Djibouti - Technical Assistance Project

Do_ent of The World Bank FOR OF AL USE ONL Repwt No. 12092 PROJECT COMPLETION REPORT DJIBOUTI TECHNICAL ASSISTANCE PROJECT (CREDIT NO. 1232-DI) JUNE 28, 1993 MICROGRAPHICS Report No: 12092 Type: PCR Country Operations Division South-Central and Indian Ocean Department Africa Regional Office nbis document has a restricted distribution and may be used by eipiets only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENIS Currency Unit = Djibouti franc (DF) US$1.00 = DF 177.72 GLOSSARY OF ABBREVIATIONS ICR - Project Completion Report TA - Technical Assistance IDA - International Development Association UNDP - United Nations Development Programme FAC - Fonds d'Aide et de Coop6ration SDR - Special Drawing Right OECD - Organization for Economic Ccoperation and Development EEC - European Economic Community WEIGS ANDMEASES Metric System Metric British/US EAuivalents 1 meter (m) 3.3 feet 1 hectare (ha) 2.47 acre 1 are (100 m2) 0.02 acres 1 kldometer (kn) 0.62 miles 1 square kilometer (km2) 0.39 square mile (sq.mi) I kilogram (kg) 2.2 pounds (lb) I liter (1) 0.26 US gallon (gal) 022 British gallon (imp gal) 1 metric ton (m. ton) 2,204 pounds (lb) FCAL YEAR Janualy 1 - December 31  FOR OFFICIAL USE ONLY THE WORLD BANK W"hington, D.C. 20433 U.SA Offles of Dirvctor.enoral Operations Evaluaton June 28, 1993 MEMORANDUM TO T,H1 EXECUTIVE DIRECMORS AND THE PRESIDENT SUBJECr: Project Completion Report on Djibouti - Technical Assistance Project (Credit 1232-DI) Attached is the Project Completion Report on Djibouti - Technical Assistance Project (Credit 1232-DI) prepared by the Africa Resional Office, with Part II contributed by the Borrower. The project objectives were: (i) to improve the Govemment's capabilities to assess the county's resources; (ii) to formulate an appropriate development strategy, (iii) to prepare yearly investment programs; (iv) to evaluate and prepare investment projects; and (v) to strengthen the Djibouti Planning and Statistical Directorates. With few exceptions (preparation of some useful project studies and improvements in the Statistical Directorate), these objectives were not achieved. Both the Bank and the Borrower conclude that the outcome was unsatisfactory, that the impact on institutional development was negligible and that sustainability is unlikely. The PCR provides a candid albeit sketchy discussion of project performance. The main flaw in the design was excessive complexity. In addition, the Borrower considers it to havc been fundamentally flawed by its blueprint approach, with "no effort ... made to adapt to [Djibouti'sj specific situation." The main shortcomings in implementation were the Government's weak commitment to project objectives and the lack of clear benchmarks (on the part of either the Bank or the Government) for institutional capacity improvement. The project may be audited. Attachment This document has a restricted distribution and may be used by recipients only In the peFr ormancc- 'their official duties Its wntents may not otherwise be disclosed without World Bank authorization.  FOR OMCL41 USE ONLY DJIBOUTi PROJECr COMXPLEIgON REPORT TECIENICAL ASSLrANCE PROJECT (Cvet 1232-DI) Table of PREFACE .......................... ....******4 * *... I EVALlIATION SUMMARY ...................................... ....*... iii PART I - PROJECT REVIEW FROM THE BANK"S PERSPECITVE PROJECTTIDENTIR`Y .............................................. 1 ONcRO i)UCe1ON ............................................... 2 H. THEZITnNG .................................... I M]. lllE PRO.lECT .................................................. 2 Objectives .................... 0.............................. 2 Compo sition ..................................................... 2 Concept and Design ............................................. 3 Benefits and Risks .............................................. 3 iV. 11PLEfMIENTATION **.... .*.... *. *. 4..... ....... 4.... *.*. * ...*. * 4 Overal Performance ............................ .... * 4 Disbursements ................. .............444....*.... *....* 5 Technical Assistance to Planning . . .... ... .. .. .... .... .. .. .. .. . .... . 6 Technical Assistance to the Directorate of Statistics ... .................. 6 Studies Fund ............................................... . Documentation Center ........................................... 7 Training Prograun ............. .................................. 7 Government Performance ......................................... 8 Bank Management and Supervision ........ ................................ O Bank and UNDP Cooperation . ................. *.. 0 ......... ......... 9 V. IMPACr ...4.... .... ........... ........................... 9 Externaly.Financed Projects ................... .......... . .... 9 InstitutionalImpact ........ .... ...... *..... * 4. 9 VL CONCLUSIONS AND LESSONS LEARNED ............................. 10 Concept and Design .................. 4.4 44.................. 10 Bank Performance ................... ................... 10 Lessons Learned ............................... ....... 11 PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 1. IINRODUCTION . ............. *....... ......... 12 IL PROJECT CONTEXTr . ............................ 12 This document has a restricted distribudon and may be used by tecipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (cont'd) IIL PROJECr EWPLEMEW ATION ...................................... 13 Worldliank Perorinance ........ ......... 14 UNDf Performance ............................................ 14 PART m - STATISTICAL INFORMATION Related Bank Credits ............................