Ghana - Private Sector Development Project

Document of The World Bank FOR OFFICIAL USE ONLY REPORT No 21547 IMPLEMENTATION COMPLETION REPORT (IDA-26650; PPFI-P8540) ONA CREDIT IN THE AMOUNT OF SDR 9 MILLION (US$13 MILLION EQUIVALENT) TO THE REPUBLIC OF GHANA FOR A PRIVATE SECTOR DEVELOPMENT PROJECT December 21, 2000 Private Sector Group Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2000) Currency Unit = Ghanaian Cedis iGHC 5188 = US$ 1 US$ 0.192 = GHC 1000 FISCAL YEAR ABBREVIATIONS AND ACRONYMS B KR! Buildings and Roads Research Institute CSIR Council for Scientific and industrial Research EOP End of Project FRI Food Research Institute GSB Ghana Standard Board GTFA Ghana Trade Fair Authority GDP Gross Domestic Product ICR Implementation Completion Report IDA International Development Association IRI Industrial Research Institute ISSER The Institute of Statistical, Social & Economic Research IQNET International Quality Network MFEP Ministry of Finance & Economic Planning MEST Ministry of Environment, Science & Technology MTI Ministry of Trade & Industry MOJ Ministry of Justice MOP Memorandum of the President NGO Non-govermmental Organization NPV Net Present Value ODA Overseas Development Agency PEPTA Public Enterprise Privatization Technical Assistance PSD Private Sector Development QAG Quality Assurance Group SIC Scientific Instrumentation Center SME Small & Medium-Term Enterprise TEDF Technology and Enterprise Development Fund TTL Task Team Leader UNDP United Nations Development Programme USAID United States Agency for international Development USD United States Dollar Vice President: Callisto E. Madavo Country Manager/Director: Peter C. Harrold Sector Manager/Director: Demba Ba Task Team Leader/Task Manager: Kofi Boateng-Agyen/Michael Wong  FOR OFFICIAL USE ONLY CONTENTS Page No. 1. Project Data I 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 4 5. Major Factors Affecting Implementation and Outcome 7 6. Sustainability 9 7. Bank and Borrower Performance 9 8. Lessons Learned 11 9. Partner Comments 12 10. Additional Information 24 Annex 1. Key Performance Indicators/Log Frame Matrix 25 Annex 2. Project Costs and Financing 26 Annex 3. Economic Costs and Benefits 28 Annex 4. Bank Inputs 29 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 30 Annex 6. Ratings of Bank and Borrower Performance 31 Annex 7. List of Supporting Documents 32 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.   Project ID: P000960 Project Name: PRIV SECTOR DEV Team Leader: Kofi-Boateng Agyen TL Unit: AFC1O ICR Type: Core ICR Report Date: December 21, 2000 1. Project Data Name: PRIV SECTOR DEV L/C/TFNumber: IDA-26650; PPFI-P8540 Country/Department: GHANA Region: Africa Regional Office Sector/subsector: DB - Business Environment KEY DATES Original Revised/Actual PCD: 08/27/93 Effective: 05/11/95 07/12/95 Appraisal: 01/28/94 MTR: 09/30/97 04/29/98 Approval: 12/06/94 Closing: 06/30/2000 06/30/2000 Borrower/lImplementing Agency: GOVT OF GHANA/TBD Other Partners: Ministry of Justice/ Ministry of Trade and Industry/Ministry of Environment, Science and Technology STAFF Current At Appraisal Vice President: Callisto E. Madavo Jaycox Edward V.K. Country Manager: Peter C. Harrold Edwin Lim Sector Manager: Demba Ba Mary Oakes Smith Team Leader at ICR: Kofi-Boateng Agyen Patrick Connolly ICR Primary Author: Michael Wong; Agata Pawlowska 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: U Sustainability: UN Institutional Development Impact: N Bank Performance: U Borrower Performance: U QAG (if available) ICR Quality at Entry: U Project at Risk at Any Time:  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project objective was to foster the development of a competitive private sector by (a) assisting the Government in its efforts to restructure, reform and commercialize its technical research and development institutions along competitive and demand-driven principles; (b) providing a broad segment of the private sector with the necessary financial and technical assistance to support the development of commercially-bankable projects by improving their feasibility and quality; (c) supporting efforts by the export industry to improve their design and the promotion of their products; and (d) assisting the Government in developing a program to upgrade the delivery of legal services to the commercial and manufacturing sectors, thereby accelerating response time for commercial transactions and commercial contracts disputes. The project objective was in line with the Country Assistance Strategy of the Bank for Ghana which called for increasing private sector-led growth. The project was not a stand-alone operation, but one of the instruments in the Bank program in support of private sector development. The project complemented other activities supported by the Bank and other donors. USAID had put in place a Trade & Investment Project (TIP) for US$80 million to remove constraints to the development of the private sector in Ghana. In addition, the Bank was supporting the private sector with the Private Enterprise & Export Development Credit (PEED, Cr. 2502 approved in 1993) which included a short-term credit line for exports, and the Small & Medium Enterprise Development Credit (SME, Cr. 1996 approved in 1989), which included a medium-term credit line. In addition to the credit lines, other projects supported the restructuring of the banking sector which was expected to contribute to easing the credit constraint to private sector activity. The project under review originally included a line of credit of about US$20 million, which was dropped during preparation since other institutions had indicated their intention to provide this type of financing. The project objective itself was general, as it was part of an overall Bank strategy for the support of the private sector. At the time the project was prepared, it was believed that increasing the efficiency of certain public institutions involved in research and development (R&D), trade facilitation, industrial design, etc., would improve the competitiveness of the economy. This translated into the five components of the PSD Project. Learning from the experience of the past years and judging ex post, it is evident that, in fact, a key ingredient was missing; the demand for good quality products and support services. In addition, the project attempted to replicate the successful experience in other countries that supported their public institutions, which was regarded as best practice at the time. This included the R&D institutions in South Africa (after which this project was modeled), and the private-public partnership in Malaysia. The implementation arrangements relied heavily on government agencies and did not incorporate institutions which would benefit from the project during design or implementation. 3.2 Revised Objective: The revised overall strategy was to increase and deepen the private sector contribution to economic growth in Ghana, and the objective of the project in particular was to improve private sector competitiveness in global markets. These statements are the result of a revision of the project that occurred at the mid-term review in April 1998. The reformulation was not reported -2 -  or approved by the Board since the original objective was very broad, and a revision of the loan agreement was not needed. 3.3 Original Components: 3.3.1 The project consisted of the following five components: (a) Training and technical assistance to the Secretariat of Ghana's Council for Scientific and Industrial Research (CSIR) and four institutions (the Food Research Institute, FRI; the Industrial Research Institute, IRI; the Scientific Instrumentation Center, SIC; and the Buildings and Roads Research Institute, BRRI) to develop a commercialization strategy to serve the needs of the private sector, and capacity building to strengthen the role of the Ghana Standard Board (GSB) in developing metrology and quality testing standards and to disseminate its services throughout the country. The project envisaged changes in the legal framework and operating practices of these institutions. The recommended changes were that 40 percent of CSIR's governing council and 40 percent of the management boards of the four institutions above would be from the private sector, and that the director-general of CSIR be appointed by its governing council. It was also recommended that contract research be carried out to meet the needs of industry, and that no less than 70 percent of the income from such research go to the institute that carried out the research. An additional change envisioned was that the director of an institute would have more responsibility and freedom to take action than in the past. (b) A technology and enterprise development fund (TEDF) to assist private small- and medium-size enterprises to develop value-added products and provide reliable services, to develop their technical and financial plans to a level of bankable quality and feasibility, and to support their efforts to raise the necessary funds or investor support; (c) for the Ghana Trade Fair Authority (GTFA), a study to determine the market demand, an architectural survey to assess the rehabilitation and redesign needs of the pavilions and establish the investment parameters to be met; d) for the Industrial Design Center, a feasibility study to determine the scope, financial viability, commercial demand and organizational structure of such a center; and (e) in the legal sector, a study to design improvements in the delivery of legal services and assistance to strengthen the capacity of government to support the delivery of services. 