Cameroon - Social Dimensions of Adjustment Project

Document of The World Bank FOR OFFICIAL USE ONLY DS 32c4- 6C Report No. P-5273-CM MEMOPANDI1. AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THS EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$21.5 MILLION TO THE REPUBLIC OF CAMEROON FOR A SOCIAL DIMENSIONS OF ADJUSTMENT PROJECT APRIL 24, 1990 Tbis document has a resticted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Dank authorization.  CURRENCY EQUIVALENTS The CFA franc (CFAF) is tied to the French franc (FF) in the ratio of FF 1 to CFAF 50. The French franc is currently floating. The rate of CFAF 305 to the US dollar is used for the economic projections beginning 1989190. Currency unit - CFA Franc (CFAF) USS 1.00 CFAF 305 CFAF 1.0 billion US$ 3,3 million SYSTEM OF WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ADB African Development Bank CFA Communaut6 Financi&re d'Afrique CFAF CFA franc CIDA Canadian International Development Agency CTC/DSA Comite Technique de Coordination du Projet Dimensions Sociales de l'Ajustement CTPAS Comite Technique charg4 de la Preparation et du Suivi du Programme d'Ajustement Stracturel FNE Fonds National de L'Emploi ILO International Labor Organization NGO Non-Governmental Organizdtion PAS Programme d'Ajustement Structurel PPF Project Preparation Facility PRODEC Programme de Ddvelopppment Communautaire SDA Social Dimensions of Adjustment UNDP United Nations Development Program UNFPA United Nations Fund for Population Activities USAID United States Agency for International Development WID Women in Development FISCAL YEAR July 1 to June 30  FOR OmCIAL USE ONLY REPUBLIC OF CAMEROON SOCIAL DIMENSIONS OF ADJUSTMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Cameroon Implementing Agencies: Mini3try of Planning and Regional Development and technical ministries Loan Amount: US$ 21.5 million, equivalent. Onlending Terms: Grant, US$ 11.2 million for the National Employment Fund Financing Plan: USS million I IBRD 21.5 25 AfDB 16.0 19 European Comnunity 10.0 12 F.R. of Germany 7.7 9 CIDA 7.3 9 France 3.9 5 USAID 3.5 4 UNFPA 3.2 4 Japan 1.0 1 UNDP 0.8 1 Government 10.8 13 Total 85.7 100 Economic Rate of Return: Not applicable Staff Appraisal Reportt No. 8451-CM Map No. 21811R This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THZ EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF CAMEROON FOR A SOCIAL DIMENSIONS OF ADJUSTMENT PROJECT 1. The following memorandum and recommendation on a proposed loan to the Republic of Cameroon for US$ 21.5 million equivalent is submitted for approval. The proposed IBRD loan, with a five-year grace period and 20 years maturity, would help finance a Social Dimensions of Adjustment Project as part of Cameroon's ongoing structural adjustment. Additional funds would be provided by the African Development Bank (US$ 16.0 million), the European Community (US$ 10.0 million), the Federal Republic of Germany (USS 7.7 million), the Canadian International Development Agency (US$ 7.3), France (US$ 3.9 million), the US Agency for International Development (US$ 3.5 million), the United Nations Fund for Population Activities (US$ 3.2 million), Japan (US$ 1.0 million), the United Nations Development Program (US$ 0.8 million), and the Government of Cameroon (US$ 10.8 million). 2. The Project and Structural Adiustment. The Cameroonian Government is determined to reestablish economic growth with equity over the medium and long term and ensure the protection of vulnerable groups in the short term. It has, therefore, decided to address the social dimensions of adjustment as an integral part of its Structural Adjustment Program. This determination, expressed in the Government's Statement of Development Strategy and Economic Recovery (and accompanying matrix of actions), dated May 1989, has been translated into the policy and operational program reforms included in the proposed Project. As a critical part of the Structural Adjustment Program adopted by the Government, it is closely coordinated in both conception and design with the $150 million equivalent IBRD SAL and the Economic Management Project approved on June 8, 1989 and July 11, 1989, respectively. The three operations, therefore, constitute an integrated whole, with this Project focusing on issues of poverty. Because the SDA objectives are to be achieved as part of the Structural Adjustment Program, failure of the Government to make satisfactory progress under that Program would be considered an event justifying the Bank to suspend disbursements under the SDA Project. 