Senegal - Second Public Works and Employment Project

Document of The World Bank FOR OFFICIAL USE ONLY ReportNo.: 17701 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT (Credit No. 2369-SE) April 17, 1998 Water and Urban 2 CouLntry Department 14 Africa Reuion This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = CFA Franc (FCFA) US$ 1.00 = FCFA 279 (at appraisal 1992) US$1.00 FCFA 575 (at closing 1997) WEIGHTS AND MEASURES Metric System FISCAL YEAR OF BORROWER January 1 - December 31 ABBREVIATIONS AND ACRONYMS AGETIP Agence d'Execution de Travaux d'Intert Public contre le sous emploi (Public Works Executing Agency) AMS Association des Maires du Senegal (Association of Mayors of Senegal) ASC Associations of Sports and Culture CFD Caisse Franqaise de Developpement (French Development Fund) CIDA (or ACDI) Canadian International Development Agency IDA International Development Association KfW Kreditanstalt fur Wiederaufjbau (German Cooperation) O&M Operations and Maintenance PPGE Priority Program for Employment Generation PPF Project Preparation Facility SAR Staff Appraisal Report SDR Special Drawing Rights SFD Special Fund for Development SME Small and Medium Enterprises Vice President: Jean-Louis Sarbib, AFR Country Director: Mahmood A. Ayub, AFC14 Sector Manager: Letitia A. Obeng, AFTU2 Task Team Leader: Leslie Pean, AFTU2  FOR OFFICIAL USE ONLY TABLE OF CONTENTS PREFACE ...................................................... i EVALUATION SUMMARY ..................................................... ii PART I: PROJECT IMPLEMENTATION ASSESSMENT Background ...............................................1. A. Statement/Evaluation of Objectives ................................................1 B. Achievement of Project Objectives ................................................3 C. Major Factors Affecting the Project ................................................6 D. Project Sustainability ................................................6 E. Bank Performance .................................................7 F. Borrower Performance ................................................,.8 G. Assessment of Outcome ................................................8 H. Future Operations ............................................... , , . 9 I. Key Lessons Learned ................................................9 PART II: STATISTICAL ANNEXES Table 1: Summary of Assessments ............................................... 10 Table 2: Related Bank Loans/Credits ................................................ 12 Table 3: Project Timetable ............................................... 12 Table 4: Credit Disbursements; Cumulative Estimated and Actual ................................ 13 Table 5: Key Indicators for Project Implementation ................................................ 13 Table 6: Studies Included in the Project ............................................... 14 Table 7A: Project Costs ............................................... 15 Table 7B: Project Financing ................................................ 15 Table 8: Status of Legal Covenants ............................................... 16 Table 9: Compliance with Operational Manual Statements ............................................ 16 Table 10: Bank Resources; Staff Inputs ..................... .......................... 17 Table 1: Bank Resources; Missions ................................................ 17 LIST OF ANNEXES A. Aide Memoire of last supervision mission Map IBRD No. 27218 This document has a restricted distribution and may be used by recipients only in the perfornance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT CREDIT No. 2369-SE PREFACE This is the Implementation Completion Report (ICR) for the Second Public Works and Employment Project in the Republic of Senegal, for which Credit 2369-SE in the amount of SDR 28.5 million (US$39 million equivalent) was approved on May 21, 1992 and became effective on January 27, 1993. The credit closed on June 30, 1997, following a one-year extension. It was fully disbursed, and the last disbursement took place on August 14, 1997. Counterpart funds from the Government totaled US$7 million and municipalities contributed US$ 10 million. Cofinancing was provided in the order of US$29.35 million by Germany (KfW), Canada (CIDA), the European Union (PPGE) and France (FSD). The ICR was prepared by Leslie Pean (Sr. Projects Officer), staff from the Executing Agency (AGETIP). Rumana Huque (Consultant) also provided assistance. The ICR was reviewed by Mahmood A. Ayub (Country Director, AFC 14). Preparation of this ICR began during the Bank's final supervision/completion mission that took place between January 27 and 30, 1997 (the Mission's Aide Memoire is presented in Annex A). The ICR was discussed with the Borrower during the last supervision mission. It was updated and submitted to the Government for comments on September 1997; no comments were received. Comments from the Senegal Country Team and Technical Specialists have been incorporated in this ICR.  i IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT CREDIT No. 2369-SE EVALUATION SUMMARY INTRODUCTION 1. In 1989, the Government of Senegal decided to undertake a public works and employment project in an attempt to generate employment. With IDA's support, the first Public Works and Employment Project (Cr. 2075-SE) in the amount of SDR 20 million was approved in December 1989, which became effective in March 1990. The Agence d'Execution des Travaux d 'Interet Public contre le Sous-Emploi (AGETIP) was created as an independent non-profit institution in April 1989, to execute the project. AGETIP spearheaded a new initiative, the concept of delegated contract management or Convention de Maitrise d'ouvrage deleguee. The success of this initiative as a tool to increase local absorptive capacity and to involve small contractors in project execution led the Government to request IDA's assistance for a second project