3.3.2 Assessment of components In general, the components did not relate sufficiently to the project objective because they were too public sector-focused, supply driven and did not fully address the constraints. Public sector focus: The support institutions in R&D are owned and run by the Government and directly dependent on the Government's budget. The amendments of the legal framework and operating practices of CSIR envisaged at appraisal were insufficient, even if adopted, to effect the desired turnaround of the research institutions, as they left control of these institutions in the public sector. -3-  Supply driven: Both intense competition and consumers themselves are the driving force of innovation and productivity in the private sector. By funding suppliers instead of directly funding/subsidizing research projects initiated by the private sector and implemented by a provider selected through competitive bidding, there was a disconnect between market demand and supply. Address the root causes for constraints: Consultations with the private sector identified upgrading the industrial infrastructure and commercial judicial system, and overhauling R&D institutions and manpower development as areas for action. The underlying message was for government to assume the role of facilitator and allow private sector involvement in these sectors. This was not sufficiently acknowledged by the R&D component. The provision of financial and technical assistance to develop commercially-bankable projects by improving their feasibility and quality (TEDF) addressed a private sector concem. Greater consultation with the banking community would have ensured that the fund activities were indeed addressing their requirements. 3.4 Revised Components: The project components were not revised, although in 1999, six months prior to the closing date of the project, the Public Enterprise and Privatization Project (PEPTA, Cr. 2877 approved in 1996) was amended to include support for the GSB and legal components of the PSD project, which were being implemented satisfactorily, but which would not be completed by the closing date of the PSD project of June 30, 2000. 3.5 Quality at Entry: The project was never subjected to a Quality-at-entry review. As noted elsewhere in this report, although extensive work was done at preparation to identify constraints, the project design did not fully take into account the preconditions for successful reform of the institutions involved in the project and had a complex implementation arrangement, described below, which did not fully bring in the ultimate beneficiaries of the project-financed institutions. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The macroeconomic fundamentals of Ghana have been deteriorating since the credit was approved, and it is likely that this has resulted in changed perceptions and priorities and affected project outcome. The project helped create a greater consciousness of markets and commercial practices among all participating institutions which is an important beginning in achieving the project objective of restructuring, reforming and commercializing them. Also, while actual progress in meeting project objectives was limited in some of the beneficiary institutions, significant progress was made in improving the performance of the GSB and in the modernization of the legal infrastructure, and Bank support for these activities will be continued under another Bank project. The second key project component, the TEDF, had limited impact. Its outcome was adversely affected not only because of its design, but also by the adverse investrnent climate in the country. The project outcome is therefore rated unsatisfactory because of it had limited achievements when measured against outcome indicators, as discussed in the section on - 4 -  components below. 4.2 Outputs by components: a) Commercialization of Research and Development 1.1 Council for Scientific and Industrial Research The central objective of this component was to support the reorganization and reorientation of the four industrial-oriented CSIR institutes along commercially-based lines so as to provide more effectively the linkages between the delivery of skills and the development of information and standards to industry. The institutions were expected to generate 30 percent of their revenue from the private sector, and to service at least 300 SMEs. The component is rated unsatisfactory mainly because it did not meet its objectives. The Government did amend the CSIR charter in 1995, and but did not include provisions that would have allowed the institutes to retain 70 percent of their revenues as agreed in the legal documents with the Bank. The institutions have in fact not retained a significant portion of their revenue and are not able to meet running costs. The amendments also imposed the requirement that CSIR institutes generate 30 percent of their budget. Revenues still only account for under 10 percent of the institutes' costs. The institutes did reduce the staff and met the target of ratio of research staff to support staff. In spite of the timid changes introduced in the legal and organizational framework, the CSIR institutions have taken an increasingly commercial approach with the establishment of marketing offices, and have started advertising their capabilities. Therefore, there is some evidence that the project has left a lasting imprint. 1.2 Ghana Standards Board In addition to the commercialization of the GSB, key services were to be upgraded to the International Standards Organization (ISO) standards. The implementation of this component is rated satisfactory because two important benchmarks were achieved: GSB obtained ISO 9000 certification in May 2000, and has put in place a twinning arrangement with an external partner. The component is still being implemented under the PEPTA Project. Therefore, the targeted revenue generation and companies to be certified may be achieved. At 10 percent, revenues are far below the projected 30 percent, and the process of initiation of 20 companies in ISO 9000, ISO 14,000 and ISO/IEC has not be completed. b) Technology and Enterprise Development Fund (TEDF) The objective of the TEDF was to encourage and facilitate the ability of the small- and medium-size enterprises (annual sales US$400,000) to access financing and improve their productive efficiency. The component is rated unsatisfactory mainly because project implementation was slow and costly, the program was ineffectively managed and had a limited impact. Slow and costly implementation: Disbursements from the TEDF were slow in the first three years, while project management fees were disbursed as projected. While only 8 percent of the - 5 -  TEDF was disbursed in 1997, 100 percent of the management fees were spent. Disbursement of the fund only improved after the mid-term review agreements that Empretec's management fees be based on performance, and that the grant contribution of 50:50 be changed to 35:65, and other donor programs implemented with Empretec were completed. At closure of the project, 66 percent of the TEDF and 91 percent of the management fee was disbursed. Ineffective management: The fund managers decided to pay consultants up-front, instead of reimbursing companies for consultant services which were carried out, as is the standard practice. This resulted in a significant number of clients not paying for services, paying late or paying a lower than required amount; in fact, there are still disputes outstanding as a result of this management failure according to the draft audit report. The actual payments ratio to clients or to consultants is difficult to assess from the information provided by Empretec. Limited impact: A detailed survey was not completed. However, the clients interviewed as part of this review confirmed that they did not receive credit from commercial banks on the basis of the consultant services. In those cases where credits were made available, they were given on the basis of a purchasing order or other form of collateral. However, this is not reflective only of the fund, but of the problems with the banking sector which have not been resolved. The access of credit to SMEs in general continues to be a problem. For those clients who were not focused on access to finance, services provided did contribute to improvement in the performance of their business. However, both firms and consultants believed that a payment arrangement where the beneficiary enterprises paid half the costs of the consultant services (a ratio of 50:50) would not work in Ghana, and were surprised to hear that the scheme is implemented successfully on a 50:50 basis in other African countries. The use of the word "fund" in the title of the matching grant scheme could have also had a negative effect on users who generally associate funds with grant funds. c) Rehabilitation and Commercialization of the Ghana Trade Fair Authority The objective of this component was to support a private sector-led development of a viable GTFA. The project financed the studies for the GTFA as planned. However, none of the rehabilitation or construction work envisaged at appraisal was financed under the project. Experience with this component is rated unsatisfactory. After completing the study, the GTFA was placed on the divestiture list, and the Ministry of Trade and Industry and the Ministry of Finance (MOF) could not agree on the need for