*****ss 15 Prc&d Timetable ..... ................... ..................... 15 Credit Dfsbursements .............. ............... .. 16 Project Implementation . ........ ................................ 17 PseofBankResoums ...and ......................................... 21  -i- PROJECT COMPLETION REPORT DIIBOUI TECHNICAL ASSISTANCE PROJBCr (Credit 1232-DI) PREFACE This is the Project Completion Report (PCR) for the Technical Assistance Project in Djibouti, for which Credit 1232-DII in the amount of SDR 2.6 million was approved on April 20, 1982. The credit became effective on September 22, 1982, and was closed on June 30, 1989, three-and-a-half years behind schedule. The last disbursement wvas on February 24, 1989, and a balance of SDR 843,005.03 was cancelled. The PCR was prepared by the Country Operations Division of the South- Central and Indian Ocean Department (AF3CO). There was no completion mission. The Borrower prepared Part II, which was received on June 3, 1992. The PCR is based on the President's Report, the Credit Agreement, reports by and correspondence between the Bank and the Borrower, internal Bank memoranda, and interviews with Bank staff previously involved with the project  -iii- PROJECT COMPLETION REPORT DJIBOUTI TECHNICAL ASSISTANCED PROJECT (Credit 1232-DI) EVALUATION SUMMARY Objectives The main objectives of the project were to improve Djibouti's capacity to formulate an appropriate development strategy, to coordinate development efforts, and to prepare and analyze sound development projects (see para. 5). Implementation Emprience Overall, project performance was unsatisfactory. Implementation problems arose early on due to weaknesses in public administration and a weak Government commitment to project objectives. The project's main component (assistance to the planning function) was redesigned about six months following effectiveness. However, the redesign focussed on short-term solutions and was not based on clear benchmarks related to institutional development. One of the main objectives of the project was to strengthen the planning function in Djibouti through direct support of a technical assistance (TA) team to the Planning Directorate. Foilowing the redesign of tuiis component, the TA team was assigned to an "Oversight Committee (established in February 1984 under the aegis of the Minister of Fmance), to follow-up, inter alia on the recommendations of a donors'conference held in November 1983. While the Committee succeeded in preparing a public investment program and several feasibility studies (under the Studies Fund) which were subsequently financed by donors, the Planning Directorate was marginalized in the process. On the other hand, the component providing support to the Statistics Directorate was fully functional following the resolution of difficulties in its start-up phase. (See paras. 13-18.) Results Even though the main objectives of the planning component (formulation of an appropriate development strategy and strengthening of the planning function) were not achieved, the project, nevertheless, provided valuable support during its implementation in the improvement of the economic and financial management of the country a portfolio of projects was prepared and submitted to a donors conference (held in 1983) resulting in the financing of several of these projects. This was followed by the preparation of the 1984-88 Public Investment Program. Modest results were achieved under the other components. (See paras. 21-25.)  -iV- Sustainability Given the lack of a sound permanent institutional framework for planning during project implementation, the objective of improving institutional capacity in the planning function was not achieved. The statistics component produced satisfactory results, and the need for accurate and timely data seems to have been internalized well. The sustainability of the documentation center appears unlikely given the lack of systematic use of these facilities, as well as lack of discipline in its maintenance. (See paras. 35-37.) Findings and Lessons Learned Although the project's concept was good, its original design was over- dimensioned for a first Bank-financed operation in such a small and complex country as Djibouti The project's redesign in mid-course should have been based on a more clearly defined long-term institution building concept. In retrospect, Government requests for closing date extensions should not have been readily accommodated in the absence of a clear Government commitment to the project objectives.  DJIBOUtl PROJECr COMPLEInON REPORT TECHNICAL ASSISTANCE PROJECT (ffl 1232DI) PART I - PROJECT REVIEW FROM THE BAUNS PERSPECTIV Project Idenfti Name Technical Assistance Project Credit Number 1232-DI RVP Unit Africa Region countty Djibouti Sector Technical Assistance L INTRODUCrION 1. This project, for which an IDA credit of SDR 2.6 million was approved on April 20, 12, was the first operation financed by the Bank Group in Djibouti IL THE SETIING 2. he Republic of Djibouti, is a small country of 23,200 sq. km. located strategicaLly in the Horn of Africa. Two-thirds of its 450,000 1/ inhabitants live in the capital, Djibouti City. Djibouti has received some 80,000 refugees and immigrants since the 1980S from Ethiopia and Somalia, at great economic and social cost. According to the UN classification, Djibouti belongs to the Least Developed Countries group. (However, based on Bank estimates of national accounts, the GNP per capita is estimated at between US$740-US$900 in 1990.) 