Senegal - Public Works and Employment Project

Document of The World Bank FOR OFFICIAL USE ONLY 6:42 Zo &w 5 - Report No. 8032-SE STAFF APPRAISAL REPORT SENEGAL PUBLIC WORKS AND EMPLOYMENT PROJECT NOVEMBER 3, 1989 Infrastructure Division Sahelian Department Africa Region Tis docment has a restidcted disribution and may be used by recipients only in the perfonnance of their offichi duties. Its contents may not othenvise be disclosed witbout World Bank authorization.  C=XEQELYAL S Currency Unit = CFA Franc (CFAF) US$ 1.00 = CFAF 316 CFAF I million = US$ 3,166 SYSTEM OF WEIGHT AND ME-ASURES : METIC EISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS BHS Banque de 1'Habitat du Senegal (National Housing Bank) CUD Communaut6 Urbaine de Dakar (Greater Dakar Intermunicipal Organization) MEF Ministry of Economy and Finance MPC Ministry of Plan and Cooa,eration SDA Social Dimensions of Adjustment SMIG Salaire Minimum Interprofessionnel Garanti (Minimum Wage Rate) UMOA Union Mondtaire Ouest Africaine (Regional Central Bank) This report was based on the findings of a World Bank mission consisting of Messrs. Frangois Pechon (financial analyst), Max Pulgar-Vidal (economist), Leslie Pdan (economist), Friedrich Peloschek (legal counsel) and Hugues Castaing (engineer consultant) who visited Senegal in February/March 1989 to appraise the Project  FOR OMCIL USE ONLY SENEGAL PUBLIC WORKS AND EMPLOYMENT PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. Credit and Project Summary iii to v 1. TITHE ECONOMIC AND SOCIAL CONTEXT A. Unemployment, Structural Adjustment and Social Unrest ... I B Government's Policy and Undertakings .2 C. The Construction L-idustry's Performance and Constraints 3 D. The Bank's Previous Role. 4 I. THE PROJECT A. Project Objectives . ........................... 5 B. Project Descripton ............................ 6 C. Rationale for Bank Group Involvement ............... 10 D. Status of Project Preparation ....... .............. 10 E. Project Cost and Financing Plan ...... ............. 11 F. Project Implementation .......... .............. 12 G . Procurement ............................... 13 H. Disbursement .............................. 15 I . Accounting, Auditing and Reportigg .................. 16 J. Economic Analysis ........................... 16 K. Benefits and Risks ........................... 17 This document has a restricted distribution and may be used by recipients only in the performance of i' * i Aal duties Its contents may not otherwise be disclosed without World Bank authorization.  I u - III. AGREEMENIS REACHED AND RECOMMEAON ......AT N. 17 TABLES IN THE MAIN TEXT Table 2.1 - Estihnated Costs ........................... 11 Table 2.2 - Financing Plan ........................... 12 Table 2.3 - Procurement ............................. 15 SUPPORTING ANNEXES. TABLES CHARTS and MAPS 1. The Executing Agency's Statutes and By-laws 2. The Executing Agency's Procedures Manual 3. Cost Tables 4. Project Execution Schedule 5. Schedule of Disbursements and Allocation of IDA Credits 6. Economic Analysis AF5IN November 3, 1989  - i - SENEGAL PUBLIC WORKS AND EMPLOYNENT PROJECT Credit and Project Sumrrna Borw-er. Senegal Beneficiaries: Ministry of Plan and Cooperation Credit Amounx SDR 16.1 million (US$ 20.0 million) Terms: Standard IDA terms Cofinanciny: AfDB (US$ 8.3 million) and GOS (US$ 5.0 million) PRect Objectives and DescripLogn: The main objectives of the project are: (a) to create, at least temporarily, substantial new employment in urban areas as rapidly as possible; (b) to improve, through execution of the works financed by the project, the individual skills of the workers who will be employed, the corporate competitiveness of the firms that will cany out works so as to develop their capacity to respond to increased opportunities for sustained employment after completion of the project; (c) to demonstrate the feasibility of labor-intensive public projects and test the procedures that will enable the public sector to commission such projects; and (d) to produce results that are economically and socially useful. In achieving these objectives, the following conditions should be .'ulfilled: (a) avoiding the need for increased civil service staff; (b) combining low cost and high visibility; (c) supporting but not replacing other development programs; and (d) using "transparent" but expeditious and flexible procedures for subproject bidding, appraisal, contracting and disbursements. The components of the proposed project are: (a) a program of public facility and infrastructure rehabilitation and mainterance in urban areas to be carried out using labor-intensive methods by loc-l contractors; (b) a package of services related to work organization, management, and labor force training to be offered on a voluntary basis to ' Sal contractors who will be awarded contracts under component (a); an(C (c) a supervision and monitoring component in order to monitor closely the progress of the project and to prepare the transition toward localy supported employment of the target group. The implementing arrangements are critical for effective fulfilLment of the