further investments. The privatization decision was independent of project activities, and it is likely that by the time a decision is reached on divestiture of the GTFA, the studies financed under the project will be outdated. d) Industrial Design Center The original objective of this component was to establish the need, scope and nature of a design center. However, during the mid-term review, the objective was made more ambitious: to establish a privately-operated and commercially-run Industrial Design Center. Experience with the implementation was unsatisfactory as progress anticipated at appraisal and mid-term were not achieved. A study, completed under this component, identified a number of potential suppliers of -6 -  industrial design services in the private sector and existing public institutions. However, no attempt was made to strengthen existing operators because most institutions in Ghana were committed to the construction of a new facility, which the World Bank Group could not support. After the study was completed, no further investments were made since the building of an industrial design center was not feasible. e) Legal assistance and Diagnostic Study The objective of this component was to improve the operations of the court system and improve legal information and research operations. Major activities such as the assessment of constraints in the different legal institutions and providing necessary supplies such as books, computers and training were implemented. In addition, a legal sector strategy and investment plan was completed and presented to different donors who have expressed interest in supporting the legal sector. The implementation of the component is rated satisfactory since key stakeholders have been sensitized to existing constraints, other donors have expressed interest in supporting the legal sector and major decisions by Ministry of Justice are being implemented to reduce processing time and improve service delivery. 4.3 Net Present Value/Economic rate of return: A NPV was not calculated for this project. 4.4 Financial rate of return: Not applicable. 4.5 Institutional development impact: As noted elsewhere in this report, despite progress in some institutions (GSB), the reorientation of key institutions supported by the project was not achieved. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: Several exogenous factors had some influence on the achievement of project objectives, particularly in 1998 and 1999. In 1998, aggregate production and earnings in Ghana were negatively influenced by: (a) the financial crisis in Asia; (b) the recession in the Japanese economy; (c) the off-loading of gold onto the world market by Eastern Europe, Russia and parts of Western Europe; and (d) the drought brought on by El Nino. In 1999, cocoa prices fell by 40 percent between January and December; gold prices reached a low of US$235 per ounce, and crude oil prices increased. These factors influenced private sector operators, making them risk-averse and less willing to invest in innovations and new markets. 5.2 Factors generally subject to government control: The following two factors had a substantial impact on the effectiveness of the project: (a) insufficient private sector involvement in the design and implementation of the project; and (b) the use of inappropriate incentives for project management. Private sector involvement: The objective of the major components of the project was to make selected institutions more market-focused and improve their service delivery to the private sector. However, neither the private sector nor their representative organizations were sufficiently - 7 -  involved in monitoring overall progress or assessing outputs or impact. Feedback from beneficiaries would only have been possible through surveys, which were not carried out. Therefore, when project activities fell short of expectations, no appropriate measures were taken to respond in a timely manner to the poor performance. Project management: The project was initially managed by MOF and later by a consultant contracted by MOF. Frequent changes in the Project Implementation Unit staff made capacity building difficult and contributed to implementation difficulties. For most of the implementation period, the TEDF component was managed through a non-performance-based contract with Empretec, an NGO largely dependent on donor financing. The project management team in MOF had its principal contacts with the various ministries and institutions involved in the project rather than with the private enterprises which were the ultimate beneficiaries. The fact that none of the project activities fell within the direct mandate of MOF made relations more complex and weakened the project management unit. More ownership of the project or part-ownership of institutions by the private sector would have strengthened project implementation. The Government's evaluation report of the project notes that the lack of counterpart financing made project implementation difficult. Lack of counterpart financing is a problem in many Bank-financed projects in Ghana, and it is being addressed. However, the counterpart requirements in this project were so small that the shortage could be reflective of changing government priorities. 5.3 Factors generally subject to implementing agency control: The implementation arrangements of the project, with MOF responsible for implementing activities mostly under the mandate of other ministries, proved to be a difficult arrangement to achieve successful project implementation. This problem could have been addressed by involving the private sector in monitoring the project and by consulting the private sector on key issues. The project unit played the role of liaison between the World Bank Group and the different government agencies involved in the project, and was not proactive in addressing slow project progress and limited project impact. Actions by the project unit were thus dependent on the proposals from implementing institutions and responses from the World Bank Group. 5.4 Costs andfinancing: The total cost of the project was US$8.63 million or 56 percent of appraisal estimates. Of the approximately US$8.63 million disbursed, US$7.19 million was provided from the IDA credit and US$1.44 million was provided from Government counterpart funds. The low disbursement rate for the credit as a whole was due largely to the scaling down of some project components and the delays in others due to difficulties in selecting consultants. Changes in project scope. Consultant reports, in particular on GTFA and the Industrial Design Center, recommended that further investment in these institutions would only be feasible after these were divested. In the case of CSIR, a sequencing of investments based on performance indicators was judged to be the feasible way forward. Since preconditions were not met satisfactorily, civil works and capital investments under these components were lower than expected. -8 -  Difficulty in selecting consultants: In two components, implefnenting institutions considered the consultants' performance to be unsatisfactory. The need to select new consultants led to delays. In the case of TEDF, the consultant contract was not performance-based which contributed to the slow disbursement of the fund. 6. Sustainability 6.1 Rationale for sustainability rating: The project is unlikely to be sustainable because the institutional and regulatory environment has not changed sufficiently. Prior to the implementation of the project, institutions selected were found to have legal limitations, including inadequate incentives, which contributed to their lack of focus on market demand. While changes were made, such as a 40 percent private sector inclusion in governing council and management boards, these proved insufficient to create a market focus; not more than 30 private sector operators could be listed as clients for the CSIR institutes. The project did not contribute significantly to a reduced dependency on either public sector management or budget provisions from the Government. This dependency has not led to effective delivery of services in the past. For instance, one year prior to completion of the project, none of the institutions were connected to the Internet under the project as they were unable to pay their subscriptions. For two components, the legal sector and TEDF, the comments above are not applicable. The legal sector component is still ongoing, and activities are not yet complete. For the TEDF, a company survey was not completed therefore the sustainability of the investments at firm level cannot be determined in the absence of concrete data. 6.2 Transition arrangement to regular operations: Two components of the project (the legal component and capacity building within GSB) have been included in the PEPTA project which was amended for this purpose in 1999. The GTFA is now a limited liability company, no longer part of a Government of Ghana subvention and is eligible to be privatized. One of the CSIR institutes, IRI, has merged with SIC to form one institute, and other institutional reforms are underway in the context of a public sector reform program, but there is no Government directive yet about the future of these institutions. 