main defects: - The degree to which the Government can be financially committed to the contrats-plan is still comparatively uncertain, in light of its own cash flow problems. - It is still too soon to assess the real willingness of the heads of public enterprises to implement the planned rehabilitation policy with the necessary firmness and tenacity. V. Privatization 18. Originally, privatization was not one of the actions to be supported by Parapublic U. From 1985, however, the Senegalese Government formulated a divestiture policy that provided for the privatization or winding up of enterprises that it was no longer necessary to keep in the public sector. 19. In 1987-88, DRSP drew up an initial list of 10 enterprises to be privatized as a priority. However, progress was slow. By the beginning of 1989, no enterprise had yet been privatized. The for SENELEC (electric power) and I'Office des Postes et de la Catsse d'Epargne (the Office of the Postal Service and. Savings Fund). - 38 - SAL IV letter of development policy presented to the Bank on December 29, 1989 contained three lists of enterprises that were to be publicly offered for sale on the following dates at the latest: - November 189: SIDEC, VACAP, SAIH, SERAS, SNSS, SENPRIM, SONED and SENHOTEL; - September 30, 1990: SIPOA, SINAES, HAMO, Dakar-Marine, IRANSEN, SODEHME, the M'Boro Fruit Project, BICIS and Caisse Centrale de Cr6dit Agricole: - September 30, 1991: SOTEXKA, SICAP, BHS, SODIDA, SODEZI, SODITH, SODISA, SODIKA, SONEPI, SIAS, SEPFA, SONADIS and SONACOS. 20. In 1988, it had been decided that much of the remaining proceeds of Parapublic U would be devoted to privatization. Table 17 in Part III of this report shows the status of the privatization program as of the beginning of December 1990. The following conclusions can be drawn from this Table and each of the sets of privatization documentation prepared in cooperation with DRSP: - In two years, the small DRSP privatizaticA team has devoted considerable efforts to preparations, surveys and negotiations. After a slow and difficult beginning, the initial results are now appearing. - Of the total of 17 enterprises scheduled in the letter of development policy to be put on sale by either November 1989 or September 1990, 14 had actually been offered for sale by the end of 1990, and nine of these had been sold. Only three of the largest enterprises on the 1990 list had not yet been offered for sale: Dakar-Marine (although Fpparently this enterprise is in process of being taken over by a foreign company), Caisse de Crddit Agri.ole (because a mutualized structure had already been adopted) and BICIS (in which the shares will be valued and offered for sale by the foreign bank which is the majority shareholder). Consequently, it can be presumed that, after a delay of a few months, the Government will have put up for sale 16 of the 17 enterprises that it had undertaken to privatize. 21. DRSP declares that in the future it too wishes to "divest itself" of the considerable preparation, evaluation and research work involved in privatization. In accordance with the donors' advice, it plans to transfer its main projects to private consultants, who will be paid according to the amount of revenue generated by the sales. Naturally, DRSP would continue to be responsible for overall planning and policy supervision, and for selecting the enterprises to be privatized and defining the necessary conditions. 