project's objectives: an executing agency has been created as a temporary "self-destructing" body, with private legal status, with a manager recruited from the private sector. Suzh an agency will be able to avoid the cumbersome, slow, and inefficient procedures that public institutions are I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~  - iv - obliged to follow in calling for bids, awarding contracts and disbursing, and which result in de facto discrimination against small contractors. Justification and Risks: Those who suffer mostly from unemployment or underemployment attributed to structural adjustment policy are the urban poor. Although the economic rate of return of a labor-intensive public work program is difficult to estimate, benefit-cost ratios have been estimated at 2.8 and 3.0 for garbage collection and pavement rehabilitation. The proposed project is further justified by its impact on poverty alleviation and by indirectly securing other development and adjustment undertakings. The design of the project is mainly justified by the fact that the targeted industry (construction, maintenance and vrban services)--more than any other industry--hires and dismisses labor according to contract opportunities. This maximizes the probability that an increase in the industry's activity will actually result in an increase in employment. Conversely, the project is not expected to directly create permanent jobs. Main risks arise from possible inability of Senegal's economy to develop enough stable job opportunities during the period of program execution, leading to pressure from the Government to extend the program beyond its initial period. Another risk is to jeopardize previous efforts of public sector management improvement, including restrictior.s on personnel hiring, implemented during the recent years by the central and local governments; continuation of employment for those who would benefit from the program should not take the form of their being hired by local governments when the program ends. .'.ast, the control of proper use of funds is more difficult wit- such a program than with regular investment projects. The implementing arrangements established during project preparation and appraisal and contained in a Procedures Manual wh .h is attached to the Convention entered into by the Government and the Agency have been carefully designed to address this risk. Estimamed Project Costs Local Foreign Total -------------- (US$ million) ----------- Component (a): Labor-intensive Civil Works 24.43 3.65 28.08 Component (b): Services to Contractors 1.27 0.00 1.27 Component (c): Mon.itoring 0.32 0.25 0.57 Executing Agency Operating Costs 1.19 0.08 1.27 PPF and Executing Agency Capital Budget 0.06 1.55 1.61 Base Costs 2 7.27 5.53 32.80 Price Contingencies 0.21 029 0.50 Total Project Costs (1) 27.48 5.82 33.30 (I) Numbers may not add due to rounding.  Financing Plan %Of Total Lecal Foreign CIwa Proj. ----(US$ mnillion)------------- Cost Government 5.0 0.0 5.0 15% IDA 15.4 4.6 20.0 60% AfDB 7.1 1.2 8.3 25% Total Project Costs 27.5 5.8 33.3 100% Estimated Disbursements: FY90 FY91 FY9, Total 4.4 8.6 7.0 Cumulative 4.4 13.0 20.0 F'rimated Project Completion Date: June 30, 1992 Memorandum of the .!resident: No. P-5130-SE Map: IBRD No. 21021  SElQgAL PUBLIC WORKS AND EMPIOYMENT PROJECT STAFF APPRAISAL REPORT I. TlE ECONOMC AND SOCIAL CQO IX A. Inemployment. Structural Ajustment and Social Unrest 1.1 Unemployment is a very serious problem in Senegal, particularly in the greater Dakar area. In 1982, it was estimated that formal unemployment was running at a level of 19.4 percent. Since then, a number of factors have severely aggravated the situation, some of them directly related to the adjustment process. Although hard data are not available, some orders of magnitude can be estimated from an August 1989 USAID study of the informal sector in Dakar. 1.2 Senegal has been in the process of adjusting its economy for more than six years. A fourth structural adjustment loan (SAL IV) is currently under preparation. One effect of the adjustment program implemented to date has been a significant trade liberalization, resulting in a reduction of the effective levels of protection for Senegalese industries. Provisions in the second and third SALs have opened up the Senegalese economy to serious foreign competition, creating the need for companies to improve their productivity to survive, which has necessitated layoffs of excess workers and plant closings. About 25 enterprises have been closed since 1986; 4,500 workers have been laid-off. The slow supply response of the private sector has meant that these job losses have not been compensated for by new employment opportunities in other industries or sectors. 1.3 In addition, the stabilization policies undertaken by the Senegalese govemment since 1980 have led to a reduction of the role of public sector in the economy. The number of jobs created in the public sector diminished significantly from an average of 5,334 per year in the 1976- 1980 period to 1,650 in the 1980-1986 period. This trend is expected to continue and, indeed, wili become worse, as programs to downsize the civil service and to streamline public enterprises are put into effect. 