3. Djibouti's economic development constraints are substantial; they are those of a dualistic economy with skewed income distribution between a smal modern sector based on a relatively well-developed infrastructure and on expatriate skills, and a larger traditional society close to a subsistence level. The tertiary sector dominates the economy by contrbuting nearly 70 percent of GDP and providing the bulk of foreign exchange earnings. Its mainstay are services provided to the French military personnel stationed in the country (about 30 percent of GDP), and other services related to the role of Djibouti as a regional center due to its port facilities, private banidng and telecommunications services. l/ Official estimates. Bank estimatcs-prepared in the contest of the 1991 CEM-put the population in the 450,000-500,000 range.  -2- 4. Folowing Djibouti's independence in 1977, the Government sought external assistance to support the country's emerging development strategy. However, the institutional framework necessary for the design and implementation of a coherent development strategy was lacking. A preliminary request for technical assistance suppoIt from the Bank to strengthen the Government's capacity to prepare and implement an appropriate development strategy, was made by the Minister of Finance during the 1980 Annual Meetings. A formal detailed request was received from the President's office in February 1981, and the project was appraised in November 1981; the UNDP agreed to cofinance it on a parallel basis. The Bank's rationale for involvement was based on the premise that upon development of such a strategy a pipeline of "bankable" projects would emerge. IIL THE PROJECT Objectives S. The objectives set out in the President's Report were: (i) to improve the CGovernment's capabilities to assess the countrys natural and human resources, to formulate an appropriate development strategy, to prepare yearly investment programs (1983-1986), and to prepare and analyze appropriate de-velopment projects, including those suitable for submission to outside donors; and (ii) to strengthen the staff of the Planning and Statistical Directorates. Composition 6. The project, cofinanced with UNDP on a parallel basis, included the provision of the following servics and equipment: (i) three advisers: a macro-economist and a project economist/financial analyst in the Planning Directorate, and a statistician in the Statistical Directorate; (ii) three UN Volunteers: two statistical assistants in the Statistical Directorate and a documentalist in the Planning Directorate; (iii) a Project Preparation and Sector Studies Fund (Studies Fund) to finance sector, prefeasibility, and feasibility studies (140 staff- months) as wcll as the equipment needed for these studies and for appropriate pilot schemes; (iv) a training program in statistics (data collection, general statistics, national accounts), planning (macroeconomic and sector work), and prcject work ('dentification, preparation, appraisal, monitoring), as well as the necessary pedagogical material; (v) improveniont and extension of the Planning Directorate offices, to provide spacc for the advisers, the national staff, and a documentation center;  -3- (vi) equipment for the Planning and Statistical Directorates; and, (vii) two four-wheel drive vehicles. Concept and Design 7. In the early 1980s, the Government began addressing the institutional weaknesses which were hindering the country's ability to define an appropriate development strategy and prepare suitable investment projects. In September 1980, the Government created the Planning Directorate and assigned to it the responsibility for coordinating the preparation of the first ITree-Year Development Plan. To strengthen the planning process further, the Government also created in April 1981 a National Programming Commission, which included representatives of all ministries. The Commission's mandate was to help the Planning Directorate to elaborate sectoral policies and the Developruent Plan. Because of the lack of reliable statistical data, in August 1981 the Government established the National Directorate of Statistics. & The TA project, which was prepared in collaboration with the UNDP, was designed to strengthen the Planning Directorate and the Statistical Directorate. Specifically, the project would address the three main weaknesses of the two agencies: (i) shortage of skilled personnel; (ii) lack of coordination; and (iii) lack of fully prepared projects and of the statistical base necessary for planning and project work. TA personnel (advisers, etc.) were to be financed by UNDP, with IDA qmancing equipment and feasibility and sector studies. 9. T1wo of the three long-term experts would help to organize the work of the Planning Directorate, assist in supervising the preparation and implementation of the Three-Year Plan, advise and assist in managing the Studies Fund, and provide general assistance in analysis and management of development projects. The third would help design and carry out surveys, and publish periodic statistics on the: economy. Besides on- the-job training of the experts' counterparts and of staff working with consultants financed by the Studies Fund, the project would provide training through scholarships for seminars in Djibouti overseas courses, and study tous 10. TMe Studies Fund would finance background studies necessary to elaborate a development strategy and feasibility studies for specific projects making up coherent investment programs. Eperience gained in managing the Fund (especially in the area of inter-ministerial coordination) would help to establish and consolidate the planning process. To help encourage coordination, detailed procedures