22. However, although using consultants to offer government holdings for sale will probably produce quicker results. it will cost considerably more than the current procedure. The termination of Parapublic I will depne DRSP of project support. Senegal could apply for special assistance under IDA Structural Adjustment Credit 2090-SE, and the importance of this issue would in principle justify such support, which is provided for under the special terms of SAL IV. 23. As yet, the financial results of privatization have been limited. Table 18 shows that the proceeds from the nine operations so far concluded total CFAF 2.353 billion, and that potential savings to the Government are CFAF 411,000. - 39 - 24. In addition to privatization operations, the letter of development policy referred to the winding up of 12 public enterprises, and listed five which were to be dissolved by June 30, 1990 (SNPC, SISAC, SGHCV, SOMIVAC and SEIB). DRSP reports that it has completed the necessary procedures for winding up the first four enterprises, while SEIB has been absorbed by SONACOS, which was not part of the original plan. In addition to the items on this initial list, SINAES (the Industrial Enterprise for the Applications of Solar Energy) and the petroleum enterprise IRANSEN (Iranian/Senegalese) are being liquidated. Consequently, a total of seven public enterprises will have disappeared, at the same time that the banking sector is being reorganized by the Ministry of Economy and Finance." VI. CrosswDebts 25. The Government's delays in paying bills and various debts, together with delays by the public enterprises in paying their taxes, have resulted over several years in an accumulation of arrears on both sides. The position has become so complex that the SAL IV letter of development policy stated that special efforts would be devoted to accurately calculating these reciprocal debts and effecting the necessary cancellations. 26. The work is being done by the Ministry of Economy and Finance's CSP. With its limited resources augmented by a small amount of assistance from Parapublic I (allowing for studies amounting to about CFAF 40 million), CSP has calculated the consolidated arrears for the Government and public enterprises as of the end of 1989, and has prepared a settlement agreement for each case. The final calculations were as follows: - The Government's debts to the enterprises totaled CFAF 34 billion." - The enterprises' debts to the Government totaled CFAF 50 billion.' 27. This represents a CFAF 16 billion overall balance in favor of the Government. In accordance with the terms of the letter of development policy, the unpaid debts of those public enterprises without resources will be classified as irrecoverable, while the others must be settled within three years (i.e., by 1993). CSP has prepared 40 agreements incorporating these general points. Thirty-four have been signed by the Minister of Economy and Finance and by enterprises, and six are in progress. These agreements have now to be applied; i.e., the essential point is that the enterprises must repay their debts to the Government, and additional arrears must not be allowed to develop. The Ministry of Economy and Finance must be particularly vigilant in this regard. 28. CSP must now begin identifying and canceling the reciprocal debts owed to one another by the public enterprises themselves. This work has only just begun. fi/ As a result of the financial problems facing several banks, and the consequent freezing of accounts, the banking system has been reformed by winding up five banks and privatizing two others (BICIS and Caisse Nationale de Crddit Agricole). Preliminary studies for this reform were financed under Parapublic H. I/ Figures provided by CSP. - 40 - 29. The completion of Parapublic II (which itself followed Parapublic I) raises the following two questions: Should the Bank continue to support technical assistance to the Senegalese parapublic sector? Are Bank credits really an appropriate method of financing such projects? 