in March 1991. AGETIP's demonstrated effectiveness during the 1990-1993 period reinforced continued support by the donor community, led by IDA. 2. This second project, larger than the first one in terms of financing, conforms with Senegal's desire to proceed with decentralization. Further, elections in 48 municipalities in November 1990 and the inception of the Association des Maires du Sinigal (AMS) has led to an active effort to develop programs in each of the municipalities. Leaders of these local governments requested the assistance of AGETIP to help them plan and structure interventions to rehabilitate and improve living conditions. Action plans for their municipalities were to include: (a) basic urban infrastructure (paved roads, primary and secondary canals for storm drainage and sanitation); (b) slum upgrading and restructuring (roads, potable water, street lights); and (c) basic economic infrastructure and community facilities (covered markets, bus stations, slaughterhouses, public parking). PROJECT OBJECTIVES 3. Based on its experience during the first phase (AGETIP I, Cr. 2075-SE), this second credit (generally referred to as AGETIP II) included specific components in addition to public works execution and employment. These were: (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; (c) the organization of training for the municipalities and the small and microenterprises engaged in project implementation; and (d) making AGETIP a sustainable agency covering its operating costs on a fee basis. IMPLEMENTATION EXPERIENCE AND RESULTS 4. Achievement of objectives: The IDA credit and beneficiary contributions amounted to a total of CFAF 24.671 billion or about 30.5% of AGETIP's entire portfolio. Some 348 sub- projects were financed through the credit and 99.91% of the credit was disbursed by project  ii closing. Government counterpart funds represented 3.1% of the total portfolio (CFAF 2.089 billion), financing 53 sub-projects. The labor ratio for government counterpart funds was 34.32% and 71% of the funds were disbursed by this date. 5. Economic Evaluation. Economic rates of return were calculated for a representative sample of sub-projects. The sample consisted of 5 categories of projects: roads, drainage, revenue-generating projects, rehabilitation of public buildings, and construction of simple buildings (health centers, etc.). The classification into categories enabled the analysis to take into account the different duration of the economic life of each type of sub-project, the different O&M requirements, etc. The study included a sensitivity analysis of two scenarios, based on an increase in the total investments in the sub-projects. The analysis revealed the following economic rates of return: Drainage works: 3.7% to 13.2% Roads works: 25.8% to 30.4% Revenue-generating works: 14.4% to 33.8% Rehabilitation of public buildings: 5.4% to 12% Construction of public buildings: 16% to 20% 6. These rates of return, based on recently completed works by AGETIP, are in general above the 12% required for World Bank projects (for a minimum duration of 10 years), indicating that the choice of sub-projects made by the Agency has been justified from an economic point of view 7. Costs and delays. Although borrower commitment remained strong throughout project execution, it was not possible to meet the original municipal contribution of 50% of project costs. Some progress was achieved as certain large municipalities like the Communaute Urbaine de Dakar were able to pay 50%. However, these commitments were paid only with great difficulty. On average, municipal contributions tended to be far lower than this estimate. The project design was too ambitious and did not take into account that the municipalities do not have direct access to their own revenues. As a result, the project did not disburse during the first year and these delays were only solved through payment of the municipal contribution with outside donor contribution (Canada) and by amending the required municipal contribution from 50% to 10%. The Agency has recruited and retained technically competent and skilled personnel selected competitively from the private sector. All financial audits have been unqualified and technical audits have demonstrated that all works are completed within the standards and requirements of the profession. The Agency has also been able to reduce its operating costs and maintain it within 5% of project costs. SUMMARY OF FINDINGS, FUTURE OPERATIONS, AND KEY LESSONS LEARNED 8. AGETIP continues to offer meaningful support to project implementation in several sectors. In addition, the success of the operation ledthe Government and the Bank a follow-up operation, i.e. in the Urban Development Project, approved by the Board in November 1997, which involves resource mobilization and urban planning prior to sub-project implementation by AGETIP.  iii 9. AGETIP has shown unequivocally that it is possible to have a private autonomous agency capable of executing public works efficiently and effectively, without the help of external technical assistance. The success of the projects undertaken by AGETIP (which include but are not limited to this credit) has strengthened the position of AGETIP as an executing agency for Government projects and has confirmed the usefulness and efficacy of the concept of delegated contract management. 10. With regard to a separate component of the project, improving public procurement, the difficulties of general procurement laws have become apparent not only through this project but through AGETIP projects in other countries as well. A lesson to be drawn is that AGETIP projects per se are perhaps not the best instrument through which general government procurement processes can be reformed. Through this project, Government has demonstrated its willingness to streamline and make more transparent the procurement process of specific sectors (namely the building and construction industry, and increasingly, health and education). However, to try and expand this to the rest of the economy in one fell swoop might be too optimistic a goal for one sector investment project. General procurement reform is being undertaken in the context of improved portfolio management.  