Rwanda - Public Enterprise Sector Reform Project

DCumnnt of The World Bank FOR OFMICIAL USE ONLY C-lZ 2-i/ 3-' '-"- Rewt No. 8139-RW STAFF APPRAISAL REPORT RWANDESE REPUBLIC PUBLIC ENTERPRISE REFOPR PROJECT FEBRUARY 22, 1990 Industry and Energy Operations Divison South Central and Indian Ocean Department Africa Region 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 Wow.d Bank authorization.  From January 1974 through August 1983, the Rwanda Franc (RF) was pegged to the US dollar at a rate of exehange of USSlC0 = RuF 92.84. Since Septoebr 1988, the Rwanda Franc has been pegged to the SDR at a rate of exchange of SDR 1.00 a RoF 102.71. Annual Average Year USSI : 1982 RwF 92.84 1983 RwF 98.48 1984 RwF 103.86 1985 RvF 94.26 1988 RwF 87.64 1987 RwF 79.56 1986 RwF 76.45 ABBREVIATIONS A ACROYMS BCR Boucherie Charcuterte du Rwanda BNR Banque Nationale du Rwanda BRD Banque Rwandalse do 0D6vloppeuent BUNEP Bureau National d'Etudes de Projets Cco Centrals Comptabl- et Organisation IC Comlt6 Interminist6ri.l de Coordination CSR Caisse Social. du Rwanda EEC European Economic Community IDA International Development Association IGF Inspection GQn6ral- des Finances (General Inspection of Finance) IMF International Monetary Fund INR Imprimerie National. du Rwanda ISAR Institute of Agricultural Research ISFP Institut Sup6rleur des F1nances Publiques MINFIN Ministre des Finances MINIMART MUn;ster de l'Industrie et do l'Artisanat MINIPLAN UMinistbre du plan OCIR-Caft Office des Cultures Industrielles du Rwaada-Cf6 OCIR-Th6 Office des Cultures Industrielles du Rwanda-Th6 ONATRACOM Office National des Transports en Comun OPYRWA Office du Pyrethre du Rwanda ORTPN Office Rwandats du Tourisme et des Paros Nationaux OVAPAM Office do Is Valorlsatlon Pastorale et Agricol. du Muters OVIBAR Office de Valorisation Industrielle des Bananerates du Rwanda PE Public Enterprise SN Socl6t6 National. SOE Statement of Expenditures SOMIRWA Socl6t6 Mlni&re du Rwanda SONATUBES Soci6t6 National. des Tubes SORWAL Socilt6 Rwandaise des Alumettes STIR Soci6t6 des Transports Internationaux du Rwanda UNDP United Nations Development Programme FISCAL YEAR January 1 - December 31 iETRC SYSTEM  FOR OMCAL USE ONLY RWANDESE REPUBLIC PUBLIC ENTERPRISE ROPJRK PROJECT Table of Contents Page No. CREDIT AND PROJECT SUMHARY. . . . . . . . . . . . . . . . . . . . . . -i I. THE PUBLIC ENTERPRISE SECTOR. . . . . . . . . . . . . . . . . .1 A. The Macroeconomic Setting .1 IDA-Government Policy Dialogue. . . . . . . . . . . 2 B. Sector Overview. 3 Historical Perspective. . . . . . . . . . . . . . . 3 Importance of the Public Enterprise Sector to the Economy . . . . . . . . . . . . . . . . . . . . 3 Financial Performance . . . . . . . . . . . . . . . 5 C. Institutional and Legal Framework . . . . . . . . . . . . 6 Legal Structure. 6 Governoient Oversight. . . . . . . . . . . . . . . . 6 Administration and Management . . . . . . . . . . . 7 Labor Law .8 D. Government's Prior Attempts at PE Reform. . . . . . . . . 8 II. THE PROJECT ..10 A. Background. . . . . . . . . . . . . . . . . . . . . . . . 10 B. Objectives. . . . . . . . . . . . . . . . . . . . . . . . 11 C. Rationale for IDA Involvement . . . . . . . . . . . . . . 11 This report is based on the findings of an appraisal mission which visited Rvanda in June-July 1989. The mission was composed of Messrs. Chuong N. thung (AF3IE); Pierre Guislain (LEGOP), Richard Lacroix (consultant) and Ms. Susan Goldmark (AFTPS). Secretarial support was provided by Ms. A.B. Cox (AFTPS). 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.  RVANDESE REPUBLIC PUBLIC ENTERPRISE REFORM PROJECT Table of Contents (cont'd) Page D. Description of the Project. . . . . . . . . . . . . . . . 12 (1) Reduction of the State's Role in the Productive Sectors . . . . . . . . . .. 12 (2) Improvement of the Legal and Institutional Framework ..13 (3) Enterprise Restructuring. . . . . . . . . . . . . . 15 (4) Project Implementation and Institutional Strengthening .16 Institutional Coordination and Implementation of the Project. . . . . . . . . . . . ; . . . 16 Institutional Strengthening of the Ministry if Finance. . . . . . . . . . . . . . . . . . 21 III. THE IDA CREDIT. . ..23 A. Project Costs, Financing and Use of Project Funds . . . . 23 B. Project Implementation. . . . . . . . . . . . . . . . . . 24 Project Management. . . . . . . . . . . . . . . . . 24 Procurement and Disbursements . . . . . . . . . . . 