30. The problem of the parapublic sector in Senegal is of prime importance. The sector continues to incur high costs for the community, while providing services that are essential for economic development. Although the results of Parapublic I and Parapublic H have been either inadequate or only partially successful, it is desirable that appropriate technical assistance for the sector should continue. The assistance should be provided both for those enterprises that remain in the public sector and for privatizing the others. - 41- PART_ - SUMMARY OF STATISTICAL DATA Table 1: Related Bank Loans or Credits Credit Title Purpose Aorvd MtAComments First Parapublic TA for PE Reform 1977 Completed Predecessor TA Project to Parapublic I SAL I Economic 1981 Completed Each of the Structural SALs has Adjustment contained a PE reform SAL II 1986 Completed component closely linked SAL II1 1987 Completed to the Para- public TA SAL IV 1990 On-going projects. - 42 - Table 2: Project Timetable Item Date Planned Date Revised Actual 1. Identification NA NA 5/24/82 2. Preparation NA NA 6/82 3. Appraisal Mission 11/82 2/83 11'82 4. Credit Negotiation 3/83 6/83 5/83 5. Board Approval 9/83 6/83 7/83 6. Credit Signature NA NA 8/10/83 7. Effectiveness 1/30/84 3/30/84 8/12/83 8. Closing Date 6/30/87 12/31/89 6/30/90 9. Completion Date 12/31/87 6/30/90 12/20/90 - 43 - Table 3: Credit Disbursements CumUlative Estimated and Actual Credit Disbursements (US$ thousand equivalent) Year Appraisal Cumulative Actual as % Actual as Cumulative Actual of Estimate % of Total Estimate Disbursements 1983 800 672 84 6 1984 3,000 1,437 48 12 1985 5,800 2,628 45 22 1986 8,400 4,336 52 36 1987 10,300 7,832 76 64 1988 11,000 10,240 93 84 1989 11,000 12,111 110 100 1990 11,000 12,160 111 100 The last disbursement was made on December 20, 1990, and an undisbursed balance of SDR 52,416 was canceled. - 44 - Table 4: Project Costs and Financing A. Project Cost Financed by IDA US$ thousand Planned IDA Actual IDA Staff and Equipment for PMU and Control Agencies 399 1,725 Equipment for Enterprise Rehabilitation 1,746 - Consultants 4,183 8,668 Studies 798 466 Audits !,250 928 Accounting Assistance 496 305 Refund of PPF 496 373 Unallocated 1,628 - Total 11,000 12,466 B. Proiect Financing Plan US$ thousand LocAl Foreign Intal IDA Credit 1,500 9,500 11,000 Government 1,000 - 1,000 Total 2,500 9,500 12,000 - 45 - Table 5:. Status of Covenants Section_No. Covenan CoEmmA= 3.05 By March 31 of each year Borrower regularly submitted the during execution of the selection of enterprises as agreed. Project, the Borrower shall submit to the Association for its approval the Borrower's proposal for the selection of Parapublic Enterprises for the purpose of the preparation of rehabilitation programs. 3.06 (d) At the end of the first year Follow-up on the performance of implementation of each contracts has been patchy. There was contrat-pla and annually initially no follow-up. It has since thereafter until completion improved with the improved staffing of the Project, the Borrower levels in the PMU. shall, in consultation with the Association and the enterprises concerned, review the performance of the Borrower and the enterprises concerned in respect of their respective obligations under said contrat-Ian. 3.07 (a) The Borrower shall cause through The audits have progressed CVCCEP each of SOTRAC, satisfactorily and this is one of the SONADIS, SODEFITEX, OPT, most successful project components. SENELEC, CPSP, OHLM, SICAP, Dakar-Marine, and BNDS (as defined under Part B.1 of the Project) or such other enterprises as the CVCCEP may propose to the Association from time to time and may have been agreed by the Association to select and employ auditors in conformity with the provisions of Section 3.02 of this Agreement. 