1.4 These factors, which tend to reduce employment opportunities, are cornpounded by two trends that tend to increase the number of job seekers. First, the age structure of the population is such that each year there are approximately 100,000 new entrants into tile labor force. Second, a similar number of migrants, driven out of the rural areas by adverse climatic conditions and inadequate income opportunities, come to Dakar every year searching for employment. 1.5 This leaves only the informal sector as a source of employment and this sector has undoubtedly created a substantial number of jobs. It has not, however, been able to overcome the effects of the factors set out above. As an indicator of the magnitude of the crisis, the results of a USAID study may be cited: for every 100 workers leaving the work force through death or retirement, 262 appear immediately to take their place. As a result, although the dimensions of the problem cannot be quantified with precision, there can be no doubt that unemployment has substantially increased and that the already fragile social situation is being subjected to additional strain. 1.6 Until the investment environment is improved, allowing new investments to generate additional jobs, the unemployment problem, which public opinion considers as an adverse effect of adjustment, will pose a growing threat to the Government's ability to sustain the adjustment  Senegal Public Works -2 - process. The increasing discontent among the population has created social unrest which, while it finds its leadership among unemployed high school and university graduates, is fueled by the large number of unemployed urban iesidents and by the growing number of immigrants from rural areas seeking a better living in the capital city. 1.7 In order to alleviate the social stress in urban areas, especially in Dakar, the Government is eager to complement its structural adjustment program with labor intensive public works projects which would have an immediate impact on employment and would also contribute to Dakar's and other cities' efficiency and attractveness for investors. The rationale behind such a program is *hat its results, albeit temporary, will offset increasing short-term unemployment and ease the transition to more sustainable employment creation resulting from the positive effects expected from adjustment in the medium term. B. Goven'ment's Policy and Undertakings 1.8 The Government of Senegal has made several attempts to deal with the growing unemployment problem. In November 1987, the Government created the "Detegavion a l'Insertion, d la Reinsertion et d l'Emploi" (DIRE), a special administrative body in charge of managing progrL5ls aimed at improving the e.nployment situation. DIRE's mandate is to produce and implement a comprehensive employment policy. This includes the identification and removal of rigidities that impede equilibrium in the labor market. DIRE's main role has been the management and development of the activities of the National Employment Fund to finance small- scale enterprises. To date, 82 projects have been approved for a total of CFAF 1,200 million. Fifty-four percent of these projects are located in the Dakar-Thies area, and the other 46% are located in Louga (6), Tambacounda (7), Ziguinchor (7), St. Louis (4), Diourbel (4), Koblack (5), and Kolda (4). These projects have led to the creation of 70C jobs. These jobs huave been filled by unemployed graduate students (25), laid-off public servants (53) and the rest by rmturning migrants and other targeted groups. The projects covered a wide range of economic activities, including: agriculture (14 projects), poultry and fattening (20 projects), bakery (7 projects), and trade (14 projects). DIRE is also active in the organization of an interministerial working group to promote the development of the craft sector. Thirty-three project documents with the potential for creating 250 jobs for the youth have been studied. Five projects have been implemented, including: one ceramic workshop in Dakar, three sewing workshops in Tambacounda and Kolda, and one carpentry workshop in Kaffrine. These five projects currently employ 52 persons. While interesting, these projects are too expensive and have created too few jobs. 1.9 The Government has been looking for a broader program and, in this respect, commissioned a US consultant firm (IM&D) to prepare a "special program for employment" consisting of various labor-intensive public projects likely to be financed by external donors. This study was completed in March 1989. Fifty projects were identified and selected to be presented at a donors' conference which was organized in May 1989, in Paris, to gather funding pledges. Twenty-eight million dollars have been pledged ty the participating delegations in recognition of the urgency of creating a program of short-term employment opportunities. The proposed Public Works and Employment Project is considered by the Government as a vanguard component of this program. The proposed project is geared toward the needs of specific strata of the urban work force (the building and construction industry) affected by the short-term impact of the adjustment program.  