7. Bank and Borrower Performance Bank 7.1 Lending: The Bank's performance in the identification of the project was unsatisfactory. The project team consulted with the private sector and other relevant donors such as USAID, DFID (then ODA) and UNDP. As mentioned earlier, the project complemented other projects of the Bank and the USAID. However, in hindsight, insufficient emphasis was placed on conditions necessary for successful implementation of the components supporting public institutions, i.e., insufficient amendment to the CSIR act and divestiture of GTFA. Lastly, the implementation arrangements were complex and the TEDF arrangements gave no incentive to the NGO in charge to effectively and efficiently implement the component. 7.2 Supervision: Although the project had a complex design and implementation structure and task managers -9-  changed frequently (at least three times during the project period), supervision is rated satisfactory. This rating is based on adequate reporting, early identification of difficulties, and advising the Government and project implementing agency adequately. Due to active supervision, resources were used efficiently: components that were not performing well were stopped, and the two performing project components, the legal sector and the GSB, were incorporated into a related Bank project (PEPTA). The Government's evaluation report indicates that the Bank frequently changed disbursement conditions. In fact, disbursement conditions were not changed. At mid-term review it was agreed that given the slow pace of implementation of some components, it would be more appropriate to link certain expenditures to outputs to ensure that the expenditures actually met needs. 7.3 Overall Bank performance: The overall Bank performance is rated unsatisfactory on the basis of the project design, implementation structure and the lack of private sector involvement. Borrower 7.4 Preparation: The Government consulted extensively with the private sector during project identification. However, during preparation and appraisal, the private sector was not adequately consulted. In fact, the project design appears to have been driven in part by the public sector institutions which were being reformed. This contributed to a public sector-managed and supply-driven project. The borrower's performance during preparation and appraisal are therefore rated as unsatisfactory. 7.5 Government implementation performance: Key changes in the legal framework for some institutions, notably the CSIR institutes, which were conditions of the credit and critical to project success, were not implemented. Furthermore, the Government did not sufficiently consult with the private sector during implementation. As a result, the Borrower's performance during implementation is rated unsatisfactory. Amendment of the CSIR Act. Following the sector policy letter issued by the Ministry of Environment, Science and Technology, the amendment of the CSIR Act would allow independent institutions to retain at least 70 percent of their earnings and in so doing, change the incentive structure and create the basis for the commercialization of the four institutions. This modification was not included in the amendment of the Act, which left the incentive structure unchanged. This did not encourage management of the institutions to take a more commercially-oriented attitude. Private sector involvement. The board and management of CSIR were still largely dominated by the public sector. Even if the 40 percent private sector participation had been appointed and was active, it was too small to influence the institutions to be more market-focused. In some areas of direct interest to the private sector, such as the divestiture of GTFA, the lack of consultation was compounded by the slow decision-making process of government on fundamental matters such as divestiture. 7.6 Implementing Agency: Given a general lack of commitment and inadequate legal environment, implementation was marginally satisfactory. Management was fairly efficient and progress reports, procurement and audit reports delivered on time within the responsibility of the implementing agency. -10-  7.7 Overall Borrower performance: The overall Borrower performance is rated unsatisfactory due to the apparent lack of commitment by the government and the limited involvement of ultimate beneficiaries. 8. Lessons Learned The following lessons may be of relevance for similar projects in the sector or in the country: (a) Importance of private sector involvement in project design and implementation Beneficiaries and their representative organizations were insufficiently involved in project design, identification of priorities, activities and implementation structure. Project approaches or methods proposed should be more widely discussed with various groups in the private sector before implementation; for example, if the 50 percent matching grant concept, which is widely accepted throughout Africa, had been discussed before its introduction, several problems could have been avoided. In addition, the private sector was not consistently briefed on the status of the project, and project implementation was carried out without their involvement. (b) Importance of defining appropriate roles for government and private sector Partly as a result of the above, the private sector did not assume any real ownership of the project. In reality, all key decisions were taken by Government, which retained control of the project. This contributed to the development of a project which was supply-driven and failed to meet the needs of the private sector in terms of the type, quality and timeliness of delivery of services. This impacted negatively on the sustainability of the project. While private sector involvement is important, the balance between the role of Government and that of the private sector is critical for achieving positive results. The Government should be in close collaboration with the private sector to establish an appropriate facilitative environment for private sector development. (c) Importance of clarity of objectives The project framework would have benefited from greater clarity in the link between the activities supported by the project and a more competitive private sector. The components under the project (technological assistance, market research and financial assistance) are commonly found among competitive and successful exporting industries, and in fact, the project aimed to replicate experience (e.g., South Africa) with the type of institutions supported under the project and with public-private partnerships (e.g., Malaysia). However, the process for selecting the partner institutions does not appear to have been guided by clear criteria linked to the overall purpose of the project. The activities under the project, including government support, usually take place in the context of existing domestic industries that are already functioning and often there is considerable local market demand for the product and services. Examples include the leather shoe industry in Italy or the hi-tech industry in the Silicon Valley. Because of the limited link with the local market and existing industries, there is no assurance that the activities supported by the project would lead to tangible and observable results. - 1 1 -  (d) Importance of a comprehensive public sector reform: In retrospect, it is clear that is difficult, if not impossible, to change the incentive structure of selected public institutions without an overall government commitment to public sector institutional reform. Experience has now shown that a comprehensive public sector reform, like the one that is being implemented in Ghana now, is the most effective way to bring about needed changes. Such an approach was not present in Ghana at the time this project was prepared. (e) Importance of commitment to the project by all players The project was hampered by the Government's failure to implement certain commitments such as those indicated in the letter of sector policy; this is representative of a certain lack of commitment to private sector-led development which inevitably will handicap any private sector development project, particularly one in which the Government has such a significant role. At the same time, the private sector must be willing to show commitment by contributing its share. For example, it should be willing to pay for 50 percent of consultant services, as is done in other African countries, instead of being over-reliant on Government. 9. Partner Comments (a) Borrower/implementing agency: REPUBLIC OF GHANA PRIVATE SECTOR DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower : Republic of Ghana Amount SDR 9 million (US$ 13 million equivalent) Terms . Standard IDA with 40 years maturity Beneficiaries Ministry of Environment, Science and Technology Council for Scientific and Industrial Research Ghana Standards Board Ministry of Trade and Industry Empretec Ghana Foundation (SMEs) Ghana Trade Fair Authority Ministry of Justice and Judicial Service Private Sector Institution (PEF, ATAG, AGI etc.) 1.0 INTRODUCTION The Private Sector Development Project (PSD), a US$13 million IDA facility became - 12 -  effective in 1995. The Project is a culmination of the renewed commitment of the Government to accelerate the pace of development of Ghana's private sector. The Project is also a direct result of the Business Community's own assessment of lingering issues which impede growth of the private sector. These issues were confirmed and consolidated during a series of roundtable meetings between the Private Sector and key members of Government and the Donor Community in 1994. The Project compliments and enhances the effectiveness of other private sector development initiatives, which were being promoted by the Government. The ongoing USAID funded Trade and Investment Project is one notable project, which was developed simultaneously with the PSDP and is providing export support services to the private sector. Other World Bank Projects have already been implemented to improve private sector growth and delivery( eg. PEEP) The Government also recognizes that one key stumbling block is that Ghana's industry on the whole lacks technological capabilities, which it needs to develop. Technical, managerial, and institutional information and skills would allow productive enterprises to use equipment and technology more efficiently. The Private Sector Development Programme (PSDP) was therefore initiated by the Government of Ghana and the International Development Association (IDA) to overcome the manufacturing and technological constraints facing the private sector and create a more dynamic non-traditional sector alternative, to address the lack of connection, and bridge the gap, between the state sponsored research and development institutes and a technologically deficient private sector in an environment in which the necessary supports for such elements as trade development and competitive product designs are also lacking. 