24 Special Account ...25 Auditing and Reporting. . . . . . . . . . . . . . . 25 IV. BENEFITS AND RISKS. . . . . . . . . . . . . . . . . . . . . . . 25 Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 25 Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 26 V. AGREEMENTS REACHED AND RECOMMENDATIONS. . . . . . . . . . 26  RWANDESE REPUBLIC PUBLIC ENTERPRISE RFPORM PROJECT TEXT TABLES 1. Characteristics of Selected Enterprises and Recommendations of the Working Groups 2. Second Group of Rwandese PEs to be Restructured Under the Project 3. Project Costs and Financing Plan (US$ thousand equivalent) ANNEXES Annex I - Table 1: List of Rwandese PEs - Table 2: Transfers between Public Enterprises and the Government - Table 3: Net Profits/Losses of Selected Rwandese PEs - Table 4: Arrears of 17 Rwandese Public Enterprises Owed to Third Parties Annex II Public Enterprises Selected for Restructuring under the Project Annex III Estimated Schedule of Disbursements Annex IV Government Policy Statement on Public Enterprise Reform Annex V Key Program Actions  RWANDESE REPUBLIC PUBLIC ENTERPRISE REFORM PROJECT CREDIT AND PROJECT SUHMARY Borrowers Government of Rwanda Implementing Agency: Ministry of Finance Credit Amountt SDR 3.4 million (US$4.4 million) Terms: Standard IDA terms (40 years maturity) Project Description: The project will provide technical assistance to the Government to help carry out its public enterprise reform program in tha following three areass (i) reform of the public enterprises' institutional and legal framework; (ii) rehabilitation, privatization or liquidation of selected public enterprises; and (iii) development of a national capacity to design, implement and monitor PE reforms. The proceeds of the IDA Credit would be used for: (i) technical assistance and equipment to (a) revise public enterprise legislation; (b) help develop and implement restructuring plans foz viable enterprises; (c) assist in the liquidation of nonviable enterprises and in the design and implementation of the Government's privatization strategy; and (d) strengthen the Finance Ministry which is responsible for overall supervision of PE performance; and (ii) training of PE managers and MINIFIN staff. Benefits: The project will assist Rwanda to achieve a more streamlined, efficient and business-oriented PE sector with a reduced financial and administrative burden on the Government. Another benefit of the project would be derived from the restructuring of the sector. The closure of uneconomic enterprises would reduce resource waste, while the sale of viable ones to the private sector and the rehabilitation of those remaining under Government control are designed to maximize the economic benefits of those enterprises. Risks: Care has been taken in the project design so that it can improve the economic and financial performance of selected public enterprises even with some additional postponement of structural adjustment. But if the necessary macroeconomic reforms are postponed indefinitely, there is a risk that many of the project's expected benefits will not fully materialize. The policy dialogue is, however, continuing and it is expected that the Government will take the necessary measures if the economic situation deteriorates further.  - ii 0 At the program level, as the operation involves broad-ranging and complex reforms both at the sector and enterprise levels, there is a risk that vested interests within Government and the affected enterprises will resist reform measures as these may imply increasing autonomy and replacing some existing PE managers. This risk is mitigated by the Government's commitment to carry out the necessary reforms. A second risk relates to the privatization program which, if not implemented properly with clear and transparent criteria, could result in creating a rent situation for some private investors. Finally, there is the risk that project implementation may be slowed down by the capacity of the Government administration to carry out the policy reform package and to monitor the execution of enterprise restructuring programs. These two r5sks are addressed through the establishment of a new Directorate of Public Enterprises in the Ministry of Finance which will be in charge of implementing the reforms and providing technical assistance and consulting services to help Rwandese institutions carry out the tasks envisaged under the project. FtoJoct Costt and Flnancinq