were agreed and included in the legal documents for the credit. Benefits and Risks 11. \ccording to the President's Report (PR), a number of benefits were expected from the project First, it would help Djibouti to elaborate a development strategy and increase the number of adequately prepared project proposals to be submitted for external financing. &cond, application by all concerned government agencies of uniform criteria for project preparation and implementation would improve inter-agency coordination. Third, the project would contribute to establishing administrative procedures through the design and implementation of a workable planning process. Fnally, as a result of the  -4 - above, planning, policy analsis, and decision-making capabilities of key institutions would be strengthened and this would in turn help In better coordination of foreign assistance. 12. The PR highlighted inter alia the risk associated with the Government's ability to strengthen the Planning Directorate while solving coordination problems. However, it was stated that "as planning work progresses, these risks are expected to diminish as responsibilities are sorted out and institutional mechanisms established". It was also exp'-ted that close supervision by the Association and the detailed specification of the p.ocedures for managing the Studies Fund and selecting candidates for training should help alleviate the risks. IV. IMPLEMENTATION Overall Performance 13. Overall performance on the project was unsatisfactory. The credit became effective in September 1982 (after a three-month delay) and almost from the outset it became evident that major difficulties would arise in its implementation. This was due to two main factors: (i) the country's weak public administration, including the lack of qualified nationals as well as poor coordination among ministries and agencies; and (ii) lack of coordination among donors providing technical assistance and lack of the donors' faniliarity with their respective procedures. Since this was the first operation financed by the Bank Group in the country, it was agreed that a period of a few months of familiarzation was needed. 14. Following this initial period of familiarization, the project component providing assistance to the National Statistics Directorate was functioning satisfactorily. The Directorate's work program emphasized the need to improve collection and analysis of pertinent statistical data and with the expertise of the technical assistance team assigned to the Directorate work was undertaken to inter alia prepare a list of public and private enterprises, bi-annual bulletins, directory of statistics, trade statistics, etc. 15. On the other hand, the project component providing assistance to the Planning Directorate, which was also responsible for managing the Studies Fund, continued to encounter major implementation difficulties. Upon its arrival in Djibouti, the TA team prepared an action plan (approved by the Government, UNDP, and the Bank) for the implementation of the project's objectives. Witbin this framework, one of the first tasks of the team was to assess the mechanics of the planning process in DJibouti, as well as the functions and responsibilities of the Planning Directorate, so as to put in place the administrative framework necessary for the planning process. This assessment led to the realization that although the functions and resoonsibilities of the Planning Directorate as well as the required administrative framework were defined in several legislation and administrative directives, the Directorate functioned in an isolated manner without coordinating with the technical ministries. It was also ascertained that the Directorate was thinly staffed and that the existing staff were not qualified to carry out planning functions. These shortcomings reduced the Directorate's effectiveness.  - - 16. A case in point was the Donors Conference, which the Planning Directorate was originally given the responsibility to prepare. The Planning Director proposed to use the Studies Fund to hire consulting firms for the preparation of projects for submission to the Conference, but failed to coordinate with the Bank on substance and procedures (procurement rules were not respected, leading to the Bank's refusal to finance consultants hired by the Director). To provide further assistance to the Planning Directorate, an experienced Bank staff member was sent to Djibouti at the request of the President of Djibouti, to assist with the preparation of the conference, but Bank staff advice was also not followed. As a result, the Govemment kept postponing the Conference (it was finally held in November 1983) and appointed an Interministerial Committee, chaired by the Minister of Fnance, to organize the Conference and prepare its background documentation. The project was an important instrument in helping the committee in its task. 17. Mid-term review. Following the Donors Conference, responsibility for the follow- up on the Conference's results was given to an Oversight Committee, chaired by the Minister of Fnance. Given the inability of the Planning Directorate to function within the existing institutional framework, the Tripartire Review meeting (between the Government, UNDP, and the Bank) in February 1984 decided that: (a) effective March 1, 1984, the project activities pertaining to strategy formulation and project preparation would revert to the Ministry of Finance; and (b) the technical assistance component for planning would be moved to the office of the Minister of Finance, as a 'Secr6tariat Technique" of the Oversight Committee. 