Se. :egal Public Works -3- C. The Construction Industry's Performance and Constraints 1.10 In order to understand the characteristics of the construction industrv, a survey of the target enterprises was undertaken to uncover the actual constraints cuirentfi. iaced by them in connection with the labor regulatory framework, credit availability, and public sector C iwiir1vt ing and contract administration. In particular, the survey aimed at obtaining a description of the enterprises themselves, including: (a) overall :iancial position (fixed capital, working capital, short- and long-term debt, taxes owed, amounts owed by government); (b) managerial aspects (qualifications of management and workers, proportion of cost overruns and implementation delays in recent contracts, overall orientations of the enterprise in connection with public works); and (c) employment by category (indefinite contract, fixed-tern contract, daily laborers) and any hiring/firing practices worth noting. The results indicate that the target enterprises face a number of constraints in the areas of access to financing and training, as well as with respect to bidding procedures and payment delays. The project has been designed to address these issues. 1.11 The domestic construction industry encompasses about 300 firms, more than ninety percent of which are small or very small scale enterprises (less than 25 permanent workers). The industry's total permanent manpower is estimated at 6,000 workers. In addition, the industry employs an estimated 20,000 temporary workers. The industry's annual turnover is an estimated CFAF 70 billion (US$ 225 million) of which CFAF 50 billion (US$ 161 million) is commissioned by public agencies (GOS, local governments and parastatals). Thus, each additional US$ 10 million of public investment in the form of public works commnissioned to local contractors represents a 4.4 % increase in the industry's activity. 1.12 Ever for works which do not require high qualifications and could be efficiently carried out under labor-Lntensive techniques by local small firms, most of t'v se firms cannot be awarded or even bid for contracts under Governmer.t projects, for two main .ons: (a) their low level of sophistication with respect to administratnve and financial management does not enable them to submit acceptable proposals and to give evidence of their fulfilling the demanding administrative requirements in accordance with the cumbersome procurement procedures in force for public contracts; and (b) current delays experienced by contractors for being paid through the Government's admi'nistrative procedures are measured in months in the best cases, and too often in ycars, only large firms with a substantial working capital can afford to await payment for such a long time. Moreover initial advancer, which are theoretically intended to enable contractors to purchase supplies needed to start the works, are delivered in the form of Treasury checks, which cannot be cashed in commercial banks and are thus worthless except for paying taxes.  Senegal Public Works - 4 - D. The Bank's Pre_ious Role 1.13 Senegal is one of the target countries of the regional program called Social Dimensions of Adjustment (SDA), the objectives of which are to measure the effects of adjustment on households' standards of living, especially among the poorest segment of the population and to propose specifically tailored programs to alleviate strain on those most vulnerable to the effects of adjustment policies. 1.14 Und,r SAL III, a national reinsertion fund (Fonds National de Reinsertion or FNR), was created to ease the transition of laid-off workers in the parapublic and industrial sectors and to stimulate voluntary resignation from the civil service. Unemployed graduate students ("maftrisards') and Senegalese returning from Europe are also eligible for aid from this fund. The fund has been allocated US$ 10 million (US$ 5.0 million from IDA and US$ 5.0 million from AfDB) and is managed by DIRE (para 1.8). The national reinsertion fund which was created to provide help to those affected by civil service reductions and public enterprise restructuring has been practically extended through the creation of the National Employment Fund, to cover other categories such as emigrants who have resettled in Senegal and unemployed new graduates from colleges and universities. The proposed project offers services complementary to those provided by these funds and, since it focuses specifically on the building and construction trades, is not in competition with them. 1.15 In the urban sector, the Bank has been active for 15 years. The first urban project (Sites and Services Project, Cr. 336 SE) focused on housing and its target was to achieve, through delivery of 14,000 serviced plots in Dakar and 1,200 in Thies, the following objectives: (a) support Government's withdrawal from direct housing financing and increase owner occupancy. (b) diversify housing supply and concurrently broaden demand; and (c) demonstrate the effectiveness and replicability of sites and services projects and build institutions capable of pursuing and replicating such projects. This project was successfully completed with a recalculated economic rate of return of 19%. 