Niger - Economic and Financial Management Improvement Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 10835 PROJECT PERFORMANCE AUDIT REPORT NIGER ECONOMIC AND FINANCIAL MANAGEMENT IMPROVEMENT PROJECT (CREDIT 1493-NIR) JUNE 30, 1992 MICOFIC'HE COF-y -Report No. 10835-NIR ' NAMI'SATC), / X31678 / ,J2 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRElIY EQUIVALENTS Currency Unit: CFA francs (Annual Averages) 1984 US$1 - CFA 437 1988 US$1 = CFA 298 1985 US$1 = CFA 449 1989 US$1 = CFA 319 1986 US$1 - CFA 346 1990 US$1 = CFA 272 1987 US$1 = CFA 301 1991 US$1 - CFA 282 ABBREVIATIONS AND ACRONYMS ADETEF Association pour le D6veloppement des Echanges en Technologie Economique et Financi&re BCEAO Banque Centrale des Etats de 1'Afrique de l'Ouest CCCE Caisse Centrale de Cooperation Economique CNCA Caisse Nationale de Cr6dit Agricole DEPP Direction de l'Evaluation et de la Programmation des Projets DSI Direction de la Statisque et de l'Informatique ENA Ecole Nationale d'Administration FAC Fonds d'Aide et de Coop6ration ID Institutional Development IDA International Development Association IMF International Monetary Fund IIAP Institut International d'Administration Publique NIGELEC Niger Electric Power Company OED Operations Evaluation Department PAGEF Projet d'Aide A la Gestion Economique et Financibre PCR Project Completion Report PDIEP Projet de D6veloppement Institutionnel des Entreprises Publiques PIP Public Investment Program PMU Project Management Unit PPAR Project Performance Audit Report PPF Project Preparation Facility SAL Structural Adjustment Loan TA Technical Assistance UNDP United Nations Development Programme UNDTCD United Nations Department for Technical Cooperation and Development UNCTAD United Nations Commission for Trade and Development USAID United States Agency for International Development Fiscal Year October 1 - September 30 (until 1990) January 1 - December 1 (since 1990) FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of DirectorGeneral Operations Evaluatim June 30, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Niger - Economic and Financial Management Improvement Project (Credit 1493-NIR) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Niger - Economic and Financial Management Improvement Project (Credit 1493-NIR)." prepared by the Operations Evaluation Department. Yves Rovani by H. Eberhard K6pp Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT NIGER ECONOMIC AND FINANCIAL MANAGEMENT IMPROVEMENT REPORT (Gredit 1493-NIR) TABLE OF CONTENTS Pate No. Preface . . . . . . . . . . . . . . . . . . . . . . . . . .. Basic Data Sheet . . . . . . . . . . . . . . . . . . . . . . . . . ii Evaluation Summary . . . . . . . . . . . . . . . . . . . . . . . . . vii I. INTRODUCTION A. The Economy.............. ...... . . 1 B. Economic Performance.. ............ . . . 1 C. Background to the Technical Assistance Project . . . . 2 II. OBJECTIVES AND DESIGN A. Objectives . . . . . . . . . . . . . . . . . . . . . . 4 B. Design and Components . . . . . . . . . . . . . . . . . 4 III. PROJECT IMPLEMENTATION A. Disbursements.. ................ . . 8 B. Project Management.. ............. . . 8 C. Supervision.............. ...... . . 10 D. Government Commitment . . *................... . . . 10 E. Implementation of Projects Components.... . . . . . .11 1. Economic Studies.. ............ . . .11 2. Institutional Building. ........... . . .12 IV. PROJECT RESULTS A. Economic Studies . . . . . . . . . . . . . . . . . . . 21 B. Institutional Development. ......... . . . . . .22 1. Ministry of Planning..... .... . . . . . .22 2. Ministry of Finse .e ........ . . . . . . 23 3. Training..... .... . . . . . . . . . . . .24 4. Project Management..... .... . . . . . . .24 5. Operating Expenditures and tlivil Works . . . I . . 24 6. Local Consulting Capacity. ....... . . . . . .25 V. SUSTAINABILITY.......... ....... . . . . . .25 VI. LESSONS OF EXPERIENCE 1. Institutional Development Strategy . . . . . . . . 26 2. Borrower's Commitment .. . .... . . . . . . . . . . . . 27 3. Project Management Unit . . . . . . . . . . . . . . 27 4. Supervision . . . . . . . . . . . . . . . . . . . . 27 5. Operating and Construction Expenditursse ..... . 27 This document has c 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. Table of Contents (cont'd) 6. Funds Allocation ........ ................. 28 7. Studies . . . . . . . . . . . . . . . . . . . . . . 28 8. Training ....... ..................... .....28 9. Twinning ....... ..................... .... 28 10. Local Expertise ......... .................. 29 PROJECT rERFORMANCE AUDIT REPORT NIGER ECONOMIC AND FINANCIAL MANAGEMENT IMPROVEMENT REPORT (Credit 1493-NIR) PREFACE 1. This is the Project Performance Audit Report (PPAR) on the Economic and Financial Management Improvement Project, involving IDA Credit 1493-NIR. The Credit in the amount of SDR 11 million was approved on June 7, 1984, and the last disbursement was on July 4, 1990. The Credit was closed on October 31, 1990, six months behind schedule. All but SDR 0.01 million was disbursed. 2. The PPAR consists of the Project Performance Audit Repo-t prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR)1 prepared by the Country Operations Division, Country Department V of the Africa Region. The PPAR is based on the PCR, the President's Report, sector and economic reports, the credit documents, the summary o the Board discussions, study of the project files, and discussions with Bank staff. The PPAR is also based on a Case Study prepared for the OED Study "Free Standing Technical Assistance for Institutional Development in Sub-Saharan Africa." On that occasion an OED mission visited Niger and discussed the effectiveness of the Bank's assistance with Government officials. Their kind cooperation and valuable assistance in the preparation of this report is gratefully acknowledged. 3. The PCR provides a good account and assessment of the project experience with regard to the implementation of the various components, credit administration and the Bank and the Borrower performance. The PPAR portrays the critical issues of concern that led to a request for technical assistance i' support of structural adjustment programs, evaluated the progress made and the results achieved by the agreed upon activities and ascertains the key factors that determined the project's outcome and the sustainability of the institutional building reforms. The PPAR then draws lessons from the project experience. 4. The draft PPAR was sent to the Borrower for comments but none were received. ' PCR, Report No. 9938, October 3, 1991. PROJECT PERZORMKNE AUDIT REXOHT NIGER ECONOMIC AND FINANCIAL MANAGEMENT IMPROVEXENT PROJECT (Credit 1493-NiR) BASIC DATA SHEET CREDIT POSITION (Amounts in US$ Million) As of April 30. 1992 Credit Original Diarsed Canceled Repaid Outstanding 1493 11.70 13.70' 0.01 -- 15.06 Discrepancies between original and disbursed amounts are due to fluctuations in the exchange rate of the US$ in relation with SDRs. The credit expressed in SDR was 99.9 percent disbursed. CUMUIATIVE ESTIATED AND ACTUAL DISBURSEMENTS fl85 Fge FY88 FY89 FY90 FY91 Appraisal Estimate (US$M) 1.60 2.40 2.90 2.20 1.50 1.10 Actual (US$W) 1.68 1.61 2.37 3.72 3.16 1.13 0.04 Actual as Z of Appraisal (1) 105 67 82 169 211 103 Date of Final Disbursement: July 4, ISO PROJECT DATES Original Actual Identification 01/81 07/82 Appraisal 04/81 03/14/83 Negotiations 04/20/84 Board Approval 06/07/84 Credit Agreement 07/13/84 Effectiveness 11/12/84 11/06/84 Project Completion 10/89 10/31/90 Credit Closing 04/30/90 10/31/90 - iv - Premppraisal 3.4 42.7 0.3 20.2 66.6 raleal 10.4 14.2 26.2 29.7 1o,S 14"tlatios 4.3 4.3 evision 0* 23.1 8.5 6.6 9.4 6.0 5.2 0.6 39.7 COW10tif a - - - - - - - 9-6 - - - ILL 9_ TOLA 3.4 $3.1 14.5 46.7 34.0 23.1 8.3 7.2 9.4 6.0 5.2 0.7 211.8 No. of No. of Staff Monh/Year Wegks Persons Weeks Identification 03/81 3 1 3 Preparation 11/82 2 2 4 Preparation 02/03 2 1 2 Appraisal 03/83 4 4 16 Post Appraisal 07/83 3 1 3 Supervision I 10/84 3 3 9 Supervision II 05/85 2 1 2 Supervision III 11/85P' 1 1 1 Supervision IV 01/86 1 1 1 Supervision V 10/86 1 1 1 Supervision VI 05/87 1 1 1 Supervision VII 10/87 1 1 1 Supervision VIII 04/88 1 1 1 Supervision IX 11/88 1 1 1 Supervision X 12/88 4 1 4 Supervision XI 06/89 1 1 1 ' Resident Representative takes over as Task Manager of Project. More involvement with the PMU on a day-to-day basis results in less SW recorded on supervision missions. OTHER PROJECT DATA Borrower/Executing Agency: Government of Niger Follow-on Project(s): Related IDA Credits Project: Structural Adjustment Credit No.: 1660-NIR Amount: SDR 20.0 million Board Date: 02/18/86 -v- Project: Structural Adjustment Credit No. A012-NIR Amount: SDR 40.0 million Board Date: 02/18/86 Project: Public Enterprise Sector Adjustmet,t Credit No.: 1833-NIR Amount SDR 60.0 million Board Date: 06/25/87 Project: Public Enterprise Institutional Development Credit No.: 1838-NIR Amount: SDR 5.5 million Board Date: 07/07/87 - vii PROJECT PERFORMANCE AUDIT REPORT NIGER ECONOMIC AND FINANCIAL MANAGEMENT IMPROVEMENT PROJECT (Credit 1493-NIR) EVALUATION SUMMARY Introduction 1. From 1976 to 1980, the Nigerien 4. In 1982, the Government economy went through a period and introduced austerity measures in the sustained expansion, with an average budget and prepared a consolidation GDP growth rate in excess of 8 program aimed at restoring balance to percent. Such expansion was explained the financial situation of the public by a succession of good harvests, sector. In 1983-86, its stabilization considerable proceeds from uranium of program was supported by a Standby which Niger was a major producer and Arrangement with the IMF while, in an ambitious spending program financed 1986, the Bank supported a structural from the revenue of uranium output and adjustment program to improve economic borrowing abroad (para. 1.3). growth prospects while keeping budgetary and external deficits at 2. At the very moment when Niger sustainable levels (paras. 1.5 and was launching its first Five-Year Plan 1.10). (1979-1983), a sharp turnaround in the prevailing circumstances altered its 5. The Nigerien authorities economic prospects radically. The recognized that structural adjustment levelling off and then the decline of reforms would take considerable time uranium prices shrank the volume of and would require high levels of budget resources available and brought external and financial assistance. a deterioration in the balance of The Economic and Financial Management payments (para. 1.4). Project =stituted a first step in this process. They consequently 3. The end of the uranium boom approached the Bank for a technical revealed a number of serious assistance project which would serve deficiencies in the atructure of the as the preparatory stage for the SAL. economy, partly as a result of public The TA project was approved in 1984 investment being f<: ussed on and the SAL in 1986 (para. 1.11). infrastructure and construction projects, while agricultural Objectives and Design investment encountered serious problems. In addition, many public 6. The project had two key enterprises incurred substantial objectives (para. 2.1): losses and had become a drain on the Government budget and the financial (i) to help the Government design a sector (para. 1.7). consolidation program for the short - viii - term and structural adjustment program from headquarters, and frequent for the medium term; and changes in headquarters staff supervisirg the project did not help (ii) to strengthen progressively the (paras. 3.12-3.13). economic and financial management capabilities of the Ministries of 10. Niger's commitment was Planning and Finance. unconditional. Political and senior civil service leaders largely endorsed 7. In order to reach those the project at its inception (para. objectives the Project, to be 3.14). implemented over five years, comprised two major sets of actions (para. 2.2): 11. Economic studies were carried out. The most important were the (i) Economic studies mainly to diagnostic study of parastatals, the support adjustment reforms civil service reform study, the particularly in the parastatal sector agriculture credit study and the study (diagnostic study); of studies. The latter concluded that over a thousand studies had be (ii) Institutional building efforts uneartaken in 1981-85 (paras. 3.15- to strengthen (a) the Ministry of Plan 3.24). in public investment programming, capital expenditures budgeting and 12. Institutional building efforts statistical analysis and (b) the were made in the Ministry of Planning Ministry of Finance in fiscal to rehabiltate the Statistical management, budget preparation and Department, strengthen the investment financial planning. planning and budgetary system and improve the services of a computer Project Implementation center (paras. 3.25-3.33). 8. Practically all of the credit 13. In the Ministry of Finance a was disbursed and the credit was number of measures were taken to closed on October 31, 1990, only six introduce financial planning, months behind schedule. The credit strengthen public debt management, was utilized without respect for the improve fiscal management and customs breakdown of allocations for administration and modernize a components as originally planned. computer center. These measures Large sums were spent on items that reinforced the assistance received by were not even envisaged at the outset the Ministry from the IMF and the like civil works and offices. Project French Government (ADETEF agency) management proved costly (more than 8 (paras. 