Madagascar - Public-Private Partnership and Information Management for Regional Development Project

Document of The World Bank FOR OFFICIAL USE ONLY PROJECT COMPLETION NOTE (Credit No. 333109MG) ONA CREDIT IN THE AMOUNT OF SDR 3.4 MILLION (US$4.6 MILLION EQUIVALENT) TO THE REPUBLIC OF MADAGASCAR FORA, . _ PUBLIC-PRIVATE PARTNERSHIP AND INFORMATION MANAGEMENT FOR REGIONAL DEVELOPMENT PROJECT LEARNING AND INNOVATION LOAN (LIL) November 13,2003 Water and Urban 1 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents mav not otherwise be disclosed without World Bank authorization. I  CURRENCY EQUIVALENTS Currency Unit Malagasy Franc US$l .oo 5925 MGF (November 13,2003) SDR 1 8438 MGF SYSTEM OF WEIG Metric System FISCAL YEAR January 1 - December 31 ABBREVIATIONS CAS Country Assistance Strategy GOM Government of Madagascar LIL Learning and Innovation Loan Vice President: Callisto Madavo Country Director: Hafez Ghanem Sector Manager: Jaime Biderman Task Team Leader: SusanneHolste ii  FOR OFFICIAL USE ONLY F MADAGASCA GIONA EVELOPME PRO . e project was identified by the government and the a& during 199 was appraised and negotiated in December 1999. The Board approved a Learning and Innovation Credit for US$ 4.6 million on March 3 1, 2000. The Development Credit Agreement was signed on May 26,200O. The expected effectiveness date of the credit, as agreedin the Project Appraisal Document, was June 30, 2000; however, the credit became effective only on May 24,200 1, signaling problems of commitment and complexity from the outset. 2 The objective of the project was to assist the Government of Madagascar (GOM) and the country's economic regions in developing model methodologies and tools that would promote regional development and facilitate investment planning. This was to be done on a pilot basis in at least three economic regions, Menabe, Anosy, and Mangoro, along with other regions that might have chosen to participate as the project unfolded. The objective of the LIL was clear and important to the country's economic and social development, especially because regional and local economic growth led by private sector investment was critical to the economic development of Madagascar. Decentralizing the decision-making process for public investment, which would support private sector efforts in order to achieve economic growth, and build public-private partnerships in support of regional and local priorities, was necessary for the promotion of a more sustainable development. Further, creating a better business environment in each region required better and more productive public investment, and such investment required better coordination across sectors, i.e. improved geographic integration, and a systematic search for ways to create synergy `between public and private sector investment. 3 The project was consistent with the Country Assistance Strategy (CAS), discussed by the Board on February 18, 1997. One of the main strategic objectives of the CAS was to . strengthen the public sector's ability to deliver quality services, thereby creating a business environment that enables the private sector to thrive. The project was expected to significantly contribute to achieving this objective by implementing the above activities.  4 Theprojectincludedthreecomponents:(A) pilot public-privatepartnershipfor regional developmentplanningandinvestmentprogramming;(B) regionalinformationandknowledge management,and(C) disseminationof the modelto otherregions. Theprojectwasto have n implementedover a five-y ber 31, 2004. Thetotal project atedat US$ 5.1million equivalent,includinga foreignexchangecorn million, or 83percentof the total projectcost. TheIDA creditof $4 Wasto finance onsultantservices, wasto financethe remainingUS$ 0.5 million equival ,820or 7% of th credithadbeendisbursed. easons for cancellation 5 Significantdelayswere experiencedin complyingwith the effectivenessconditions, namely:(i) the establishmentof theprojectcoordinationunit; (ii) therecruitmentof a contract managerfor thepurposesof implementingComponentA: Pilot Public-PrivatePartnershipfor RegionalDevelopmentPlanningandInvestmentProgrammingwhich was considereda key resourcefor the successof the project;(iii) recruitmentof a projectaccountandauditors,and (iv) adoptionof an acceptableProject ImplementationManual. The project only became effectivein May 2001. 6 Implementationwas very slow from the outset and it becamerapidly apparentthat capacitywas insufficient: the ProjectImplementationUnit was not equippedto follow up contracts,take the agendaforward or makereasonableprogressin the executionof project activities. Thecontractmanagerfor ComponentA alsoappearedto haveinsufficientcapacity to implementthat aspectof theproject,their skillsbeingprimarily in theareaof environmental managementandland cadastreratherthanin the innovativeregionalplanningapproachthat wascalledfor in thisproject. . 7 No commitment or support was provided by central governmentfor this project. Madagascarconstitution provides for three levels of decentralizedgovernment:national, provincial andcommune;in additionthere are legelprovisionsfor the regionallevel. The selectedpilot regions,however,remainedinterestedin the project and becameincreasingly fmstrated with the lack of project support. This was particularlyapparentin the Regionof Anosy (Fort Dauphin) where the regional planning committee managedto sustain its momentumdespitelack of supportfrom the project. The political crisis of 2002 and the changeof two taskmanagersbroughtadditionaldelaysto projectimplementation.During the CountryPortfolio PerformanceReview in October2002,the new governmentof decidedthat theproject wasno longera developmentpriority andacknowledgedits apparent failure. OnOctober14,2002GOM informedtheBankof its decisionto closetheproject. The BankacknowledgedGovermnent'sdecisionandfixed June30,2003asthedeadlinefor receipt of final withdrawalapplications.  Lessons learnt . The following lessons can be drawn: i. As a LIL the project was "intended to finance applied learning and development, and is judged to be essential to facilitate follow-on rams within acceptable levels of risk, as such the project should provide structured sup ort for time-sensitive initiatives ." atio period of five years' suggests that the project was more intended as a freestanding activity rather than one that preparesfor follow-on actions. ii. The project design appears to have been overly ambitious in view of the very limited capacity of the implementing agency and the selected contract manager. interdependent components. iii. The turnover in task management might also have rendered more limited the chances of the project to succeed. Stability appears particularly important for innovative projects that operate without a clear institutional framework. iv. Government at the time appearsto have been less committed to this project than the Bank and there was no manifest interest by the line ministry to support this initiative which would have reinforced decentralization. While regions have legal status, the regional development committees which were to be the strategic partners of this LIL, operate as consultatative bodies but without legal recognition. V. The project concept might *quite well have been ahead of its time. The new government fully subscribes to the decentralization agenda and looks towards the regions as a key partner in economic development. This is becoming quite apparent in the government's growth pole program which relies heavily on the notion of regional development to leverage private sector initiative with public investments and which will be supported by a Bank project. 3