Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10421-SE Type: (SAR) PEAN, L. / X33092 / J9 123/ AF5IN STAFF APPRAISAL REPORT REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT MAY 1, 1992 Infrastructure Operations Division Sahelian Department Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their offici'al duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency unit = CFA Franc (CFAF) US$1.0 = CFAF 278.7 CFAF 1 million = US$3588 SYSTEM OF WEIGHTS AND MEASURES Metric System FISCAL YEAR July I - June 30 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AGETIP Agence d'Execution des Travaux d'Interet Public contre le Sous-Emploi AMS Association des Maires du Senegal CIDA Canadian International Development Agency DIRE Delegation a l'Insertion, a la Reinsertion et a l'Emploi FED Fonds Europeen de D6veloppement GIE Groupement d'Interet Economique GOS Government of Senegal ICB International Competitive Bidding ILO International Labor Organization LCB Local Competitive Bidding PCR Project Completion Report PPF Project Preparation Facility SDA Social Dimensions of Adjustment UNCDP United Nations Capital Development Program UNDP United Nations Development Program This report is based on the findings of a World Bank mission consisting of Messrs. Leslie Pan (Economist, Mission Leader), Peter Watson (Division Chief), and Pape Alioune Ndao (Financial Analyst, Consultant) who visited Senegal in January/February 1992. Messrs. Emmanuel James and Patrick Canel are the Peer Reviewers for the operation. Mmes. JoAnne Nickerson and Amy Gallagher supported the preparation of the report. Ms. Katherine Marshall and Mr. Peter Watson are the Department Director and managing Division Chief, respectively, for the operation. FOR OFFICIAL USE ONLY REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT STAFF APPRAISAL REPORT Table of Contents Credit and Project Summary I. SECTORAL BACKGROUND Economic and Social Context ..................................... 1 Urbanization Trends .... 2 Construction and Public Works Sector ................................ 3 Rationale fol IDA Involvement in the Sector ........................... 4 II. PUBLIC WORKS AND EMPLOYMENT - FIRST PROJECT Project Objectives . ............................................ 5 Institutional Form ............. ............................... 5 Organization and Staffing ....................................... 6 Program Targets and Capacity ....................... , 6 Project Identification and Appraisal ...................... 7 Subproject Implementation ...................... 7 Contracting and Supervision ....................... 7 Monitoring and Evaluation ....B... ...., 8 Achievements ...................... 8 Lessons Learned ...................... 9 Donor Coordination ...................... 9 MII. THE PROJECT Project Formulation ...................... 10 Project Objectives ...................... 10 Intended Beneficiaries ...................... 11 Project Description ...................... 11 Construction and Public Works Program .......................... 12 Development of Pilot Activities ........... ............... 14 Training and Studies .......................... 15 Status of Project Preparation........... ............,,,.,.17 Project'Cost and Financing Plan .................... 17 Project Implementation........... t .......... 20 Procurement .................................... 21 Disbursements ......................... 23 Accounting, Auditing and Reporting ............................... 24 Supervision Plan ..............................,......... 25 Envirommental Impact ....................... 26 Economic Analysis and Benefits ....................... 26 Risks ........................,,...... 27 IV. AGREEMENTS REACHED AND RECOMMENDATIONS .28 This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. ItS content.s rnay not otherwise be disclosed without World Bank authorization. - ii - Tables in the Main Tet Table 3.1 - Local and Forei Inflation Rates Table 3.2 - Project Cost Summary Table 3.3 - Financing Plan Table 3.4 - Procurement Table 3.5 - Disbursements Table 3.6 - Key Indicators ANNEXES 1. AGETIP's Statutes and By-Laws 2. Framework Agreement between AGETIP and GOS ("Convention") 3. Procedures Manual of AGETIP 4. Disbursement Profile Comparison (AGETIP vs. Standards) 5. Entreprises attributaires de marchds IDA 6. Summary of Technical Assistance Training 7. Action Plan for Mutual Guarantee Company S. Terms of Reference for (A) Training Services for Beneficiaries and (B) the Grassroots Participation Program 9. Project Costs and Implementation Schedule 10. Procurement Profile of AGETIP contracts 11. Consulting Services Required in Man/months 12. Supervision Plan Note: Annexes 1, 2 and 3 are given for illustrative purposes cnly and will be revised as a condition of Project effectiveness. - iii - EULC OF SENL SECOND PULC MOMK AND EMPLOYMENT PROECT STAF-F APRAISAL REP, Credit and Project Summary Borrow,e: Republic of Senegal Boeneficiaries: Ministry of the Economy and Finance Municipalities Executing Agency: Agence d'Execution des Travaux d'Jntdr8t Public contre le Sous-Emploi Credi Amount: US$39.0 million -rerm,s: Standard IDA terms, with 40 years maturity Cofinancing: Other donors (US$15 million), Government of Senegal (US$7 million), Municipalities of Senegal (US$20 million) Dbjectives and ,DesonWtiQzl: Based on its accrued experience during the first phase, project objectives, in addition to public works execution and employment enhancement, include: (a) the continuation and decentralization of AGETIP activities in secondary cities; (O) the development of pilot activities to test the feasibility of AGETIP's approach in other areas; (c) the organization of training for the municipalities and the small- and micro-enterprises engaged in project lmplementation; and (d) to make AGETIP a sustainable agency covering its operating costs on a fee basis. The credit will mainly finance the investment operations of AGETIP for three years. The project will consist of three components involving the creation of short-term employment and laying the groundwork for long-term development of Senegal's municipal employment infrastructure. The first component of the proposed project would continue with the execution of public works, such as the rehabilitation and maintenance of public facilities in urban areas to be carried out under labor-intensive schemes by local contractors. The second component will deal with three pilot activities: (a) applying AGETIP procedures to the development and management of municipal revenue-earning infrastucture; (b) improving the efficiency of procuring goods for public purposes; and (c) developing and testing AGETIP-type mechanisms to support rural investments. The third component is comprised of: (a) a package of training services related to - iv - work organization, management, and technical skills training, to be offered on a voluntary basis to local contractors who will be awarded contracts under the first component; (b) a training program for local engineering firms and beneficiaries on the preparation of feasibility studies and technical project proposals; (c) a monitoring and consulting component in order to monihor closely the progress of the project, to prepare the transition toward lociJly supported employment of the target group, to monitor unemployment levels In areas and sectors covered by the project, and to verify that assets created or rehabilitated are being maintained by the beneficiaries; (d) a study and selected audit of the Public Investment Program to analyse existing procurement regulations and practices and to uncover bottlenecks impeding project implementation and design system improvements; (e) a package of technical assistance to assess the feasibility of establishing a mutual guarantee company for the small contractors; and (i) a program aimed at increasing grassroot participation in urban infrastructure maintenance. and Risk: The main benefits are that the project will create low-cost, short-term employment opporunities using private sectr enterprises in the execution of social and economic public works and will generate income for many categories of the work force. It will also help Government in the area of project management and will demonstrate the efficienc- r-f private sector management in public works execution. The main 's concern the continuation of the Agency after the project. IDA wi'l not continue its support of the Agency under Government auspices, i.e., through credit to the Government to be passed on to AGETIP ir. grant form. Specific measures for cost recovery such as the intreAtuction of a service fee by the Agency for execution works are designed to maximize this possibility. The intr -duction of cost-sharing by the municipalities is intended to create the conditions for AGETIP to operate independently of IMA and other donor financing after the project ends. Another risk is the fear that the Government may try to influence the Agency resulting in the latter's ioss of independence and operational efficiency. These risks will be minimized by the establishment of internal control mechanisms and appropriate supervisory procedures by independent engineering and consulting firms. The risk of political interference will be reduced by strict adherence to Convention the Manual of Procedures. Estimated Projct Costs: (USS Million) COMFONEN1S LOCAL FOREIGN TOTAL % FOREIGN 1. PUBLIC WORKS 42.a 13 S S63 24 2. PILOT ACT1VIMES 3.2 1.4 4.S 30 3. TRAWNG, SrUDIES 2.1 1.S 3.S 41 -Services to contractora 1.1 0.4 1.S 27 -T.A. for beneficiaries 0.1 0.2 0.3 80 -Monitoring 0.4 0.2 0.S 30 -Contract mansgenmen udy 0.0 0.5 0.S 100 -Mutual guarantee company 0.1 0.2 0.3 80 -Greasroots participation 0.S 0.0 0.S 0 PPF Refinancing 0.S 0.0 0.S 100 TOTAL BASE COSIS 48.S 16.3 64.8 26 Price Condingencic 0.9 0.3 1.2 26 Parallel-Financed Works 15.0 0.0 15.0 0 TOTAL POJECT COSTS 64.4 16.6 81.0 21 Figures may not add up to do rounding. ciming Plan: (US$ Million) LOCAL FOREIGN TOTAL 5 OF TOTAL _ PROJBCr COST Govonment 7 - 7 8.0 IDA 18 21 39 48.0 Municipalitie. 20 - 20 2S.0 Other dono0s 15 - 15 19.0 TOTAL PROJECT COST 60 21 81 - vi - J!stlpated Dibreents: (US$ Million) FY93 FY94 FY95 FY96 _______ 39. Total 12 12 12 3 11Cumulative 12 1 24 36 39 REPU-BLIC OF SIUGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECr Stff Aaisal I==or SECTION I - SECTORAL BACKGROUND Economic and Social Context 1.1 Senegal has made some progress in adjusting its ecoimy in the past two years. In particular, there has been an effort to carry out a program of economic stabilization to control inflationary pressures, and to strengthen the country's external sector position. In 1989/1990, real GDP grew by 3.6 percent, below the targeted rate of 4.6 percent, but higher than the 3.1 percent rate achieved during 19985/786-;^88/1989. The rate of inflation, as measured by the GDP deflator, was kept below the program tp&get of two percent. On the fiscal front, the balance turned from a deficit of 4.3 percent of GDP in 1989-1990 to a surl-us of 0.2 percent at the end of 1990/1991. External payment arrears have been eliminated and domestic arrears were reduced significantly. However, the Government has not been successful in making reforms on the expenditure side and especially on the wage bill. Measures to rectify this slippage have been t3ken including voluntary departures, significant downsizing of embassies abroad and limiting hiring to 1,600 persons in 1991/1992. 1.2 These attempts at structural adjustment have put additional pressures on the employment situation especially in urban areas. Privatization of public enterprises and layoffs in the public sector have contributed to a rise in unemployment and to a noticeable increese In informal sector activities. Senegal exemplifies a situation where the rate of job creation has not kept pace with rapid population growth. Generally and depending on the sources and methodologies utilized, unemployment has been estimated between 12.3 percent and 30 percent of the labor force. Frecise measurement is rendered difficult due to the large portion of the labor force working in the informal sector. According to the latest labor market information based on an employment survey of April-May 1991 in the Dakar area, the unemployment rate is estimated to have jumped from 16.7 percent in 1976 and 23.4 percent in 1988 to reach the current 24.4 percent. This figure is based on an active population of 586,000 persons, out of which 443,000 are working and 143,000 are unemployed. The Dakar area has a total population of 1,568,000 persons, out of which 1.1 million are considered able to work, including persons up to age 24. This latter group represents 47 percent of that total or 517,000 persons. 1.3 Uremployment is particularly affecting youth, unemployed graduates, migrants and the unskilled. Of the unemployed, 60 percent are less than 30 years old. The 24.4 percent unemployment figure represents 'absolute unemployment", i.e., those who do not have a job and are actively looking for one. If one takes into consideration the number of unemployed who have given up looking for a job (essendally women), the rate of unemployment would be 32 percent of the active population. In addition, it has been estimated that underemployment which concerns those who regularly work less than the average 40 hours per week affects 15.4 percent of the active population. The unemployment figure goes up to 35 percent for males and 44 percent for females in the 20-24 working age group. Half of the unemployed have no professional experience since they have never worked in their lives. Eighty percent of the unemployed have been looking for a job for a year or more. Women are more affected by the loss of a job than men, especiaUy those between the ages of 20 and 34. Half of the unemployed claim that -2- their unemployment is caused by lay-offs of salaried personnel due to cutbacks, contract termination or firm closings. 1.4 In order to improve these difficult social and economic conditions, the Government of Senegal (GOS) has launched a number of economic and political initiatives since the early 1990s. These initiatives involve the implementation of economic reforms and the creation of employment programs. Essentially, GOS is withdrawing from many sectors and welcoming private initiatives. In particular, the Government has taken a different path on two key issues affecting agriculture and industry and has adopted in these two areas a "nouvelle politique agrico6 ' (NPA) and a "nouvelle politique industrielle" (NPI). These new policies constitute significant departures from the theories that have promoted subsidies and state involvement through the socieets d'encadrement in the rural sector. At the same time, in the industrial area, the Government has promulgated a new investment code, frozen the minimum wage (SMIG)1 and reduced administrative obstacles and procedures for private enterprise creation. 