3.34-3.62). percent of total expenditures) and difficulties of authority were 14. Only part of the training encountered by the Management Unit program was seriously prepared and a (paras. 3.1-3.11). number of training activities took place in an atmosphere of 9. Project supervision was mainly improvisation. Implementation of the entrusted to the Bank's R<: dent program met with serious difficulties. Representative. In practice, the No overall view on strategy appears to split of responsibilities between the have governed the organization and local level in Niamey and headquarters planning of the different elements in Washington was not always clear. that made up the training program There was little technical support (paras. 3.63-3.78). - ix - 15. A twinning agreement was signed * After many hesitations, the Bank between the Nigerien authorities and ultimately was not overly ambitious. the French ADETEF. The latter sent it adopted limited objectives many short-term missions to the (restructuring of the public sector, Ministry of Finance. The approach was programming of public investments, one of "little steps" to resolve taxation system, Customs, debt, etc.), specific problems without ADETEF although such objectives were not . seekin& a full restructuring of the defined as part of an integrated long- Ministry of Finance, which was not the term institutional development TA project's objective. ADETEF stragegy (cf. para. 26). The experts, however, provided little on- consultants were carefully selected. the-job training (paras. 3.79-3.83). This was the case with the main consultant at Planning, who had Proiect Results already demonstrated his mettle elsewhere, as well as with the aspects 16. The capabilities of Niger's selected by ADETEF. economic and financial administration have improved since 1983/84. Today, 0 Secondly, the resolve of the the Planning and Finance Ministries Niger policy makers, itself enhanced know how to do things that they did by the low turnover among the leaders. not know or did not understand clearly eight years ago. At Planning, the 0 Thirdly, the use of "twinning" procedures to prepare an investment was to a large extent, successful, planning and budgetary system have although, as indicated, ADETEF experts been adopted. The Statistical and short-term assignments were not always Computer Department has been organized conducive to provide lasting an, equipped with the means for modern counterparts on-the-job training. data processing; it has improved both the quantity and quality of its 18. Forty-nine diagnostic studies output. The Project Planning and were completed and they have led to Evaluation Department and the the rehabilitation or the liquidation Investment Finance Department can of a number of public enterprises, in identify some projects that can be accordance to the 1986 SAL's major submitted to the donors. At Finance, concern for the reform of the progress is even clearer. The Customs parapublic sector (para. 4.4). Administration can input and process most declarations by computer. The 19. Other studies, such as the cost- Taxation Administration has revamped recovery study for the health sector, tax legislation, expanded the tax base the industrial incentives study and and computerized the main taxes. The the cross debt study, proved useful. Computer Center at Finance is now Some other studies, such as the civil working efficiently. The Treasury is service study, the agricultural credit improving its means of collection. system study and the Air Niger study, The Public Debt Department has were probably not entirely needed computerized its data processing of (paras. 4.5-4.6). the external debt (para 4.1). 20. Although positive results were 17. This suggests that, on the achieved by the Project, there are whole, the Project achieved important obviously still major institutional results although many deficiencies deficiencies. In the Ministry of remain. There are three reasons for Planning, the programming/budgeting this relative success (para. 4.2): system does not seem to have a close operational link with the budget. Lessons of-Experience Project-programming is done with little relation with the technical 24. The capabilities of the ministries operations. Project Ministries of Planning and Finance evaluation remains weak (paras. 4.8 improved as a result of the project's and 4.9). actions. However, experience has shown that a number of these actions 21. The implementation of the were scattered and uncoordinated. As computerization of customs was a a result, the project did not and positive resulu of the project. could not properly evaluate, in a However, the budgeting forecasting global manner, the adequacy and system in the Ministry of Finance consistency of administrative and remE.ins very weak. The Ministry is financial systems and procedures in regularly identified as a major Finance, Planning and Technical bottleneck in budget implementation. Ministries (para. 6.1). A debt recording system has been set up but is not yet used as a part of 25. The main lessons of experience the economic and financial forecasting which can be derived from the project system (paras. 4.14-4.16). are as follows: 22. Training was the least 1. Institutional Develoment successful component of the project Strategy due to a lack of concert between the Bank and the Nigerien authorities on 26. The lesson is that PAGEF may the nature and content of the actions have been more successful if it has to be promoted (para. 4.17). been planned within the context of a long-term country-specific Sustainabilit institutional develoment strategy. In parallel with the dialogue on economic 23. The Project helped develop a policy reforms, the Bank should have certain number of tools and functions worked with Niger to develop such a (debt systems, investment long-term institutional strategy. The programming), undertake construction Bank's advice on such strategy should and acquire equipment perceived as have been based on issues identified urgently needed. At the same time it in its economic and sector work attempted to perpetuate its including an institutional assessment undertakings through the provision of survey, paying considerable attention (a) considerable support to operations to local institutional setting and of the Ministries (Planning and social and cultural factors. If this Finance); (b) generous financing of had been done, successive TA projects poorly programmed training; and (c) may have been planned over a longer diagnostic and other studies of uneven period than that covered by PAGEF and quality. It has done so, however, may have led to better fulfillment of without paying sufficient attention to long-term institutional objectives the instgtutionalzation of the (paras 6.2-6.3). functions and systems it helped install. As a result, the 2. Borrower's Commitment sustainability of many of the Project's financed elements is 27. The staunch commitment of the uncertain (paras. 5.1-5.3). Nigerien authorities persisted - xi - throughout the project. This confirms to finance salaries and construction the positive effect of a strong expenditures. As regards salaries, borrower's commitment to project discrimination between beneficiaries objectives and implementation (para. create a "malaise" in the Ministries 6.4). and topping salaries should be avoided to the extent possible. Capital 3. Project Management Unit investment (office construction) and renewable equipment (computers, 28. PAGEF involved two implementing vehicles) induce recurrent ministries (Planning and Finance) and expenditures which have later to be the location of PMU under the direct borne either by a new project (Niger control of the Planning Minister insisted in having a PAGEF II largely proved detrimental to the success of for this purpose which created the project (para. 4.19). In making problems since the Bank could not arrangements for project coordination, agree in this respect) or by future the key is to ensure enough autonomy national budgets. This type of for project implementation and yet expenditures should not conflict with avoid an "enclave" syndrome. What the policy to cut public spending that should prove effective is the is advocated elsewhere (para. 6.7). appointment of a full time coordinator relatively high in the ministerial 6. Studies hierarchy (Director or Director General) and with political acumen 31. Studies proliferated in the (para 6.5). project reviewed. Often it was difficult to assess their quality and 4. Supervision difficult to find evidence of their impact. Studies should receive 29. Supervision was not special attention in guidelines on satisfactory, partly because the Bank assistance for institutional Resident Representative was delegated development, so that the requirements almost all responsibilities for the for studies are clearly identified at project and was left acting mostly the project design stage, the studies alone in the field. Resident missions are prepared carefully, and Bank staff should certainly continue to be follows up on their implementation. involved in day-to-day detailed Studies that are unlikely to be management and administration because supervised and evaluated should be close contacts are needed with local eliminated (para. 6.9). authorities and expatriate experts are more easily handled locally. But, 7. Training Headquarters staff should play a key role in supervising TA projects, 32. Training was the least particularly as regards institutional successful component of the project. development strategy work and But formal training should be as providing specialized skills, not expertly designed and supervised as available in resident missions (para. other project components. Training 6.6). programs must be very specific and detailed in the projects reviewed, and 5. Operating and Construction their preparation should take into Exendituresaccount actual and behavioral factors (e.g. in Niger the great importance 30. A technical assistance project given to training abroad as a sign of should not allocate too large amounts recognition of services rendered). - xii - Training programs must be designed in been considered as important as full cooperation with the borrower technical skills. On the whole, the and, to the maximum extent, prepared twinning approach worked well in before the TA project is approved Niger, although it is difficult to say (para. 6.10). that it should be recommended as always the best approach (a similar 8. Twinning twinning experience with ADETEF in Rwanda's Finance Ministry did not work 33. The twinning approach had a host very well) (para. 6.11). of advantages in Niger. A particular difficulty was that the selected 9. Local ExRertise agency from a donor country (i.e. ADETEF from France) became too visible 34. Local consultant expertise was and appeared, rightly or wrongly, as not utilized by the project. More use carrying the risk of monopolizing could perhaps have been made of technical assistance. Another problem Nigerien consulting firms for instance was the difficulty to provide in diagnostic studies on parastatals. sustained on the job training during Joint ventures (using not only the short-term missions, as this was the conventional method of subcontracting) case in the twinning experiment. between local and expatriates Experts' teaching ability and consulting firms might have been suitability for teamwork sometimes explored more, with Bank encouragement were missing while they should have (para 6.13). PROJECT PERFORMANCE AUDIT REPORT NIGER ECONOMIC AND FINANCIAL MANAGEMENT IMPROVEMENT PROJECT (Credit 1493-NIR) I. InRODUCTION A. THE ECONM 1.1 Twice as large as France, Niger is a vast landlocked country and its closest access to the sea is 600 km. from the southern border with Nigeria. The population is estimated at 7.5 million and growing at about 3.2 percent per year, which is above the average for Sub-Saharan Africa. Nearly 90 percent of the population are concentrated within a narrow strip of arable lands along its southern border, an area which represents only 12 percent of the national territory. The climate is particularly arid (August is the only month of the year when precipitation exceeds evaporation). Niger is one of the poorest countries of the world with a per capita GNP of US$290 in 1989. 