1 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT CREDIT No. 2369-SE PART I: PROJECT IMPLEMENTATION ASSESSMENT Background 1. In 1989, the Government of Senegal decided to undertake a public works and employment project in an attempt to generate employment. With IDA's support, the first Public Works and Employment Project (Cr. 2075-SE) in the amount of SDR 20 million was approved in December 1989, which became effective in March 1990. The Agence d 'Execution des Travaux d'Interet Public contre le Sous-Emploi (AGETIP) was created as an independent non-profit institution in April 1989, to execute the project. AGETIP spearheaded a new initiative, the concept of delegated contract management or Convention de Maitrise d 'ouvrage deleguee. The success of this initiative as a tool to increase local absorptive capacity and to involve small contractors in project execution led the Government to request IDA's assistance for a second project in March 1991. AGETIP's demonstrated effectiveness during the 1990-1993 period reinforced continued support by the donor community, led by IDA. 2. This second project, larger than the first one in terms of financing, conforms with Senegal's desire to proceed with decentralization. Further, elections in 48 municipalities in November 1990 and the inception of the Association des Maires du Sen2gal (AMS) has led to an active effort to develop programs in each of the municipalities. Leaders of these local governments requested the assistance of AGETIP to help them plan and structure interventions to rehabilitate and improve living conditions. Action plans for their municipalities were to include: (a) basic urban infrastructure (paved roads, primary and secondary canals for storm drainage and sanitation); (b) slum upgrading and restructuring (roads, potable water, street lights); and (c) basic economic infrastructure and community facilities (covered markets, bus stations, slaughterhouses, public parking). A. Statement/Evaluation of Objectives Al. Project Objectives 3. Based on its experience during the first phase (AGETIP I, Cr. 2075-SE), this second credit (generally referred to as AGETIP II) included specific components in addition to public works execution and employment. These were: (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; (c) the organization of training for the municipalities and the small and microenterprises engaged in project implementation; and (d) making AGETIP a sustainable agency covering its operating costs on a fee basis.  2 4. The Credit financed the investment operations of AGETIP for three years. As detailed in the Staff Appraisal Report (Report 10421-SE, May 1, 1992), the project consisted of three principal components involving short-term employment creation and laying the groundwork for long-term development and management of municipal revenue-earning infrastructure in Senegal. The three components were: (a) Continuation and expansion ofAGETIP's workprogram of public facility and infrastructure rehabilitation and maintenance in urban areas to be carried out under labor- intensive schemes by local contractors (90% of total project costs). AGETIP agreed to decentralize its activities and set up two regional offices in Saint Louis and Ziguinchor. Municipalities benefiting from sub-projects executed under the project would finance 50% of the cost of these sub-projects, and in order to encourage municipalities with strong management skills, it was decided to introduce an "incentive fund" (fonds d 'incitation). (b) A program ofpilot activities designed to test the applicability of AGETIP's principles to other areas: (i) a revenue-generating infrastructure program (markets, slaughterhouses, bus stations, cold storage houses and public parking) to test the application of AGETIP procedures to other municipal infrastructure; (ii) a public procurement program to improve the efficiency of procurement of goods for public purposes (hospital and school furniture and sanitation equipment) designed to be executed by small artisans; and (iii) a rural investment program for support of rural investment. (c) Training and studies to finance training services offered to local contractors, a training program for local engineering firms and beneficiaries, a monitoring and consulting component to closely monitor the progress of the project, a study and selective audit of the Public Investment Program to analyze existing procurement legislation and practices, a technical assistance package to assess the feasibility of establishing a mutual guarantee company for small contractors and a program aimed at increasing grassroots participation in urban infrastructure maintenance. A2. Evaluation of Objectives and Risks 5. The project supported the policy of the Government of Senegal to execute small works in urban areas through labor-intensive techniques using local small and medium enterprises. The project was the continuation of an on-going Public Works and Employment project that was a safety net to deal with the negative impacts of the adjustment program. The project intended to go one step further to help municipalities improve urban management by offering them a vehicle to execute their projects with their financial participation. The project responded positively to municipal constraints in sub-project execution by providing the municipalities with an avenue to address: (a) the absence of capacity to prepare studies and design works; (b) insufficient capacity to award and manage small contracts; and (c) insufficient capacity to monitor works and evaluate results. The implementation of these objectives was well within the capacity of AGETIP. 