Ghana - Private Sector Development

 ICRR 10813 Report Number : ICRR10813 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 02/26/2001 PROJ ID : P000960 Appraisal Actual Project Name : Priv Sector Dev Project Costs 15.50 8.69 US$M ) (US$M) Country : Ghana Loan/ US$M ) 13 Loan /Credit (US$M) 7.19 Sector (s): Business Environment Cofinancing 2.5, of which govt 1.5, of which US$M ) 1.4, beneficiaries 1.1 (US$M) government 1.44, beneficiaries .06 L/C Number : C2665; CP854 Board Approval 94 FY ) (FY) Partners involved : Closing Date 06/30/2000 06/30/2000 Prepared by : Reviewed by : Group Manager : Group : 2. Project Objectives and Components a. Objectives The original project objective was to foster the development of a competitive private sector by (a) assisting the Government to restructure, reform and commercialize its technical research and development establishment along competitive and demand driven principles, thereby assisting in developing appropriate technology and improved knowledge of quality and standards; (b) providing to a broad segment of the private sector the necessary financial and technical assistance to support the development of commercially bankable projects; (c) supporting efforts by the export industry to improve design and promotion of products; and (d) assisting the Government in developing a program to upgrade the delivery of legal services to the commercial and manufacturing sectors . In April, 1998, a revised strategy was adopted to increase and deepen the private sector contribution to economic growth in Ghana, and to support this a project objective was added, namely, to improve private sector competitiveness in global markets. The revision was not reported to the Board . b. Components (a) US$2.23 million to provide technical assistance and training to the Secretariat of Ghana's Council for Scientific and Industrial Research (CSIR) and four institutions (the Food Research Institute (FRI), Industrial Research Institute (IRI), the Scientific Instrumentation center (SIC), the Buildings and Roads Research Institute (BRRI) to develop a commercialization strategy to serve the needs of the private sector, and US$ 1.17 million for capacity building to strengthen the role of the Ghana Standard Board (GSB) in developing metrology and quality testing standards and to disseminate its services throughout the country . (b) a Technology and Enterprise Development Fund (TEDF) of US$2.52 million to assist private small-and medium-size enterprises to develop value -added products and provide reliable services and improve the bankability and investor appeal of their operations, (c) US$0.39 million for a study for the Ghana Trade Fair Authority (GTFA) to determine market demand, and an architectural survey to assess rehabilitation and redesign needs of GTFA buildings, (d) US$0.12 million for a feasibility study for the Industrial Design Center (IDC) to determine the scope, financial viability, commercial demand and organization structure of the IDC, and (e) US$1.3 million for a legal sector study to design improvement in the delivery of legal services and assistance to strengthen the capacity of government to support the delivery of services . Overhead for responsible ministries was very high and came to US$ 0.96 million, equivalent to 11% of the total. c. Comments on Project Cost, Financing and Dates The total project cost was US$ 8.69 million. An IDA credit financed US$7.19 million, the government, US$1.44 million, and beneficiaries, US$0.06 million. The project was appraised in January 1994, approved by the Board on December 6, 1994, made effective on July 12, 1995, and closed on schedule on June 30, 2000. 3. Achievement of Relevant Objectives: (a) The Council and the four research institutes failed to meet the quantitative test as to whether they restructured along competitive and demand driven principles , in that they achieved only 10% private sector financing of their budgets against the 30% targeted. (b) The private sector was not supported as envisaged in developing commercially bankable projects. (c) The export industry was not supported in improving the design and promotion of products. (d) The project did not adequately assist in developing a program to upgrade the delivery of legal services to the commercial and manufacturing sectors . However, legal constraints to more effective operations were assessed in the different legal institutions, necessary supplies such as books and computers were provided and training was implemented. Finally, as a result of the above shortcomings, the project did not improve private sector competitiveness in global markets . 4. Significant Outcomes/Impacts: The Ghana Standards Board did improve its operations substantially with ISO 9000 certification of its physical laboratories, and the new twinning arrangement should presage further improvements . The project successfully supported the assessment of legal constraints to private sector development . This should be a helpful first step in addressing these constraints . 5. Significant Shortcomings (including non-compliance with safeguard policies): The institutes have not met market tests and their programs remain supply driven rather than market -oriented. The TEDF has had only a marginal impact on improving SME growth and productivity . Thus, the project tried but failed to reform and commercialize public sector research and development by supporting operations of existing institutions . Although The Ghana Standards Board did achieved ISO 9000 certification of its physical laboratories, it failed to achieve IS) 9000 certification for its five other divisions . Out of the project's 14 output indicators, one has been achieved, 2 have been partially achieved, 4 are deemed unlikely to be achieved, and 6 out of the 14 output indicators are not available. Since almost half of the project's output indicators are not even available, the project's monitoring and evaluation system was seriously flawed, limiting the lessons which the government might have derived from the project. 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory Institutional Dev .: Negligible Negligible Sustainability : Unlikely Unlikely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf .: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. 7. Lessons of Broad Applicability: Government ownership must be carefully assessed before the Bank tries to support reforms . The Bank should not attempt to buy reforms in a subsector without strong evidence of government commitment, especially where there is an absence of a broader government commitment to private sector development, as evidenced in the case of Ghana by the poor performance of other Bank projects intended to promote PSD . Evidence of such a commitment for this kind of project could include personnel changes and market outreach programs which could begin before project financing is approved by the Bank . Finally, monitoring and evaluation needs to be an integral part of projects, and failure to adequately implement monitoring and evaluation systems can seriously compromise a project . 8. Assessment Recommended? Yes No 9. Comments on Quality of ICR: The ICR is concisely and clearly written and clearly conveys the weaknesses, failures, and very modest achievements of this project .