1.2 The great majority of the population is occupied in subsistence agriculture. Except during the Sahelian drought periods, the country has been self-sufficient in staple food production, despite its limited agricultural resource base. The discovery of large uranium deposits in the late 1960s triggered the development of an important sector. Under highly favorable conditions in the world market for uranium during the second half of the 1970s, production expanded rapidly, and Niger became fifth among world producers, with 10-15 percent of the market. The uranium boom ended in the early 1980s when prices dropped and Niger's production decreased. Export proceeds from uranium fell by 25 percent during 1984-89, owing essentially to the continued decline in export contract prices, and the medium-term prospects seem unfavorable. Despite all this, the uranium sector continues to be of crucial importance to the economy as it accounts for about 8 percent of GDP, 75 percent of export proceeds, and some 15 percent of Government revenues. B. ECONOMIC PERFORMANCE 1.3 From 1976 to 1980, the Niger economy went through a period of rapid and sustained expansion, with an average annual GDP growth rate in excess of 8 percent. the conjunction of three factors explains this expansion: 1. a succession of good or average harvests due to satisfactory rainfall (all the more significant because the years prior to 1976 were ones of devastating drought); 2. as indicated above, considerable proceeds from uranium, which increased by 400 percent between 1975 and 1980 (i.e., from 6 percent of GDP to 13 percent), a period when uranium prices increased by 500 percent. -2- 3. an ambitious spending program financed from the proceeds of uranium output and borrowing abroad. 1.4 At the very moment when Niger was launching its first Five-Year Plan (1979-1983), a sharp turnaround in the prevailing circumstances altered its economic prospects radically. The leveling off and then the decline of uranium prices shrank the volume of budget resources available and brought a deterioration in the balance of payments: the budget deficit amounted to 12 percent of GDP in 1982. To finance growing budget and external deficits, the country accumulated heavy foreign debts, which rose to US$915 million by the end of 1984, or 65 percent of GDP. Within a few years, despite goods results in the agricultural sector, growth gave way to recession (1980, +6 percent; 1982, -0.5 percent) and, in 1983-84 a protracted drought led to a decline in GDP growth averaging 9 percent in those two years. 1.5 Faced with rapidly deteriorating economic conditions, the Government launched, in 1983, a stabilization program to reduce the domestic and external imbalances, and, in 1985, a structural adjustment program to improve economic growth prospects while keeping budgetary and external deficits at sustainable levels. These programs have been supported by the IMF through a series of Standby Arrangements from May 1983 to November 1986, a Structural Adjustment Facility (1988), and by IDA (with the Special African Facility) through a Structural Adjustment Credit (1986). Debt rescheduling agreements have been reached with the Paris Club continuously since 1983, and with the London Club in 1984 and 1986 and again in 1988. The various debt reduction initiatives have led to a significant decrease of Niger's debt service ratio. 1.6 In the period 1985-1988, there was an improvement in the economic and financial situation--GDP rose at an average annual rate of 4.4 percent--and the external current account deficit was reduced from 15.2 percent of CDP in 1985 to 9.2 percent in 1988. However, Niger's recent economic performance has been mixed. Under the influence of less favorable weather conditions and a further drop in the price of uranium, GDP in 1989 dropped by 3.5 percent after an increase of 5 percent in 1988. GDP dropped further by about 1 percent in 1990. Economic developments in 1991 have been overshadowed by political events. Political instability and lack of consensus on reforms have brought the adjustment program to a standstill. C. BACKGROUND TO THE TECHNICAL ASSISTANCE PROJECT 1.7 The end of the uranium boom revealed a number of serious deficiencies in the structure of the economy, partly as a result of the Government's use of the public expenditure program as the primary instrument for allocating resources in the economy and for generating economic growth. Public investment focussed on infrastructure and construction projects, while agricultural investment encountered serious problems. Recurrent expenditures favored personnel and transfer payment over operation and maintenance, to the detriment of existing infrastructure and basic public services. 1.8 During the late 1970s, public enterprises proliferated into uneconomic activities and acquired privileges that discouraged private sector development. Many of them incurred substantial operating losses and became a drain on the -3- Government budget and the financial sector. This negative performance was caused by Government regulatory policies in the areas of pricing, marketing and employment, by excessive Government interference in day-to-day management, by lack of qualified personnel, and by inadequate management practices. 1.9 Until 1979, when NIger launched its first Five-Year Plan, there had been only limited macroeconomic dialogue between the Bank and Niger. But in June 1979, the Niger authorities requested technical assistance from the Bank in various spheres, particularly planning. In 1980, the Bank indicated ii:s willingness to provide aid for various sectors and that there was also the additional possibility of "assistance in improving public sector management" and in "strengthening external debt management." In 1981, the first version of a technical assistanci project was prepared. It consisted of three segments: institutional diagnostic studies at the Ministries of Planning, Mines, and Rural Development; training courses for civil servants (mainly in the Ministry of Civil Service and Labor); and funds for experts and consultants to advise on preparing investment projects and conducting statistical studies in key sectors. 1.10 In 1982, Niger's Head of State instructed his Government to (a) introduce austerity measures in the 1982/83 budget, and (b) prepare a consolidation program for 1983/84 and 1984/85 aimed at restoring balance to the financial situation of the public sector. At the time of the annual meeting of September 1982, the Nigerien authorities requested an extension of the TA Project's scope, particularly with the view to cover the rehabilitation of public enterprises. The Nigerien authorities also wished to see work begun in the Investments Departments of the Ministry of Plan and in the Public Debt and Studies Department of the Ministry of Finance. They were also very favorable to a joint Bank/IMF/French Ministry of Finance assistance to computerization of the country's fiscal system. This wish appeared to be the result of earlier contacts, arranged through ADETEF (Association pour le Ddveloppement des Technologies Economiques et Financibres) between the Ministry of Finance in Niamey and the Ministry of Finance in Paris. 1.11 In 1983, the Bank resident representative in Niamey set out the whole situation as it then stood. The Niger authorities, having failed for two years to obtain all the assistance they had expected from bilateral donors (in particular in the Middle East), found themselves obliged to approach the IMF and the Bank. Moreover, they were aware of the need for structural adjustment, for which the Technical Assistance Project would serve as the preparatory stage. 1.12 In order to hasten project start-up, the Bank approved two advances from the Project Preparation Facility for a total of US$995,000 in 1983. These advances were made to enable the Government to complete the preparation of the Project, formulate the first phase (1983/84) of Niger's consolidation program, and to undertake diagnostic studies of the parastatal sector. The main part of the parastatal studies was submitted to the Bank in March 1984. A review of the public investment program, the public debt and the general financial situation of the Government was also completed. In early 1984, ongoing technical assistance was provided to the Public Debt and the Financial Planning Departments of the Ministry of Finance and the Public Investment Department of the Ministry of Plan to help these departments monitor the performance criteria of the IMF Standby program approved in 1983. After receiving final approval on June 7, -4- 1984, the Project Agreement was signed on July 13, 1984 and published in the official bulletin of the Republic of Niger on October 1, 1984. A SDR 11 million (US$11.7 million equivalent) credit was provided to the Economic and Financial Management Improvement Project. Total project cost was estimated at US$12.6 million of which IDA was to contribute US$11.2 million in foreign exchange and US$0.5 million in local currency. II. OBJECTIVES AND DESIGN A. OBJECTIVES 2.1 The Nigerien Government recognized that structural adjustment reforms would take considerable time and would require high levels of external technical and financial assistance. The Economic and Financial Management Improvement Project (usually denominated PAGEF, i.e., Projet d'Aide & la Gestion Economique et Financi6re) constituted a first step in this process. The project had two key specific objectives: (i) help the Government design a consolidation program for the short term and a structural adjustment program for the medium term; and (ii) progressively strengthen the economic and financial management capabilities of the Ministries of Planning and Finance (President's Report, para. 42). B. DESIGN AND COMPONENTS 2.2 In order to reach these objectives the Project, to be implemented over five years (1984/85-1989/90), comprised two major sets of actions: (i) Economic studies to help the Government prepare a short-term consolidation program supported by the IMF Standby arrangement, but mainly to support structural adjustment reforms and in particular to define guidelines, as well as specific programs, for the rehabilitation of the parastatal sector (Diagnostic Study). Their total cost was estimated at US$2.1 million. (ii) Institutional building efforts to strengthen: (a) the Ministry of Elan in public investment programming, capital expenditure budgeting, and statistical analysis; and (b) the Ministry of Finance in fiscal management, budget preparation and financial planning. The intention was also to help improve the functional relationship between the two ministries and in particular help eliminate the confusion existing in the public investment financing process. This confusion made it difficult for the Ministry of Plan to supervise the implementation of the public investment program and determine annual financing needs. Similarly, the Ministry of Finance had no way of controlling public investment expenditures, foreign borrowing and induced -5- current expenditure which were supposed to be administered by the Ministry of Plan. 2.3 To secure the benefits of the institution-building provided to the Ministries of Plan and Finance, the project was to: (a) strengthen staffing and improve the knowledge and skills of existing staff in key departments of the two ministries; and (b) help the two ministries establish training capabilities to allow a continuous upgraaing of the knowledge and skills of their staff in the future (SAR, para. 54). A training program was to be implemented in two phases. The first phase was designed to reduce a severe shortage of statistical assistants (task to be undertaken by UNDTCD) and training mid- and high-level staff in the Ministries of Plan and Finance (training to be provided b) ADETEF). To promote cooperation between the two ministries, the project was to finance five to six seminars. The second phase was to assist the National Public Administration School (ENA) to establish short-term training programs in economic and financial management. However, the scope and design of the second phase was to be based on a more comprehensive assessment of the training needs of the ministries, to be carried out during the first phase of the training program. 2.4 Total cost of institution-building measures was US$4.61 million, including US$1.26 million for the Ministry of Plan, US$2.56 million for the Ministry of Finance and US$0.79 million for the training program for these two ministries. The Project Management Unit cost was estimated at US$0.5 million. 