3. To prepare this Project, the Government established, under the Technical Committee for the Preparation and Follow-up of the Structural Adjustment Program (CTPAS), five working groups covering the areas of population and health, education and vocational training, employment, women in development, and institutional development. These working groups prepared the Project through a broad participatory process supported by the Bank through the Africa Region SDS, Unit.  2 4. ProJect ObJectives. The Government's Declaration of Development Strategy identifies as its objectives in the social dimensions: (a) to promote the participation of the poorest population groups in the recovery process by establishing sustainable social programs and complementary policy measures; (b) to mitigate adverse social effects of Cameroon's economic crisis and the consequent adjustment measures through a set of priority actions and policy adjustments; and (c) to promote the institutionalization of these concerns among the routine duties of existing agencies (presently being strengthened by the Economic Management Project, financed by Loan 3110-CM of 1989). From these objectives energe the three lines of action of the Project: (a) support to a fundamental policy reform process in the social sectors; (b) immediate actions to address priority needs while the overall reform process takes hold; and (c) institutional support for the above actions. 5. Policy Reform Process. The Project would strengthen the socio- economic policy reform process and related programming. This component would contain the following elements: (a) support for on-going efforts to design and implement new national policies in population. health, and women in development, which would be oriented towards the provision of basic social services targeting the most disadvantaged segments of the population and the establishment of cost-effective and sustainable delivery systems including the introduction of adequate cost-recovery mechanisms; and (b) improvement of financial resource allocation and efficiency through program budgeting in health thereby protecting operating expenses that will benefit the poor. Policy development, institutional strengthening, and program budgeting for the education sector will be supported by the complementary Education and Vocational Training Project (Loan 2683-CM of 1986) which is currently being restructured. These elements are intended to be precursors of planned human resources development operations from FY92 onwards. 6. Immediate Actions. Action Programs cover the following areas: (a) Health and Population: strengthening maternal and child health and family planning programs, emergency replenishment of medical and pharmaceutical supplies for primary health care, and introduction of cost recovery measures and systems to ensure sustainability. (b) Education: emergency replenishment of educational materials for primary and secondary education. (c) Employment: creation of a National Employment Fund (FNE) to finance the following activities: a unit to assist workers displaced from public service by austerity measures and recent school or university graduates, directing them as appropriate to job opportunities, retraining, or self-employment; strengthening of vocational training in Government -nd NGO-managed training schools by providing financing for the expansion and/or consolidation of effective programs; on-the-job training programs to promote job creation by helping employers train new workers; and conducting two pilot programs (i) to support self-employment, and (ii) to make available technical and financial assistance to existing or new micro- enterprises. (d) Women in Development: strengthening of existing women's support agencies and a sensitization program to involve line Government agencies more actively in the promotion of women's participation in socio- economic activity. (e) Community Development: establishment of a Community  3 Development Program (PRODEC) to provide grants, to NG0s and others, for sustainable small-scale social infrastructure and services, and for the creation or expansion of urban micro income-generating activities, at the community level. 