6. The major risks in meeting the project objectives were: (a) the Agency's administrative costs after the project; (b) political interference in the day-to-day management of AGETIP; and (c) AGETIP's future. To adequately minimize these risks, the project's appraisal work focused  3 on: (a) specific measures for cost recovery, such as the introduction of a service fee by the Agency for the execution of works; (b) the preparation of internal control mechanisms and appropriate supervisory procedures; and (c) provision of a range of options to AGETIP's management from breaking up the activities of AGETIP and decentralizing into smaller units at regional levels, to privatization. B. Achievement of Project Objectives B1. Degree of Achievement of Objectives 7. The IDA credit and beneficiary contributions amounted to a total of CFAF 24.671 billion or about 30.5% of AGETIP's entire portfolio. Some 348 sub-projects were financed through the credit and 99.91% of the credit was disbursed by project closing. Government counterpart funds represented 3. 1 % of the total portfolio (CFAF 2.089 billion), financing 53 sub-projects. The labor ratio for government counterpart funds was 34.32% and 71% of the funds were disbursed by this date. 8. Creation of employment. Achievement of this objective has been substantial. * 150,860 jobs were created for an average duration of 37.6 days (i.e. 5,672,377 person days of employment created).' * The average salary was approximately CFAF 95 562 for an average of 37.6 days, or CFAF 2,661 per day (for an annual salary of CFAF 60,500 for 11 months of work). Taking into account the devaluation of the CFA in 1994, and comparing AGETIP's salary as a percentage of annual per capita income (US$400) for the country as a whole, AGETIP is able to provide about 47% of per capita income. This indicates an improvement over the performance of AGETIP I, which provided workers with 33% of the annual per capita income. * The labor ratio for AGETIP as a whole (including financing from other donors) was 25.51%. 9. The majority of the laborers hired through AGETIP projects came from very disadvantaged groups of society with little prospects for employment in the current economic situation of Senegal, notably unskilled or semi-skilled workers, workers retrenched from the public service who were not able to find employment elsewhere, and recently graduated students. As many of these groups often support families of ten or twelve people each, the employment created has had an important impact on the containment and alleviation of poverty in the country. 10. Creation of infrastructure. Physical achievements as a result of this project have been substantial. AGETIP, through financing from both this credit and from other donors, has contributed to the rehabilitation and construction of numerous public buildings (including I Disbursements in 1993 were slow due to problems with beneficiary contributions. However, employment picked up considerably in 1994, 1995 and 1996. Employment doubled from 1994 to 1995 and tripled from 1995 to 1996, to reach 14,645 person years in 1996, more than double the number envisaged in the SAR for that year.  4 hospitals, health centers, classes, stadiums, youth centers, etc.); rehabilitation of over 100 km of urban roads; cleaning and rehabilitation of drainage and sewage canals; monthly sand and garbage collection in 20 communes; and improvement of the urban environment through the creation of parks, among others. 11. Improving public procurement. One of the objectives of the project was to improve the efficiency of Government procurement of goods for public purposes through reforms in the Public Procurement Code. Achievement of this component has been negligible. AGETIP has fulfilled all its obligations for implementation of this component, including hiring consultants, completing related studies, and making recommendations to Government for reform of the Procurement Code. However, the final decision to reform the Code has not been taken by Government. The Ministry of Economic Modernization, which has been the main interlocutor for the reforms throughout the process, has proposed that a law be passed on the issue of the reform rather than the relatively simpler process of passing a decree. However, the Ministry of Economy and Finance feels that the preparation of such a law falls under its jurisdiction, and now wants to be in charge of the process. This conflict of competency between the two ministries has resulted in a complete deadlock in the process of reform of the Code. 12. Private sector development. The achievement of this objective has been substantial. AGETIP has actively promoted the creation of small and micro-enterprises. As the following table shows, under AGETIP I, 1220 enterprises and 292 engineering firms had been registered with AGETIP. Since AGETIP II, 854 new enterprises and 100 additional engineering firms have been registered. Local Private Sector Development 1 ~~~~~~~~~~~~~~~~~~~~~~~~~~~1 Small & Medium Enterprises (SMEs) Registered 1,220 854 Received contracts 231 148 Engineering/consulting firms Registered 292 100 Received contracts 159 31 Total disbursements to enterprises and engineering/consulting firms during AGETIP II amounted to CFAF 56.5 billion (for an average contract of CFAF 25 million). This figure is four times that achieved during AGETIP I. With a 64% increase in the number of enterprises during this second phase, and a 48% increase in the number of new engineering firms, this implies a much greater distribution of income going to enterprises. The average amount of business received by the 379 SMEs stands at CFAF 124 million since the inception of AGETIP (compared to CFAF 45 million at the end of AGETIP I), and for engineering firms, about CFAF 15 million (compared to CFAF 4 million for AGETIP I). 