2.5 A very substantial part of the credit, i.e., US$2.8 million (28 percent of the credit base cost of US$10 million), remained unallocated since it was thought that additional technical support in institutional building (including training) could only be identified progressively during project implementation. Moreover, funds were to be made available to finance various sectoral studies required for the definition of the structural adjustment program (agricultural research, irrigation, agricultural marketing and input supply, private industrial and trade sector, mining, public sector employment and management of human resources, etc.). Such a large unallocated portion of the credit, apparently justified by the need to provide flexibility to changing needs of the adjustment program, entailed a high risk of its utilization as a "slush" fund. 2.6 Finally, funds (US$0.51 million) were provided for a Project Management Unit (PMU) located in the Ministry of Plan. This Unit was to be composed of the Director of Public Investment acting as Project Director, an expatriate consultant as Assistant Project Director, an accountant and a secretary. The PMU was to be supervised by a Technical Inter-Ministerial Project Coordination Committee. This committee was established to provide technical supervision of project implementation, and to ensure coordination between the various ministerial departments at the working level. It was composed of the Secretary General of the Ministry of Plan (Chairman), the Secretary General of the Ministry of Commerce and Transport (Vice Chairman), the Project Director, the coordinator of the working group in charge of the parastatal studies, the directors of the recipient ministerial departments, and the assistant project director of the PMU. 2.7 The project involved a twinning arrangement between the Nigerien Ministries of Plan and Finance and the French Ministry of Finance and Economy through its non-profit association of experts, ADETEF. The French Ministry of -6- Finance was to provide technical assistance through periodic short-term secondment of experts drawn from its own staff as well as from other French ministries, such as the Ministries of Plan and Cooperation. In addition, ADETEF was to organize training in the French Ministry of Finance. Finally, the Ministries of Plan and Finance were to have access to French expertise on public finance management and fiscal policies. A first protocol defining a two-year cooperation program in the field of public finance management between the two governments was signed in September 1983, several months before the Bank-financed project was approved. The IDA credit was to cover travel and subsistence expenditures for the French staff seconded to the Nigerien Government, estimated at US$6,000 per man/month, for about 20 man/months, i.e., US$120,000 (salaries were paid by the French Government). This compared with planned expenditures of US$5.37 million for other consultants and experts provided under the credit (357 man/months), i.e., US$15,000 per man/month on average (para. 2.10). 2.8 Through ADETEF, IDA was assumed to be able to encourage both FAC and CCCE participation in the project and coordinate TA with substantial French assistance provided to the Ministries of Plan and Finance. 2.9 Another special arrangement was envisaged with UNDTCD for the implementation of the statistical component of the project and the related training program (para. 2.3). UNDTCD was to provide statistical consultants and also support the implementation of the training programs designed for the Statistical Department of the Plan. 2.10 Use of individual experts, consultants and consultant agencies was to complement the assistance to be provided under the twinning arrangement. A total of 357 man/months was allocated as follows: * 7 - I. Economic Studies man/months - Government's investment program and financial situation of the country 7 - Diagnostic study of parastatal sector 46 - Specific studies of rehabilitation of selected public enterprises 70 - Project appraisal studies 20 - Other sector studies Subtotal 143 II. Institution Building - Ministry of Plan - Statistics Department 22 - Public Investment (one Advisor for 2 yrs.) 24 - Computer Center 24 Subtotal 70 - Ministry of Finance - Financial planning and monitoring of budget (one financial advisor for 24 mont7as and one short-term ADETEF consultant) 30 - Public debt management (in cooperation with an IMF advisor) 24 - Fiscal management improvement 90 Subtotal 144 III. Training - Statistical training (UN): 2-year scholarships for local training 30 - Local and abroad (ADETEF) - Scholarships (10 four-year and 20 six-month) for training abroad - Five to six seminars IV. Total 357 -8- III. PROJECT IMPLEMENTATIO A. DISBURSEMENTS 3.1 All of the credit, but US$10,000, was disbursed and the last disbursement was in July 1990. The credit was closed on October 31 ,1990, six months behind schedule to allow completion of a documentation center for the Ministry of Plan, the construction of which took longer than planned and had not originally been included in the project. 3.2 At the end of the fifth year (the project covered the period FY85-89, plus the first quarter of FY90), 91.5 percent of the funds had been disbursed. After a slowdown in disbursements in 1986 and 1987, expenditures rapidly accelerated in 1988 and 1989, leaving only 8.5 percent to be disbursed in FY90. 3.3 The credit was utilized without respect for the breakdown of allocations within the US$11.7 million total amount (cf. PCR Annex 4). Not only were allocations between various project components on several occasions changed significantly, but actual expenditures were not consistent with the new allocations. Th4s laxity raises questions as to the advantage of even making specific allocations. As the credit allocations did not have any limiting or even indicative nature, it became pointless to go into minute details (number of consultants, months, number of seminars, typewriters, etc.), as was done over several pages in Annex IV of the President's Report when very large sums were spent on items that were not even envisaged at the outset (renovation of offices and civil works absorbed nearly 10 percent of the credit). The very fact that there was a provision for unspecified TA and additional studies of more than one fourth (28 percent) of the total project base cost, made any detailed breakdown of other credit components appear unrealistic. 3.4 Project management was not only inconsistent with the organization that had been envisaged (para. 3.5), but was also much more costly. It had been projected that the Management Unit would use US$506,000, i.e., 4.0 percent of the total project cost. In reality, by 1988, its cost had already represented 8.3 percent of total expenditures incurred. B. PROJECT MANAGEMENT 3.5 Officially responsible for project coordination and monitoring, the Interministerial Committee met for the first time on October 8, 1984. The minutes state that the "Committee will meet every three months," because "the meetings, with or without the presence of the Bank, should be held frequently during the start-up period of the Project." In actuality, that first meeting of the Interministerial Committee was also one of its last. The Committee apparently only met two other times (one of those meetings is referred to in minutes dated February 7, 1985). 3.6 It was subsequently decided to establish a smaller Committee. On September 8, 1986 a "restricted" Committee met, consisting of only its chairman, a Planning representative, the World Bank resident representative and the project director and deputy director (five in all). During the meeting, project -9- programming was decided for the next three years (thus running into a second project) and the proposed budget for 1986/87 was submitted. There is no indication of any other meeting of the "restricted" Committee. Questioned about this, the Secretary General of the Ministry of Planning sa'd: "There are many committees and they are all alike." 3.7 The composition of the Management Unit was not exactly as envisaged at the outset. Its official director was not the head of the Investment Department ' of the Ministry of Plan, but a deputy head of the Project Planning and Evaluation Department (DEPP). As the latter could serve as project director only on a Rart- time basis, he was assisted by the project deputy director, an expatriate * consultant (fully paid by the project), who worked full-time. 3.8 This duality of authority in the PMU explains why it was not necessary to fill the position of "adviser," especially since the deputy director had sound training in investment programming and was a member of the consulting firm team that did the early diagnostic studies at the start of the Project (para. 1.12). 3.9 In addition to its accounting and administrative functions, the Management Unit was responsible for tasks that involved coordination rather than outright control. In actual fact, the Management Unit had very little authority. This point did not escape the auditors in charge of auditing the project's accounts. They noted in their report, "The specific structure of the project shows that (...) those responsible for coordination (...) do not have the hierarchical authority to enforce the decisions (...) taken by the ministries and departments responsible for executing parts of the project (...). Moreover, the legal and contractual provisions do not give information on the authority empowered to negotiate and then formulate the action plan of the budget for that plan." In short, "the specific structure of the project reflects a lack of general oversight, if coordination is seen as only one of the aspects of oversight. No ministry or unit within the organization has the legal authority to enforce the decisions that arise naturally from the oversight function." 3.10 The difficulties of authority encountered by the Management Unit prompted written comments from the Bank's resident representative in Niamey and Bank officials in Washington. On several occasions, the Bank's resident representative had to remind the Minister of Planning in his supervision reports (para. 3.12) of the need to "strengthen" project monitoring: "Henceforth, the World Bank will consider only requests issued by the Management Unit, which means that all correspondence related to the Project must be approved by it," (letter of July 19, 1985). "Project oversight continues to be short-circuited by the various participants in the project. I, therefore, deeply hope that for the remainder of its duration, project management is more closely involved in the decision-making process" (letter of May 12, 1987). In addition, the Chief of the Western Africa Region Programs Division wrote on July 19, 1985 to the Minister of Planning, "The complaints of the Management Unit are legitimate and require urgent solutions." 3.11 The hierarchical position of PMU within the Directorate of the Ministry of Plan (and at times, under the control of the Minister himself) weakened the objectivity of decision-making of the Unit and often undercut its managerial role. The Unit came to be seen as a coordinating and administrative body who - 10 - merely paid bills. Moreover, the appointment of a deputy director of the Ministry of Plan as the Director of the Unit was unsatisfactory, as he only devoted part of his time to the Unit, thus de facto delegating his functions to the expatriate director of the Unit (PCR, para. 21). C. SUPERVISION 3.12 At the beginning of the project, supervision was Bank Headquarters' responsibility. However, in October 1986, monitoring was entrusted to the Bank's Resident Representative to ensure quicker resolutions to implementation problems. The Resident Representative took a very active personal role in monitoring the project's execution. His reports, while courteous at all times, did not lack firmness. Decentralization of supervision was definitely a positive change. However, to the extent that the management of the project was itself decentralized (the decision to finance office construction out of project funds was taken in Washington)--except, of course, for important matters--the central authority could evidently not abandon its control. In practice, the split of responsibilities in supervision between the local level in Niamey and headquarters in Washington was not always clear. There was too little technical support from headquarters staff during the official biannual supervision missions held by the Resident Representative and his staff, and the frequent changes in headquarters staff supervising the project did not help. 3.13 Supervision of the consultants by Headquarters and the Resident Mission was uneven and usually very cursory. The diagnostic studies that were to have served as a basis for the public sector restructuring program were one of the areas focused on at Headquarters. A review was made in 1984, but it seems to have been an exception, especially since the few assessments done by Headquarters do not bear witness to very great vigilance. No annual performance evaluation of long-term consultants was prepared either by the Government or the PMU. D. GOVERNMENT COMMITMENT 3.14 Niger's commitment changed over the years. Until early 1982 at least, the Niger authorities showed reticence in engaging in dialogue with the Bank-- undoubtedly fearing "interventionism"- -when Niger's economic situation, which was affected by the slump in uranium prices, was rapidly deteriorating. Relying on several studies, the Government was hoping for a reversal in the trend and preferred to turn to its traditional donors (including Middle East countries). However, when those hopes proved illusory, the authorities became gradually convinced of the need for technical assistance in preparation for structural adjustment. They then took the necessary steps to work hand in hand with the Bank. The resolve to succeed was favored by the political longevity of the chief ministers. The Minister of Finance, who became Prime Minister in November 1983, continually monitored the implementation of the adjustment measures and strongly supported PAGEF. His commitment, as well as that of the Head of State, has been unconditional. The Prime Minister's departure in 1988 seems to have disturbed donors somewhat, but, by that time, most of the TA credit had already been disbursed. - 11 - E. IMPLEMENTATION OF PROJECTS COMPONENTS 1. Economic Studies 3.15 They included: (i) a public investment and financial situation study; (ii) other studies required for the definition of a structural adjustment program; and (iii) selected project appraisal studies for the Ministry of Plan. 3.16 The wost important studies were the Diagnostic Study of Parastatals, the Civil Service Reform Study and the Agricultural Credit Study. a) Diagnostic Study 3.17 The. costliest, and undoubtedly the most extensive, of the series of diagnostic studies were those made of the parastatal agencies and corporations. Fifty individual studies were made at a total cost of nearly CFAF 200 million (about US$0.7 million). They were very rapidly begun and completed between October 1983 and April 1984. 