7. Institutional Suppor,. To complement the Economic Management Project, which focuses on strengthening the ability to execute a reform program and to manage the economy on a daily basis, this Project component would focus on the integration of social and economic aspects in macro- economic policy making, and would reinforce this capacity in the key Government institutions responsible for socio-economic policy formulation, programming, and monitoring. This component would contain technical assistance for (a) integration of distributional and employment impacts in macro-policy formulation; (b) reinforcement of the existing planning and programming units in the ministries of health, education, labor, and social and women's affairs; and (c) reinforcement of the socio-economic information base through the development of a system for household surveys and support to the system for preparing price indices. 8. Implementation Arrangements. The Project would be organized into identifiable and manageable modules in line ministries in order to facilitate the implementation of the diverse components of the Project. Project coordination would be the task of a high-level coordinating committee, chaired by a senior, full-time, Administrator under the supervision of the Presidency. Individual task managers in the line ministries would be assigned to each module. A separate agency has been established to administer the employment module, the National Employment Fund (FNE), which would report to the Ministry of Labor. 9. Financial Arrangements. At a donors' meeting convened by the Government in February 1990 and a follow-up meeting in April 1990, US$ 53.4 million of cofinancing for the Project was confirmed (see para. 1). Furthermore, tne Federal Republic of Germany, France, USAID, UNFPA, and the World Food Program are putting in place projects which would complement the SDA Project. 10. Justification and Risks. By fostering the participation of the poor in economic activity and the sustained development of human resources, the Project would contribute to the restoration of suE ainable growth over the medium and long term. It would also contribute to protecting the poor and other vulnerable groups during the transition phase of the adjustment process. The main risks are related to: (a) the complex nature of the Project which would involve many different Cameroonian agencies, not all of which may move speedily to execute Project components in accordance with Project objectives, and several different donorss this risk would be minimized through the creation of a strong coordinating unit under the Presidency, the division of the Project into modules under the responsibility of separate managers, and reliance on existing structures for most Project modules would alleviate this risk by streamlining Project execution and facilitating the channelling of external finance from the different donors; (b) there could also be, despite the Government's strong commitment, resistance to the population and women's components of the  '4 Project, which may conflict with established cultural valuest this risk would be mitigated by the intensive information programs being and to be carried out by the Government; and (c) the innovative nature of the self- employment and micro enterprise support programs: substantial safeguards. including limited pilot testing periods, followed by built-in review and evaluation, have been incorporated into project design so as to minimize the risks associated with these programs. 