18. The project's planning component was thus redesigned to provide inter alia assistance to the Oversight Committee in the coordination and implementation of the projects being financed by the donors. In addition, one of the main assignments of the TA team was to prepare the 1984-88 Public Investment Program (see para. 21). Disbursements 19. By the original closing date (December 31, 1985), 53% of the credit had been disbursed, mainly from the funds allocated to the Studies Fund. The credit was then extended to June 30, 1986, to allow the Government time to complete the project as well as for the Bank to continue as executing agency for the UNDP following the prolongation of the latter's program. A second extension (to December 31, 1987) was approved by the Bank to provide funds for technical assistance to the Education project (approved in February 1985), as well as to finance the long-term development study. This study was carded out with assistance from France (FAC) but the Government rejected its findings. In November 1987, the Government requested a third extension of the closing date to u-e the remaining funds (about SDR 900,000 or 35% of approved credit amount) under this credit to prepare a similar study on long-term development possibilities and to formulate an action plan for the implementation of the findings of the study. This request was approved and the crcdit was extended to June 30, 1989, with a clear indication to the Government to providc the Bank with comprehensive proposals on the use of the remaining funds. However, by early 1989, the Government had not presented any proposals. 20. In March 1989, the Government finally presented a proposal and requested a fourth extension of the closing date. This was not accepted because tt} proposal and  -6- terms of reference for the envisaged studies were not found fully satisfactory by the Bank. As a result, the credit was closed on June 30, 1989, and the remaining funds of SDR 843,005.03, or 32% of the original credit amount, were cancelled. Technical Assistince to Planning 21. As mentioned above (para 17), this component was redesigned in February 1984, when the TA team was reassigned to the new role of 1S6cretariat Technique' (ST) of the Oversight Committee. In this capacity, one of the priority tasks of the ST was the preparation of the 1984-88 Public investment Program (PIP). In addition to the projects approved by the Donors Conference, the PIP included other projects, several of which had secured financing. The 1984-88 PIP included 94 projects, 33 of which were under implementation prior to the Donors Conference. The following were achieved under this component: (i) Preparation of the 198488 PIP and follow-up on the recommendations of the Donors Conference; (ii) Inventory of projects under implementation and projects with secured financing, by sector, and by type of financing; (iii) Projected budgetary requirements for the PIP by sector, and rolling PIP; (iv) Analysis of the public finances and of the financial status of public enterprises; (v) Analysis of the macroeconomic impact of the PIP, mainly on employment and recurrent costs; (vi) Recommendations on the linkage between the PIP and the budget in order to ensure transparency; (vii) Assessment of the economic situation and long-term perspectives; (viii) Identification of studies to be financed under the Studies Fund, and preparation of TORs for feasibility studies; (ix) Setting-up of a monitoring system of the public debt (external and internal); (x) Organization of a seminar on the project cycle to facilitate the preparation, updating, and implementation of the PIP. Technical Assistance to the Directorate of Statistics 22. The objectives of this component were to update and expand the statistical base, and to ensure the reliability and timeliness of the data collected, as well as to train local counterparts. Following difriculties during the start-up stage of implementation, the TA team was subsequently fully integrated in the work program of the Directorate of  -7- Statistics. However, the results achieved were not fully satisfactory due to: (i) lack of awareness by the technical ministries of the importance of statistical data in the task of economic development; (ii) lack of sufficient staff equipment and logistical space in the Drectorste of Statistics; (iui) lack of coordination in the processing of data; and (iv) lack of coordination between the Directorates of Statistics and Planning. Also, the TA teams for planning and statistics were systematically excluded from statistical work relevant to the planning function, such as preparation of the national accounts. The situation finally improved, and work under the component helped in: * the standardization of data collection; * indexing of the public and private enterprises; * coordination of statistics fo; social security, * preparation of labor and public health statistics, as well as car registration; * analysis of census statistics; u training of local counterparts; * analysis of foreign trade data. Studies Fund 23. The original objective of the Studies Fund, namely the preparation of sectoral studies to elaborate a development strategy, was not met. However, following the Tripartite Review of February 1984, the responsibility for this component reverted to the Ministry of Finance, and it accomplished the following - Feasibility study of the Balbala telecommunications project, as well as supervision of the implementation of the project; * Architectural and technical studies for the IDA-financed Urban Development Project; ' Financing of the technical assistance component of the IDA-financed Education Project;