1.2 PROJECT MISSION The mission of the PSD Project is to deepen and broaden the overall technological, productive and export capacity of the private sector within the general framework of other private-sector projects geared towards achieving private sector-led economy for the country by the year 2010. 1.3 PROJECT OBJECTIVES The project aimed at fostering the development of a competitive private sector by doing the following: a. Assist the Government to build on its investment liberalization by restructuring, reforning and commercializing its technical research and development establishment along competitive and demand driven principles. From this selective institutional strengthening, Ghana's private sector will be enabled to evaluate and develop appropriate technology, improve its knowledge of quality and standards, deepen its technical capacity and improve upon its management information systems; - 13 -  b. Provide to a broad segment of the private sector the necessary financial and technical assistance to support the development of commercially bankable projects by improving their feasibility and quality; c. Support efforts by the export industry to improve their design and the promotion of their products; and d. Assist the Government in developing a program to upgrade the delivery of legal services to the commercial and manufacturing sectors, thereby accelerating response time for commercial transactions and commercial contract disputes. 1.4 EXPECTED OUTPUTS At the end of the Project in June 2000, it was expected that Ghana would have: * achieved revamped research institutions operating on more efficient commercial lines; * brought much awareness to private sector enterprises to source more research services to improve upon their technological and entrepreneurial (management ) efficiency to operate more profitably; * assisted private sector enterprises to achieve better industrial design and aesthetic quality of non-traditional products that are competitive in the international market; * achieved efficient and modernized commercial juridical system capable of speedily delivering legal services for the commercial and manufacturing sectors for their healthy operations; and * Achieved market-driven demand for private sector goods and services both domestically and internationally from a central commercially based trade promotion facility with private sector involvement. 1.5 THE INSTITUTIONAL AND POLICY FRAMEWORK Three primary areas of institutional and policy framework were considered under the project, namely, Commercialization, Capacity Building and Legal Process: (a) Commercialization The premise under the provision of technical assistance in the project is the adoption by Government of the imperatives of commercialization in the reorganization and operation of the Council for Industrial Scientific Research (CSIR), the Ghana Standards Board (GSB) the Technology and Enterprise Development Fund (TEDF) along demand driven principles, the restructuring of the Ghana Trade Fair Authority (GTFA) and a study for the establishment of an Industrial Design Center. (a) Capacity Building The design and operation of the TEDF had as its primary focus: (i) the improvement of the capacity of private enterprises to meet the technical and financial -14 -  requirements of their business; and (ii) the development of either indigenous Ghanaian consulting capacity or the active recruitment of non-resident Ghanaian technical capacity, if possible, in pursuit of its objectives (b) Legal Process The inefficiency in the delivery of legal and judicial services has constrained the establishment of a viable commercial climate especially with regard to the conclusion of business transactions and the enforcement of contracts. The PSDP has therefore been designed to strengthen the information and management systems to improve the organization and institutional delivery of legal services and strengthen the Government's capacity to support its broader private sector development initiatives. 1.6 PROJECT COST AND FINANCING PLAN The IDA Credit of US$ 13 million was allocated as follows: (IJS$MILLION) COMPONENT Projected in ACTUAL/LATEST TOTAL SARIPAD EST] E IDA BENEFI IDA BENEFI PROJECTED ACTUAL CIARY CIARY SARIPAD ESTIMATE CSIR 4.18 0.45 2.00 0.23 4.63 2.23 __~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~... . . . . ._. ... . . . G.S.B. 2.18 0.25 0.98 0.19 2.38 1.17 EMPRETEC 2.50 1.47 1.78 0.74 3.97 2.52 Desip n Center 0.75 0208 0.11 0.01 0.83 0.12 Ghana Trade Fair 0.95 0.10 0.39 0.00 1.05 0.39 Compay _______ Legal Services 1.38 0.14 1.26 0.04 1.52 1.30 MFEP 0.01 0.00 0.01 MEST 0.01 0.00 0.73 0.23 0.01 0.65 MTI 0.01 0.00 0.00 0.01 Unallocated 1.03 0.09 0.00 0.00 I1.12 0.00 Total 12.95 2.58 10.63 4.95 15.53 8.69 Indicative total project costs, including duties and taxes, was estimated at US$15.53 million. The Credit financed 100 percent of foreign costs (US$10.7 million equivalent) and 90 percent of local costs (US$2.3 million equivalent). Total matching funds were estimated at approximately US$2.5 million equivalent, of which US$1.4 million equivalent was to be provided for directly by the Government and other beneficiaries, and a contribution of US$1.1 million equivalent was anticipated under the TEDF from private sector companies. -15-  The IDA supported preparatory work under the project with a PPF in the amount of US$0.4 million 2.0 Assessment of Development Objective and Design 2.1 Development objective The Development Objective of the PSDP is to foster the development of a competitive private sector by (a) supporting Government to restructure, reform and commercialize its technical research and development establishment along competitive and demand driven prnciples (b) providing the private sector with the necessary financial and technical assistance to support the development of commercially viable bankable projects (c) supporting export industry to improve their design and the promotion of their products; and (d) assisting to upgrade the delivery of legal services to commercial and manufacturing sectors, thereby accelerating response time for commercial transactions and commercial contracts disputes 2. 1.1 Original Objectives and Design of the Project The project's original objectives are desirable (and rated highly satisfactory). The development objectives set for the project (i.e. commercialization, capacity building and improvement in the legal processes) were very pertinent. The attainment of these objectives will provide necessary support for private sector development and promote competitiveness of Ghanaian goods and services. We observed a total disconnection between the development objectives of the project and the activities leading to the achievement of the stated objectives. Thus, the implementation activities of the various components of the project were successful. However, due to some unforeseen difficulties, we could not achieve the development of the project 2.1.2 The design of the project failed however to address some major constraints of the private sector: a) The design of the Legal Diagnostics studies was limited in scope. Certain vital areas such as access and title to land were not considered in the design of Project. As a result institutions such as the Land Commission and the Land Title Registry were left out of the legal sector component. (b) The need to re-furbish the Laboratories of the Ghana Standard Board (GSB), (c) The provision of vehicular support for GSB, which is necessary for the expansion of services to Regional Centers as well as extension, services to Industry. (d) The Cost- Ratio sharing of 50:50 and a five percent service charge in the initial design of the TEDF proved problematic. The inability of the project design to properly determine the ability of the target group to raise the client contribution was a fundamental flaw in design. The financial strength of the target group also meant that the average project size of US$ 9,000 was beyond their means. -16 -  2.1.3 In the design of the project, time frames for the execution of some components were underestimated. The complexity of the project required a minimum of two years of studies and discussions (i.e. Consultations with the Private Sector Stakeholders) before commencement of implementation programs, which were estimated to require another three (3) to five (5) years. 