3.07 (b) The Borrower shall cause said enterprises: (i) to have their accounts audited, in accordance with appropriate auditing - 46 - principles consistently applied by the auditors employed pursuant to subpara,caph (a) (i) above; (ii) to furnish to the Association as soon as available: (A) certified copies of their accounts and financial statements as audited under Part B. 1 of the Project, and (B) the reports of such audits of such scope and in such detail as the Association shall have reasonably requested. 3.11 During execution of the Project, Initially, the PMU was not adequately the Borrower shall maintain the staffed of empowered. This was Project Management Unit within the rectified over the last three years Borrower's Sdecrtariat Gdadrale do of the project la Prdsidence adequate powers, organization and staffing; such unit to be headed, at all times, by a suitably qualified Director who shall be President of GESP and shall report directly to the S6erdtarit Gdndrale de la Prdsidence. 3.11 (b) By December 31, 1984, the Borrower Ie covenant was complied with later shall submit to the Association for than the agreed date, but the training its approval the training program to programs were of lower quality than be carried out under Part C.3 (ii) of hoped for. the Project, such training program to be prepared on the basis of the results of the study carried out under Part C.3 (i) of the Project. 3.13 (a) The Borrower shall, promptly upon Cooperation with the Government in their preparation, submit to the studies was excellent and these studies Association for its approval terms played an important role in the of reference of all studies to be formulation and implementation of the carried out under Part D of the structural adjustment program. Project. 3.13 (b) Promptly upon completion of any study carried out under Part D of the Project, the Borrower shall furnish any such study to the Association and afford the Association a reasonable opportunity to comment on its recommendations. - 47 - 4.01 (a) The Borrower shall maintain or cause The project accounts were adequately to be maintained separate accounts maintained as certified by the auditors adequate to reflect in accordance and the audited accounts duly with consistently maintained submitted to the Bank, with some appropriate accounting practices delays, but not excessively so, the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. 4.01 (b) The Borrower shall: (i) have the accounts referred to in para (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than four months after the end of each such year, a certified copy of the report of such audit by such auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said accounts, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. - 48 - Table 6: Use of Bank Resources A. Staff In Stage of Proect Cycle Planned Revised Fial Through Appraisal - - Appraisal through Board Approval - - Board Approval through Effectiveness Supervision - - 212.8 TOTAL 212.811l Il Information provided by the MIS data appears to be inaccurate and the figure shown as total staff weeks spent comprises all stages of the project, from preparation through PCR preparation. - 49 - B._Missions Month/ No. of b Specialization Performance Types of Year Persons Field Total Represented Rating Status Problems 2/84 1 2 PE 3 Weak project management unit 5/84 5 5 PE, legal, 3 management 7/84 1 2 PE 3 11/84 1 1 PE 3 "plus lack of relev3nt strategy 3/85 1 2 PB 2 Lack of strategy 5/85 1 2 PE 2 Slow implementation 9/85 1 2 PE 2 Reluctance to use TA 3/86 3 4 PE, legal 2 Slow implementation 6/86 3 3 PE, econ. 2 Slow implementation 6/87 2 3 PE, econ. 2 Inadequately staffed PMU 10/87 2 2 PE, econ. 2 a 12/87 3 3 PE, legal, 3 Shortage of funds econ. 3/88 1 1 PE 3 5/88 1 1 PE 2 Slow implementation 11/88 1 1 PE 2 a 7/89 2 3 PE, econ. 2 Lack of funds 5/90 1 2 PE 2 Slow implementation 12/90 1 2 PB 2 - 50 - Table 7: DRSP Personnel. by Source