3.18 The studies were generally very brief. For instance, four ranged from 12 to 32 double-spaced pages (annexes included) respectively. Despite their being so brief, however, these diagnoses appear on the whole to have provided a quite clear picture of the set of problems faced by individual enterprises. b) The Civil Service Reform Study--limited usefulness 3.19 That study could hardly be called satisfactory. The approach taken was not rigorous, neither clear nor coherent. No diagnosis was made of the problems affecting the Civil Service. While there were some positive aspects to the report, any worthy ideas put forward were unfortunately not new, since they were to be found in texts already drafted by the Ministry of the Civil Service and Labor. Despite its high cost, the study had to be redone by ILO. This involved further expenditure of US$0.63 million of which 40 percent were charged to PAGEF. c) The Agricultural Credit Study--one among too many studies 3.20 The Agricultural credit system is a case in point. In addition to being the subject of a diagnostic study by a consulting firm, it was the focus of at least two other diagnostic examinations: a voluminous joint study by Niger's own Caisse Nationale de Credit Agricole, France's CCCE and the EEC, as well as a no less voluminous study carried out by four researchers on behalf of the University of Ohio and financed by USAID. 3.21 In the same vein, AIR NIGER was the subject of at least ten studies. d) The Study of Studies 3.22 The Government felt it necessary to have an inventory and description of the existing studies. It, therefore, retained a Nigerien consulting firm to provide a summary description of all studies on Niger undertaken by the Administration itself and by donor countries over the period 1981-85. - 12 - 3.23 Seven sectors were named initially: Rural Development, Energy, Water Resources, Human Resources, Housing, Sanitation, and Economic and Financial Studies, but thirteen others were added later under additional arrangements. The first seven alone gave rise to over a thousand studies. However, the Consultant's Report is no more than an inventory, since the firm considered it "imprudent to act alone in reaching any value judgement on the studies or ranking them in order of importance." e) Distribution of Studies Very Uneven from Standpoint of Consultant's Nationality 3.24 Most of the studies were carried out by French firms. Exceptions were the Civil Service Study and one of the supporting studies on tLe Project Planning and Evaluating Department (DEPP) of the Ministry of Plan, which were commissioned from two Canadian firms. Two Nigerien firms only were selected--one ior a study on cross-indebtedness among public enterprises and one for the inventory of all studies. 2. Institutional Building a) Ministry of Planning 3.25 The PAGEF was to (i) rehabilitate the Statistical Department; (ii) strengthen the analytical and managerial capabilities of the Public Investment Department; and (iii) improve the services of a computer center. (i) Rehabilitation of the Statistical Department (DSI) 3.26 Progress was made under PAGEF. DSI, which has a sizeable staff and stock of equipment, can claim credit for a number of national achievements. The head of the Department, a dynamic individual, continued ongoing activities and set a series of short-term goals which, although ambitious, did not appear beyond reach, such as the introduction of a new method of drawing up the Niamey consumer price index or the continuation of a survey of the informal sector and small- scale enterprises. Training became also an important element of the program. 3.27 The UN Development and Technical Cooperation Department (UNDTCD) had prepared the statistical component in the Ministry of Plan and was slated before project approval to provide technical assistance and on-the-job training to the DSI. A contract was signed for US$1.45 million. Owing to the cumbersome procedures of the UNDTCD and various difficulties (selection of consultants, disbursement procedures), the contract was repudiated in June 1986. The Bank allowed the PMU to manage this activity with the technical cooperation of the French Statistical Institute (INSEE). In retrospect, the delays experienced by the statistical component could have been reduced or averted by expanding the search for consultant services and not relying solely on the services of UNDTCD, which was known for its heavy bureaucratic procedures and long recruitment delays (PCR, para. 9). * 13 - (ii) Strengthening the Public Investment Department 3.28 Introduction of a public investment planning system and institution of an investment budget embracing all expenditures, whatever the source of financing involved, was one of the most important tasks in the institutional strengthening of the Ministry of Planning. In FY83/84, the Minister placed this task in the hands of a French consulting firm which has now disappeared but whose former chairman and managing director remeined in Niger as an adviser to the head of the Project Planning and Evaluation Department. 3.29 The investment planning and budgeting system set by the consultant was * financed partly by the Bank and partly by CCCE. It was actually an updated version of a system followed in C6te D'Ivoire in drawing up government program framework legislation. This is not surprising as the consultant, before arriving in Niger, worked for several years as an assistant adviser to the head of the Department of Planning and Programs in the Ministry of Planning in Abidjan. 3.30 The procedures initiated by the consultant appear to have come into use in 1985. Data-processing meant that the Investment Finance Department was able to produce its first computerized budget for 1985. The electronic equipment used (three PCs in that Department and several others in the Project Planning and Evaluation Department) were financed partly by the Bank through the Economic and Financial Management Improvement Project (PAGEF) and partly by USAID. 3.31 The consultant also succeeded in making the system an integral part of Ministry of Plan operations. As early as 1984, a CCCE agent sent out to Niamey was able, in the absence of consultant personnel, to get ministry staff to explain to him the broad outlines of the system and how to use it. 3.32 The investment budget is now a reliable document which is issued regularly. However, despite these positive aspects, the investment programming system structure remains limited to data gathering and its operational significance remains uncertain. (iii) Computer Center 3.33 The project was to finance consultants services to develop programs to computerize the management and analysis of the public investment data base and for the analysis of small surveys such as consumer prices and economic activities of the modern sector. The major activities of the Computer Center have been: (a) missions providing assistance and advice (systems analysis and formulation of a data-processing master plan for the Ministry of Plan); and (b) a considerable proportion of the work effort was devoted to making up the backlog in processing foreign trade data. The Center is also responsible for gathering and processing data from Customs declarations which are then issued in three Customs statistics bulletins: Treasury assessments, list of Customs receipts analyzed by payer, and list of Customs receipts analyzed by country of origin. As installation of the SYDONIA system proceeded at the various divisions of the Customs posts (para. 3.54), these data-processing operations were to be transferred from the DSI Computer Center to the Customs Administration itself. -14- b) Ministry of Finance 3.34 PAGEF was to help the Ministry of Finance to: (i) introduce financial planning; (ii) strengthen public debt management; and (iii) improve fiscal management; and (iv) install a new computer center. The components were designed to reinforce and integrate the assistance received by the Ministry from the IMF and the French Government (ADETEF) (i) Financial Planning 3.35 The goal was to possess a monthly monitoring mechanism that would provide a broad summary view of public finances (execution of the national budget and its associated revenue flows, arrears of payment, etc.) and the major money and credit indicators. A performance chart was to provide a tool for appraising progress, or the lack of it, with the economic and financial recovery plan worked out in conjunction with the IMF. In fact, one of the uses of the performance chart was that it would mean that monthly and quarterly data on implementation of the stabilization program could be remitted to the IMF more rapidly than previously. 3.36 This performance chart consisted of two segments: (1) public finances, and (2) money and credit supply. 3.37 The public finances segment of the chart provided coverage of key criteria reflecting implementation of the IMF program in four areas: (1) public financial operations; (2) public investment; (3) public debt; and (4) payment arrears. The money and credit supply segment was also designed to enable the IMF to monitor accurately to what extent Niger was accomplishing the goals set for it; it reflected both the monthly monetary situation (the money supply and its counterparts: net public sector government position, credit to the economy, external assets, etc.) and the annual balance of payments. 3.38 Obviously, the quality of the performance chart depended on how successfully and rapidly each section of the Ministries of Finance and Planning developed the primary information for which it was responsible. While data on the public debt was relatively sound, some improvement was needed in other spheres such as government spending (Treasury and Public Accounts), tax revenue (Taxation Administration and Treasury) or Customs (Customs Administration and Treasury). 3.39 A French expert was responsible for verifying the information on which the performance chart was based and making adjustments where called for, particularly between revenues as collected and as assessed. 3.40 The first performance chart appeared in January 1984 (data for September 1983/September 1982) and has appeared regularly since then. 3.41 The project had also provided funds for a financial expert for two years to set up a budgetary forecasting system. Unfortunately this expert was never recruited--apparently owing to both the difficulty of finding a good candidate and the lack of enthusiasm ultimately shown by the Niger authorities. However, - 15 - it also seems that the Ministry of Finance received assistance from the short- term ADETEF assistants in solving at least some of the most pressing problems. (ii) Public Debt 3.42 The project was to help the Public Debt Department to improve its daily management of the public debt api develop analytical capabilities to analyze the structure of the debt and its consequences on the budget. Consultant services were to be provided in debt management and computer programming. Close cooperation was to be kept with an IMF advisor who was assisting the Ministry in reorganizing the public debt management system. 3.43 The goal here was to set up a PC system for the management and analysis of the public external debt- -accounting procedures, generation of the statistics required annually by the Bank and the IMF, and simulation of debt-service schedules in light of various hypotheses (drawdown policy, exchange rates, money market rates, etc.). 3.44 Priority went to the accounting capabilities of the program, which was intended to lighten the daily tasks of the responsible department significantly, tasks that become particularly demanding when preparations are being made for international negotiations. 3.45 A BULL MICRAL 30 was installed in October 1985. Several consultants put a computerized system in place and in 1986, a French technical assistant was named as advisor to the head of the Department. By end-1987, a final mission by two French experts visited Niamey to supervise the implementation of the last phases of the consulting services contract (delivery of procedures manuals, program for automatic calculation of maturities, system improvements, etc.). The final audit showed that the system in place met original specifications and was functioning satisfactorily. (iii) Fiscal Administration 3.46 The project was to help the Ministry improve its fiscal management through the computerization of (a) personal income tax administration; (b) private property registration (Cadastre) and taxation; and (c) customs clea:ance procedures and foreign trade operations. In addition to equipment and supplies, the project was to provide 90 man/months of consultant services to achieve these objectives. 