1.5 As a means to help generate employment, GOS created an institution called the DIRE (Delegation I l'Insertion, a la Reinsertion et I l'Emploi) in 1987 to try to deal especially with the unemployment problems of young graduates and laid-off personnel from the civil service, public enterprises and the private sector. The DIRE is in charge of the management of the National Employment Fund and of a Special Fund, financed by GOS for US$11.4 million and international donors like AfDB, IDA and receiving technical assistance from UNDP and ILO. Essentially the project has promoted the creation of new enterprises by making credit available and lending through commercial banks to targeted unemployed people with lankable proposals. The complexity of the institutional set-up, the lack of independence necessary to operate, the reluctance of the banking sector to make small credits and to monitor small loan portfolios, and the absence of auditing of the entities involved in fund flows have led to major bottlenecks which have had a negative impact on credit effectiveness and efficiency. The DIRE has had mixed results. As of July 1991, DIRE had financed 496 projects mostly in urban areas ranging from US$10,000 to US$50,000. These projects havf created approximately 1,500 jobs at a cost of US$11,000 per job. More than half of the jobs created or 52 percent have been in the tertiary sector, 39 percent in the primary sector and the rest (8 percent) in the secondary sector. Thirty-two percent of the projects funded have failed and the reimbursement rate is about 10 percent. Urbanization mnd 1.6 Like other developing countries, Senegal is undergoing rapid urbanization and, despite a population that still is for the most part rural, the primary sector now accounts for less than 30 percent of GDP. A high natural growth rate and an extremely mobile population are significant features of Senegal's urbanization process. In 1985, the urban population represented more than one third of the total population (6.5 million). In 1991, the urban population grew to 3 million inhabitants (45 percent of the total population) and is expected to reach 9 million by the year 2015 (56 percent of the total population). Due to the country's institutional and economic heritage, over 53 percent of the urban population is concentrated in the Dakar area and accounts for more than 80 percent of the jobs in the modern sector. Dakar has had an average annual population growth rate of 5.6 percent since 1976. With 22 percent of Senegal's entire population, Dakar has grown from a city of an estimated 1.1 million in 1980 to a city of 1.7 million according to the last census in 1988. Several other communes have also had 1 The minimum wage is CFAF 1600 for an eight-hour day. -3 - high annual growth rates in the 1980s, ranging from 4.5 percent for Kolda, Fatick and Ziguinchor to six percent for Pikine and Mbour. Although Dakar is expanding rapidly and lacks infrastructure, a few secondary cities are now growing faster. This leads to a more balanced population distribution through a densification of the urban network. 1.7 The urban sector can be characterized in three ways: (a) first and foremost, the growing scarcity of public resources during the last decade has resulted in a steady decline in per capita urban investment. Confronted with an increased inter-sectoral competition, the urban investment level reached only 54 percent of its previous level under the Sixth Plan, thus accumulating a chrom.. *ofrastructure deficit. Given its key role in the national economy and the limited de- ," Ant potential of the regional poles over the medium term, GOS has largely conct. &r&aed its efforts on the rehabilitation of Dakar; (b) secondly, the main government bodies responsible for urban development and housing encountered the same difficulties as the public sector as a whole. Poor performance could be partially explained by the fact that advantageous financing conditions were no longer available and this led to an unrealistic infrastructure policy given affordable demand; and (c) lastly, the reform of the Municipal Code, transferring the bulk of the responsibility for maintaining infrastructure and services to local communities, was not accompanied by significantly increased resources or authority. 1.8 Acting against these urbanization and unemployment trends, the current Government's strategy emphasizes the promotion of a decentralization scheme. As a result, GOS is eager to withdraw, at least partially, from direct support tr urban services, urban infrastructure development and provision of shelter. These functions are now being taken over, to the extent possible, by local governments and the private sector. Implementation of these reforms was supported by IDA through the Technical Assistance, Urban Management and Rehabilitation Project (Cr. 1458/SF113-SE), the ongoing Municipal Housing and Development Project (Cr. 1884-SE) and various related initiatives of the donor community. Within the overall objectives of laying the foundation for sustained growth through development of private initiatives, the Government strategy for the urban sector aims at improving the support that efficient cities can give to the creation of economic activities and employment generation opportunities. Constructon and Public Works Sect 1.9 During the 1980s, the construction and public works industry was affected by a severe recession which impacted particularly on employment in that sector. From 1982 to 1988, employment declined by more than half in the industry. The number of persons working declined from 6,651 employees in 1982 to 3,139 in 1988. As a result, the share of the construction and public works employment in total employment went from 11.1 percent in 1982 to 5.3 percent in 1988. The backlog of inadequate maintenance of road infrastructure has been increasing and often the necessary periodic maintenance works are deferrsd until rehabilitation costs approach those of new construction. The problems plaguing the public works sector stem mainly from the weak organization and the fiscal problems of the Government. On the organizational side, funds from the recurrent budget and from the -4- investment budget ujed to finance road maintenance programs are not always made available. The cumbersome system of public expenditures involves a number of steps from "engagement", "liquidation", "ordonnancement" and "paiement effectif" that might take up to 18 months, hence the reluctance of suppliers to sell goods and services to Government. 1.10 Most public works are carried out by force account by maintenance brigades with very low productivity. For example, it Is estimated that the average annual output of force acc;ount brigades during the 1983-1987 period for both periodic and routine maintenance of the network of paved roads (heavy periodic maintenance) would translate into a capacity to resurface the network once every 45 years. Routine maintenance output rates on paved roads were much worse. For the network of earth roads and se e, output corresponds to a partial regravelling every eight years and fiul regravelling every 100 years. A major factor contributing to this situation is the weak procurement capacity and especially the erratic nature of contract settlements hampering the utilization of private contractors to execute the works. In any given year, a substantial portion of work done by private contractors is carried as arrears by the treasury. Those arrears have fluctuated from CFAF 2 billion in 1987 to CFAF 0.3 billion in 1990 and to CFAF 1.1 billion in May 1991. Payments for arrears are estimated to be as high as 40 percent in any given year. As a result of this situation, not only are contractors reluctant to bid on GOS jobs, but when they do, they include routinely in their bid prices the cost of carrying such slow-paying receivables. The need for a more expeditious payment system to reduce costs has led GOS to accept the establishment of a mechanism permitting the timely payment of contractors. An account has been established in a commercial bank and is administered by the Ministry of Equipment, Transport and the Sea, and controlled a posterlori by the Ministry of the Economy and Finance. This account would, within limits of the annual budgets, at all times have available CFAF 120 (lower limit) to CFAF 350 million (upper limit), amounts estimated necessaiy to meet payment deadlines. Rationale for IDA Involvement in the Sector 1.11 By financing the first Public Works and Employment Project (Cr. 2075-SE), IDA has already played a leading role in the rehabilitation of infrastructure in Dakar and in the main centers of the ten regions of Senegal. IDA's strategy is to support the Government in the urban sector to promote its decentralization policy. A fourth urban project (FY94) is under preparation to help the Government test the effectiveness of its decentralization policy, especially in terms of improving the quality of infrastructure maintenance and urban services. The fourth urban project proposes a multi-faceted approach to reaching the goals of creation of economic activities and tue generation of employment opportunities in urban areas. This approach includes the following priorities: (a) improved functioning of urban centers and the development of a more balanced urban network in support of urban-rural linkages; Ob) improved urban services delivery through the implementation of self-reliant mechanisms for provision and financing of these services; (c) development of appropriate procedures to finance priority urban investments identified in the Municipal Investment Plan; and (d) implementation of an appropriate framework to support the dynamism of the private sector. These actions are closely linked with, and complementary to, the proposed second public works and employment project. Therefore, a second program of labor-intensive public works aimed at improving the urban environment using private enterprises sets the stage to address some of the policy concerns, such as contracting efficiency and private sector participation, that will be dealt with in the fourth urban project. Continued IDA involvement as requested by GOS would help address urban infrastructure maintenance and rehabilitation problems while creating employment and training workers in the informal sectot. SECTION IX - PUBLIC WORKS AND EMPLOYMENT - FItST PROJECT 2.1 In an attempt to further mitigate the effects of the adjustment program on the economy as a whole and on youth and the urban poor in particular, GOS is supporting macro-economic growth policies with speciiic employment generation programs that are cost-effective. As overall growth cannot take piace without the necessary infrastructures in terms of roads, schools, dispensaries, etc., the construction industry seeraed the logical starting point for intervention; therefore, with IDA support, GOS decided to undertake a public works and employment project in 1989. Prjec Objectiv 2.2 The first Public Works and Employment Project (Cr. 2075-SE) was approved on December 14, 1989 and became effective on March 7, 1990. Its objectives are: (a) to create, at least temporarily, substantial new employment in urban areas as rapidly as possible; (3) to improve, through the execution of the works financed by the project, the individual skills of the workers who will be employed, and the corporate competitiveness of the firms that will carry out works so as to develop their capacity to respond to increased opportunities for sustained employment after project completion; (c) to demonstrate the feasibility of labor-intensive projects and test the procedures that will enable the public sector to commission such projects; and (d) to undertake subprojects that are economically and socially useful. 2.3 Associated objectives, which v-re also being met, include: (a) avoiding the need to increase the civil service; (b) combining the benefits of implementation methodologies that feature low cost, high visibility and conspicuous impact; (c) supporting but not replacing other development programs by efficiently executing their subprojects related to infrastructure; (d) using transparent but expeditious and flexible procedures for subproject proposals, appraisal, contracting and disbursements; and (e) providing sustainable technical and managerial assistance. jnstitutionalEFrm 2.4 After considering the barriers that small contractors would be facing in terms of access to public contracts, it was deemed necessary to establish a special agency with private legal status to -6 - implement the project. To this end, an organization called the "Agence d'Execution des Travaux d'Inter8t Public contre le Sous-Emploi" (AGETIP) was created in 1989 as an independent institution, with a board consisting of a Director drawn from the private sector and representatives from the National Council of Employers of Senegal, the Union of Construction and Public Works workers, and the Association of Mayors of Senegal (Annex 1). AGETIP was given the necessary private legal status and entered into a Convntion with GOS to execute the project (Annex 2). Orzanization andSafflg 2.5 AGETIP is headed by a widely respected Senegalese executive who has over fifteen years of experience in the private sector. He is assisted by technical and financial directors and by an internal auditor also with a strong private sector background. The director has the authority to recruit AGETIP's professional and clerical staff that numbers 20 persons. Administrative costs have been kept below five percent of the total program amount. Project management is governed by a Procedures Manual which is an integral part of the Conventon. Program Targets and Capaciy 2.6 In trying to address the issue of unemployment affecting youdh, migrants and unskilled laborers, AGETIP targets, in particular, the small and medium firms of the domestic construction industry. These firms ai9 negatively impacted by the cumbersome bidding pro_;dures and payment delays occurring in the public sector. AGETIP's effectiveness can be seen in the fact that it has led to the creation of 11,103 jobs with an average duration of 30 days each. Seventy-eight enterprises won contracts to execute 119 subprojects, among which are 15 youI groups called "Groupements d'Interet Economique" (GIE). It is worth noting the large number of GlEs that have been formed since the creation of AGETIP, an element that indicates that the target group of young and unskilled has been reached. Of the 681 enterprises pre-qualified by AGETIP, 103 are GEEs, of which 99 were created after 1989. 2.7 During the preparation of the first project, a survey of the target enterprises was undertaken. In particular, the survey aimed at describing the enterprises themselves, including: (a) overall financial position (fixed capital, working capital, guarantees, suppliers); (b) managerial aspects (qualifications of management, willingness to attend training programs, ability to fulfill contractual obligations in terms of duration and quality, overall orientations of the enterprise in connection with public works through AGETIP); and (c) employment by category (indefinite contract, fixed-term contract, daily laborers), subscription to social security. 