of Financing (at June 30, 1990, closing date of Parapublic II) Personnel costs borne by No. of persons World Bank (Parapublic H, Credit 1398-SE 3 - Counterpart funds 29 - French Ministry of Cooperation and the Caisse Centrale de Coopdration Economique* 2 - Canadian International Development Agency' I - Senegalese civil service 3 Total 38 Table 8: Nonpersonnel Expenditures (category I) 1983 to 1990 CFAF * Transportation equipment and vehicles 124,693,000 * Other equipment, alterations, installations 61,140,549 * Office equipment and furniture 141,332,663 * Teaching materials 19,008,500 * Advertising 29,123,426 Total 375,298,138 1/ Mr. Masse N'Diaye, Mrs. Ndeye Aby Silla and Mr. Amadou Cheikou Diop. 21 Messrs. Andr6 Blanchard and Claude Ciffre. Mr. Pierre Morin. - 51 - Table 9: Vehicle Procurement Breakdown by year and agency Agency DRSP CSP/MEF Other Total agencies' - 1983, 1984 and 1985 - - 3 3 - 1986 and 1987 3 1 - 4 - 1986 and 1989 - - 4 4 - 1990 2 - - 2 Total 5 1 7 13 1/ CVCCEP, ACCICEP, OPCE. - 52 - Table 10: Use of Long Term Consultants ConsUltant or firm Da=i 1. Individuals * Michel Haurant (SONEES) 1983-84 * Jean-Pierre Deghaye (SOTRAC) 1983-87 * Jean Babin (OPTS) 1983-88 " Michel Lafon (SONATEL) various periGds * Mamina Cammra (CVCCEP) 1984-87 * Mrs. Marie Ba (CVCCEP) 1987-89 2. EjUm .ouis BERGER-INTER (CFP) 1983-88 * CEGIR (CEP) 1983-88 * MAHEU-NOISEUX (BOM) 1985-88 * DFC (contrat-plan unit) 1986-88 * MAHEU-NOISEUX (OPCE) 1986-89 * CEGIR (Equalization and Price Stabilization Fund) 1987-89 * SOFREPOST (OPCE) 1987-89 * METRA-Conseil International (SAED) various periods - 53 - Table 11: The SIGASP Project (Parapublic Sector Computerized Management Information Sstm) The SIGASP required IDA financing in the amount of CFAF 43,547,500, of which 60% was under Credit 1398-SE and 40% under Credit 2090-SE. As a result of competitive bidding, the SINORG firm was selected to develop the system. BULL-SENEGAL was awarded the hardware contract - totaling CFAF 34,159,259, for a DPX 2200 server and terminals for DRSP, CSP and CFP. The purpose of the system was to provide for regular and comprehensive monitoring of the parapublic sector, along with the capability to: - assess improvements in the performance of those enterprises remaining in the public sector, through data taken from their financial statements; the operating data were to be monitored quarterly and annually; - monitor the amount of support provided for the parapublic sector under the national budget, as well as changes in personnel numbers and the wage bill; - track the reciprocal debts between the Government and enterprises and among the enterprises themselves; - prepare the annual report on the evaluation of the Government's portfolio and its performance. Regularly updated, the system can provide data on Government divestiture and any equity investments. The financial data will be furnished by the Directorates of the Ministry of Finance, and CSP will be responsible for inputting. Two types of seminars will be organized to train enterprise personnel and management. The first will be targeted for the staff of the Directorates General, aad subsequent sessions will train those responsible for filling out the data sheets in the enterprises (management auditors, finance directors and secretaries general). Particular attention will be paid to the need for timely and reliable data. The system will be able to store information for the five preceding years and thus can be used to assess trends in the sector over that period. Sourc : DRSP Re54 - Recent Trends In The Senegalese Parapublic Sector - 55 - Table 12: Recent Trends in the Paraoublic Sector 1986 1987 1988 1989 - Total value added (in billions of CFAF) (97.1) 87.52 103.05 108.73 - No. of personnel (in thousands) 30.8 30.5 31.150 27.176 - Overall