Plan (UJ8 tJioutand equl vs tnt) Locol Foreign Total X Project Costs Long-Ter Consultants 700 1,280 2,060 41 Equipment 90 90 2 Operating Cost 800 240 S40 11 Short-Term Consulting Servics 265 780 985 20 Tr.ining 185 90 275 6 Refinancing of Project Preperatton Advance 60 440 500 10 Contingencies 170 820 490 10 Total 1 700 S 170 4,980 100 ) (88) (84) (100) (-) F;nanc'ns * opo- d IDA Credit 4,440 90 Government 490 10 Total l7W !w Estimated Disbure.ments: (USI Thousand) 1991 1992 1998 1994 1995 Annual 1,070 1,230 1,075 980 8S Cumulative t,070 2,800 8,875 4,856 4,440  RWANDESE REPUBLIC PUBLIC ENTERPRISE REFORM PROJECT I. THE PUBLIC ENTERPRISE SECTOR A. The Macroeconomic SettinB 1.01. Rwanda is a small land-locked country with a fairly homogeneous population of slightly over six million and a GNP per capita of about US$280 in 1988. The population, overwhelmingly rural (90 percent), is in,.reasing at a rate of 3.7 percent per annum and derives its livelihood mainly from subsistence agriculture and coffee cultivation. 1.02. Despite the predominantly rural nature of its economy (In 1989, 39 percent of GDP and 90 percent of foreign exchange earnings, mainly from coffee and tea), Rwanda has a relatively active modern sector. Services (excluding public administration) have grown rapidly over the last six or seven years and in 1989 accounted for 27 percent of GDP. Ir.dustry has also emerged as an important sector, contributing about 18 percent to GDP and employing over 40,000 people. The sector is geared toward meeting the domestic demand for basic goods, with over half of its production consisting of food and beverages. Manufacturing exports are negligible. Another major sector of the economy is public administration, which accounts for 9 percent of GDP and employs 22 percent of the total salaried labor force. Construction and public works make up the remaining 7 percent of GDP. 1.03. Throughout the 1970s, Rwanda achieved considerable economic progress, as evidenced by a high rate of GDP growth of approximately 6 percent per annum, single digit inflation, high levels of foreign exchange reserves, balanced budgets, equitable income distribution, and improvements in nutrition standards. This performance, superior to that of many other developing countries. was to a large extent attritutable to prudent economic management which kept the internal and external sectors of the economy in balance. 1.04. The economy became more volatile in the 1980s. Real GDP fluctuated widely during 1981-87 as a result of erratic weather conditions, with yeirs of high growth (6 percent in 1983 and over 4 percent in 1985-86) followed by near stagnation in 1987, and accelerated declines in 1988 (-3.1 percent) and in 1989 (estimated -6.3 percent). Overall. GDP growth over the last seven years has fallen behind population growth, resulting in a deterioration of the average living standard of the population. Prospects are bleak for the immediate future; a large budgetary deficit and continued pressures on the balance of payments are anticipated. 1.05. The economic downturn and the emerging financial problems show the continued vulnerability of the Rwandese economy to developments in the world coffee market. The liquidation of Rwanda's large mining company (Socidt6 Miniere du Rwanda, SOMIRWA), in the mid 1980s, increased the economy's dependence on coffee to generate foreign exchange. Rwanda's economic problems also have been exacerbated by policies followed by the Government over the past few years. The Rwandese authorities did not perceive the coffee boom of the late 1970s as a temporary phenomenon and embarked on a large public expenditure program, failing to adjust it when coffee prices reverted to a more normal level in the 1o808.  - 2 - As a result, large budgetary deficits developed and had to be financed by increased borrowing, particularly from domestic sources. Between 1981 and 1987, public domestic debt quadrupled, reaching RwP 21.1 billion (US$270 million) or 13 percent of GDP at end-1987. At the same time, the balance of payments came under pressure as terms of trade deteriorated and the exchange rate became overvalued. From 1986 to 1988 Rwanda had to draw down about RwF 4 billion (US$52 million) of foreign exchange reserves to finance the external deficit. Rwanda's external position is expected to further deteriorate in the near future, given depressed coffee market prices and low production levels. 