2.8 AGETIP used the results of the survey in order to classify the enterprises and pre-qualify them to participate in the execution of the subprojects. The target enterprises have demonstrated an ability to abide by bidding procedures and attend training programs. About 600 firms of the domestic construction industry have been prequalified to participate in the AGETIP program. Of these 600 firms, 78 have won 119 contracts, and of these 78 firms, 96 percent or 75 firms are small- or medium-sized. -7- AGETIP has also prequalified 191 consulting engineers of which 97 have had at least one contract with the Agency. Project Identification and Apraisal 2.9 AGETIP advertises widely its procedures as contained in the Procedures Manual (Annex 3), especially as they pertain to the categories of works and services eligible to oe financed under the Project. AGETIP reviews the subprojects that are presented by the municipalities and ministries of the central Government for their eligibility based on certain pre-determined criteria known and published in the Procedures Manual. The portfolio of projects identified is then submitted to IDA for review and after analysis, the portfolio to be executed for the coming year is retained and approved. It is then that consulting firms are hired to prepare bidding and technical documents to call for bids. Sbject Impmenn 2.10 Once a subproject has been selected, the public agency which has submitted it ("the beneficiary") enters into an agreement (Conventon de matrtse d'ouvrage deleguee) with the Executing Agency, according to a pre-established model which is attached to Sectiop IV of the Agency's Procedures Manual. This agreement includes inter ali the following provisions: (a) the Executing Agency is substituted for the beneficiary for the entire execution of the subproject and has full authority, on behalf of the beneficiary, to select the contractors, sign the contracts, supervise the works, acknowledge delivery, and pay contractors; (b) the subproject is financed by the Execuuig Agency, on the basis of the funds made available to it under the project, and therefore is additional to the beneficiary's own capital budget or investment program. The beneficiary will not be requcsted to reimburse the cost of the subproject; (c) the beneficiary pledges the responsibility for the ongoing maintenance of the subproject; in case of non-compliance with this clause, the beneficiary will not have access to the Agency's financial resources, until the situation is rectified; and (d) provisions for resolving disputes. Contracting-and Suprision 2.11 With the support of a management information system containing files for contractors, consulting firms and subprojects, all of which have been screened and reviewed by IDA prior to credit effectiveness, AGETIP is able to proceed swifldy with contracting without the long delays observed in the public procurement system. The roster of eligible contractors and consulting firms maintained by the Agency is always open, and newcomers, once they satisfy the requirements specified in the Procedures Manual, can be pre-qualified and classified. At the end of the year, the roster is re-examined and firms are reclassified based on performance. Beside the guidelines delineated in the Procedures Manual, AGEIIP implements the subproject with the support of a management information system which allows for decision-mRking to be made without delay. At any time, the managers of the Agency know exactly -8 - what the situation is for every project, supplier, payment, voucher, and bill. Problems can be identified and corrected immediately. Monitoring and Evaluatioi 2.12 In order to better understand the target groups of beneficiaries (individuals, firms, municipalities, etc.), AGETIP has commissioned a number of studies to monitor the issues of labor ratio, wages, cost overruns, completion delays, unit prices, etc. The mid-term evaluation, based on a sample of 40 construction enterprises, has revealed that the labor ratio in the volume of works fluctuates between 20 and 22 percent for road works, to 25 and 30 percent for building rehabilitations, and to over 30 percent for street sand removal and the cleaning of gutters and drainage ditches. Daily wages paid also fluctuate between 1400-1900 CFAF for service workers, to 1950-2600 CFAF f'.or building rehabilitation and to 2800-3 100 CFAF for road works demanding the utilization of machinery. AGETIP has been able to execute its first portfolio of an amount of 2.3 billion CFAF with a small cost overrun of 27.5 million CFAF, representing 1.2 percent of the portfolio. This must be compared with the public procurement system where cost overruns amount to 15 percent of original estimates. On a sample of 64 work sites, only five, or less than 10 percent, registered completion delays for causes having to do with raw material and supply shortages. On unit prices, the analysis indicates that AGETIP has obtained prices that are five to 40 percent lower than those obtained by the administration. Finally, AGETIP has verified through its technical audits that the assets created or rehabilitated have indeed been maintained by the beneficiaries. 2.13 To further explore the impact of the first Public Works and Project on unemployment in urban areas, a follow-up program of quantitative surveys among Project beneficiaries will be launched at the end the first project. The objective of this survey will be to improve empirical information on employment characteristics and quality of life in the construction and public works industry, especially in urban areas. The second phase project's monitoring component will also include a study to monitor unemployment levels in areas and sectors it covers. Achievements 2.14 Among its achievements, AGETIP has contributed to the renovation of 27,900 square meters of public buildings, to the construction of 4400 square meters of simple buildings including schools and dispensaries, to the rehabilitation of 50 kilometers of urban roads and 38,000 square meters of sidewalks, the demolition of 15,000 square meters of old buildings, the cleaning of 37,200 linear meters of drainage canals and the clearing of 122,000 square meters of bushes, the collection of 7700 cubic meters of sand and to the filling of 18,000 cubic meters of embankment. It has set up easy and clear bidding procedures which facilitated a large participation of the small- and medium-scale enterprises in the program. Small- and medium-scale enterprises have executed these works within the time framework specified in the contracts signed with AGETIP. (Several training programs have been conducted by AGETTP so that these firms would have a good understanding of the Agency's procedures.) 2.15 On many counts AGETIP has been a success. A review of project disbursement profiles indicates that AGETIP has shown an absorptive capacity greater than the average IDA-financed project (Annex 4). Other governments in the region have decided to promote this form of private management of public contracts. The organizational design has been adopted in Niger, Burkina Faso, Benin, Mali, and Mauritania. The traditional role where government produce public services is being replaced by one -9- where the government prides those services but lets the private sector deliver them. AGETIP has demonstrated how managerial autonomy and private sector orientation lead to strong results. A case in point is the bidding and procurement procedures: it takes AGETIP two months to complete the whole process, while it takes the administration six months to do the same. Lessons Learned 2.16 Preliminary reflections on the design of the first Public Works and Employment Project suggested improvements in the following areas: (a) In the appraisal of subprojects area, it was suggested that for social projects, numerical indicators such as population, number of current and potential users of sor:al infrastructures, tax collection efficiency, etc., be used to rank subprojects; (b) In procurenent, on the evaluation of the contractor's bids, it was suggested that a post- qualification bid be introduced to take into account the remaining capacity of the contractors in contract award as well as provide explanations for bids that are 15 percent lower than the reference price and to have an additional guarantee. These changes will be reflected in AGETIP's updated Procedures Manual; (c) Regarding the disbursement of counterpart funding, experience has shown that Government has been slow in disbursing its counterpart funding. To address this issue a strong covenant linking the review of subproject batches to the disbursement of such funding has been included in the Development Credit Agreement (SAR, para 4.3 (e)); (d) The training for contractors component should have been designed earlier to enable participating contractors to have immediate access to training. For the second phase project, training for contractors will be available upon credit effectiveness; (e) A program to increase grassroots participation should have been promoted. This program has been included under the training and studies component of the second phase project (para 3.24); and (t) The eIvironmental impact of subprojects was not taken into account in the eligibility criteria for subproject appraisal and selection. To address this point, another eligibility criterion has been introduced into AGETIP's updated Procedures Manual stating that subprojects having a negative impact on the environment will not be considered for implementation. Donor Coordination 2.17 AGETIP has evolved as an institution and has received funding from eight other donors including AfDB, Japan, Germany, Canada, World Food Program (WFP), the FED and UNDP. AGETIP has also developed programs for the promotion of micro, small and medium enterprises funded by the Caisse Centrale of France and United Nations Capital Development Fund (UNCDF) and Belgium. - 10- SECTION m - THE PROJECT E^,rjWc ,F.Qfllation 3.1 The success of the AGET1P initiative as a tool to increase the local absorptive capacity and to involve small contractors in project execution led GOS to request IDA's assistance for a second project in a letter dated March 19, 1991. 3.2 AGETIP's contribution to urban renewal and employment has not gone unnoticed by local officials. Senegal has been experimenting with decentralization over the past two years. Municipal elections took place in 48 localities in November 1990, and the newly elected mayors who gathered within the Associat'on des Malres du Sdingal (AMS) have been active in trying to develop programs for their communes. The response of the leaders of these local govermnents to the difficult situation in their cities has been to request the assistance of AGETIP to help them plan and structure interventions to rehabilitate and improve living conditions. With the support of AGE' 1P, the mayors are looking forward to investment strategies and action plans for their municipalities to include: (a) basic urban infrastructure (paved roads and primary and secondary canals for storm drainage and sanitation, primary schools, dispensaries and neighborhood clinics, sports fields, community centers, youth centers, etc.); (b) slum upgrading and neighborhood restructuring (roads, drainage canals for wastewater, potable water, street lights, garbage collection, land development, etc.); and (c) basic economic infrastructure and community facilities (covered markets, bus stations, slaughterhouses, public parking, warehouses, cold storage, etc.). 3.3 Using the concept of matrlse d'ouvrage delWguie (delegated contract management), the municipalities want to promote the construction or restoration of basic infrastructure as a central element of urban regeneration and of the government decentralization program. Such capital investments would have primary multiplier effects associated with the construction or restoration phase, while having a substantial impact on the local economy. Furthermore, te refurbishing of obsolete infrastructure would have secondary multiplier effects on employment and income associated with the on-going use of the restored or newly built facility. rolect QbWectives 3.4 Based on its accrued experience during the first phase, project objectives, in addition to public works execution and employment enhancement, include: (a) the continuation and decentralization of AGETIP activities in secondary cities; (b) the development of pilot activities to test the feasibility of AGETIP's approach in other areas; - 11 - (c) the organization of training for the municipalities and the small and micro enterprises engaged in project implementation; and (d) to make AGETIP a sustainable agency covering its operating costs on a fee basis. Intended Beneficiaries 3.5 The project's intended beneficiaries are divided into f.wE groups. First, there is the population at large benefitting from better drainage, sanitation, and roads. In particular, this will benefit the poorest neighborhoods, since project selection criteria give priority to poorest areas. Second, there are the small enterprises and t4cherons (class A - see Annex 5) from the informal sector who mostly are in the lowest part of the income distribution and the youth groups known as Groupement d'Interet Economique (GIE) that come from the lowest 25 percent of the urban population. The project will be helpful to the former categories to the extent that it will provide them with work and contribute to making them achieve a transition from the informal to the formal sector. A third group of beneficiaries is constituted by the 41 municipalities that will benefit from investment from the project. Finally, the project benefits a fourth group, the maltres d'oeuvre (architects, engineers, and consulting firms) that will be engaged in the preparation of bidding documents and supervision of the works. Proiect Description 3.6 The three components of the proposed project are: (a) the continuation and expansion of AGETIP's public works program of public facility and infrastructure rehabilitation and maintenance in urban areas to be carried out under labor- intensive schemes by local contractors; (b) a program of three pilot activities which include: fi) the application of AGET[P procedures to the development and management of municipal revenue-earning infrastructure; (ii) a program to improve the efficiency of procurement of goods (i.e., school furniture) for public purposes, financed from the reorientation of existing government purchases (from current budget or from projects); and (iii) the development and testing of AGETIP-type mechanisms to support rural investments; and (c) a training and studies component which would support: (i) a package of training services related to work organization, management, and technical skills training, to be offered on a voluntary basis to local contractors who will be awarded contracts under component (a); - 12 - (ii) a training program for local engineering firms and beneficiaries on the preparation of feasibility studies and technical project proposals; (iii) a monitoring and consulting component in order to monitor closely the progress of the project, to prepare the transition toward locally supported employment of the target group, to monitor unemployment levels in areas and sectors covered by the project, and to verify that assets created or rehabilitated are being maintained by the beneficiaries; (iv) a study and selective audit of the Publi,. Investment Program to analyze existing procurement legislation and pritctices and to uncover bottlenecks impeding project implementation and design system improvements; (v) a package of technical assistance to assess the feasibility of establishing a mutual guarantee company for the small contractors; and (vi) a program aimed at increasing grassroot participation in urban infrastructure maintenance. 