13. Through the project, the Agency organized a training program to develop the technical and managerial capacities of enterprises. A total of 3,853 individuals from 400 enterprises and 42 consulting firms participated in these training sessions. In addition, a Mutual Guarantee Company for enterprises in the building and construction industry was created through the  5 establishment of Mutuelles Regionale de Credit d'Epargne et de Garantie in each of the 10 regions of Senegal. 14. The building and construction industry. The contribution of AGETIP to the building and construction industry has increased from 2.7% of total production in this sector during the first phase (AGETIP I) to 13.2% of total production at the end of AGETIP II (this assumes an average annual growth of 5% in the sector, outside of AGETIP activities, from 1994 to 1996). While the contribution to the industry in terms of total production is modest, AGETIP has unquestionably contributed to the creation and promotion of 148 small and micro-enterprises, accounting for 50% of the businesses of small enterprises, and 75% of the businesses of micro- enterprises. This demonstrates that AGETIP has been successful in opening up the barriers to entry for small and micro-enterprises into the building and construction industry. These enterprises, usually consisting of less than 10 salaried staff, have also had a spillover effect on the promotion of informal sector firms ("tdcherons," artisanal workers, mechanics, etc.). AGETIP has had an impact not only on small businesses, but on the entire spectrum of enterprises in this sector. Of the approximately 200 enterprises that received AGETIP contracts in the second phase, 45 enterprises (22%) received 70% of the total value of contracts. These enterprises included the 4 largest enterprises in Senegal (Class D), 13 medium enterprises (Class C) and 24 small enterprises (Class B). 15. Institutional development. AGETIP has been involved in the implementation of several projects funded by IDA in the sectors of education, health, nutrition, and transport. AGETIP has also been useful in the re-structuration of projects in the agriculture sector and the formulation of a private sector development project. 16. Impact on otherAfrican countries/AFRICATIP. The institutional model that AGETIP represents has proved to be transferable in situations outside of Senegal also and the AGETIP concept has had wide replication in other African countries. Twelve countries now have AGETIP-type agencies, based on the concept of delegated contract management. These countries have formed an association called AFRICATIP which meets regularly to exchange experiences, ideas and best practices among the different agencies. B2. Economic Evaluation 17. Economic rates of return were calculated for a representative sample of sub-projects. The sample consisted of 5 categories of projects: roads, drainage, revenue-generating projects, rehabilitation of public buildings, and construction of simple buildings (health centers, etc.). The classification into categories enabled the analysis to take into account the different duration of the economic life of each type of sub-project, the different O&M requirements, etc. The study included a sensitivity analysis of two scenarios, based on an increase in the total investments in the sub-projects. The analysis revealed the following economic rates of return: Drainage works: 3.7% to 13.2% Roads works: 25.8% to 30.4% Revenue-generating works: 14.4% to 33.8% Rehabilitation of public buildings: 5.4% to 12% Construction of public buildings: 16% to 20%  6 These rates of return, based on recently completed works by AGETIP, are in general above the 12% required for World Bank projects (for a minimum duration of 10 years), indicating that the choice of sub-projects made by the Agency has been justified from an economic point of view. C. Major Factors Affecting the Project 18. Factors subject to government Control. * Counterpartfundsfrom the municipalities. Although borrower commitment remained strong throughout project execution, it was not possible to meet the original municipal contribution of 50% of project costs. Some progress was achieved as certain large municipalities like the Communaute Urbaine de Dakar were able to pay 50%. However, these commitments were paid only with great difficulty. On average, municipal contributions tended to be far lower than this estimate. The project design was too ambitious and did not take into account that the municipalities do not have direct access to their own revenues. As a result, the project did not disburse during the first year and these delays were only solved through payment of the municipal contribution with outside donor contribution (Canada) and by amending the required municipal contribution from 50% to 10%. * Borrower commitment. It is encouraging to note that from the beginning, Borrower commitment has remained strong in terms of observing a "hands-off' policy over the management of the Agency. Government control has taken place at intervals but was never excessive. The process of decision-making in the Agency remained autonomous and independent, not only in terms of procurement but also in the areas of personnel management and, most importantly, in the area of conflict resolution with contractors, suppliers, NGOs, and consultants. 