1.16 The second urban project (Urban Management and Rehabilitation Technical Assistance Project, Cr. 1458/SF-13 SE) wa. undertaken as a pilot endeavor dealing with issues related to the main urban area of Senegal, the Dakar region, and aiming both at gaining insight into overall urban sector issues and at improving comprehensive management of Dakar (housing, transportation, services, etc.). Studies carried out within this project provided the framework required to draw up a more comprehensive strategy for the urban sector, as well as to help address the most urgent issues of Senegal's capital city. This project is now close to completion. 1.17 Designed on the basis of the findings of studies carried out under the second project, a Municipal and Housing Development Project (Cr. 1884-SE) became effective on November 3, 1988. This new project has two major objectives: (a) strengtheiing local governments (particularly in metropolitan Dakar) to improve policy formulation, service delivery, urban investment, and resource mobilization; and  Senegal Pubiic Works - 5 - (b) expanding the economic impact and efficiency of the housing sector by: (i) removing financial and institutional constraints on the National Housing Bank (Banque de VHabitat du Sen6gal: BHS); and 'ii) improving the operation of the urban land market threugh annual supply of a significant number of serviced and titled plots. In the medium term, this project should significantly increase the private demand for housing construction, and therefore stimulate the activity of the construction industry. Moreover, the local government strengthening component encompasses a number of public facilities and infrastructure rehabilitation sub-projects, the execution of which is likely to stimulate construction activity in the short term The proposed project would complement and extend the objectives of the Municipal and Housing Development Project by increasing the range of subprojects that can be undertaken, by streamlining bidding, contracting and payntent procedures and by setting up an executing agency that will demonstrate to public entities more efficient and cost-effective ways of providing urban infrastructure and services. II. TH PRO=ECT A. P bjectiye 2.1 The main objectives of the project are: (a) to create, at least temiporarily, substantial new employment in urban areas as rapidly as possible; (b) to improve, through execution of the works financed by the project, the individual skills of the workers who will be employed, and the corporate competitiveness of the firms that will carry out works so as to develop their capacity to respond to increased opportnities for sustained employment after completion of the project; (c) to demonstrate the feasibility of labor-intensive projects and test the procedures that will enable the public sector to commission such projects; and (d) to undertake subprojects that are economically and socially useful. In pursuing these objectives, the following conditions should be fulfilledi (a) avoiding the need to increase the civil service; (b) combining low cost and high visibility; (c) supporting, but not replacing, other development programs; and (d) using transparent but expeditious and flexible procedures for subproject bidding, appraisal, contracting and disbursements.  Senegal Public Works -6 - B. Project Descrption 2.2 The components of the proposed project are: (a) a program of public facility and infrastructure rehabilitation and wmaintenance in urban areas, to be carried out under labor-intensive schemes by local contractors; (b) a package of services related to work organization, management, and labor force training, to be offered on a voluntary basis to local contractors who will be awarded contacts under component (a); and (c) a supervision and monitoring component in order to monitor closely the progress of the project and to prepare the transition toward locally supported employment of the target group. The Exe-uting Agency created to execute the project will serve as a model for other public agencies in terms of achieving low costs and efficient work methods. It will have a staff of 14 employees including an executive director assisted by one financial director and one technical director. The activities of the Executing Agency will be guided by a Procedures Manual outlining the policies and procedures to be followed in the conduct of its activities. (See Annex 2) Implementation of a Program of Labor-intensive Civil Works Subprojects 2.3 The subprojects to be executed under component (a) will be submitted by central and local branches of the central Government as well as by local governments. The Executing Agency (see p;ra 2.18 et. seq.) will appraise the proposed subprojects after checking their eligibility in regard to precise criteria which are listed in para II-4-3 of the attached draft Procedures