3.7 The implementing arrangements which are critical for effective fulfillment of the project's objectives will remain the same, i.e., la matrise d'ouvrage d4ldgge. AGETIP will continue with its current procedures and be able to avoid the cumbersome, slow, and inefficient procedures that public institutions follow for calling for bids, awarding contracts and disbursing, which result in de facto discrimination against small contractors. AGETIP's operating procedures and internal organization, as well as those of its subsidiaries will include: (a) eligibility criteria for selecting subprojects submitted by local and central administrations for implementation under the proposed project; (b) procedures for calling for bids, selecting contractors and vendors (including prequalification if necessary), and awarding contracts; (c) internal organization for work supervision and control; (d) disbursement procedures; and (e) delivery of completed works. Accounts will be audited at least twice a year and resources will be replenished only upon presentation of properly documented records of the use of funds and satisfactory audits. The supervision committee of AGETIP will have full authority to propose and implement any measure that would be deemed usefil to ensure actual fulfillment of the project's objectives, including hiring and dismissal of AGETIP's management and staff. 3.8 AGETIP's current Procedures Manual will be revised to take into account the changes in terms of focus and scale. AGETIP, a not-for-profit organization, will be involved in revenue- generating activities. The Procedures Manual Will be revised to provide that its profits may be used to finance only additional public works projects and other related activities. The updating of the Procedures Manual, satisfactory to IDA, will be a condition of effectiveness (para. 4.2(a)). At all times, the Statutes of Agreement of the Agency and the Procedures Manual must be acceptable to IDA (para. 4.3(a)). Construction and Public Works Program 3.9 Ibis program will continue with the rehabilitation and maintenance of public infrastructure in urban areas, especially in the field of construction and public works, i.e., drainage network cleaning, public building rehabilitation, road maintenance, and urban renewal. These activities will be carried out under labor-intensive schemes by local contractors in order to create employment. This project - 13 - component will represt at approximately 90 percent oif AGETIP's activities in terms of total project costs. AGETIP will decew'rOlize its activities and set up two regional offices in Saint Louis in the north and Ziguinchor in the south. Also there will be a deconcentration of decision-making, i.e., the heads of regional offices will be responsible for dafly management of their offices. All subprojects to be financed under the credit will be reviewed and approved by IDA. 3.10 Municipal Contribution to Project Financing. One of the major objectives of the proposed project is to involve municipalities in the financing process. AGETIP will share with each municipality the funding of each subm;tted subproject. Municipalities benefitting from subprojects executed under the project will finance 50 percent of the cost of these subprojects. However, since not all municipalities - especially smaller and newer municipalities - requesting AGETIP's assistance in implementing public works will be able to finance 50 percent of the works, four exception criteria were established: (a) communities having a population of less than 15,000 inhabitants; (b) communities with an equity investment of less than 100 CFAF (US$0.37) per person per year; (c) communities with a debt per capita of 4000 CFAF (US$14.35); and (d) communities having local tax revenues of less than 12 million CFAF (US$43,057) per year. Communities meeting all four of the above criteria will be eligible to receive up to 90 percent of financing for the subprojects executed on their behalf. The Direction of Local Communities will furnish AGETIP with lists of the communities eligible for the 90 percent financing plan and those eligible for the 50 percent financing plan annually. This proposal was presented by GOS and discussed and agreed upon during negotiations (para. 4.1(b)). 3.11 Incentive Fund. In order to encourage municipalities with strong management skills, it was decided to introduce an "incentive fund" (fonds d'incitation). Those municipalities having reserves in their recurrent budgets at the end of the fiscal year wiUl be able to transfer these reserves to their investment budgets. IDA wiUl then match the equivalent of every dollar the municipality saved with the equivalent of two dollars for subproject financing. This fund wiUl receive a global endowment of US$6 million which should be spread out as follows over the life of the project: (a) US$1 million the first year; (b) US$2 million the second year; and (c) US$3 million the third year. The Direction of Local Communities will be responsible for providing AGETIP with a list of communities eligible for the incentive fund at the beginning of each year. 3.12 In addition, the construction and public works program will execute construction components of other current or planned projects financed by IDA and other donors. These construction - 14 - components will be executed on a fee basis. The Procedures Manual states that fees cannot exceed five percent of the value of works. An example of this is the Agricultural Extension Project (Cr. 2108-SE) which is negotiating with AGETIP the construction of 13 regional agricultural inspection stations and five regional livestock inspection stations over a four-year period. Similar collaboration is envisaged in the Second Agricultural Research Project (Cr. 2107-SE), and in the Primary Education Development Project (Cr. 1735-SE) and the proposed human resources sector project planned for FY93 for school and clinic construction. Development of Pilot Activities 3.13 The pilot activities consist of a set of three programs designed to test the applicability of AGETIP's principles to other areas. The philosophy of transferability will be measured for income generating municipal infrastructure programs, public procurement programs in general and rural activities. This component represents seven percent of the project's total base cost. These pilot operations will be evaluated during the annual reviews. 3.14 Revenue-generating Infrastructure Program. This program will aim essentially at identifying income-generating projects for the municipalities. These projects could include markets, slaughterhouses, bus stations, cold storage houses, and public parking. AGETIP would enter into an agreement with the municipalities, prepare the feasibility studies, structure the financing for the use of funds from the CredIt Communal (provided for in part under the Municipal Housing Project (Cr. 1884- SE)), build the project, operate it, and finally transfer it to the municipality after proper management has been trained. The municipalities would pay a fee to AGETIP for these operations. AGETIP would introduce an entrepreneurial element in municipal management, i.e., bringing community improvements with profits for the municipality. 3.15 Public Procurement Program. This program will aim at -supporting GOS in its privatization policy. AGETIP would develop a program of pilot projects designed to test the applicability of AGETIP's principles and procedures to procure goods and services for the public sector whether they are financed by donors, notably IDA, or by Government budget. A sample of targeted goods and services could be: a) school desks, chairs and supplies; b) equipment for hospitals and clinics; and c) sanitation equipment for municipalities (garbage containers, wheel barrows, brooms, etc.). This program would extend the AGETIP principle to non-construction contracts to be executed by small ardsans. 3.16 Rural Investment Program. This program will aim to extend AGETIP-type operations to the support of rural investment. The two principal targets would be socially productive infrastructure at the level of the local community, through communauts rurales and on-farm investment. The justification for this is that existing mechanisms are rather ineffective at this level, and leads to an exacerbation of the continuing urban bias of other official policies. The commwuads rurales are the lowest level of elected local government, and Government policy is to increase their role and powers, but they currently lack political credibility because of their lack of resources Communautds rurales should not, however, be encouraged to engage in directly productive investments, which occur principally on- farm. Nor does the existing credit system significantly address the issue of long-term investment on small farns. It is proposed that AGETIP develop pilot operations to address these problems, present detailed proposals for Government and IDA's approval, put them into effect by the creation of decentralized organizations, and provide training and monitoring services. In the event that agreement cannot be - 15- reached on an implementable proposal, the funds allocated for this purpose would be transferred to the public works program. Trainin and Studies 3.17 Package of Traiing Services for Contractors. This component, represenfing four percent of AGETIP's activities in terms of total base project costs, will aim at increasing the technical and managerial capacity of small- and medium-scale Senegalese firms in the building and construction trades. The rationale behind this component is twofold: (a) most firms in the target group are expected to show weaknesses, in terms of management, work organization, and technical skills, which might jeopardize the successfil implementation of the subprojects that they will be commissioned to carry out. The provision of some technical assistance to contractors is deemed an effective way of addressing this risk; and (b) conversely, those firms which are going to be awarded contracts under the proposed projects may be expected to be comparatively more efficient than others, if the selection process is effective. Therefore, with a view to strengthening comparative advantages instead of randomly spreading assistance over the whole industry, these firms deserve to be supported to improve the overall efficiency and competitiveness of the industry. 3.18 AGETIP conducted a survey to determine the training needs and the willingness of the contractors to participate in the financing of these needs. The results reveal that 96 percent of the entrepreneurs interviewed indicated training needs for themselves and their employees as well as the specific fields (site management, technical training, accounting and finances) in which that training was needed. Also 74 percent have expressed the wiUl to invest their own funds in training. A majority of the contractors are willing to pay 20,000 CFAF per month and per person, with the possibility of a five percent increment per month until the 36th month. Several subprograms will be offered under this component, some of whi^h would be: (a) a business administration and financial management program intended for entrepreneurs and their administrative staff; and (b) a work organization program primarily designed for foremen and various technical training courses to improve the skiUs of basic workers. These subprograms would be very practical at the grassroot level and will take the form of on-the-job assistance and training. Potential beneficiaries will be free to accept or refuse this form of assistance, except in cases where technical assistance will be deemed indispensable for successful implementation of the subproject and will, therefore, be a condition of contract award. 3.19 The establishment of an effective technical and management assistance operation to the small and medium firms involved in project execution will be delegated to an outside entity that will be contracted for this purpose. Annex 6 presents the summary of training services that will be offered under the two programs. Terms of reference have been drafted to solicit proposals from a list of local - 16- consultants already Identified to formulate an Action Plan that will be presented to IDA for its approval no later than three months after credit effectiveness. These terms of reference were agreed upon during negotiations (para. 4.1(d)). The agreed Action Plan will be updated annually to reflect the needs Identified during site supervision of project execution. 3.20 Technical Assistance to Beneficiaries. This component would provide support to beneficiaries to prepare feasibility studies and technical project proposals that would be submitted to AGETIP for funding (Annex 8). The submission for IDA's approval of a detailed Action Plan for the implementation of this component is a condition of credit effectiveness (para. 4.2(c)). 3.21 Monitoring Program. The monitoring program will broaden the scope of the regular supervision of any IDA project. Given the wide margin of independence and initiative which is deemed instrumental to ensuring AGETIP's efficiency and effectiveness, close and continuous ex post and monitoring are essential to prevent AGETIP from misusing its autonomous decision power. Moreover, the many innovative and even experimental features of the proposed project call for provisions enabling the Government and donors to jointly monitor progress of the project toward the proposed objectives and to take expeditious measures if they assess that some misconception has prevailed in the project design, and that there is a danger of the objectives being missed. In order to make relevant information available for the above-mentioned meetings, consultant services (e.g., technical, management and financial audits of AGETIP, studies of the impact and performance of already implemented subprojects, a study monitoring unemployment levels in areas and sectors covered by AGETIP, and a study of the performance of procurement procedures) will be identified and agreed upon with the Government by regular supervision missions and will be commissioned by AGETIP upon request by the Government in order to deliver findings and recommendations in a timely manner for the above meetings. 3.22 Contract Management Audit Study. This component will consist of a study and selected audit of the Public Investment Program to analyze existing procurement regulations and practices, to uncover the bottlenecks in procurement, contracting, works supervision, payment, and audits that impede project implementation and to design system improvements. The study will help the Government document problem areas and will at the same time demonstrate the benefits of alternative procedures and contract administration methods that emphasize efficiency and transparency used by the Public Works Employment Project. The terms of reference for the audit were agreed on during negotiations (para. 4. 1(c)). It was agreed during negotiations that: (a) within six months of the completion of the study and not later than October 1993, the Government will present to IDA for its comments an Action Plan to adopt the changes recommended by the study to determine how they will be implemented (para. 4. 1(c)); and (b) the Government will subsequently implement the agreed Action Plan, not later than April 30, 1994 (para. 4.1(c)). 