productivity of personnel (value added/ 13.1) 2.9 3.3 4 personnel) I I Ioures DRSP - 56 - December 19, 1990 Table 13: Government Sunoort for Public Enterorises and Aaencies Cin thousands of CFAF) 1990/91 Letter of 1987/88 1998/89 1989/90 Finance Act Developmen t Policy 1. NONCOMMERCIAL PUBLIC ENTERPRISES ONAC 36,256 36,256 36,300 36,300 36,300 SBEA 27,504 27,504 27,504 27,504 27,500 cOUD 1,348,000 1,623,744 3,533,000 3,533,000 3,412,300 INSEPS 105,730 105,730 105,730 0 106,700 INDR 130,000 130,000 130,000 0 91,100 SAED 593,978 461,982 383,407 161,600 161,000 Islamic Institute 26,650 25,650 40,700 25,800 25,800 CNTDS 195,453 160,020 160,000 0 136,000 ORTS 1,155,312 827,118 686,500 578,900 578,900 ONFP 90,000 0 0 0 0 ISRA 983,607 940,673 913,000 913,000 913,000 PAD 0 140,098 0 0 119,800 SCNS 255,000 210,000 0 0 0 BRGM 122,884 95,577 39,700 0 67,400 SAR 76,500 76,500 63,500 0 54,000 University of Dakar 4,728,765 4,896,765 5,890,600 5,500,000 5,146,800 SOTRAC 400,000 1,000,000 1,000,000 500,000 600,000 UNCX 119,602 83,722 69,500 59,100 59,100 ZFID 114,300 88,900 73,800 0 66,400 ENSUT 107,479 127,479 172,500 172,479 172,600 ENS 32,000 30,000 20,000 28,000 0 NAT.ORCH. 46,229 46,229 46,200 0 46,200 UNI.N 21,375 21,375 21,400 21,375 0 ASECNA 198,123 198,123 82,200 0 139,700 SODEVA 0 111,173 324,800 108,800 108,800 PNA + other 32.231 200.000 200.000 0 280.800 Subtotal 1 10,946,978 11,125,428 14,020,341 11,665,858 12,349,900 (excluding COUD) 9,598,978 10,101,684 10,487,341 8,132,858 8,937,900 II. COMMERCIAL PUBLIC ENTERPRISES ITA 158,175 185,000 185,000 102,000 102,000 MSAD 54,434 44,566 22,300 0 26,800 CEREEG 27,000 18,900 17,400 0 0 NIS 0 2,507 0 0 0 CICES 150,000 105,000 101,000 0 42,600 SONEPI 90,000 70,000 58,100 35,900 35,900 ASACE 0 0 0 CNQP 119,971 119,971 134,000 0 54,400 SONEPI 90,000 70,000 58,100 35,900 35,900 ASACE 0 0 0 CNQP 119,971 119,971 134,000 0 54,400 APS 62,317 56,189 46,600 27,900 27,900 SONATRA 104,191 102,755 96,600 0 61,200 SONIVAC 105,400 130,193 541,100 0 0 Subtotal II 871.488 835.081 1.202.100 165.800 350800 Grand Total 11,818,466 12,560,509 15,222,441 11,831,658 12,700,700 (excluding COUD) 10r470r466 10,936,765 11r689,441 8r298r658- 9,288,700 SreS: NEFP, Budget Directorate. - 57 - Table 14t Cost to the Government of the Parapublic Sector' (excludina the aroundnut gubeectorl (in millions of CFAF) 1987 1988 1989 - Cost to Government of enterprises (all subsidies) 34,479 39,326 15,378 less groundnut subsector 21,810 32,916 2,860 - Cost to Government, excluding groundnut subsector 12,669 6,410 12,518 - Government revenue from public enterprises 9,495 20,484 15,378 - Difference (excluding groundnut subsector): net cost to Government (negative sign) -3,174 14,074 2,860 Source: CFP Table 15: Government Operating Subsidies to the Parapublic Sector (excluding the groundnut subsector) (in millions of CFAF) 1987 1988 1989 - Operating subsidies (including groundnut subsector) 32,842 40,246 10,492 less subsidy to groundnut subsector 21,810 32,916 2,860 - Operating subsidies excluding groundnut subsector 11,032 7,330 7,632 Sourcs CP This table gives a provisional summary of the 1989 figures for the following group of public enterprises: SNHLM, SICAP, OPCE, SONATEL, SONACOS, SONACOS-Graines, CSPT, SSPT, Petrosen, PAD, CEREEQ, SODEMHE, CNQP, ONFP, SENELEC, SOTRAC, COSENAM, SONATRA, SIAS, SAED, SODEFITEX, MSAD, SONED, INSEPS, COUD, SONEPI and ISBEA. This table is a provisional summary of the 1989 figures for the following group of public enterprises: SNHLM, SICAP, SONATEL, SONACOS, SONACOS-Graines, SEPFA, CSPT, SSPT, SNSSS, APS, CNTDS, ORTS, ONAC, COSEC, SNPC, MSAD, SONED, INSEPS, COUD, SONEPI, ISBEA, SOTRAC, COSENAM, SONATRA, SIAS, PAD, CEREEQ, SODHEME, CNQP, SODIZI, SODISA, SODIDA, ONFP, SENELEC, SONEES, SINAES, SAED, ITA, SODEFITEX, SSPP, SOFISEDIT, BHS, CNCAS