3.47 Personal income tax. The processing of annual declarations (on new printed forms) and of collection of automatic taxes is now computerized, as is the generation of assessment notices and tax rolls. Editing of pre-printed declarations is also possible. 3.48 Property tax and cadastre reform. Although activity in these two areas is limited for the moment to Niamey itself, reforming of the cadastre of the capital has provided an opportunity to reorganize the associated documentary material (property-owner and surfaces-area files, etc.) and to plan computerization of these data. Beginning in 1985, the first property rolls were - 16 - arawn up and have helped to more than triple property tax revenues and increase the proceeds of the tax on rental value 1.5 times. 3.49 Despite progress in upgrading the cadastre, a number of technical difficulties have arisen. How can the property-owner file be made to intersect with the file of taxpayers subject to the general income tax? Can a link be established between the two?, etc. 3.50 Customs Administration. The goal was to computerize all aspects of clearance operations, from the time goods come into the custody of the Administration until issue of the release order following payment of duties and charges. Computerization was expected to lighten the burden of repetitive clerical tasks while allowing immediate generation of reliable statistics. 3.51 The first diagnostic study of the Customs Administration was made in late 1983 by a French specialist. A second mission, in April 1984, produced a set of general conditions and specifications and a time schedule for implementation of the project. Most of 1984 was devoted to administrative groundwork (revising the Tariff, creating files relating to regulations, developing new Customs declaration forms) for the projected changes. In late 1984 and early 1985, the first premises were prepared for occupancy and orders for hardware placed. Beginning in 1985, these facilities were fully equipped and ready for use. 3.52 UNCTAD provided technical assistance in the form of SYDONIA software. A French national served as technical assistant until May 1987 and an UNCTAD computer specialist visited Niamey regularly on missions. The Customs Adminiscration itself assigned the following personnel to the project: one senior inspector, two headquarters inspectors, three examiners, four supervisors, one computer specialist and four data entry clerks--a total of 15 staff members. 3.53 Although the Management Improvement Project did not provide any remuneration for personnel, it did finance purchases of equipment (in particular, 14 MICRAL, 60 computers and 2 vehicles) and the cost of enclosing space adjacent to several Administration depots. 3.54 System start-up problems have been satisfactorily overcome at four facilities in Niamey, which together process 80 percent of Customs declarations (there is a total of eleven facilities, five in Niamey and six in the provinces). In addition to extending the system to all facilities, the agency plans to expand it to cover other functions (licensing, warehouse management, etc.). 3.55 According to information obtained from the agency itself, various problems have had to be faced subsequently: * Interruption of telephone service at all facilities, including headquarters. Unfortunately, this occurred at the very critical point when SYDONIA software was being introduced. - Weak electric power supply to facilities, which obliged the agency to enter into a contract with NIGELEC, the national electric power - 17 - authority, in order to have the transformers serving its premises reinforced. - A final difficulty arose with the software itself. During the period of initial use, incongruous results were sometimes obtained, apparently as a consequence of inconsistencies between the software and the Customs nomenclature used in Niger. Corrections and clarifications are to be proposed by the UNCTAD technicians. 3.56 These difficulties--external to the Customs Administration, after all-- appear to be rectifiable. Accordingly, the goal of "computerization of the Customs Administration" can generally be considered a success. 3.57 Various computer programs have been or are to be introduced (collection of Customs duties, property taxes, personal income taxes), but they may come up against shortcomings in the computer procedures employed by departments upstream from the Treasury (particularly the Taxation and Customs Administrations). Data- processing appears to have been introduced there without sufficient concern for possible Treasury needs, although the difficulties that surfaced after these needs were identified could have easily been ironed out through recourse to the Ministry of Finance's own computer Center. 3.58 The lack of standardization of computer equipment has led to problems across different services and thus compromised possible efficiency gains (e.g., the Ministry of Plan is equipped with IBM, while the Ministry of Finance with BULL). (iv) Computer Center of the Ministry of Finance 3.59 This Center, attached to the Ministry's Studies and Projections Department, had for a number of years used a small computer (HB 61/58) to process the Civil Service payroll. However, as the volume of data to be processed finally outstripped the capacity of this hardware, it was replaced in 1980 with a medium-size computer (HB 62/35), so that processing operations could be upgraded and new types of study developed. 3.60 In 1983, the Center acquired a transactional system which meant better service for users and greater programming flexibility. Since the system was then expanded considerably, the computer reached saturation in 1987 and was replaced in November of that year by more powerful, new-generation hardware (BULL DPS 4000), with 14 keyboard/screen terminals. 3.61 The programmers were trained through internships, arranged by ADETEF, in the computing activities departments of the Tax Administration in France, while two expatriates served as project managers. 3.62 The premises occupied were not originally designed to house a computer center. Operating conditions were poor (dust, air conditioning, security). Since space utilization was at the maximum, plans were made to build onto the rear of the ministry building. This extension project, financed from the Management Improvement Project, provided a satisfactory solution. - 18 - c) TraLning 3.63 As indicated above (para. 2.3), a formal training component was included in the project amounting to US$0.79 million, i.e. 8 percent of the base cost of PAGEF. 3.64 Only the first phase of the training program was defined with some details. It referred to training of statistical assistants, improvement of the skills of existing mid-level staff, training of high-level staff and seminars. (i) Training of Local Assistants 3.65 At least 30 statistical assistants were to be trained in general statistical methods in the Statistical Department of the Ministry of Plan. A two-year local program was designed by a UNDP-financed consultant. Thirty two- year local scholarships were to be granted to trainers. Three consultants furnished to the Statistical Department by FAC and local high-level staff were to provide the training. 3.66 A training center was established in the Statistical Department. The Center has concentrated mainly on: (a) administrative and monitoring activities in connection with students enrolled in a special cycle of training courses given in Niamey (e.g., curriculum planning and organization of study visits for programmers and other technical personnel); and (b) the organization of internships abroad. 3.67 Numerous seminars and internships abroad were organized: three seminars in Niger and ten abroad (in Libreville, on data bases; Addis Ababa (2); Lom6; Montreal; Ouagadougou; Accra; Paris; Luxembourg; and Rome). 3.68 Training of statistical assistants did take place throughout the life of the project and nearly 200 persons received this training (PCR, para. 9). (ii) Improvement of the Skills of Existing Mid-level Staff and Training of High-level Staff 3.69 The training program for mid-level staff of the Public Investment Department of the Ministry of Plan and the Financial Planning, Public Debt, and Fiscal Administration Departments of the Ministry of Finance was designed by a mission of French training specialists organized by ADETEF and financed under the first PPF advance. The program was to include both visits to different departments of the French Ministry of Finance by selected Nigerien staff, and local short-term training programs involved courses and on-the-job training to familiarize the Nigerien staff with the use of modern data processing in investment orogramming and budgeting; public debt and fiscal management. French short-term consultants provided by ADETEF were to assist in the local training programs. 3.70 The project also included a training component for high-level staff. Ten four-year scholarships were provided as well as 26-month fellowships for training abroad. - 19 - 3.71 In general, internships were short (from a few days to a maximum of three months only) and all of them were organized abroad. The heavy emphasis on short internships abroad led to very high costs. The TA Project Director put the "average cost of the individual internship at CFAF 2,229,730," a figure that could be compared at that time to "the average cost of an academic year at an American university, approximately US$10,000, or CFAF 2,780,000." This seems to be the main reason for expenditures on training which totalled US$1.29 million, although only US$0.61 million was originally provided in the project cost (including contingencies). There seems to have been little justification for some choices. What was the real use of sending an intern from the Administration Department of the Ministry of Planning to spend two months studying inventory management in the U.S. (University of Atlanta) in 1987? The same question can be put regarding the four internships planned in 1988 at the University of Pittsburgh, where for the tenth consecutive year Professor David J. Gould was organizing a "seminar for French-speaking participants on managing development." The exercise was to last two months; costs per intern were US$16,500 (registration, US$7,000; per diems, US$6,800; and travel expenses, US$2,700). 3.72 In this general atmosphere of improvisation, ADETEF attempted to play a useful role where the Ministry of Finance was concerned. It provided opportunities for civil service personnel from Niger to follow courses given in Paris by the Institut International d'Administration Publique (IIAP), an entity which organizes special sessions on specialized topics. For instance, a session (with an informational focus) on valued-added taxes was given in 1988. Participants, selected on the basis of their personal history records, were responsible only for their traveling and living expenses (which were met by their home government, although a French Government grant might have been available). 3.73 Out of 88 internships (stages) abroad, 14 were to follow courses given by HAP. 3.74 In addition, ADETEF also organized training opportunities at some of the specialized schools in France (Ecole Nationale du Tr6sor, Ecole Nationale des Imp6ts) and in some of the key departments of the Ministry of Finance (Direction de la Comptabilit6 Publique, Contr6le d'Etat). 3.75 The training of higher-level staff (ten four-year scholarships abroad) never materialized because of difficulties in releasing these officials from their normal responsibilities. (iii) Seminars 3.76 To promote further cooperation between the Ministries of Plan and Finance, the project was to finance five to six seminars, including the cost of foreign lecturers invited to participate in the seminars. The latter were to be partly organized by the PMU in the Ministry of Plan and ADETEF. 3.77 The seminars, nine in number, were all held in Niger. Only the one held on project financial analysis, appears to have been of any real use. - 20 - (iv) Observations on the Training Program Implementation 3.78 The Bank Resident Representative asked repeatedly the Nigerien authorities to submit a detailed program taking into account specific training needs to meet the project's objectives. He even insisted, for example, on postponing all internships abroad until the Ministry of Finance's training plan had been reformulated because it did not really filled the project's requirements. It appears that training abroad was often considered in Niger more as a reward for good performance or merit rather than to satisfy specific needs of particular projects. Consequently, the large number of trainees designated to benefit from scholarships awarded under PAGEF often did not come from the very departments in the Plan and Finance Ministries targeted by PAGEF's objectives. As a result and basically because of a different approach to training altogether taken by the Bank and by the Nigerien authorities, implementation of the program met with serious difficulties. No overall view on strategy appears to have governed the organization and planning of the different elements that made up the training program. Needs assessment, choice of internship opportunities and selection of the interns themselves were decided on a hit-or-miss basis without real consultation between the Ministries of Plan and Finance, the PMU and the Bank resident representative in Niamey. d) Twinning Experience: The role of ADETEF 3.79 ADETEF made many missions--over 30 in fact. The shortest missions lasted two to five days and the longest ones, 25 days. Thus, virtually all missions were brief. Missions were devoted to land taxation (cadastre) (twelve missions), debt reporting systems (seven missions), Treasury Department management and monitoring (nine missions), training in the Ministry of Finance (four missions), and Customs reform (one mission). 