11. Government Action Required. Prior to negotiations the Tecnnical Committee for the Coordination of the SDA Project (CTCJDSA) was established, the Project's Administrator was appointed, and cofinancing was arranged. At negotiations, the principal matters agreed were: (a) if the Bank were to find Government performance uns..tisfactory (i) under the Structural Adjustment Program or (ii) in the preparation of a statement of policy, a medium-term action plan and long-term implementation strategy for education (under the Education and Vocational Training Project), such unsatisfactory performance would justify suspending disbursements under the SDA Project; (b) the need for mid-term evaluation of the Project; (c) the need for Bank consultation prior to implementation of sectoral policies in the areas of population, health, and women in development; (d) the need to develop a system of program budgnting to protect core expenditures in the area of health; (e) detailed plh s for the management of the various modules and for the implementation of action programs (except in the case of education where this would be a condition of disbursements); (f) the contents of and a timetable for the cost-recovery pr,3gram for pharmaceuticals and medical supplies; and (g) the establishment of a users' committee in connection with the development and use of the Cameroonian Household Survey. Prior to Board presentation, legislation establishing the FNE and PRODEC was enacted, and their Director-G^neral and unit chief, respectively, were appoii-ted. Appointment of the L nbers of the CTCIDSA, most of whom would be the managers for the Projec* odules, and its deputy administrator and accountant; appointment of the isor to the Director General of the FNE; and the establishment of the i 3ject Account for the FNE and deposit therein of CFAF 100 million would be conditions of effectiveness. Conditions of disbursements for specific modules inc:udes for education, detailed implementation plans for the action progrwA; for the formal vocational training and self-employment programs of the employment module, effectiveness of ADB cofinancing, constitution of the FNE's Board of Directors, adoption of an organigram and operating procedures for the PNE, execution of a subsidiary agreement allowing the Government to pass funds to the FNE, appointment of the manager of the FNE's Employment and Training Assistance Division, and appointment of the manager of the FNE unit administering the self-employmemt program and his internationally recruited advisor; for the second phase of the self-employmer.t program, Bank agreement following evaluation of the first phase; and for community development, effectiveness of cofinancing and adoption of guidelines for sub-project selection, appraisal, and supervision. A matrix of detailed actions has been developed by the Government in the process of Project preparation and was finalized and agreed upon during negotiations.  5 12. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the International Bank for Reconstruction and Dovelopment and recommend that the Executive Directors approve the proposed loan. Barber B. Conable President Vashington, DC April 24, 1990  Schedule A REPUBLI* OF CAMEROON SOCIAL DIMENSIONS OF ADJUSTMENT PROJECT EaltiMAM Project Cos (USS millon *qu ye lent) X Foreign X Total Local Foreign Total Exchane BA. Coot,. Population 1- 4 8.1 4.6 69.1X 5.ax Health 6.7 12.0 19.2 06.4X 22.2X Education and Training 8.7 1.9 10.6 17.92 32 ax Employment 17.7 15.0 82.7 4e.0x 87.63 Women in Dovolopment 8.4 2.8 .7 8e9.ll 6.6x Community Development - PROOEC 8.2 2.7 5.9 45.2X 6.8X Planning Capacity A Into. Bao. 5.6 1.6 7.1 20.8X 8.2X SDA Project Monagemont 0 0.O.1 0.9 93 1.0X Total BASELIN COSTS 47.4 S9.2 85.6 45.ax 10. ON Phylical Contingencl-s 1.6 1.2 2.6 42.3X 8.23 Price Contingencle 8.1 1.9 5.0 37.43 6.7X Total PROJECT COSTS 52.0 42.8 94.8 44.8X 108.9X Ione TAXES 6.8 0.0 8.6 0.03 9.3X Total TO BE FDNANCED 48.2 42.5 65.7 49.6X W.0N Financing Plan CUSS mHfiion~ lqielnt) Shar* I8 21.526 African Development Bank 16.0 19X European Community 10.0 12X Federal Republic of Germany 7.7 eX Canadian International Development Ageney 7.8 9X France 8.9 CX US Agency for International Devolop nt 8.5 4X United Nation. Fund for Population 8.2 4X Activitiee Japan 1.0 1X Unitod Nation. Developmnt Program 0.8 1X Government of Cameroon 10.6 lX a ". u  7 Schedule __ Page 1 O. 2 REPUBLIC OF CAMEROON SOCIAL DIMENSIONS OF ADJUSTMENT PROJECT PROCUREMENT AND DISBURSEMENT ARRANGEMENTS Procureen (U ml Illione) (lnaluding