3.23 Action Plan for the Establishment of a Mutual Guarantee Company. Eighty percent of the micro- and small-enterprises and Groupements d'Interet Economique (GIE) constituting the main target group of AGETIP are young firms that do not have access to bank credit to finance their equipment and working capital. This component would provide financial assistance to conduct the feasibility study to respond to the needs expressed by local entrepreneurs for the establishment of a mutual guarantee company. It will give support in terms of logistics, training and preparation of the techniques and - 17- procedures for the organization of a mutual guarantee company that would serve the firms likely to execute works under the project. The timetable of key steps for launching studies and activities necessary to implement this component is in Annex 7. 3.24 rassroot Participation Progrm. This component would help organize a program to increase grassroots participation in urban infrastructure project maintenance (Annex 8). This program would disseminate information, using the local languages, logos, appropriate colors and music, to the c.'efs de quarter, neighborhood committees and to the t4cherons and micro-entrepreneurs to increase the level of responsibility that the community feels with respect to project works. In this framework, AGETIP has been organizing a number of activities to increase public awareness and support for the project. The credit will provide financing for the continuation of these activities, including an informaion seminar to distribute documentation and to sensitize the population on the project, a meeting of the General Assembly of the Agency, and a week-long campaign in the media. The objective of this effort is to improve communication between the grassroots and local authorities so that the former are consulted on projects that affect their neighborhood, before the projects are presented to the Agency for funding and implementation. This is particularly important in the case of garbage collection and sewer cleaning, where grassroots participation can make a difference in terms of public hygiene. The submission for IDA's approval of a detailed plan of action for this program is a condition of credit effectiveness (para 4.2(c)). Status of Project Preparation 3.25 A PPF in the amount of US$480,000 was granted to GOS on December 6, 1991 to finance short-term consultant services in various fields (training, participation and involvement of the population, mutual guarantee fund, updating the Procedures Manual, municipal revenue-earning infrastructure, public procurement) needed for the project preparation. All studies are underway and preliminary drafts were reviewed at appraisal. AGETIP personnel and representatives of the Government have met regularly with the consultants to monitor progress on these studies. The project was appraised in the latter half of January 1992 and negotiated in April 1992. Proiect Cost and Financing Plan 3.26 The project base cost is estimated at US$64.8 million equivalent (CFAF 18.4 billion) out of a total project cost of US$81 million (CFAF 22.6 billion) net of taxes and duties. Based on data from the first Public Works and Employment Project, the foreign exchange component of the program is estimated at 24 percent of the total cost. Base cost estimates are in January 1992 prices. Annual inflation rates have been estimated as follows: - 18- Table 3.1 - Local and Foreign Inflation Rates r -1993 1994 1995 1996 Local 3.0 3.0 3.0 3.0 Foreign 3.9 _ 3.9 3.8 3.8 Since the volume of labor-intensive public works will be adjusted according to available funds, price contingencies have not been applied to the estimated local cost of the public works component which constitutes 66 percent of total base costs. Price contingencies on the remaining components amount to two percent of base costs. A summary of estimated costs is presented in Table 3.2 below. Detailed project costs are provided in Annex 9. Tble 3.2 Estimated Costs (net of taxes and duties) (US$M) COMPONENTS LOCAL FOREIGN TOAL % POREIGN i. PUBUCWORKS 42.8 13.5 56.3 24 2. PIL ACTrIrS 3.2 1.4 4.5 30 3. TRAING, STUDIBS 2.1 1.5 3.5 41 -services tocontractors 1.1 0.4 1.5 27 -T.A. for beneficiaries 0.1 0.2 0.3 s0 -Monitoring 0.4 0.2 0.5 30 -Contract managment study 0.0 0.5 0.5 100 -Mutal guante company 0.1 0.2 0.3 80 -Grassroots padicipation 0.5 0.0 0.5 0 PPF Refinancing 0.5 0.0 0.5 100 TOTAL BASE COSTS 48.5 16.3 64.8 26 Price Contingencies 0.9 0.3 1.2 26 Paralel-Financed Work IS.0 0.0 1S.0 0 TOTAL FROJECT COSTS 64.4 16.6 81.0 21 Fipure. may not add up to do rounding. - 19 - 3.27 The proposed IDA credit of US$39 million equivalent (CFAF 10.7 billion) will finance 48 percent of project costs net of duties and taxes over a three-year period. This amount includes a five percent fee to be paid to AGETIP for its delegated contract management work. The Government's financial contribution will be US$7 miUlion equivalent (CFAF 1.95 billion) or eight percent of total project costs. The Government's contribution of CFAF 650 million per year represents a small portion of Govermnent's actual expenditures of CFAF 75 billion for 1990 and of CFAF 99 billion for 1995. The Government's contribution will be provided to AGETIP from Government budgetary resources to finance new subprojects (in addition to those financed by IDA and other cofinanciers) (para 4.1(e)). It was agreed during negotiations that the Goverrment will: (a) cause the Executing Agency to execute new subprojects of an aggregate value of US$7 million equivalent (CFAF 1.95 billion) before December 1995, of which subprojects totalling the equivalent of at least US$2.3 million (CFAF 650 million) would be completed by December 31, 1993. The portfolio of these subprojects will be submitted to IDA in addition to the US$17 milion financed by IDA and other cofinanciers. Additional subprojects representing an aggregate cost of at least another US$2.3 million equivalent (CFAF 650 million) will be completed not later than December 31, 1994 (paras. 4.1(e) and 4.3(d)); and (b) make available to AGETIP, out of its own resources, all the funds necessary for the execution of those subprojects (paras. 4.1(e) and 4.3(d)). On a quarterly basis, these funds will be made available to AGETIP and a quarterly advance to be made to AGETIP on the annual amount of the Government's financial contribution to the project will be a condition of credit effectiveness (para. 4.2(d)). It is stipulated in the Development Credit Agreement that IDA reserves itself the right not to review the annual subproject batches submitted by the Agency if the Government has not honored its counterpart funding obligations as described above (para 4.3 (e)). Munidpalities contribution will be US$20 million equivalent (CFAF 5.6 bi1lion) or 25 percent of total project costs. Cofinandng totaling US$15 miUlion equivalent (CFAF 4.2 biUlion) or 19 percent of total program costs) will be assumed by AfDB, CIDA, EEC, and WFP. These donors have expressed their interest and requested copies of the appraisal report. Their commitment will be finalized after negotiations. The EEC is about to start the Lome IV program. Within that program, there are two major civil works interventions of a potential scope totaling US$10 million (CFAF 2.8 billion). It is envisaged that this would provide an opportunity for AGETIP to execute an additional US$10 million (CFAF 2.8 billion) of civil works. Also, the WFP is planning an appraisal mission from April 24 to May 9, 1992 in Senegal on works to be given to AGETIP to execute on a parallel financing program of US$15 million (CFAF 4.2 billion). The proposed financing plan is set out in the following table: -20 - lXble 3.3 Financing PIa (US$" I , .. . S_ PaLML FREGN T rA . OPTrarAL _ _ _ . ~~~~~~~~~~PROJETC0CSTl Governm-nat 7 7 . .8.0_ IDA is 21 39 . .48.0l L_nici;" 20 20 2S.0 |Olhe donos iS I S is 19.0 TOA .RJC COST0 21 81 3.28 AEI'-s AbsoZtiv QWp&gfty. AGETIP is expected to have the capacity to consume thie credits and to implement subprojects for an amount of US$22 million per year. This amount represents a doubling of its current credit consumuption. The opening of new regional offices in Kaolack, Saint Louis and Ziguinchor, and the ensuing decetralization of its operations will make this possible. AGETIP has a list of 600 prequlalified firms, of which 78 have obtained contracts. Of the 191 engineers prequalified by the Agency, 97 have had contracts to carry out studies and supervise works. This means that there is a large enough remahinig capacity in the f;-ald of contractors and consulting engineers. AGETIP will increase its current 20-person staff to accommodate the additional management personnel necesary to process the higher volume of works. ojiect Tmplmntto 3.29 The Govanuent will enter into a Convention with AGETIP. setting forth the various obligations of both parties. Pailure of either party to comply with its obligations under the Convention, with respect to project implementation, will be a reason for suspension. 3.30 AGETIP has demonstrated its ability to avoid cumbersome, slow, and inefficient procedures that public institutions are obliged to follow for ca11ing for bids, awarding contracts and disbursing, and which result in de facto disarimination against small contractors. AGETIP's operating procedures and internal organization were well appraised dur ;ng the first phase. Efficiency has been demonstrated by the adherence to the Procedures Manual confirmed by several supervision and audit miSsions. At all times during project implementaton, thie Statutes of Agreement of the Agency and the Procedures Manual must be acceptable to IDA (para. 4.3(a)). To initiate implementation of the second project, AGETIP will submit for IDA's approval, and as a condition of effectiveness, a list of subprojects for the firs year of project excecution amounting to a total of US$17 million (CI7AP 4.7 billion) (para 4.2(b)). Also AGETI1P will submit for IDA's approval the second and third annual work program including batches of subprojects finaced by IIDA, municipalities and other donors, totalling at least USS16 million (CPAP 4.4 bfiion) each no later than August 31, 1993 and August 31, 1994 respectvely pari. 4.3(c)). Each submission wfll include an analysis of he measures that AGETlP proposes to implement to ensure that it wil have the absorptive capacity to carry out its mission. Ink1~~~~~~~~~II~~ -21 - 3.31 In order to ensure expeditious Implementation of the program, the Agency has full authority and will not be submitted to any ex-ante clearance for carrying out the whole process of project execution. In particular, the public institutions which will propose subprojects will have to surrender their authority for execution of the subproject until the delis -ry of the completed works. The mayors of the municipalities have demonstrated a willingness to respect the concept of matrise d 'ouvrage ddidgu0e. In return, they will get the works cofinanced by the project in addition to those financed from their own investment budgets or from the Credit Communal. 3.32 The Agency will be submitted to close ex-post supervision by the Government and will have to furnish detailed activity reports every other month. The Borrower and IDA will meet at least once a year during the three-year period of project execution to exchange views with regard to the progress of the project and subprojects, the management of AGETIP's operations, the performance of its personnel, including key personnel, the performance by the Agency of its obligations under the Convention between the Government and AGETIP, and particularly the procurement practices and procedures being followed by the Agency pursuant to the Procedures Manual. The Special Account of the Agency will be replenished only upon presentation of properly documented records of the use of the funds. The above mentioned meetings between the Government and IDA may result in proposing and implementing any measure that will be deemed useful to ensure actual fulfillment of the project's objectives, including hiring and dismissal of the Agency's staff. It was agreed at negotiations that there will be annual reviews of the management of the operations of the Executing Agency, the performance by the Executing Agency of its obligations under the Convention (including procurement procedures), and the performance by the Executing Agency and implementing enterprises of their respective obligations under Subproject Agreements, to be carried out by IDA and Government in October of each year (para. 4. 1(a)). 3.33 The professional experience of the Agency's staff has been acquired primarily from the private soflor. During negotiations, assurances were obtained from the Government concerning its responsibilities to ensure that any change in the Directors of the Agency will be acceptable to IDA. The Agency Director has already proven his capacity to conduct such projects as per results produced during the first stage. The recruitment of the other regional staff will be based on qualifications and experience acceptable to IDA (para. 4.3 (b)). AGETIP's cost structure has been found to be reasonable and will be one of the elements reviewed at the annual reviews with IDA and Government. Procurement 3.34 The procurement procedures according to which the Agency will select contractors and award contracts are another important feature of the project. These special procurement procedures were designed to address the issue of employment generation, and at the same time, ensure adequate competition. They were discussed at appraisal and agreement was reached during negotiations, and will be included in the updated Procedures Manual. AGETIP's procurement experience indicates that there is competition and cost savings as several firms have bid for each contract, and that the winning bid is on average less than 3.8 percent of the estimated price (Annex 10). The reporting on procurement will be done according to the format outlined in Annex 10. 