Manual (Annex 2). In the subproject selection process (Procedures Manual, paras 11-3 and II-4), the following will be critical: (a) the subproject shoulu have a proven economic or social utility and be ready for execution without requiring substantial detailed engineering; (b) the subproject itinplementation should not require the use of sophisticated equipment, and should be achievable through labor-intensive methods (i.e., with labor, as a percentage of the total cost, amounting to more than 20%); (c) if competing with other subprojects for funds available during a given period, an eligible subproject should have, ceteris paribus, a higher rate of return (and/or a demonstrated higher intangible benefit generation) than its competitors; and (d) preference will be given to those subprojects which are likely to improve the skills of the workers involved and to expose the contractor to an experience which could be taken advantage of for future activities. Eligible subprojects are expected to include, but not be limited to, construction and repair of urban infrastructure and public facilities, street and drainage network cleaning (especially sand and garbage removal). as well as services to the population, such as garbage collection (especially in remote or difficult-to-access areas where the existing waste management system is not effective). Provided that all the eligibility criteria are met, eligible subprojects will fall into two  Senegal Public Works - 7 - groups. The first group of subprojects--urban works--to which at least 60% of all funds .iill be allocated include: (a) works for drainage of low-lying areas, including underground water mains, observation platforms, cesspools, channel headers, retaining wails, etc.; (b) minor infrastructure maintenance and rehabilitation works (filling in ravines, laying out sidewalks, repair of gutters and small sanitation works); (c) works like those under category (b) carried out on a recurring basis and requiring organizaton of shift work (filling in potholes); (d) construction of simple buildings such as schools or clinics; (e) repair of buildings; this category is subdivided in accordance with the specialized labor involved (coating and painting, carpentry, plumbing, electrical w.Jrk, roofing, finishing, minor masonry work); (f) demolition of condemned buildings and recovery of materials; and (g) clearing of brush and terracing works (road shoulders, embankments, gabions) requming construction based on pre-established plans. The second category of subprojects--urban services--to which at most 40% of all funds will be allocated include: (a) specific works for cleaning public property: removal of sand from roadways, cleaning of drainage ditches and gutters, garbage collection, etc.; (b) works like those under category (a) carried out on a recurring basis and requiring organization of shift work; and (c) planting and park works. 2.4 The Agency will submit for IDA approval, prior to effectiveness, a list of subprojects amounting to a total of US$ 7.5 million (para 3.3b). Also, the Agency will submit for IDA approval a second batch of subprojects totalling US$ 7.5 million no later than October 15, 1990. Subprojects whose estimated cost will exceed CFAF 100 million (US$ 316,000) will be subject to IDA's review and approval prior to final selection by the Executing Agency (para 11-4-2 of the Procedures Manual). The Agency will, however, carry out the regular appraisal procedure prior to submitting the project and the appraisal report to IDA for approval. 2.5 Once a subproject has been selected, the public agency which has submitted it ("the beneficiary") will enter into an agreement ("Convendion de mattrise d'ouvrage dftug6de") with the Executing Agency -- according to a pre-established model which is attached to section II of the Agency's Procedures Manual (Annex 2). This agreement will include inter alia the following provisions: !  Senegal Public Works -8- (a) the Executing Agency is substituted for the beneficiary for the whole execution of the subproject ard has full authority, on behalf of the beneficiary, to select the contractors, sign the contracts, supervise the works, acknowledge delivery, and pay contractors; (b) the subproject is financed by the Executing Agency, on the basis of the funds made available to it under the projert, and therefore is additional to the beneficiary's own capital budget or investment r rogram; the beneficiary will not be requested to reimburse the cost of the subproject; ana (c) provisions have also been devised to take care of possible litigation upon delivery of the completed works to the beneficiary. It has to be pointed out that the additional requirement (provision (b)), albeit in contradiction with IDA's usual requirement of cost recovery, is in this case critical to ensure a net increase in the total demand of works, as compared to regular public investment programs, and thus ensure incremental employment generation. 