contingencies, excluding taxes) (amounts in parenthese would be finaned by IW) NOT lCD LCD OTHER APPLICABLE TOTALS Equipmnt and Supplits 0.5 4.2 21.3 25.9 (O.G)y (4.2)V (*.6) Consultant Serviel 2.6 7.1 9.? (2.6) (2.6) TrnJning 0.1 4.5 4.6 (0.1) (0.1) Operating Expenditures 1.4 10.0 12.3 9 Sub-Projects (FNE, PRODEC, Pop.) 12.0 20.5 82.5 (12.0) (12.0) PPF Repayment 0.8 0.0 (0._) (0.8) TOTALS 0.5 4.2 16.1 64.8 65.7 (0.5) (4.2) (18.1) (0.8) (21.5) 1 Vehicles and equipment for employmnt. _/ Equipment, school desks, and teaching materials for education; vehicles and equipm_t for employment, SDA project managemnt, and the price Indices component of the planning capactity and Information base modulo. jI Of which: technical assistance 42X, salaries of recruited personnol 40X, studies 110, and supervision and evaluation 75. #1 Includes civil service salaries lnnned by the Governoent) and fuel. Includes minor Items (fuel and at pliet) costing US 25,000 or less, with an aggregte value estimatod at US2 0.6 mllion (equivalent), which would be procured on the balss oF price quotations from not lses then thre reputable suppliers.  8 Schedule B Page 2 of 2 (US millioIne) (including contingencies, excluding taxes) Percentageg / of Amount of the Loan Expendlture to Caoaory Alilocated be Financed Education - Shool asks 2 00 100Xl - Teaching manuals nnd mater1ael Je.60 1005 !Ae I lont UTPS Expenditures - Con-ultants' services and training 0.80 1001 - Equipment and vehicles 0.80 lOOt/86X - Operating costs 0.60 8to ilNE Expenditures - Consultant services 1.20 1005 - Equipment and vehileso 0.20 100X/855 - Operating costs 0.80 8on - Voeatlonal Training 1.00 100% - Goods and Services for: Self-employment phase 1 2.00 lO0% Self-employment phase 2 6.50 100% CoTmunhl Devojloent - 0on.ultnt service87 1O0X - Coods and services 2.60 501 Pljannin Cpa city A Information Base - Contultent4' * rvie and trainin 0.06 100% - Vehicles and equipment 0.04 10OX/86C - Operating costs 0.10 Pro3et Admnistration - Training 0.09 lOO0 - Veh;cles and equipmlet 0.06 1OOX/85% - Operating costs 0.25 8an Other WFM Repayment 0.75 Amount Due - Unallocated 1.00 TOTAL 21.SO / Where two percentages aro shown, the fi ret refers to foreign exchange and the *scond to local expenditures. Schedule of Estimated Sank Dlsburem_nts -u- mil lions) (including contingenclo, excluding taxes) Fl!Sal "gr Annual Cumulativ* - - 9Sn 2.2 -2.2S 1992 5.4 7.6 1998 4.6 12.0 1994 8.4 15.5 1996 8.2 18.7 1998 2.8 21.5  9 Schedule C REPUBLIC OF CAMEROON SOCIAL DIMENSIONS OF ADJUSTMENT PROJECT Timetable of Key Project Processing Events (a)Time taken to preparet 15 months (b)Prepared bys Govervment with I8RD, ADB, and CIDA assistance. Other donors and ILO also helped prepare certain components. (c)First IERD mission: February 1989 (d)Appraisal mission: February 1990 (e)Negotiations: April 11-19, 1990 (f)Planned date of Effectiveness: September 1, 1990  10 Schedule D Page 1 of 2 Run Tim: 04/23/90 at 11.01.12 Statw Of tank Gro weratiom in CMEROON PFOGR25 - Smury Statement Of Lo isand IDA Credits (LOA date as of 3/30/90 - NIS date as of 04/23/90) ,,_,,. ........................... . .. . . ............. ........... _... ...... ....... .. Amat in USS million (Less cmleatis) ...... ........................... . Loan or Fiscat Urnis- Closirn Credit No. Ye Sorrow Purpose tOA bursed Oate ......... ------ ........ ........... ...... ....... Credits 27 Credits(s) closed 253.20 All closed for CAMEROON TOTAL mber Credits 0 0 30 Louis(s) closed 451.08 L20920-CAN 1982 CAMEROON FORESTRY 7.00 .71 12/31/89(4) L22590-CAN 1983 CAMEROON PORT III 22.50 8.74 06/30/90(R) L24060-CON 1984 CAIERO IESTERN PWVICi IDP 21.50 14.33 12/31/90 L24850-CAm 1985 CAMEROON HEEC RUSER 8.30 .88 0630/90 L25670-CA 1985 CAMEROON FSAR II 25.50 20.60 12131/91 L25840-CA 1985 CAMEROON RODS VI 125.00 75.14 06/30/ L26830-CAN 1986 CAMEROON EDUC. & VC. TRAIN. 30.10 23.63 06/30/93 1o0180t-Cm 1967 CAMEROOI ROADS VI 20.00 06/30/91 127660-CAM 198? CAMERM ACRIC. RESEARCH 17.80 11.67 06/30/93 L29120-CAM 1988 CAIEROO COWA RENOl 103.00 85.80 12/31/94 129990-CAN 1989 CAMEROM URBAN It 146.00 128.61 06/3094 L30140-CAM 1989 CAJER00N LIVESTOCK SECTOR OEl 34.60 32.31 06/30/95 L30A9-CA(S) 1989 CAERO SAL I 150.00