and CSAR. Table 16: sumary of the Seven 1989-90 Contrats-Ptan SONATEL SOTRMC SueS SONEES SONATRA PAD SMHLit 1. Turnover (in millions of CFAF) * 1968 19,M6 9.056 10.031 13,824 1570 7,503 2.280 * 1969 22.449 9.248 14,104 1,710 7,454 1,929 * end of Program 26-570 12.493 9999 - 2 344 7716 -unecified 2. Oparating xponditures (in ittemo of CFAF) * 196 7,369 10,461 10,417 12.249 1,746 6,1SS 1.800 * 196 7,636 11,444 13,99 1.961 5.907 1.953 * end of prograin 9,874 9,591 7.027 2.481 5.065 3. Goverment fimacial spor (in alittion of CFAF) * 19 900 255 102 * 199 - 900 96 . * end of proram *O5til 150(2) * thqpecified *_ _4_ _ 4. Personetl * 1988 1,947 2,967 1.441 103 735 311 * 1989 1,96S 2,883 2,454 1,445 101 743 303 * end of program 1 2516 2,300 1496 UnsMpeciffed 705 289 S. Tax and custom system Ordinary Ordinary - Capital investment Exemption from Unspecified - Capital Ordinary legislation legislation exempted from alt taxes and investment legislation taxes custom duties exempted from for five years taxes and - Preferential rate custom duties for fuel 6. Chages in rates Probably Possible In accordance with Brought into line Not regulated Unspecified stable application obJectives with general for increases Price increases 7. Personel productivity (turnover/no. of persomel) * 1988 10.2 3 9.6 15.2 10.2 7.4 * 1989 11.4 3.2 (4) 9.7 17.3 10 6.3 * end of progrm 13.5 4.9 4.3 *_- 10.9 - (1) Repament of public service bonds. (2) fitlegiblel Table 17: Status of P&ic Enterprise Privatization (Deceaberl S. 1990) Agreemnt Operation as Appraisal of Copetitive I Transfer of private Enterprise procedure (1) bidding (2) Government Office of the ounership (5) enterpise Commns (7) Divestiture President (4) Nonitoring fomi* (3) SA P 1: hNTEAPISE TO SE PUT I M SALE EFORE DE NM 1989 SIDEC 6 movie theaters I0/89 07/89 11/89 01/90 11/90 continuing 16 movie theaters 10/89 03/90 10/90 13 mawl theaters VACAP 07/89 12/89 01/90 03/90 03/90 sold In its entirety to Ctd tAditerrande. SAI-NERIDIEN 06/87 under may Two takers identified. 02/90 SERAS 06/87 09/89 04/90 05/90 08/90 continuing 06/89 Suss 02/90 usder way SENPRIN 09/89 02/90 tease 09/89 Payment not yet recetvd. SOED 10/89 12/89 06/90 07/90 07/90 continuing %a SENOTEL 08/89 09/89 09/90 under way continuing Purchase price to be paid through cance tion of reciprocal debts with the _ _ _ __ _ __ _ _ovement. GROL 2: ENTERPRISES TO BE PUT UP FOR SALE BEFORE SEPT:NBER 1990 SIPOA 01/90 04/90 06/90 09/90 aider way continuing SINAES 03/90 Wound up In 1990. HANM 05/90 02/90 SADEME 11/90 11/90 11/90 11/90 DAKAR-KARIME under way iler may I1gOR0 03/9 BICIS 02/90 05/90 CcAS under way IRANSEN Uouid Up tWatnd up in 1989. GRO 3: ENTERPRISES TO BE PUT UP FOR SALE BEFORE SEPIENIER 1991 SOITEEOA SICAP 07/87 to be qxieted INS uder may SODIDA/SODIZI uder way SODITN/SODISA S0DIKA SIAS Soure: DRSP - 60 - Table 18s Financial Results of Privatization Oyerations tend-11901 Potential eavings Committee*s Proceeds from sale to the reference price (in millions of CPAP) Government' MBAO poultry farm 1002 100' RENAULT-SENEGAL 41 45 SERAS 406 4064 UPT 40 0 95 SNSSS 600s SIDEC 79 796 VACAP 371 1,200 810 BONED 66 81 BONED 83 SIPOA 54 547 TOTAL 411 1,946 2,353 Source: DRS 1/ Includes subsidies, operating deficits and any other government commitments. 2/ According to the assets appraisal report, as amended by the Directorate of Publicly Owned Property. Value of the annuity calculated at 8% over 30 years. 4/ In addition to the additional dividend to be paid after issuance of the financial statements at June 30, 1990. &J Dividends received by the Government, together with taxes on the dividend received by Salins du Midi, which were paid on July 3, 1989. i/ This transaction involves two of the three theaters put up for sale. 2/ Additional dividend paid in April 1990.