3.35 It is anticipated that all the civil works contracts will be below CFAF 150 million (US$540,000). In case any contract is higher tLan this value, International Competitive Bidding procedures (ICB) will be followed for such procurement contracts. -22 - 3.36 AGETIP will continue to maintain a roster of contractors eligible for Local Competitive Bidding (LCB). It will continue to use the list established under the first phase of eligible contractors and engineering firms according to procedures acceptable to IDA and spelled out in the Procedures Manual. The roster will stay open during project execution so as to allow additional applications at any time. Large firms using modern equipment are not likely to be Wnterested by the type and size of most subprojects proposed, but they are not excluded from participating in the process. The same applies to foreign firms. The purpose of preregistration will be to determine the contractors who can demonstrate their ability to carry out the proposed labor-intensive works effectively and will, therefore, be eligible to bid. IDA will review and approve the new selection and satisfy itself that the procedures agreed with the Procedures Manual. The actual performance of the contractors who are awarded contracts by the Agency will provide the basis for the Agency to reassess the contractors' classification, and consequently upgrade or downgrade them. Table, 3.4 Summar of Proosed Procurement Affangements (US$ Million) Procurement Method Project Element ICB NLCBF OTHER . TOTAL 1. Public Works 59.32 15.0 74.32 (32.32) (32.32) 2. Consultancies 2.1 Consultancies for Pilot Activities 1.50 1.50 (1.50) (1.50) 2.2 Services to Contrators 1.50 1.50 (1.50) (1.50) 2.3 T.A. to Beneficiaries .25 .25 (.25) (.25) 2.4 Prtojet Monitoring .50 .50 (.50) (.50) 2.5 Contract Management Study .50 .50 (.SO) (.50) 2.6 Mutual Guarantee Company .25 .25 (.25) (.25) 2.7 Orassroot Participation .50 .50 _____________________________ ________ (.50) (.50) 3. Misellaneous .48 .48 3.1 PPF Refinancing (.48) (.48) TOTAL 59.32 5.48 15.0 79.80 (32.32) (5.48) (37.80) Note: Figures in parentheses show IDA amount. Totals exclude US$1.2 million in price contingencies. N.I.P. - Not IDA Financed. Works will be procured in accordancewith the Executing Agency's Procedures Manual (acceptable to IDA). Consulting servics will be procured according to IDA Guidelines. -23 - 3.37 The target group of firms expected to participate in project procurement comprises primarily small- and medium-scale enterprises, which are more likely than large ones to bid for labor- intensive projects. However given the low level of sophistication of these firms in regard to administrative and financial management, they are currently discriminated against by the procurement procedures in force for public contracts. This is one of the basic reasons why it has been deemed necessary to establish a special agency, with private legal status, to implement the project. Basically, the objective of the standard procurement procedure is to ensure fair competition among eligible contractors without requiring them to prepare a complex proposal, including detailed calculations of price. The core of the procurement procedure will be local advertisement among registered contractors of a proposed contract for a given subproject. All contractors registered in the roster for the category of works and the area concerned by the subproject will be invited to bid. 3.38 The contract, which will be written in simple language and will describe the scope and nature of the works, proposes a reference price with some straightforward explanations about its calculation (unit prices and quantities). Contractors will be invited to bid by way of discounts either on the total price or on the unit prices. Among eligible bidders, the whiner will be selected on the basis of the proposed discount and other criteria (such as timeliness of performance) - if any is specified in the bidding documents - and invited to sign the proposed contract. The contract awarding committee, composed of the Agency's Director General, Technical and Financial Directors will have futl authority to select the winner. However, it will have to justify in writing, in the minutes of the meeting, and in reference to the explicit criteria listed in the bidding documents, any decision not to select the lowest bid. The contracting awarding committee will open the bids in public and the bidding firms or their representatives may attend the meeting. For all contracts for which there are less than five bidders or for contracts with an estimated cost equal to or greater than CFAF 62.5 million (US$250,000), the awarding committee will submit its decision to IDA for approval prior to notifying the winning bidder. 3.39 Consultant services for training, technical assistance, and project monitoring will procured according to IDA guidelines spelled out in the "Use of Consultants by World Bank Borrower ard by the World Bank as Executing Agency". For the mode of selection of consultant services, the Agency will use short-listing for pilot activities and services to contractors, individuals for monitoring, technical assistance to beneficiaries and grassroot participation, and finally firms for the contract management study. A summary of the consulting services in man-months required is given in Annex 11. 3.40 These procurement procedures have been used under phase one and have worked well. As in the first phase, only parallel financing is envisaged. Should joint financing occur, it will be done in accordance with IDA Guidelines. Disbursements 3.41 The IDA credit will be disbursed on the basis of the categories shown in Table 3.5. The closing date will be June 30, 1996. Disbursements will be made on the basis of 100 percent of total expenditures for IDA's share of civil works and 100 percent for al other categories net of taxes. The Government will disburse 100 percent against its share of civil works equivalent to 10 percent of the sum of civil works financed jointly by IDA and by the Government. This procedure has been selected to ensure the independence of the Executing Agency in making payments to contractors, who have had very bad experience with disbursement procedures pertaining to payments from counterparts funds. To ensure that IDA does not disburse all of its contribution without corresponding action by Government, a - 24 - condition has been devised to permit IDA to suspend disbursements at the end of the first and second years, should the Govemnment have failed to make its contribution. Table 3.5 Disbursements by Categoy CATEGORY AMOUNT PERCENTAGE FINANCED (S$M) 1) Public Work a) Subprojects 14.32 50% of expenditures b) Subprojects 9.00 90% of expenditures c) Subprojects financed under incitement fund 6.00 67% of expenditures 2) Pilot Activities 100% of expenditures a) Public Works 3.00 b) Consultants services 1.50 3) Consultant Services for Training, Studies and 3.50 100% of expenditures Monitoring 5) PPF Refinancing 0.48 6) Unallocated 1.20 TOTAL 39.00 3.42 To expedite project implementation, a Special Account denominated in CFAF will be opened at a commercial bank and maintained and operated on terms and conditions acceptable to IDA. The authorized allocation will be CFAF 600 million, representing anticipated eligible expenditures financed by IDA for a four-month period. 3.43 All withdrawal applications will be accompanied by full documentation, except for coL.racts for civil works valued at less than US$20,000 equivalent and for goods and services valued at less than US$20,000 equivalent for which disbursements will be made on the basis of Statements of Expenditures (SOEs). In such cases the relevant documentation will be retained by AGETIP for review by IDA supervision missions and the project's external auditors. Accounting. Auditing and Reporting 3.44 The accounting system will be revised and updated to take into account the expansion and decentralization of AGETIP's operations. This revision and the appointment of auditors are conditions of credit effectiveness (para. 4.2(e)). Consolidated project accounts will be maintained by the Agency. These accounts will be audited every six months by independent auditors acceptable to IDA according to terms of reference agreed by IDA. The auditors will be appointed for a period of three years. Auditors will express separate opinions on statements of expenditures and special accounts. Project accounts and auditors' reports will be submitted to IDA within three months of the close of each -25 - semester. So far under the first phase, all audit reports have been satisfactory and on time. Besides financial audits, AGETIP will be submitted to bi-monthly management audits, and a technical audit will be undertaken annually. The Agency will submit monthly progress reports and prepare a project completion report (PCR) within three months of the closing date. Suerviso Plan 3.45 The output indicators to measure project performance will be the following: (a) number of Convendons de Mafrse d'Ouvrage Ddlegu0e, (b) number of contracts signed with enterprises, (c) number of contracts completed, (d) percentage of contracts completed on time and on budget, (e) percentage of contracts completed on budget, (f) percentage of payments to contractors within 30 days of invoice reception, (g) number of person-days of employment created, (0) average time for processing contracts, (i) number of GEs awarded contracts, and U) number of studies completed. Table 3.5 below indicates the desired numbers and percentages to be achieved for each project year. Table 3.6 Key Indicators .K.,.a -.M l Indicator | Year I Year2 jYear3 No. of Conventions de Maftrise d'Ouvrage Dgliguie 130 140 150 No. of contracts signed 260 280 300 No. of works contracts completed 85 130 140 Percentage of contracts completed on time 80 90 100 Percentage of contracts completed on budget 80 90 100 Percentage of payments to contractors within 30 80 90 100 days of invoice receipt No. of person-days of employment created (million) 1.12 1.12 1.12 Average time for processing contracts (working 40 30 20 days) No. of GIE awarded contracts 26 42 60 No. of studies completed 4 4 4 The Project will be supernsed every four months. Supervision missions will consist of field trips to visit work sites to review financial and management practices, bidding, and payments procedures, micro- and small-enterprise participation as well as maimizaton of employment creation. Supervision missions will also monitor carefully the number of ma2tres d'oeuvre, the number of firms -26- bidding and winning contracts and the number of firms receiving technical assistance. The necessary staff Inputs for supervislon are as follows: seven staff weeks in FY93, six in FY94, six in FY95 and four in FY96 for a total of 23 staff weeks. A detailed supervision plan is shown in Annex 12. Environmental Impact 3.46 AGETIP's projects in the areas of sanitation and cleaning of urban drainage, urban renewal, road maintenance, public gardening, garbage collection, school and clinic construction and rehabilitation have been found to have led to significant improvements in the urban environment. Several projects involving garbage collection have had a positive impact on the environment especially through the removal of tons of hazardous materials along the river banks in Saint Louis. The land cleared has been used for community vegetable gardening. Other cases have to do with the elimination of stagnant water and the cleaning of canals in Kaolack and Rufisque. Street and sidewalk paving and desanding in Dakar and other cities have led to better traffic flow and have diminished the incidence of flooding during the rainy season as the drains are clear from large quantities of silt. Overall, the impact of AGETIP has been felt on the ecology as many sites have been cleared from pollution. Improvement in public hygiene has led to reduced disease in Kaolack where, for the first time in years, there has not been any cholera. 3.47 Many of the subprojects, both works and services, will have a positive Impact on the urban environment. This is particularly true of subprojects such as soil and water conservation works, drainage improvements and terracing, sanitation improvements, planting and park works, and solid waste collection. AGETIP is in the process of hiring a full-time environmental engineer to carry out an environmental assessment of its project portfolio. The engineer will examine all subprojects pertaining to sand-removal, drainage, building and road rehabilitation, and garbage collection to determine their environmental impact and make recommendations on how to mitigate any adverse impacts. An additional subproject eligibility criterion will be added to AGETIP's updated Procedures Manual stating that subprojects must not have a negative impact on the environment. Finally, the annual technical audits will also include an assessment of the environmental impact of subprojects. Economic Analysis and Benefits 3.48 An economic analysis has been carried out for a sample of actual subprojects executed under the first project on the basis of a comparison of discounted economic costs and benefits over time. Specific benefits depend on the type oi subproject, but include among other things: (a) reductions in vehicle operating costs (in the case of urban road maintenance or *ehabilitation subprojects); (b) reductions in the cost of services, in the case of labor-intensive garbage collection which would otherwise be undertaken by more mechanized technologies; and (c) avoided cost of reconstruction (in the case of subprojects involving maintenance or rehabilitation of infrastructure and/or buildings that would otherwise deteriorate). - 27 - Projects involving sidewalk stabilization, street desanding, sewer and gutter cleaning, repair of underground water mains, drainage of low-lying areas have been found to have internal rates of return ranging from 19 percent to 50 percent in the case of hospital rehabilitation. In the case of road maintenance involving regrading, regravelling and resealing, the rates of return have been found to be between 11 percent and 22 percent. Finally for garbage collection and other low-cost sanitation, the rates of return are around 29 percent. 3.49 The project will create low-cost, short-term employment opportunities using private sector enterprises in the execution of social and economic public works. It will generate incomes for many categories of the work force (in the building and construction trades). The project will also help the Government in the area of project management. It will demonstrate the efficiency of private sector management in public works execution. Subprojects concerned with garbage collection and sewer cleaning will produce environmental benefits. 3.50 Finally although it is difficult to be precise about the xolm of epo that will be created by the project and the program, to obtain a national estimate, we assume that: (a) on average, 33 percent of subproject contract amounts will be paid out in wages (including social security); and (b) actual average wages are about CFAF 1800 per day (including social security); this average wage overestimates payments received by workers in subcontracting informal sector microenterprises. On this basis, it is estimated that about 1.12 million person-days of employment will be created by the project every year. Assuming an annual construction period of nine months, the project will create about 5,600 jobs per year. To the extent that actual average wages are lower than indicated above, the amount of employment created would be greater. Rink 3.51 The main risks concern the continuation of the Agency after the project. IDA will not continue its support of the Agency under Government auspices, i.e., through credit to the Government to be passed on to AGETIP in grant form. Specific measures for cost recovery such as the introduction of a service fee by the Agency for execution works are designed to maximize this possibility. The introduction of cost-sharing by the municipalities is intended to create the conditions for AGETIP to operate independently of IDA and other donor financing after the Project ends. Another risk is the fear that the Government may try to influence the Agency resulting in the latter's loss of independence and operational efficiency. These risks wil be minimized by the establishment of internal control mechanisms and appropriate supervisory procedures by independent engineering and consulting firms. The risk of political interference wil be reduced by strict adherence to the Procedures Manual. 