3.80 Although the Customs Administration received only one ADETEF mission, it benefitted very early on from UNCTAD technical assistance. All other major departments or offices in the Ministry of Finance received a very large number of missions. Some technical assistants became veritable "regulars" at Finance (in particular in Treasury and the Taxation Administration), the same technical assistant might return on three or four tours of duty. 3.81 The brevity of ADETEF experts work made it possible to avoid the oft- proclaimed pitfalls of experts who "become entrenched." The missions aimed first at assessing and then providing remedies. Monitoring of early results was assured by the successive mission visits, always brief, by the expert responsible for a specific problem. 3.82 The approach was one of "little steps" to resolve specific problems whenever they arose without ADETEF seeking at any moment a full restructuring of the Ministry of Finance (and this certainly was not PAGEF's objective'. 3.83 The ADETEF experts obtained a high level of respect from their Nigerien counterparts and successfully put in place computerized systems for external debt, fiscal management and customs administration. However, they provided little on-the-job training, which may explain the limited lasting effect of short-term ADETEF missions (PCR, para. 24). The fact that continued assistance - 21 - could not be provided, for the budgetary forecasting system as originally planned under the Project (which had provided funds for an expert for two years) (para. 3.41), was certainly detrimental to the success of that part of the project. IV. PROJECT RESULTS 4.1 The capabilities of Niger's economic and financial administration have improved since 1983/84. Today, the Planning and Finance Ministries know how to do things that they did not know or did not understand clearly eight years ago. At Planning, the procedures to prepare an investment planning and budgetary system have been adopted. The Statistical and Computer Department has been organized and equipped with the means for modern data processing; it has improved both the quantity and quality of its output. The Project Planning and Evaluation Department and the Investment Finance Department can identify some projects that can be submitted to the donors. At Finance, progress is even clearer. The Customs Administration can input and process most declarations by computer. The Taxation Administration has revamped tax legislation, expanded the tax base and computerized the main taxes. The Computer Center at Finance is now working efficiently. The Treasury is improving its means of collection. The Public Debt Department has computerized its data processing of the external debt. 4.2 These results suggest that on the whole the Project achieved important results although many deficiencies remain. There are three reasons for this success: - After many hesitations, the Bank ultimately was not overly ambitious. It adopted limited and well-defined objectives (restructuring of the public sector, programming of public investments, taxation system, Customs, debt, etc.). The consultants were carefully selected. This was the case with the main consultant at Planning, who had already demonstrated his mettle elsewhere, as well as with the aspects selected by ADETEF. - Secondly, the resolve of the Niger policy makers, itself enhanced by the low turnover among the leaders. - Thirdly, the use of "twinning" was to a large extent, successful, although as indicated ADETEF experts short-term assignments was not always conducive to provide lasting counterparts on-the-job training. A. Economic Studies 4.3 Economic studies were to help the Government prepare a short-term consolidation program and a structural adjustment program. In particular, guidelines had to be defined as well as specific programs for the rehabilitation of the parastatal sector through diagnostic studies (para. 2.2). - 22 - 4.4 Forty-nine diagnostic studies were completed and appear, on the whole, to have provided a clear picture of the set of problems found by each enterprise. Diagnostic studies led to the rehabilitation or the liquidation of a number of public enterprises. One of the 1986 SAL major concerns was the reform of the parapublic sector. Reform of this sector was considered so important that the SAL was supplemented by a public enterprise sector adjustment program in 1987, itself supported by a Public Enterprise Institutional Development project. Under that project the Ministry of Public Enterprises was abolished and responsibility for monitoring public enterprises was transferred to the Ministry of Planning and Finance. After a difficult period of transition, project implementation was satisfactory. 4.5 The recommendations of the cost-recovery study contributed to the introduction of a number of measures in the livestock sector and prompted the Government in shifting to a grassroots approach in the design of cost-recovery mechanisms for the health sector. The Industrial Incentives Study recommended a number of actions related to tariff reform, investment code modifications and simplification of administrative procedures which were adopted (PCR para. 15). The Cross Debt Study led to a settlement of cross debts among public enterprises. These measures were part of the structural adjustment reforms agreed with the Bank. 4.6 The usefulness of some other studies was, however, far from apparent (paras. 3.19-3.23). The Civil Service Study had a limited usefulness since most recommendations had already been made earlier. The Agricultural Credit System Satdy contributed to the liquidation of the Caisse Nationale du Credit Agricole (CNCA), although it may not have been necessary to undertake such study since other similar studies financed by other donors had or were being conducted at the same period. The same could be said for the Air Niger study--the decision to close Air Niger was an entirely political problem whose technical and economic aspects had been fully known for some time. 4.7 Other studies, while costly, were found to be wanting by the Project Management Unit and had to be redone (for example, the above mentioned study on the Civil Service "suffered from a lack of rigor, clarity and consistency"). In general, the number of studies was excessive. Unfortunately, there was a tendency to order a report as soon as a problem arose, without giving due consideration to the quality of the person who was to do it; often a decision could be taken outright as all factors are already known. The multiplication of studies may be an alibi for lack of action. B. Institutional Development 4.8 Although positive results have been achieved (para. 4.1), there are obviously still major institutional deficiencies despite the good professional qualities displayed by a number of Nigerien civil servants. 1. Ministry of Planning 4.9 PAGEF has helped in setting up a three-year rolling investment program. However, the programming/budgeting system structure seems to be an ad hoc affair without a close relation to the budget. Consolidation of the investment and - 23 - recurrent budgets does not go farther than publication in a unique document and does not permit a full-fledged analysis. Project programming seems to be mainly an internal recording exercise in the Ministry of Planning with little relation with the technical ministries operations. 14.10 Recurrent expenditures have not been effectively studied and, therefore, the recurrent budget does not take into account relevant expenditures generated by investments. 4.11 Although there exists a theoretical "project cycle" in the Ministry of Planning, there is little effective control system nor procedures to implement it. As a result, the situation has not improved from project identification to project execution; an identification exercise was carried out in 1988 concerning 24 projects which were presented at a round table of donors in 1988 but this seems to have been a one shot operation only. Project evaluation remains weak, due to lack of technical expertise in the Ministry of Planning, reducing considerably its capacity to discuss with technical ministries. Project supervision has been marginal. 4.12 The Statistical Department (DSI) can claim credit for a number of notable achievements. In addition to a general population census in 1988, DSI has focussed partly on the informal sector and partly on household budgets. It has developed a version of the Standard International Classification by Industry (for all branches of economic activity) specifically adapted to Niger, as well as a data file on all establishments in operation. After several years interruption, probably largely a consequence of poor coordination between DSI and certain ministries which were slow to provide the required information, DSI has again published a Statistical Year Book. 4.13 The Computer Center has (a) organized missions providing assistance and advice (systems analysis and formulation of a data-processug master plan for the Ministry of Planning); and (b) devoted considerable efforts to make up for the backlog in processing foreign trade data. 2. Ministry of Finance 4.14 The implementation of the computerization of customs (SYDONIA system) is probably one of the most tangible and positive results of the PAGEF. 4.15 Efforts to improve fiscal recovery have had some positive results (computerization of income tax and property tax, and new fiscal code) (para. 3.46-3.56). However, the fairly heavy investment in hardware and construction were not matched by a similar effort to reform budgetary structures and procedures. A financial expert who was to set up a budgeting forecasting system was never appointed and many financial problems were not solved. Treasury was little touched, although it has now improved its collection means. The Budget Directorate was not touched at all by PAGEF. The Ministry of Finance is regularly identified as a major bottleneck in budget implementation. 4.16 A decent debt recording system has been set up. However, it is not yet used as a part of an economic and financial forecasting system. This system was supposed to be set up under PAGEF. * 24 - 3. Training 4.17 Training was the least successful component of the Project (paras. 3.63-3.78). This is paradoxical because, by its very nature, the technical assistance was to have focussed on training. The reason for this failure is undoubtedly linked to a lack of concert between the Bank and the two ministries (Planning and Finance) involved on the nature and content of the actions to be promoted. In this respect, it is unfortunate that there was a "dialogue of the deaf" between the two partners, with the Niger authorities preferring to send their officials to internships abroad and the Bank leaning toward on-site training. A case can be made for both approaches and neither of the two has any clear advantage. One disadvantage of training abroad is that the trainees are in a very different environment but, conversely, on site-sessions using an external consultant lack the necessary monitoring after the departure of the consultant. These problems should be explored in depth so that the Bank can determine the guidelines to be followed. Above all, failing a sound doctrine on what should be done, a very confusing situation such as that faced by Niger, where initiatives were taken in spotty fashion, must be avoided. 4. Project Management 4.18 Results have been unsatisfactory, despite substi4ntial efforts made by the PMU, in particular the Deputy Director. The Management Unit felt it was "short-circuited," as the Niger authorities did not respect their original commitment to entrust overall Project coordination to an Interministerial Commission. Perhaps the idea to establish that entity, which was undeniably too cumbersome, was unrealistic. 4.19 PAGEF suffered from the position of its management unit within a Directorate of the Ministry of Planning. On one hand this precluded initiatives and consistent guidance from the management unit, as any intervention in any other Ministry was subject to the approval of the Minister of Planning, on the other hand, the Minister has the opportunity to use the project (and its funds) for leverage with other parts of the Administration; he could and did use PAGEF to finance operations without consultation with the Management Unit, which wAs often informed of such operations when it received bills. As a result, some important elements of the project never got under way ("Pr6vision" in Finance), while others of questionable priority were carried out at the discretion of the Minister (construction of a Documentation Center for half a million dollars). 