2.1.4 Furthermore, we believe that better results would have been obtained if as part of the Project Preparatory activities, some training were provided to the group of 'Project Coordinators' from each of the beneficiary agencies. Such training would have provided a clearer understanding of the objectives and associated conditionalities and a unified focus for the entire project. 3.0. Assessment of Project Outcome and degree of success relative to objective A. The Ghana Standards Board (G SB) * The Consultancy Studies (Client Survey Report) confirmed the need to create a strong public relation/marketing function. The Consultants therefore recommended that the Ghana Standards Board should create a "Corporate Business Division" to handle issues relating to Public Relations and Marketing. The GSB has implemented this recommendation. * The Ghana Standards Board drew plans for the Certification of each of its six divisions to the relevant ISO 9000 standard. As at May, 2000, only one division has been able to achieve this objective i.e. Certification of its Physical Laboratories to ISO 9002 by Lloyds of UK. There are plans to certify five other divisions by the year 2001. * The GSB is currently in the process of establishing an ISO 9000 Certification Body to undertake System Certification of organizations in Ghana. Quality Assessors have been trained and necessary documentation and procedures for the program are currently under discussion. * Industry Sector Committees have been created to address the specific standards needs of particular Industry Sectors. Strategies were also reconmmended for this program. The GSB is currently implementing these recommendations through: a) Formation of the new Industry Sector Committee (ISC) b) Reconstitution of Technical Committee (TCs) and c) Adoption of new Rules and Procedures for Operation of ISCs and TCs. Approximately 65 - 70% of expected work has been done. * The Consultancy Studies provided a "Strategic Business Plan" for the GSB. The strategic business plan was divided into three (3) phases: Short-term i.e. tasks to accomplish within 1 - 2 years (1999 being the base year). Medium-Term: i.e. tasks to accomplish within 2 - 3 years long-term: i.e. tasks to accomplish within 5 - 8 years - 17 -  Though not all the activities recommended for the plan period were undertaken, a number of short-term activities have been commenced (about 70 - 80%). A fair amount of work on the Medium Term activities has also started. Generally, due to the late take off of implementation and related problems, it was not possible to achieve all the stated objectives. Discussions are far advance to establish a twinning relationship with the Standards Institution of Israel. Draft agreements have been exchanged and these are being studied. Other Standards Organizations with which discussions have been initiated are: a. National Institute of Standards and Technology of the United States of America; b. Standards and Productivity Institute of Singapore. c. South African Bureau of Standards B. THE TECHNOLOGY AND ENTERPRISE DEVELOPMENT FUND The project document required that 245 assignments be awarded to consultants by the end of the project life. It also required that half of the number of contracts assigned each year should be completed by the end of the year. In addition to the numbers to be achieved, it also made projections with regard to the amount of money that had to be disbursed from the Fund each year. This was arrived at on the basis of the estimated average cost of project of US$9,000. Following the mid-term review of the Fund, in which the cost-sharing ratio was changed from 50: 50 to 70:30 plus a five (5% percent service fee, Empretec was required to achieve 150 assignments with 75 completed by the end of the project in June 2000. Results show that Empretec managed to sign 496 contracts and 300 of these assignments have been completed to date. The full impact of the fund on the private sector will be assessed latter. C. LEGAL SECTOR * Short-term library, training and office equipment needs were identified for the legal sector. Basic office equipment was supplied to the Judicial Service and government legal Institutions like the A-G's Dept., the Registrar-General's Dept., Legal Aid Board, and The Ghana School of Law. * In order to improve both the operations of the court systems and inject efficiency into legal and judicial service delivery, the Government conducted six diagnostic studies. The studies were structured to unravel the major issues militating against speedier delivery of legal services as well as those that affect transparent administration of justice. The major issue confirmed by the studies is the lack of capacity of the sector to deliver efficient and effective legal services to civil society in general and the private sector in particular. There are also problems associated with poor docket and record management, ineffectual organizational structures and general lack of office infrastructure. * The Findings of the Studies and their accompanying recommendations, which were discussed at Stakeholders' Workshop, held at Elmina in October, 1999 revolved around the capacity of the sector to provide legal services that will be responsive to the needs of the private sector and support the development process currently underway. At the institutional level, the - 18 -  reforms sought to enhance the skills of all categories of staff; reduce the massive backlog of cases in the courts; improve access to legal information; provide alternatives to litigation and improve the internal management of the judiciary among others. * The recommendations also aimed at eliminating the duplication in the processes leading to land acquisition and transfers. * The studies recommended a program to be implemented carried out over five years, divided into three distinct but related components as follow: a. institutional strengthening and support of the Judiciary, MOJ and other Government Legal Offices; b. human resource development and technical assistance; and c. legal service delivery and application of technology. * Three strategic areas namely capacity building, legal service delivery and technology form the building blocks of the strategic plan of the reform program. The Strategic Plan has been developed with programs for the short-term and strategic options for the long term. * Following from the studies, a draft bill on Alternative Dispute Resolution (ADR) was discussed and accepted by a cross-section of Stakeholders. D. GHANA TRADE FAIR COMPANY * The objectives of the Commercialization and Reorganization studies undertaken by Sorca Management Consultants were achieved. The study underscored the commercial viability and the need for the establishment of a regional trade promotion facility in Ghana. However, as a result of budgetary constraints, the international market demand, which formed a critical portion of the study, was not undertaken. This placed a serious limitation on the overall conclusion reached by the Sorca Consultants regarding the commercial sustainability and the international demand for the Trade Fair Center. * The study recommended that the Ghana Trade Fair Center should be transformed into a Regional Trade Fair Facility. Government of Ghana has accepted the recommendation and has provided funds for the rehabilitation of some structures recommended by the consultants. * The Ghana Trade Fair Company has adopted the report and has rehabilitated substantial portions of the facility. This include the ultra-modern conference center and collapsible pavilions E. COUNCIL FOR SCIENTIFIC AND INDUSTRIAL RESEARCH * Two domes at Building and Roads Research Institute were converted into laboratories and offices. This has to a great extent solved the problem of inadequate office space for scientific research. * Various scientific books and journals were procured for the three Institutes namely Institute of Industrial Research (IIR), Food Research Institute (FRI), Building Road Research Institute (BRRI) and the Secretariat. This has improved the libraries of the Institutes and the Secretariat. * Some equipment was procured for the three of CSIR Institutes. These include various laboratory equipment, Total Workstation modern computerized survey equipment) and a Percussive Drilling Rig. The Total Workstation and the Drilling Rig are very important equipment and will greatly assist Building and Roads Research Institute in its comnmercialization drive. * Staff training under the project was organized in the form of local training, external training - 19 -  and study tours for individuals as well as groups of staff. Short training courses in marketing, change management, costing and study tours were organized for staff and management. * Seminars, Workshops and other forms of interactions organized by the project consultants gingered the CSIR into action to begin developing its new management structures and procedures. A document on the restructuring of the CSIR Secretariat has been prepared indicating the main Centers, Sectors, Divisions, Sections and Units in the Secretariat as well as the current and projected staffing situation and job descriptions. Council has approved this document. * Consultancy reports with implementable recommendations are available at the CSIR as very important reference documents. Very significant among these are the consultancy reports on i. Marketing Plans and Strategies ii. Costing and Budgeting iii. Forecasting External Revenues