3.52 AGEI's futur. The private legal status of AGETIP makes it difficult to predict how it will evolve at the end of the IDA credit. It is possible, however, to indicate certain options that its owners wil be able to choose among, as there wiUl be no special projects or markets reserved to support its activities in the area of delegated contract management. The flrst option is for AGETIP - 28 - to continue with Its current status as a non-governmental organization (NGO) with the same board. A second option is Its conversion to a for-profit organization in which shares will be sold to its current board members and to other investors. A third option is that it might split up Into smaller AGETPs. A fourth option Is that a scheme of joint ownership by the current employees alone or associated with the municipalities could be considered. Assets would be appraised and bought at their historical cost with a provision for amortization. In all cases, the members of its board wUi decide its future. SECTION IV - AGREMENT REACHED AND RECOMMENDATION ARM abed during Negotiations 4.1 During negotiations, agreement was reached concerning: (a) dates for the annual reviews (para 3.32); (b) the exception criteria for municipal project coflnancing (para. 3.10); (c) terms of reference for the contract management audit study and a schedule for an Action Plan to implement the changes as recommended In the study (para. 3.22); (d) taning programs for contractors (para 3.19) and beneflciaries (para. 3.20); and (e) the government's financial contribution (para. 3.27). Condions of Effectiveness 4.2 Conditions of efectiveness are that: (a) AGETIP and GOS have signed a new Convendon which will include an updated Procedures Manual and enated revired By-Laws to take into account AGETIP's pilot activities (para. 3.8); (b) AGETEP has submitted to IDA a first batch of subprojects amounting to a total of US$17 million (CFAP 4.7 billion), for Implementation during the flrst year (para. 3.29). In addition, AGETP will submit to IDA another batch of subprojects mounting to US$2.3 million flnanced through the Government's contribution (para 3.27); (c) AGETP has submitted an Action Plan for the next phases of the trainW program for the beneflciaries and for grassroots paricipadon program (paras. 3.20 and 3.24); (d) AGETIP has received in Its accounts a quarterly advance on the annual amount of Government financial contribution to the project (para. 3.27); and -29 - (e) AGETIP has revised its accounting system to take into account the expansion and decentralization of Its operations, and has appointed auditors for a period of three years (para. 3.44). AgEeMents Reached and Reflected In the Developmentedit Agement and Convendon 4.3 The fbllowing agreements are reflected in the Development Credit Agreement and Convendon: (a) at all times during project implementation, the Statutes of Agreement of the Agency and the Procedures Manual must be acceptable to IDA (para. 3.8); (b) at all times during project implementation, the Directors of the Agency must be acceptable to IDA (para. 3.33); (c) the Agency will submit to IDA the second and third annual work programs including batches of subprojects financed by IDA, the municipalities and co-financiers, totalling at least US$16 million (CFAF 4.4 billion) no later than August 31, 1993 and US$16 million no later than August 31, 1994 respectively (para. 3.30); (d) (i) the Executing Agency will execute new subprojects (in addition to those referred to in subpara. (c) above) of an aggregate value of US$7 million equivalent (CFAF 1.95 billion) before December 1995, of which subprojects totalling the equivalent of at least US$2.3 million (CFAF 650 million) would be completed by December 31, 1993. The portfolio of these subprojects will be submitted to IDA in addition to the US$17 million financed by IDA and other cofinanciers. Additional subprojects representing an aggregate cost of at least another US$2.3 million equivalent (CFAF 650 million) will be completed not later than December 31, 1994 (para. 3.27 (a)); and (ii) make available to AGETIP, out of its own resources, all the funds necessary for the execution of those subprojects. On a quarterly basis, these funds will be made available to AGETEP and a quarterly advance to be made to AGETIP on the annual amount of the Government's financial contribution to the project (para. 3.27 (b)); and (e) IDA reserves itself the right not to review the annual subproject batches submitted by the Agency if GOS has not honored its counterpart funding obligation (para 3.27). 4.4 Subject to the above conditions, the proposed project is suitable for a credit of US$39 million equivalent (CFAF 10.7 billion) to the Republic of Senegal on standard IDA terms. -30- SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT STAFF APPRAISAL REPORT ANNEXES 1- 12 -31 - ANNEX I REPUBLIC OF SENEGAL PUBLIC WORKS AND EMPLOYMENT PROJECT EXECUTING AGENCY'S BY-LAWS and STATUTES 32 Annex 1 EXECUTING AGENCY OF THE PUBLIC WORKS AND EMPLOYMENT PROJECT BYLAWS OF THE ASSOCIATION TITLE I -- GENERAL PROVISIONS Article ls Name In accordance with the laws and regulations currently in effect in Senegal, there is established, among the legal persons adhering to this status, an association named the 'Executing Agency of the Public Works and Employment Project". Article 2: Headquarters The headquarters of the association is located at ............ Article 3: Duration The association shall have a duration of ........ years. The association may be extended, as may be needed, by a decision of the General Assembly as provided under article 10 of these Bylaws. Article 4: Objectives Within the framework of project administration and, apart from any profit motive, the association's purpose in Senegal is to undertake any action aimed at increasirg over tae short term the demand for public works and the creation of jobs for unskilled workers and workers with few skills. For this purpose, the Association establishes the following main objectives: (a) Create, at least temporarily, substantial new employment principally in urban areas as rapidly as possible; (b) Improve, through execution of the works financed by the project, the individual skills of the workers who will be employed, the corporate competitiveness of the firms that will carry out works, so as to develop sustained employment after completion of the project; (c) Demonstrate the feasibility of widening the area of application of labor-intensive projects and develop the procedures that would enable the public sector to commission such projects; and (d) Prod4ce project results that are economically and socially useful. 33 Annex 1 Article St Composition The Association is composed of the following founding members: (a) Mr. Maguatte Wade (profession), (address); (b) Union of Construction and Public Works Workers (abbreviation), represented by its Secretary General; union headquarters: ..............; (c) National Council of Employers of Senegal (CNP), repreeented by its Chairman. Association headquarters: .... ............... *........... ; and (d) Association of Mayors of Senegal (abbreviation), represented by its Chairman; association headquarters: ........................... Article 6: New Members Acceptance of new memberr is by vote upon the proposal of a former member. Acceptunce of a legal persun should be requested to the President of the Assembly provided under article 11 of these Bylaws. The legal person should communicate in writing to the President the name and address of his representative at the request of the Association. The General Assembly, provided under article 10, must approve acceptance of new members. Acceptance of new members shall take effect upon notification in writing to the interested party by the Chairman of the Association, following payment of the new member's dues. TITLE II -- ADMINISTRATION AND OPERATION Article 7: Disqualification of members A member's capacity as an Association member is lost by: (a) death of a member who is a natural person; (b) dissolution of a member who is a legal person; and (c) resignation or removal foE serious cause declared by the General Assembly; determinatior of serious cause is within the authority of the General Assembly. Article 8: Modes of loss of capacity as member A member may resign at any time by notifying the Chairman in writing. The r^>;ration takes effect at the time the notice is received by the Chairman, unless otherwise stated in the letter of resignation; it is not 34 Annex 1 necessary for this resignation to be accepted for it to take effect, unless it is deemed necessary to postpone resignation. The resignation does not affect the member's obligation, if any, to pay his dues for the year in which the resignation takes effect. The General Assembly shall remove any member whose conduct is harmful to the Association. The member shall be notified in writing by the President of the Assembly. Article 9t Resources The Association's resources are comprised of: (a) annual dues of its members, set at CFAF .........., to be paid each year prior to .. ........ ; and (b) subsidies and/or donations that may be paid to it by the Government of Senegal or by any other organization or foreign country. Article 10: General Assembly The Association is administered by a General Assembly composed of the members whose dues are currently paid. Article ll: Presidency of the General Assembly The presidency of the General Assembly is the responsibility of Mr. Haguatte Wade, founding member of the Association. The President convenes the members of the Assembly and leads the discussions. In the case of a tie vote, the President casts the deciding vote. The President may require the presence at the Assembly of any other person, other than its members, as he deems necessary. The President must order preparation of the minutes of each meeting of the Assembly. All decisions of the General Assembly shall be made only if a quorum is present and there is a majority of two-thirds of the votes of the members present or represented at the meeting. Article 12: Powers of the General Assembly The Assembly is the supreme organ of the Association. It is responsible for realizing the corporate goals. For this purpose, the General Assembly shall delegate all powers to the Director General provided under article 14 of these Bylaws in order to carry out those objectives and to manage the Agency. 35 Annex 1 The Assembly shall meet uhen convened by its President at &east once each year and as often as necessary. Notice of the meetings shall be sent at least 15 days in advance by registered mail with return receipt requested or by transmittal memorandum, stating the date, place and agenda for the meeting. In the event that, due to reasons not imputable to the Association, a member does not receive the notice of the meeting, the member cannot pursue the procedure to nullify the decisions taken at said meeting. An Association member may give written proxy to another member for the purpose of representing him at the meetings of the Assembly. Article 13s Management of Association activities -- Director General The Association shall designate its President as the Director General, whose mission is to be responsible for management of Agency activities. No member of the Association other than the Director General may intervene in this management. The Director General is appointed for the entire duration of the Association. The functions of the Director General are inherent in the capacity of a member of the Association. Article 14: Removal of the Director General In the event of serious failure to perform his obligations, the Director General shall be removed by decision of the General Assembly. At that meeting, the Assembly shall elect an interim President before taking any other action. The interim President shall be elected by secret ballot if a quorum is present and by majority vote, as set out in article 11 for the purposes of these Bylaws. When the decision is voted on, the Director General's vote is not taken into consideration. The interim President shall notify the Director General of the removal by registered letter with return receipt requested. The removal action itself causes loss of membership in the Association, in accordance with article 13 of these Bylaws. Article 15: Powers of the Director General The Director General has very broad powers to ensure proper operation of the Agency and performance of the mission assigned to him by the Assembly. 36 Annex 1 The Director General may contract with outside consulting firms for the tasks that he deems necessary for execution of the various functions assigned to him. The Director General has full responsibility for the funds placed at his disposal. In accordance with generally accepted accounting standards and customarily applied practices, he m.-st maintain accounts and files relating to his management. Administration of the Agency by the Director General should conform to the provisions of the procedures manual that will subsequently be issued. The Director General is responsible for oversight of proper enforcement of the project's internal regulations. He may move the Association's corporate headquarters. Article 16, Changes in the Bylaws and dissolution These Bylaws cannot be changed except by the General Assembly under the conditions of a quorum and by vote of two-thirds majority of the members present or represented, as provided under article 11. The Association shall be dissolved upon expiration of the duration provided under article 3, first paragraph, subject to the possibility that it may be extended under paragraph 2 of such article. In the event of dissolution, the General Assembly shall appoint one of its members to be in charge of liquidation of che Association's property. In the event of dissolution, that person shall place all property acquired by the Association at the disposal of the Government of Senegal. Article 17: Approval of the Association as a nongovernmental organizaLion (NGO) The President shall dispose of all powers to have the Association accepted as a national NGO. Article 18: Monitoring Association activities The ministries of Social Development and of ............ or their representatives have the right to visit the Association's installations and facilities in the presence of the President of the Association. Dakar, (date) 37 Annex 1 INTERNAL REGULATIONS TITLE I -- GENERAL PROVISIONS Article 1s General Provisions These internal regulations are promulgated in accordance with the provisions of Law 61-34 of June 15, 1961, establishing in Senegal a Labor Code and the national inter-professional collective bargaining agreement of May 2, 1982. These regulations are intended to ensure, within the Project ........s (a) Technical organization of the work; (b) Discipline; (c) Sanitary working conditions; and (d) Safety. The regulations are applicable tn all persons employed, regardless of status. At the time of appointment, the employee shall acknowledge receipt of the regulations. The regulations are to be posted in accordance with current regulations. (a) A procedures manual will be issued. This manual provides the detailed rules for administrative procedures, which are compatible with, and providing for control in accordance with, the terms of the credit agreement. Article 2: Contents The internal regulations include: (a) technical organization; (b) staff recruitment methods; (c) work organization; (d) discipline; (e) modes of breaking a contract of employment; and (f) health and safety. 