5. Operating Expenditures and Civil Works 4.20 A substantial part of PAGEF resources was utilized to cover operating expenditures (principally supplies and maintenance) and the restoration of offices. As mentioned above, the civil works component in the Ministry of Planning (Documentation Center) was introduced to the project midway through implementation and led to significant delays. 4.21 Salary supplements that were originally meant only for training officers were extended to support staff of the working groups in charge of supervising SAL studies, a practice which was ultimately stopped by the Bank for its projects (PCR para 12). - 25 - 4.22 Operating expenditures as well as renovation of offices and civil works for the Documentation Center totalled US$4.46 million, i.e. 38 percent of the IDA Credit against US$1.47 million or 12.5 percent only originally planned (PCR, Table 4). 4.23 Thus the Project was ultimately a supplementary budget that allowed the Government to count on support that it would not have had without outside . assistance. Without the Project, it would not have sufficient equipment, office supplies, vehicles, etc., or the necessary expertise to become a bettir administration. This supplementary budget, which has what has been called a . "Father Christmas" aspect, was in fact crucial. But it came too large in relation with the total TA Project cost to the point that PAGEF financed on average 55 percent of recurrent expenditures of the Ministry of Planning and 25 percent of the recurrent expenditures of the Ministry of Finance. 6. Local Consulting Capacity 4.24 Use of local consultants was extremely limited. Nigerien authorities may have understood, erroneously, that the Project excluded the possibility of recruiting local consultants or consulting firms. As a result, local expertise was not fully used, in particular, in accounting V. SUSTAINABILITY 5.1 As indicated above (paras. 4.8-4.16), PAGEF helped develop a certain number of tools and functions (debt systems, investment programming), undertake construction and acquire equipment perceived as urgently needed. At the same time it attempted to perpetuate its undertakings through the provision of (a) considerable support to operations of the Ministries (Planning and Finance); (b) generous financing of poorly programmed training; and (c) diagnostic and other studies of uneven quality. It has done so without paying sufficient attention to the institutionalization of the functions and systems it helped install. 5.2 Examples of unachieved reforms are: - Better monitoring of Niger's external debt but need for further progress in analytical capability of Nigerien staff and integration into the country's economic and financial projection system; - Improvement in fiscal administration was not accompanied by reforms in budgetary structures and procedures aimed at rationalizing resource allocation and at strengthening expenditure control (PCR, para. 19); - The programming of public investment in the Ministry of Planning is continuing, but on a mechanical basis and with little regard to the reliability of data. The investment budget needs to be - 26 - coordinated with the recurrent budget and the Planning Ministry must improve its dialogue with the technical ministries. 5.3 As a result, the sustainability of many of the PAGEF's financed elements is in question. Clearly, continuous financing of operating expenditures cannot be pursued any longer under a single TA project, neither can one continue to finance training on an ad-hoc basis, outside of a comprehensive service recruitment and training policy framework. Moreover, those two activities of PAGEF have had pernicious consequences on the significance of budgets and on the stability of civil service staff. Several critical functions (investment programming and budgeting, debt recording) are still foreign grafts onto a not very receptive administrative body while other essential functions (Budget and Treasury in Finance and Civil Service Management in the Ministry of "Fonction Publique") have yet to be dealt with properly. 5.4 Since it took over the cost of capital investments (office construction) and renewable equipment (computers, vehicles, photocopiers, etc.), the Project will induce recurrent expenditures that will have to be borne either by a new project or by future national budgets. In the first case, all other things being equal, the country's debt will increase. In the second, operating expenditures will rise. The Bank will then have to ensure that these inevitable prospects do not conflict with the policies to cut public spending and reduce external debt that it advocates elsewhere. VI. LESSONS OF EXPERIENCE 6.1 The capabilities of the Ministries of Planning and Finance improved as a result of PAGEF supported actions. The project adopted specific objectives (investment programming, customs and debt computerization, public enterprises diagnostic studies, etc.). However, experience has shown that precisely because actions were scattered and uncoordinated, the project did not and could not properly evaluate the adequacy and consistency of administrative and financial systems and procedures in Finance, Planning and Technical Ministries. 1. Institutional Development Strategy 6.2 The lesson is that PAGEF may have been more successful if it has been planned within the context of a long-term country-specific institutional development strategy. In parallel, with the dialogue on economic policy reforms, the Bank should have worked wich Niger to develop a long-term institutional strategy. The Bank's advice on such strategy should have been based on issues identified in its economi and sector work and explicitly on institutional development issues, paying considerable attention to local institutional setting and social and cultural factors. If this had been done, successive TA projects may have been planned over a longer period than that co,ered by PAGEF and may have led to better fulfillment of long-term institutiotial objectives. 6.3 The project had multiple objectives, some within the framework of institutional development per se and others aimed at providing technical - 27 - assistance and the means (organizational strengthening perhaps but not to be confused with institutional development) to the Government to prepare the SAL. That there was a deviation from some of the original objectives may have still occurred even with the definition of an institutional development strategy. Sharper definition of project objectives and activities from the outset (e.g., studies to be undertaken, terms of reference for such studies) and closer monitoring (implication: greater resources for supervision) may have helped. 2. Borrower's Commitment 6.4 A useful lesson of experience gained through PAGEF has been the careful initial assessment by Bank staff of the borrower's commitment at the project identification stage. Political and senior civil service leaders largely endorsed the project at its inception. This commitment was enhanced by the low turnover among political leaders during most years of project implementation which proved beneficial to the success of the project. This confirms the positive effects of a strong borrower's commitment to project objectives and implementation. 3. Project Management Unit 6.5 PAGEF involved two implementing ministries (Planning and Finance) and the location of PMU under the direct control of the Planning Minister proved detrimental to the success of the project (para. 4.19). In making arrangements for project coordination, the key is to ensure enough autonomy for project implementation and yet avoid an "enclave" syndrome. What should prove effective is the appointment of a full time coordinator relatively high in the ministerial hierarchy (Director or Director General) and with political acumen. 4. Supervision 6.6 Supervision was not satisfactory, partly because the Bank Resident Representative was delegated almost all responsibilities for the project and was left acting mostly alone in the field. Resident missions should certainly continue to be involved in day-to-day detailed management and administration because close contacts are needed with local authorities and expatriate experts are more easily handled locally. But, Headquarters staff should play a key role in supervising TA projects, particularly as regards institutional development strategy work and providing specialized skills, not available in resident missions. 5. Operating and Construction Expenditures 6.7 A technical assistance project should not allocate too large amounts to finance salaries and construction expenditures. As regards salaries, discrimination between beneficiaries create a "malaise" in the Ministries and topping salaries should be avoided to the extent possible. Capital investment (office construction) and renewable equipment (computers, vehicles) induce recurrent expenditures which have later to be borne either by a new project (Niger insisted in h&ving a PAGEF II largely for this purpose which created problems since the Bank could not agree in this respect) or by future national - 28 - budgets. This type of expenditures should not conflict with the policy to cut public spend.ng that is advocated elsewhere. 6. Funds Allocations 6.8 Almost 30 percent of the audit was "unallocated" for the sake of flexibility. Moreover, although allocations between various project components were changed significantly on several occasions, actual expenditures were not consistent with the new allocations. The lesson is that it is futile to go into minute detail (number of consultants in man/months, typewriters, seminars, etc.) unless one has a precise and realistic view of the cost of rhe various TA components. An "unallocated" reserve of 30 percent of the total credit makes any detailed breakdown of other components look superfluous and should thus be avoided. rlexibility in the use of TA funds should not imRly laxity. 7. Studies 6.9 Studies proliferated in the project reviewed. Often it was difficult to assess their quality and difficult to find evidence of their impact. Studies should receive special attention in guidelines on assistance for institutional development, so that the requirem, ts for studies are clearly identified at the project design stage, the studies are prepared carefully, and Bank staff follows up on their implementation. Studies that cannot be evaluated and supervised should be eliminated. 8. Training 6.10 Training was the least successful component of the project. But formal training should be as expertly designed and supervised as other project components. Training programs must be very specific and detailed in the projects reviewed, and their preparation should take into account actual and behavioral factors (e.g. in Niger the great importance given to training abroad as a sign of recognition of services rendered). Programs must be designed in full cooperation with the borrower and, to the maximum extent, prepared before the TA project is approved. 9. Twinning 6.11 The twinning approach had a host of advantages in Niger that have been mentioned. A particular difficulty was that the selected agency from a donor country (i.e. ADETEF from France) became too visible and appeared, rightly or wrongly, as carrying the risk of monopolizing technical assistance. Another problem was the difficulty to provide sustained on the job training during short- term missions, as this was the case in the twinning experiment. Teaching ability and suitability for teamwork sometimes was missing while it should have been considered as important as technical skills. On the whole, the twinning approach worked well in Niger, although it is difficult to say that it should be recommended as always the best approach (a similar twinning experience with ADETEF in Rwanda's Finance Ministry did not work very well). 6.12 "Advisory" or "substitution" technical assistance? "Long-" or "short-" term technical assistance? The respective advantages and drawbacks of these - 29 - different approaches have often been discussed without leading to truly convincing reasons to favor one solution over another. Substitution assistance is not necessarily to be avoided. It can even have advantages to the extent that within a certain period of time the expatriate expert must complete a well- defined task. At any rate, project objectives must clearly distinguish between "substitution" TA used to help implementing the project itself and long-term institutional development--objectives which aim at institution building and/or system capacity. Project resources have to be allocated in consequence at the design stage. 10. Local Expertise 6.13 Local consultant expertise was not utilized by the project. More use could perhaps have been made of Nigerien consulting firms for instance in diagnostic studies on parastatals. Joint ventures (using not only the conventional method of subcontracting) between local and expatriates consulting firms might have been explored more, with Bank encouragement.