iv. Management Information Systems v. Staff Rationalization (indicating skill mix required at the Secretariat for successful commercialization) vi. Schedule of Training (indicating recommended Management training, Training schedules for commercialization and Management Career Development Training Plan). vii. Commercialization Planning Guide and Project Management Manual. * The consultants also provided the CSIR with an Implementation Plan (indicating time frame and responsibilities) and a list of equipment for the actualization of recommendations for the successful take- off of the commercialization process. * CSIR Secretariat and the three Institutes received six (6) Internet ready computers. In addition, the CSIR received thirteen (13) vehicles, which were distributed among the Secretariat and the three Institutes. The vehicles have greatly facilitated movements of staff. i Finally, it should be stated that the CSIR Secretariat and participating Institutes all achieved the following project goals to varying degrees; Greater awareness for commercialization. Restructuring of institutes with accompanying staff rationalization plan. Increased interaction with private sector agencies Increased revenue generation. A common CSIR Vision and Mission statements were formulated. A new CSIR logo for adoption by all Institutes was developed to give the CSIR a new Corporate look. The project required that CSIR should generate 30 per cent of its total budgetary requirement by the end of the project. It has not been possible for CSIR to achieve the indicated target because of the late conduct of the commercialization studies. However, the necessary structures have been put in place to enable CSIR achieve the indicated level of revenue generation in the near future. Critically, CSIR would require the full compliment of equipment recommended by the consultant to achieve the agreed target of 30%. F. INDUSTRIAL DESIGN CENTER (IDC) -20-  * The Consultants submitted a final Report on the establishment of an Industrial Design Center on 30th September 1999. Government and the IDA have accepted the report for implementation. * The Consultants indicated that there is an urgent need to establish an Industrial Design Center (IDC) in Ghana and that the IDC is commercially viable. * The consultant's strongest recommendation for the name of the center is the National Design Center, Ghana. The name will communicate the national commitment to industrial design that Ghana has embraced. It is believed that reaching the international community by communicating the national aspiration for industrial advancement is essential to the establishment of Ghana's position on the international playing field. The Consultants however, indicated that the commercial viability of the Center would depend on several factors. * The viability of the Center would depend on the provision of equipment, facilities and services to the tune of One million US Dollars. This would raise the rate of utilization of the Center to about 50% within three years. * The availability of trained and skilled Industrial Designers. Professional Industrial Designers normally take five years to complete their courses. * With regards to funding, the Report explained that while there is sufficient justification for both public and private sector funding for the proposed project Center, the capacity of the private sector to contribute substantially to the project initially could not be guaranteed. There is therefore the need for long-term government commitment in the provision of funds and in seeking donor support. The private sector is not in the position now to support a facility of this financial magnitude. The Report therefore recommended that Government should lead the way and promote the services of the Center to the private sector. * Finally the report concluded that Governments all over the world, as an industrial development policy, support the establishment of Industrial Design Centers. The Government of Ghana should therefore support the establishment of the Industrial Design Center in its formative years (1-3 years). 4.0 MAJOR FACTORS AFFECTING IMPLEMENTATION AND OUTCOME (i) Factors outside government control * The procurement of Consultants for GSB, CSIR and GTFC took a considerable time i.e. longer than planned for in the Implementation Document; * Non-performance of some consultants procured for the project resulted in delays in the implementation of the project. For instance, as a result of the non-performance of the South African (CSIR) Consultant, CSIR (Ghana) was unable to obtain approval for the procurement of important equipment on the master list. The difficulty encountered in reviving the project after the abrogation of the first contract, resulted in significant time loss. * Some of the Consultants were also late in the delivery of their final report. * There were occasional delays in obtaining 'no objections' for programs and activities. The Bank also introduced other conditions, which were initially not included in the DCA. Two examples of this "new" conditionalities were: - 21 -  a. The request for the Legal Opinion of the Attorney General as regards whether or not the GSB had met all conditions for the disbursement of the line of credit for equipment procurement. b. The insistence that the GSB obtained ISO 9000 Certification before disbursement of the equipment votes instead of the presentation of "Ian for the attainment of ISO 9000. (ii) Factors subject to government control * Mainstreaming of the project in the Ministry of Finance did not work in the case of the Private Sector Development Project. On the contrary, available evidence indicates that contracting of the project out to a project management team led to significant improvements in project implementation. * The project started in October 1995 even though the agreement was signed in January 1995. This delay greatly affected the performance of certain components of the project. In the case of the CSIR, it took almost two years for the law establishing CSIR to be amended to accommodate commercialization in its mandate. This was critical since the amendment of the law was a condition for project effectiveness. (iii) Factors subject to Implementation Agency * No clear-cut indications of the role of the private sector participants on the oversight bodies were provided. Considerable amount of time was spent to debate this issue and which occasionally frustrated the implementation of the project's program. * The project was implemented by staff of beneficiaries who additionally performed their normal duties. The implementation of the project's programs and Consultant's recommendations could have been better and more effectively supervised if project management staff had been solely assigned to the project. 3 Beneficiary agencies were not exempted from payment of various taxes on importation of equipment and other items under the project. It was expected that the beneficiaries would utilize their respective GOG matching funds to pay taxes. However the release of matching funds to beneficiaries has proved problematic. The feeling is that it is now time for the Bank and Government of Ghana to take a second look at the issue of matching funds which is tending to slow down project implementation. Our recommendation is that, the Bank should consider 100 per cent financing of similar projects. 5.0 BANK AND GOVERNMENT'S PERFORMANCE 5.1. Bank Performance Project design was rather complex and its scheduling was inappropriate. A considerable proportion of the project was made dependent on the results of consultancy studies. This requirement meant that without the consultancy reports (including business plans) no further activity could be undertaken. It was only after the acceptance of the reports of the studies that expenditures for equipment that represented over 75% of the total financial support could be utilized. - 22 -  In some cases, the Bank changed conditions for disbursement midstream without discussion with the Government of Ghana. For instance in the case of the Ghana Standards Board, the bank changed its position from (a) the development of a strategic plan for ISO 9000 " to (b) the provision of an ISO 9000 Certificate by GSB, before disbursement on Equipment. In the case of the Industrial Design Center, the Bank changed the original position of procuring basic equipment for the center without consulting government. Furthermore, the Project's Task Team leader was changed several times during the project period. All the above omissions and commnissions on the part of the Bank contributed in no small way to the poor disbursement of PSDP funds. 5.2 Government's Performance Matching fund was not provided regularly to the project; this affected the performance of the various components. The unavailability of GOG matching fund made the day to day running of the project very difficult. Workshops and seminars for effective linkages with the private sector and other promotional activities could not be organized. For the same reason staff members who spent extra duty hours on the project could not be given any compensation. There is also the need to expedite action on policy decisions on which implementation of the project is dependent. 