19. Factors subject to implementing agency controL The Agency has recruited and retained technically competent and skilled personnel selected competitively from the private sector. All financial audits have been unqualified and technical audits have demonstrated that all works are completed within the standards and requirements of the profession. The Agency has also been able to reduce its operating costs and maintain it within 5% of project costs. D. Project Sustainability 20. The issue of sustainability must be unbundled to be really realistically tackled. Sustainability can be measured at three levels: sustainability of the institutional model, sustainability of private sector growth and continued employment generation, and the sustainability of sub-projects. * Sustainability of the institutional model seems likely. Actual activity of AGETIP in terms of project execution and contract management for other entities demonstrates that AGETIP has proven itself to be a well functioning, efficient organization, and has no problems attracting funding from both Government and donors. The fact that this institutional model has already been replicated in 13 different countries in Africa, and seem to be functioning effectively in  7 almost all of them also demonstrates the sustainability of this model of delegated contract management. * Sustainability of promotion of SMEs and employment generation seems likely. As shown above, the project has resulted in a large increase in the numbers of enterprises/contractors and consulting firms in the national building and construction industry. The quality and performance of these enterprises and firms have also improved as a result of training programs financed through the project which have enabled better supervision of contractors by engineering/consulting firms (attested in the technical audit of January 1997). The Agency is also becoming more rigorous in its selection criteria, again imposing improved performance in the industry. Thus, the project has contributed not only to growth of SMEs, but the building up of their technical capacity and performance. As long as the Agency continues to use small and medium enterprises to carry out works, employment generation will also be assured. * Sustainability of sub-projects is uncertain. Sustainability of sub-projects depends on the initial quality of the infrastructure created and on its subsequent operations and maintenance (O&M). As mentioned above, the quality of works has been improving through training programs. However, more can be done on this front. One suggestion is to strengthen technical audits and institutionalize them as have been done with financial audits. Sustainability of O&M remains a problem. O&M is not in AGETIP's mandate. The entity that commissions the works (usually the municipality) has full responsibility for O&M. Although municipalities are currently contributing to some of the investment costs of the project, they nevertheless continue to lack the technical and financial resources to carry out O&M effectively. Unless the finances of municipalities improve, sub-project sustainability will remain uncertain. Another important factor in sub-project sustainability is community participation. Where communities have not been involved in the planning and implementation decisions of sub-projects, O&M by communities has suffered. AGETIP has been criticized for not involving (or even informing) communities in the sub-projects it carries out. However, community participation, especially in decision-making, is also largely the responsibility of municipalities. E. Bank Performance 21. In project identification, preparation and appraisaL The Bank's performance in helping the Borrower identify, prepare and appraise the Project was satisfactory. The SAR was thorough with considerable attention to the sectoral background and to the experience of the first project. However, the estimated capacity of municipalities to contribute to project costs was too optimistic, and, following a year of no disbursements, the credit had to be amended to allow a 10% municipal contribution (versus an original requirement of 50%). The closing date of the project was also extended by a year. 22. In project supervision. The performance of the Bank vis-a-vis the Agency has been satisfactory. Disbursements have taken place with minimum delays, IDA has been flexible (in terms of extension of project closing, amendments to municipal contributions following the devaluation, etc.), and supervision has been regular. There were some delays, including the revision of the ceiling of the Special Account, which caused the Agency problems, particularly in  8 terms of delays in payments to enterprises. The Agency feels that, having been functioning well for seven years, the amount of control that IDA continues to exercise over the Agency is excessive. F. Borrower Performance 23. Performance of Government. The performance of the Borrower is rated satisfactory. The full amount of counterpart funds amounting to 3.1% of project costs (or CFAF 2 billion) was paid. The Government has respected the autonomy of AGETIP and has not interfered in any way in the normal operations of the Agency. Relations between AGETIP and Government are excellent. However, with the deadlock over the reform of Procurement Code, one component of the project has not been achieved. 24. Performance ofAGETIP. The performance of AGETIP as an autonomous executing agency has been highly satisfactory. AGETIP has disbursed the credit in an efficient and effective manner. Its success can be partly attributed to the commitment of the Director General (who was involved with the project from the very beginning) and the expertise of its staff. The Agency has enjoyed considerable autonomy from Government, and has not abused this privilege. All audits (financial and technical) have been unqualified. The Agency has followed closely the guidelines set by the Manual of Procedures (some amendments needed to be made to the Manual of Procedures, such as evaluation criteria for bids, which the Agency carried out in an efficient manner). Operating costs have remained low at less than 5% for the duration of the project. Over 90% of works are completed within budget and 95% of works are executed on time. G. Assessment of Outcome 25. The outcome of the project is highly satisfactory. Most targets were met. The project has achieved and indeed surpassed most of its objectives regarding employment creation, development of the private sector, as well as physical infrastructure created. While the jobs created through AGETIP have not necessarily led to a massive reduction in the number of unemployed, the project has certainly contributed to reducing the rate of unemployment. It has contributed importantly to improving the quality of life of the population and reduced poverty through the incomes generated, greater access of the population to physical infrastructure relating to health, education, and social activities, and an improved urban environment. Although not a part of this credit, during this second phase, AGETIP has been entrusted as the implementing agency for two other Bank projects in the health and education sectors (in addition to carrying out contracts for specific components of a variety of other projects from both the Bank and other donors), enabling the Bank to have a greater impact in the social sectors through an already existing institution that has proven itself to be efficient and effective.  