2.6 In order to start up actual project implementation without delay after effectiveness, a first sample of eligible subprojects has been identified. These subprojects have been reviewed and approved by IDA. Five subprojects ranging from CFAF 9.0 million (US$ 28,500) to CFAF 105 million (US$ 332,300) are being carried out as subprojects with financing provided by a second PPF advance granted after project appraisal. These five subprojects comprise: (a) garbage collection; (b) removal of sand from streets and drains; (c) cleaning of urban drainage network; (d) pavement rehabilitation and/or maintenance of minor streets; and (e) rehabilitation of public buldings. These subprojects represent five of the main categories of work likely to be accomplished under the project (Section m, Annex 2). 2.7 A major critical feature of the project is the Executing Agency's disbursement procedure. As pointed out above (pL a 1.12), a condition sine qua non for small-scale enterprises to be able to undertake works commissioned by public agencies without ending up in bankruptcy is that disbursement procedures be devised to avoid the delays that are commonplace with regular public procedures. Initial advances to contractors executing the works will be given in exchange for a bank guarantee or a bond covering 100% of the amount of the advance which in any case will not be more than 20% of the total amount of the contract Payments will be scheduled according to the terms and conditions in Annex 2, Section V. Furthermore, initial advances to the consultant engineer and the contractor will be paid in a timely manner and in a cashable form. For bid preparations, the consultant engineer will be paid a maximum of 5% of the estimated cost of a subproject. For supervision and monitoring, the engineer will be paid up to a maximum of 5% of the total amount of the works. It is expected that the majority of the engineering services will be provided by Senegalese firms, thus helping to strengthen the local consulting industry. The private legal status of the Executing Agency will allow the director to direcdy order payments, by signing  Senegal Public Works -9- checks and transfer orders, without being submitted to numerous c%arances and witiout bei-lg obliged to surrender actual execution of payments to a Treasury officer ("principe de la s6paration de l'ordonnateur et du comptable"). In order to give incentives to the Executing Agency to disburse quickly and not be tempted to invest its cash instead of paying its contractors, timely payment of contractors, not exceeding ten days between work completion and payment, is considered as a key evaluation criteria of the performance of the agency. 2.8 All disbursements pertaining to contracts, the total amount of which is less than CFAF 80 million (US$ 250,000), will be on the basis of statement of expenditures (SOE) with documentation held available locally for review by auditors and supervision missions. The contractors will receive directly from the Agency the net payment for the work delivered. The Agency's Director will make replenishment requests of t;.e special account to IDA through the Ministry of Finance. A Package of Services Offered to Contractors 2.9 This component aims at increasing the technical and managerial capacity of small- and medium-scale Senegalese contracting firms in the building and construction trades. The rationale behind this component is twofold: (a) most firms in the target group are expected to show weaknesses, in terms of management, work organization and technical skills, which might jeopardize the successful implementation of the subprojects that they will be commissioned to carry out: the provision of some technical assistance to contractors is deemed an effective way to address this risk; and (b) conversely, those firms which are going te be awarded contracts under the proposed projects may be expected to be comparatively more efficient than others, if the selection process is effective. Therefore, with a view to strengthening comparative advantages instead of randomly spreading assistance over the whole industry, these firms deserve more than others to be supported to improve the overall efficiency and competitiveness of the industry. 2.10 Three subprograms are proposed under this component: (a) a business administration and financial management program intended for entrepreneurs and their administrative staff; (b) a work organization program primarxily designed for foremen; and (c) various technical training courses to improve the skills of basic workers. All three subprograms will be very practical, at the "grass-root iovel", and will take the form of on-the-job assistance and training. Potential beneficiaries will obviously be free to accept or refuse this form of assistance, except in cases where technical assistance will be deemed indispensable for successful implementation of the sub-project and will therefore be a condition of contract award. The Executing Agency will be responsible for administering the three subprograms but will contract out their implementation.  Senegal Public Works - 10- Project Monitoring 2.11 The monitoring component will broaden the scope of the regular supervision of anv Bank project. Given the wide margin of independence and initiative whick is deemed instrumenta