38 Annex 1 TITLE IIs TECHNICAL ORGANIZATION * ORGANIZATION CHART AND DIVISION OF FUNCTIONS Article 3: Objectives The objectives are set out in the procedures manual. Article 4: Organization Chart The organization chart is also established (see attached table). Article St Division of functions of management staff * The Financial Director is responsible for proper operation of the accounting, financial and legal offices. He coordinates all the actions of the legal department, the accounting department and the control department. He is responsible for maintaining the accounting system of the project in accordance with current standards in Senegal. He is responsible for budgetary, accounting and treasury control. He is in charge of relations with the outside accounting and auditing firms. * The Technical Director is responsible for monitoring administration and for acceptance of the works. He coordinates the actions of the projects department. Details of the staff functions are set out in the procedures manual. TITLE III -- RECRUITMENT Article 6: Contract of employment Staff are hired by means of a contract of employment. The contract of employment should be signed by the Director General of the Agency and by the workers. It should include the following elements: (a) Legal nature of the contract (contract for set period of time); (b) Surname and given names; (c) Address; 39 Annex 1 (d) Duration; (e) Position to be occupied; and. (f) Basic salary, bonuses, compensation and benefits granted to the worker. The worker must provides (a) record of birth; (b) judicial record; (c) documentation supporting the family status (marriage certificate, etc.); (d) documentation of diplomas and degrees; and (e) identification photographs. In addition, the worker must sign the declaration provided for under article 9, below. The Agency should maintain a file on each worker. Article 7: Recruitment methods Each worker recruited must undergo a trial period, the length of which depends on the job he is to occupy. The trial period is fixed in the contract and cannot exceed the legal limit. Article 8. Classification -- remuneration Classification and remuneration of the employee are fixed depending on the position to be filled, and in accordance with recognized skills following the legal and regulatory provisions and the provisions of the collective bargaining agreement for public works and construction. Article 9: Agency staff Agency staff members cannot hold, either directly or through an intermediary, any interest in the companies or exercise any responsibility in the public or private institutions that are invited to maintain commercial relations with the Agency or to benefit from their activity. Employees cannot accept any remuneration, commission or fee on behalf of such firms or institutions. Each employee is required, at the time they are hired by the Agency, to complete a declaration setting forth a listing of his commitments, interests or holdings that may conflict with the above- mentioned rule. 40 Annex 1 Each employee is allowed a period of one month in which to divest himself of such commitments, interests or holdings. Compliance with this requirement is a necessary condition of permanent employment. TITLE IV -- ORGANIZATION OF WORK * HOURS OF DUTY Article lOt Daily and weekly work hours The weekly work hours are fixed at 40 The daily work hours are fixed as followst * 8sOO a.m. to 12:00 p.m. and 2:30 p.m. to 6s30 p.m. The work week is Monday through Friday. Work hours shall be posted. Chqnges in the hours of duty must also be posted. Duty coverage on Saturday morning shall be provided by management staff on a rotating basis; a schedule of duty will be established later. Article ll Overtime Overtime cannot be performed except with the approval of the supervisor. The Director General of the Agency should be informed. Under this regulation, any hour worked in addition to the fixed hours of duty under the preceding article constitutes an hour of overtime and entitles the worker to remuneration calculated in accordance with labor laws. * ABSENCES Article 12t Absence for illness or personal time off For any absence, the Director General of the Agency or the chief of the department concerned should be informed thereof. During hours of duty a worker may not be absent from his post, even for service reasons, without permission from the supervisor. (a) Absences due to illness should be supported by filing a medical certificate within 48 hours. (b) Absences allowed for personal use are those provided under the national inter-professional collective bargaining agreement (article 18 of the agreement); the employer must be informed in advance. Article 13: Legal right to vacation 41 Annex 1 The right to have a vacation is acquired by the worker after an effective period of 12 months, called the "reference period." It does not automatically entitle the employee to take a vacation. The employee has the right to take the vacation in part, except that six work days must be taken. The Director General of the Agency or the heads of the offices shall prepare a plan for vacation absences of the staff members under their responsibility. Article 14: Other absences Other absences allowed under labor laws shall follow the provisions of current regulations. * PAYMENT OF SALARIES Article 15s Payment dates Salary payments are made at the end of each month for all staff members. Payment is made either by deposit to the employee's postal or bank account, in cash at the offices of the company, or by check sent to the worker. Each payday, a pay slip is sent to the employee, who must initial it, in accordance with current provisions of law and regulation. Any worker may request an explanation or information relating to his salary. He must address any question to the official in charge of the payroll office. TITLE V -- DISCIPLINE * TARDINESS - ABSENCES Article 16: Tardiness Tardiness in arriving at work must be explained to the supervisor. Article 17: Short-term absences The worker cannot leave or go away from his work post without permission. For reasons of service, he must notify his supervisor in advance. * CONDUCT Article 18: Access to offices -- professional secrecy Within the area of the work place and during hours of duty, employees must avoid conduct that may disturb the work. 42 Annex 1 No person may have access to offices unless their presence is required for work purposes. Employees are subject to professional secrecy and cannot divulge secret information to third parties. In general, the staff is subject to secrecy, impartiality and discipline similar to such obligations imposed on Government employees. Laborers and drivers are required to keep in order their tools, machinery and vehicles after hours of duty. It is formally forbidden for drivers to transport any person unless required by the work. In the event of an accident, the project bears no responsibility. * SANCTIONS Article 19t Main sanctions Sanctions for infractions under these internal regulations aret (a) oral remarks; (b) warning; *c) reprimand; (d) suspension from duty; and Ce) dismissal. Article 20: Taking sanction measures The supervisor makes the decision to impose sanctions; depending on the seriousness of the infraction committed, the sanctions may be imposed directly by the Director General of the Agency. When the sanction is taken by the supervisor, except in the case of oral remarks, the Director General of the Agency should be informed in advance. Article 21. Appeals and claims Appeals and claims should be filed first with the supervisor. If the worker does not receive a response to his appeal or claim, or if he is not satisfied, he may file an appeal himself directly with the Director General of the Agency. TITLE VI -- BREAKING AN EMPLOYMENT CONTRACT Article 22t Resignation - Dismissal 43 Annex 1 Resignations and dismissals are subject to applicable laws and regulations. Article 23: Pre-notification The party wishing to break the contract must allow a pre-notification period as provided under applicable laws and regulations. TITLE VII - HEALTH AND SAFETY Article 24t Safety and health instructions Each worker is required to obey the regulations relating to the prevention of work accidents and occupational disease, while following, in particular, safety instructions. Safety instructions shall be posted at the work sites to allow employees to become familiar with them. Article 25a Failure to follow instructions Any failure to follow instructions shall give rise to disciplinary action as provided under article 16. Article 26: Work accidents In the event of an accident at work, the victim and any other workers are required to give immediate notice of the accident to the person in charge in the Agency. This person is responsible for carrying out health-care formalities and paperwork processing at the Social Security Office. Article 27a Miscellaneous provisions In accordance with current provisions, these internal regulations shall be communicated to the workers by posting and shall be subject to inspections by labor and social security officials as well as any other authorities as provided under current regulations. Dakar, (date) Director General of the Agency 44 Statuts modifies et projet de procEs-verbal d'Assembl6e Ginerale 45 AGETIP -...l....... PROCES VERBAL DE L'ASSEMBLEE GENERALE EXTRAORDINAIRE DU .................. L'An Mil Neuf Cent Quatre Vingt Douze..................................................... Et lec.............................................................. Los Membres de rAssociation du Projet de Travaux dlntdret Public conte le Sous- Emploi (AGETIP) se sont rcunis en Assemblee Gdndrale Extraordinaire sur convocation de leur PrEsidonL 11 a dte tabli une feuillc do prdsence cmargde pa chaque membre do l'Assemblie en entrant en sEance. Le Bureau de l'Assemblde se compose come suit: Monsieur Magatte WADE est nomn6 President de seance Monsieur Oumar SANE est nommd Scruteur. ............................ est nQngme Secretaire. IA feuille de prEsence cerdfide exacte par les membresdu bureau en entant en seance pamet de constater que wous les membres soit prdserns ou reprdsentEs. 46 L'Assemblde etant ainsi rdgulierement constitude, Monsieur le President rappelle qu'elle ost appelde & ddlibdrer sur lordre du jour suivant: Prorogation de la dture de l'associadon; Modificadon des smttuts; - Modification du reglement intdeicur; - Questions diverses. Monsieur le Prdsident precise & rassemblee le contexte dans lequel se tient ta prdsente mission. En effet, I'AGETIP connait ur: toumant dans ses acdvites avec la mise en place de la deuxitme phase du projet qui doit ddmarrer au cours de I'ann6e 1992 et qui vise I traduire les orientations du Gouvernement du Senegal en interventions concretes pour lapdriode 1992- 1997. Cette deuxitme phase consiste a associer l'Agence i rexdcution et I la gesdon de projets econonmueruenz rentables, tant dans les zones urbaines qu'en milieu rumral et aussi bien sw financement local que sur financement extErieur. Compte tenu de ces nouveaux objectifs, r'AGETIP se doit de procEder I la revue des textes de base qui la regissent et dont la modification est de la compdtence de l'Assembl6e generale. Plusieurs observations sont dchangees, et personne ne demandant plus la parole, Monsieur le PrEsident met aux voies les rdsolutions ci-apres. 1lere resolutio Confonn6ment & rardcle 3 des statuts et compte tenu des nouveaux objectifs de l'Agence, l'AssemblEe gEndrale decide de proroger la duree de I'Association pour . ans renouvelables. Cette rEsolution est adoptee & runanimite. 47 2eme resolution Les articles 4, 9, 17 et 18 des statuts sont modifies ou completds ainsi qu'il SUit: * Article 4 Nouveau: Missions de I'Agene. a/ crder au moins a titre temporire et le plus rapidement possible un nombre significatif d'emplois nouveaux tant dans les zones urbaines qu'en milieu rual en vue de decentraliser les acdvitds de l'Agence; b/ crder des emplois nouveaux permanents en pardcipant a l'execudon et I la gestion de projets rentables pour l'Agence dans le domaine de la construction d'infrastructures economiques; cl executer des travaux dont le rdsultat sera dconomiquement et socialement utile; d/ arneliorer A travers l'execudon des travaux financ6s dans le cadre du projet, le savoir faire de la main d':cuvre employde, la compdtidvitd des entreprises qui seront chargdes des chantiers et l'efficacitd des institudons publiques impliquees, de fapon a ddvelopper une meilleure capacitd de rdponse de l'economie & des opportunitds de creation d'emplois durables au-del& de la pdriode d'ex6cution du projet; el mettre en place un programme d'appui A la formation et d'assistance destine & toutes les parties prenantes du projet et principalement aux PME-PMI; impliquer en prioritd les PME-PMI dans l1exdcution de travaux et comrmandes publiques confids I l'Agence; *1' amener l'Eat a reprendre les mdthodes d'intervention de I'AGETIP, en les adaptant & ses besoins, le cas dchdant, afin de rendre la gestion de I'Admir stration plus perfomante ; faire profiter les Etats de la sous- region de cette experience; "exporter" rexpdrience AGETIP sur le plan intemadonal. 48 * Article V Nouveau: Bssoures Larticle 9 est ainsi compldte.: "des revenus desdnds I er rdinvestis dmas rassociation et provenant des placements effecuzes et des conurepardes perVues par rAgence." * ,,,A&ticle 17 Nouveau: Agrment en tant u'ONG La prcsente association a e6t agidde en tant qu'ONG Nadonale par lettre no 06699/DS/DDC du 22 Aoftt 1989 du Ministre du Ddveloppement SociaL * Artiele li: Suivi des activites L'article 18 estainsi moditd : "la Primatre, en collaboration avec le Secretariat de la Presidence de la R6publique, est chargEe du suivi des.activites de l'Association. A cc dtre ele peut visiter les installations, infrastructures et realisadons de lAgence en presence du PrEsident de lAssociadon." Cene resolution est adoptee r l'unanimite. me riaouion Les articles 4, S 6 du rdglement intErieursont modifids comme suit: * ,Article 4 Nouveau (organigrammes): Voir propositions d'organigrammes aux annexes 5 a 10. * Article S Nouveau La rdpartidon des fonctions du nouveau persomnel dencadrement sera definie par le manuel des procedures. Les foncdons du Directeur Technique et du Directeur Administraif et Financier restent inchangEes; celles du Direceur Achat, du Directeur COT, du Directeur Formation et Consultaions Intcrnadonales seron definies suite I la finalisadon des dtudes concernant leurs domaines d'action respectifs. 49 A Cnntrat dg trlavl Alinda 4 nouveau: Conformdnaent A rAM:cd de COAt sigpd tame le Gouveaement du Sendgal ct I'MA" les contrats de tavail conclus entc rAgence et son Personnel sont I durde dEtemninle, nouvelables sans pouvoir excdder la durde du Projet. Cette rdsoludon est adapte i lwunanimitE. Lassemblde donne tous pouvoirs & Monsieur le Prcsident i reffet de faire prcd & toutes les formalites lEgales et rEglemencmres. Plus nien n'etant lordre du jour, Monsieur le Prdsident l&ve la seance &. heures. Ont sipnd le prisent proc&s verbaL sdent so STATUTS DE L'ASSOCIATION 51 STATUTS DE L'ASSOCIATION TIIRE T. GENERAL= Artiee 1: Denomination nl est crEi, confornnment aux lois et r6glements en vigueur au S6n6gal, entre les personnes morales ayant adhere aux statuts, une Associadon dtnomm6e "Agence d
World Bank Group · Staff Appraisal Report
Senegal - Second Public Works and Employment Project
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World Bank Group
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Staff Appraisal Report
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Senegal
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World Bank