9 H. Future Operations 26. AGETIP continues to offer meaningful support to project implementation in several sectors. In addition, the success of the operation led the Government and the Bank to a follow-up operation, i.e. in Urban Development Project, approved by the Board in November 1997, which involves municipal resource mobilization and urban planning prior to sub-project implementation by AGETIP. I. Key Lessons Learned 27. AGETIP has shown unequivocally that it is possible to have a private autonomous agency capable of executing public works efficiently and effectively, without the help of external technical assistance. The success of the projects undertaken by AGETIP (which include but are not limited to this credit) have strengthened the position of AGETIP as an executing agency for Government projects and have confirmed the usefulness and efficacy of the concept of delegated contract management. 28. Some specific lessons learned from this operation include: * The importance of evaluating the performance of the firms and enterprises hired by the Agency and the need for more flexibility in the system of remuneration for their services. * The need for stricter follow-up in the payment of contractors within the shortest possible time. * The critical importance of strict management of the technical and financial databases of the Agency, with continuous updating, and close follow-up of key indicators for implementation and performance. 29. With regard to a separate component of the project, improving public procurement, the difficulties of general procurement laws have become apparent not only through this project but through AGETIP projects in other countries as well. A lesson to be drawn is that AGETIP projects per se are perhaps not the best instrument through which general government procurement processes can be reformed. Through this project, Government has demonstrated its willingness to streamline and make more transparent the procurement process of specific sectors (namely the building and construction industry, and increasingly, health and education). However, to try and expand this to the rest of the economy in one fell swoop might be too optimistic a goal for one sector investment project. General procurement reform is being undertaken in the context of improved portfolio management.  10 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL SECOND PUBLIC WORKS AND EMPLOYMENT PROJECT CREDIT No. 2369-SE PART II: STATISTICAL ANNEXES Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Negligible Not applicable Macro policies Fii E L EZI Sector policies i i L i Financial objectives Li Li Li 27i Institutional development Li ii Physical objectives E Li Li lii Poverty reduction Li K] Li Gender issues Ei Li Li 2LI Other social objectives Li Li Li Environmental objectives Li i L i Public sector management L L Li] Private sector development L L i]] Other (capacity building) Li L i/  11 B. Project sustainability Likely Unlikely Uncertain (/) (/) (1) C. Bank performance Highly satisfactory Satisfactory Deficient (1) (1) (1) Identification I m l Preparation assistance I E LI Appraisal L LI z Supervision [II [1K] EU1 D. Borrower performance Highly satisfactory Satisfactory Deficient (1) (1) (1) Preparation C L3I Inplementation LI EI Covenant compliance n (counterpart funds) L L L Operation (if applicable) LI L I E. Assessment of Outcome Highly Highly satisfactory Satisfactory Unsatisfactory unsatisfactory V L LI (LI  12 Table 2: Related Loans and Credits Prcding operations 1884-SE - Municipal and Develop organizational, technical and financial 1988 Completed Housing Development capacities of the local governments of the Greater Dakar area, and expand the efficiency of the housing sector. 2075-SE - Public Works Create substantial new employment in urban 1989 Completed and Employment areas through labor intensive works without increasing size of civil service. Following operations 3006-SE - Urban Improve financial and organizational 1997 Approved by Development and managmnent of municipalities, programming of the Board on Decentralization priority investments and simplify the financing Nov. 20, 1997. of urban investments. Table 3: Project Timetable Identification Continuous since AGETIP I Preparation January20, 1992 Appraisal January 20-February 1, 1992 Negotiations April 23, 1992 Board Presentation May 21, 1992 Signing July 31, 1992 Effectiveness January, 1993 January 27, 1993 Midterm Review January, 1995 January 18, 1996 Project Completion December 31, 1996 June 30, 1997 Loan Closing/last disbursement April 30, 1997 August 14, 1997  13 Table 4: Credit disbursements: Cumulative Estimated and Actual (US$ million) Original Appraisal Estimate 12 24 36 39 Actual 2.53 2.92 9.04 23.85 39.12 Actual as % of original estimate 21% 12% 25% 61% Date of final disbursement August 14, 1997 Cumulative Disbursements (US$ millions) 40 35 30 255 0 . inal 20 10 V 5 0 t FY93 FY94 FY95 FY96 FY97 Table 5: Key Indicators for Project Implementation Number of execution agreements 420 1116 Number of sub-project contracts signed 840 1000 Number of contracts fully executed 355 1513 (356) Percentage of contracts on time 90 95 Percentage of contracts within budget 90 92 Percentage of payments