6.0 SUSTAINABILITY * The gains of the Project can be sustained. The project components were all designed to enhance and increase the capacity to provide contractually delivered technical services and technical capacity along commercially sustainable lines. * The provision of consultancy service on a fee- for- service basis increased EMPRETEC's potential for self-sufficiency. * The studies carried out on the commercial capacity of the GTFA and an Industrial Design Center have all focused on building a sustainable commercial framework through private sector support for the services offered. * The sustainability of commercialization gains made by the CSIR and GSB will however greatly depend upon the performance of the entire economy of Ghana. Most manufacturing industries in Ghana (these form the main client base) are Micro and Small Scale ones. These industries may not be able to afford the commercialized services of the CSIR & GSB. The efforts of the GSB and CSIR may not be successful if these micro and small-scale industries do not develop the ability to pay for these services. * CSIR Institutes and the Secretariat would require specific items of equipment recommended by consultants with justification to enable them work efficiently and effectively and generate income. The probability of obtaining these equipment under the present project does not appear feasible. * The 2-year extension given by the World Bank to the Ghana Standards Board and the Legal Sector components ensures sustainability because under PEPTA, the Strategic Plans would begin to be implemented. -23 -  7.0 LESSONS LEARNED * Agreed time-bound programs should not be varied. A Project Monitoring Team should be firm and take corrective measures as soon as irregularities are detected. One should not hesitate to even abrogate a contract when attempts to solve problems amicably do not succeed. This however should be done after the necessary consultations. * It was well noted that much as a client should cooperate with any consulting team, the consultants on the other hand should not come in with negative pre conceived ideas about a client. There must always be mutual trust and respect. * A flaw in the design of the TEDF led to initial poor performance of the fund. The flaw in the project design, which failed to properly determine the ability of the target group to raise the client contribution, which was pegged at 50% of the project cost. When the flaw was detected and the cost ratio corrected to 70:30 in April 1999, the performance of the Fund was greatly enhanced. * The project suffered greatly from lack of full time management at the initial stages since full-time officers were not handling it. This made it difficult for the officers to follow-up on pending actions either from the World Bank or from the Implementing Agencies. The position improved considerably when a full time Project Coordinator was appointed to handle the project. We therefore recommend that full-time Project Coordinators be appointed at the inception of future projects. * We firther recommend that special workshops should be organized for officers from the various implementing agencies to make them abreast with the World Bank procurement procedures, contract award procedures etc. * That the release of the matching fund should be made a requirement for projects like the PSDP to realize their development objectives; * That there should be clear cut roles for oversight bodies such the LSCC of the legal component of the Project; We further recommend that such oversight Committees should be involved in only policy issues rather than administrative ones; * All future projects should have a well structured incentive packages built in project design to ensure commitment. (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10. Additional Information - 24 -  Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicatom: L___________ IkOj -- IntPR ,___L______ ___ Private Sector contribution to GDP increased 1996: 14.2% 1997:14.80; 1999:14.6% by 40% by eop Growth in manufacturing sector increased by 1996: 3.0%; 1997: 5.4%; 1999: 4.8% 10% by eop Growth in Services Sector increased by 12% 1996: 6.7%; 1999:17.7% by eop Output Indicators: -_____-____._______ Prq#gC is WPIE late CSIR is market oriented and partially commercialized a. At least 300 SMEs adopt and or adapt at unlikely least six CSIR developed technologies by 2000 b. 30% revenue target achieved by 2000 BRRI: 1.9; FIR: 3.2; IIR 13.1 Key services of GSB upgraded to ISO standards and commercialized a. GSB accepted as member of the ongoing Intemational Quality Network (IQNET) by 2000 b. At least 30% of GSB budgetary unlikely resources are originated by the provision of services to private firms by eop c. At least 20 companies initiated into ISO unlikely 9000, ISO 14, 000 and ISO/IEC Guide by eop Technological productive and service delivery capacities of Small, micro and medium size enterprises strengthened a. At least 100 TEDF assignments initiated 1996:12, 1997:74, 1998:77,1999:344 annually b. 20 companies assisted to develop value nla (U) added products each year c. 5 Companies assisted each year in the n/a (U) developing of export products d. 20% of companies accessing TEDF n/a (U) assisted to source finance Commercial, private operated, Industrial unlikely Design Center Established and operational GTFCs developed into a viable Commercial operation Operational Capacity of legal institution improved a. 30% increase in the disposal of n/a commercial and industrial cases by 2000 b. Staff training program operational by achieved 1999 c. Searching time at Registrar General's n/a Dept. reduced by 50% by 1999 d. Processing time for docs at Attomey n/a General's Dept reduced by 20%, by 2000 End of project -25 -  Annex 2. Project Costs and Financing Proect Cost by Component (in US$ million uivalent) CSIR 4.63 2.23 48 Ghana Standards Board 2.38 1.17 49 TED Fund 3.97 2.46 63 Design Center 0.83 0.12 14 Ghana Trade Fair Company 1.05 0.39 37 Legal Services Studies 1.52 1.30 86 MFEP, MEST, MTI 0.03 0.96 3200 Unallocated 1.09 0.00 0 Total Baseline Cost 15.50 8.63 Total Project Costs 15.50 8.63 Total Financing Required 15.50 8.63 Project Costs by Procurement Arrangements (Appraisal Estimate) US$ million e uivalent) 1. Works 1.70 0.30 0.00 0.20 2.20 I_____________________ I (1.00) (0.00) (0.00) (0.00) (1.00) 2. Goods 3.50 0.00 1.10 0.50 5.10 (3.50) (0.00) (1.10) (0.00) (4.60) 3. Services 0.00 0.00 4.60 1.70 6.30 (0.00) (0.00) (4.60) (0.00) (4.60) 4. Miscellaneous .0.00 0.00 1.80 0.10 1.90 (0.00) (0.00) (1.80) (0.00) (1.80) Total 5.20 0.30 7.50 2.50 15.50 (4.50) (0.00) (7.50) (0.00) (12.00)-- The amounts for IDA's share are estimates as specific expenditure categories were not specified in the SAR. -26 -  Project Costs by Procurment Arrangements (ActuaULatest Estimate) (US$ million equivalent) 6*fld-- . t- .- 0 1GB NiB8.F. Total Cost 1. Works 0.00 0.03 0.07 0.00 0.10 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 1.34 0.00 1.48 0.00 2.82 (1.34) (0.00) (1.48) (0.00) (2.82) 3. Services 0.00 0.00 4.84 0.75 5.59 (0.00) (0.00) (4.19) (0.00) (4.19) 4. Miscellaneous 0.00 0.00 0.18 0.00 0.18 (0.00) (0.00) (0.18) (0.00) (0.18) Total 1.34 0.03 6.57 0.75 8.69 _ (1.34) (0.00) (5.85) (0.00) (7.19) These figures are estimates based on information provided from the Borrower. "Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies. 2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Component (in USS million equivalent) CSIR 4.18 0.45 2.00 0.23 47.8 51.1 G.S.B 2.13 0.25 0.98 0.19 46.0 76.0 TED Fund 2.50 1.47 1.78 0.74 71.2 50.3 Design Center 0.75 0.08 0.11 0.01 14.7 12.5 Ghana Trade Fair Auth. 0.95 0.10 0.39 0.00 41.1 28.6 Legal Services Studies 1.38 0.14 1.26 0.04 91.3 28.6 MFEP, MEST, MTI 0.03 0.00 0.73 0.23 2433.3 0.0 Unallocated 1.03 0.09 0.00 0.00 0.0 0.0 -27-  Annex 3: Economic Costs and Benefits Not applicable. - 28 -  Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development. Month/Year Count Specialty Pgress Objective Identification/Preparation Sr. Financial Economist Sr. Financial Economist Appraisal/Negotiation Supervision 6/1995 1 Operations Officer S S 10/1995 2 Operations Officer, TTL S S 6/1996 3 Operations Officer, Project S S Officer, TTL 2/1997 3 TTL, 2 PSD specialists S S 12/1997 3 TTL, Operations Officer, PSD U U specialist 4/1998 2 TTL, Operations Officer U U 1/1999 1 TTL U U 6/1999 4 TTL, Financial management, U U Legal, Procurement 10/1999 4 TTL, Legal, Operations Officer, U U PSD specialist 4/2000 1 TTL S U ICR 10/2000 3 ICR author, TTL, Financial S U management (b) Staff: Stage of Project Cycle Actual/Latest Estimate _________________ No. Staff weeks USS 0400 Identification/Preparation 69 311 Appraisal/Negotiation 56 275 Supervision 94 334 ICR 7 35 Total 226 955 -29 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O Macro policies O H OSUOM O N * NA El Sector Policies O H OSUOM O N * NA El Physical O H OSUOM O N * NA EL Financial O H OSUOM O N * NA O Institutional Development 0 H O SU O M 0 N 0 NA El Environmental O H OSUOM O N * NA Social O Poverty Reduction O H OSUOM O N * NA Oi Gender OH OSUOM ON *NA O Other (Please specify) O H OSUOM ON * NA L Private sector development 0 H O SU O M * N 0 NA El Public sector management 0 H O SU O M * N 0 NA El Other (Please specify) O H OSUOM O N * NA -30-  Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating O Lending OHS OS *U OIHU OI Supervision OHS OS OU OHU El Overall OHS OS *U O HU 6.2 Borrowerperformance Rating O Preparation OHS OS * u O HU O Government implementation performance O HS O S * U 0 HU O Implementation agency performance OHS OS OU O HU OI Overall OHS OS * u O HU - 31 -  Annex 7. List of Supporting Documents * Aide-Memoire and Back-to-Office Reports * Technical Annex and Memorandum of the President reports * Credit Agreement * Borrower's Evaluation Report - 32 -