within 30 days of invoice receipt 90 98 Number of person days of employment created 3.36 million 5.6 million (3.39 million) Average procurement processing time 30 days 29 days Number of GIEs receiving contracts 128 8862 Number of studies completed 12 17 I For all activities of AGETIP. Numbers in parentheses indicate this credit only. 2 This includes the Associations of Sports and Culture (ASC) which are composed of youth groups who participate in the sub-projects of the Special Fund for Development (SFD) and Priority Program for Employment Generation (PPGE)  14 Table 6: Studies Included in Project 67'O 0 4yThn5sas d~be tApaslor Sau; i~trtd Study for the creation of Organization of a regional mutual credit Completed Useful Mutual Guarantee company for group small contractors Procurement Reform Study Simplify public procurement procedures Completed Draft law submitted to National Assembly Impact of AGETIP on Determine impact of AGETIP on local Completed Opening financial channels for construction industry construction industry and identification of small contractors with banking long-term perspective for integration of sector. small contractors in the economy. Environmental impact of 1) Determine environmental impact of Completed Organization of an IEC projects implemented by AGETIP projects. (Information, Education, AGETIP 2) Propose methodology to carry out Communication) system and environmental impact study of AGETIP coordination on the ground evrton t i with all 5 stakeholders. portfolio Feasibility Study for the Determine economic and financial Completed Confirms role of equipment creation of an equipment conditions necessary for the creation of a leasing company to raise leasing company private leasing company. profitability, of small contractors. Study on community Review the community participation Completed Elaboration of a Plan of Action participation program to improve its efficiency Beneficiary Assessment of Evaluate AGETIP from the point of view Completed Recommends to involve the AGETIP of the beneficiaries beneficiaries as part-members in project implementation Study the financing of Determination of the conditions for Completed Made recommendations on municipal infrastructure greater involvement of the private sector municipal finance reform in urban development  15 Table 7A: Project Costs (US$ million) Public works 29.32 31.44 Pilot activities a) Public works 3 4.7 b) Consultant's services 1.5 0.18 Consultants services for training, studies and 3.5 3.69 monitoring PPF refinancing 0.48 0.285 Unallocated 1.2 1.33 TOTAL US$39 US$41.63 Table 7B3: Project Financing (US$ million) ___ ~~~US$ million US$ million IDA 39 39 Government77 Municipalities 20 10 Other donors (KfW, CIDA, FSD, PPGE) 15 29.35 TOTAL 81 85.35  16 Table 8: Status of Legal Covenants Section 01 ~ ~~C Continuous Opening and maintenance of a Full 2.02(b) ~~~~~~~~~~~~~~~Special Account compliance Section 10 C Continuous Borrower to cause AGETIP to Full 3.01(a)(i) execute the Project compliance Section 03,10 C Continuous Borrower to provide for provision Complied 3.01(a)(ii) of funds, facilities, services and with other resources necessary to enable AGETIP to carry out the Project Section 10 C Continuous Borrower not to interfere with Full 3.01(a)(iii) AGETIP's management compliance Section 10 C Borrower to enter into a Full 3.01(b) Convention with AGETIP compliance Section 10 C Continuous Borrower may not arnend or waive Full 3.01(c) Convention compliance Section 3.02 10 C Continuous Procurement to be carried out in Full accordance with Schedule 3 of compliance DCA. Section 09 C Continuous Reviews to take place during third Full 3.03(a) calendar quarter of each year. compliance Section 09 C Continuous Progress reports due one month Full 3.03(b) before annual review compliance Section 10 C Continuous Following annual reviews, Complied 3.03(c) Borrower to take corrective with actions as agreed with IDA. Section 09,10 C 04/30/1993 Complete study of public Full 3.04(a) investment program compliance Section 09 C Continuous Within 6 months submit to IDA an Full 3.04(b) action plan for comments compliance Section 10 C 04/30/1994 Borrower to implement the action Full 3.04(c) plan compliance Section 3.05 04 C Continuous Borrower to submit proof of Complied payment of its contribution for the with previous year and make budgetary provisions for its contribution for the current year. Section 01 C Continuous Borrower to maintain adequate Full 4.01(a) records and accounts compliance Section 01, 09 C Continuous Borrower will have records, Full 4.01(b) accounts and financial statements compliance audited semi-annually and submit audits three months after the end of the semi-annual period Table 9: Compliance with Operational Manual Statements Fully complied with.  17 Table 10: Bank Resources: Staff Inputs Preparation to appraisal 0 0 0 0 2.2 20.8 Appraisal 0 0 0 0 8.1 5.4 Negotiations through Board approval 0 0 0 0 0.7 1.7 Supervision 10 25.7 18.5 44.4 52.6 126.9 Completion 8.5 19.1 8.5 19.1 2.7 2.7 TOTAL 18.5 44.8 27 63.5 66.3 157.5 Table 11: Bank Resources: Missions Identification 07/88 3 6 TL, TM, OA Preparation 10/91 I 8 TL Appraisal 01/92 3 12 EC, TM, FA, ME Effectiveness 10/92 3 4 TL, UP, TM Review Supervision 1 02/93 1 9 TL I I Supervision 2 04/93 1 6 TL 1 I Supervision 3 10/93 1 5 TL 3 2 Supervision 4 02/94 2 8 TL, CE U U Counterpart I ~~~~~~~~~~Funds - -_ _ __ _ _ ___ ___ _ __ _ __ ___ _ _ ; _ _ _ __ _ __ __ _ _ _ _ _Fu d Supervision 5 07/95 2 3 TL, CE S S Supervision 6 01/96 2 12 TL, CE S S Supervision 7 06/96 3 7 TL, TM, TS S S Supervision 8 01/97 2 4 TL, CE S S ICR 09/97 1 2 TL I I * Key to Specializations ** Key to Performance Ratings EC Economist I = Problem Free OA = Operations Advisor HS = Highly Satisfactory FA= Financial Analyst S = Satisfactory UP Urban Planner U = Unsatisfactory TL Team Leader TM Technical Manager TS = Technical Specialist ME = Municipal Engineer  MAP SECTION  fe,,,er w- < \. t ;00 0 > jXj 0 16