1.06. As in the early 19809, the Government's response to the situation has been to introduce restrictions in its exchange and trade system, VAiich was one of the most liberal in the region. This move towards controls has been reinforced by demands for higher protection from local producers unable to compete with cheap imports resulting from the overvaluation of the exchange rate. According to the IMF, between end-1980 and end-1985, the trade-weighted effective exchange rate of the Rwanda Franc appreciated oy 80 percent in nominal terms and by 46 percent in real terms, as the rate of inflation in Rwanda was lower than that of its trading partners. Although it has declined since, the effective rate in mid-1988 still indicated an appreciation in real terms of about 30 percent compared with the end-1980 level. IDA-Government Policy Dialogue 1.07. Given the deterioration of Rwanda's economic situation, the Bank's dialogue with the Government over the last three years has focused on the need to restore the competitiveness of the economy through the implementation of a comprehensive reform program addressing the major structural problems, including exchange rate overvaluation, trade distortions and public sector inefficiencies. While there is a general consensus in Rwanda that the public enterprise (PE) sector is inefficient and should be restructured, the Government is still studying other broad macroeconomic reforms. 1.08. In June 1988, the Government officlally requested Bank assistance to formulate a program to reform its public enterprise sector but stressed that it needed more time to seek internal consensus on macroeconomic adjustment. Recognizing the need to move forward, the Bank agreed to help the Government in its public enterprise reform efforts, while continuing the dialogue on macroeconomic policies. IDA financed technical assistance to assist Rwandese working groups to analyze the impact of the country' s legal and institutional framework and macroeconomic policies on public enterprise performance as well as to conduct enterprise-specific diagnostic studies. The Government's Policy Statement on Public Enterprise Reform includes recommendations made by the working group on legal and institutional issues and rAlects the results of discussions with IDA staff. The Policy Statement on Public Enterprise Reform signed by the Minister of Finance was presented at negotiations (Annex IV). The proposed project is an outgrowth of this process and has been designed to assist the implementation of policy reforms. It may be regarded as an iu.portant step towards a more comprehensive adjustment process. However, until distortions in the economic environment are addressed the project will only focus on restructuring service enterprises and those producing tradables whose economic  - 3 - viability has been demonstrated and which are financially viable under the present exchange rate regime. B. Sector Overview Historical Perspective 1.09. Rwanda's public enterprise sector (para. 1.22 for definition) is relatively large, young, and still growing with most of its 62 parastatals created after 1975. Revenues generated 1by the coffee boom of the late 1970s allowed the Government to play a major role in the ownership of key enterprises. Its choice of investments was governed by pragmatic considerations: (i) the perceived obligation of Government participation in enterprises of strategic interest (coffee, tea, petroleum,) or natural monopoly (electricity), (ii) the need to stimulate the national economy through projects that could not attract Rwanda's nascent private investors (pyrethrum extract, banana wine production), and (iii) the desire to provide administrative services more efficiently through decentralized entities (tasearch institutes, universities) rather than government departments. 1.10. The donor commtunity also has been responsible for the growth of the public enterprise sector. As projects mature, the Government is automatically assuming the donors' management and financial responsibilities. According to Rwanda's 1988 development budget, the Government was supporting 99 projects; about 15 of these are expected to be reclassified as public enterprises or be sold to the private sector during the next two years. Other projects will be reclassified soon thereafter. 1.11. Of Rwanda's 62 public enterprises, 32 are wholly-owned by the Government, 12 are mixed companies (societe d'6conomie mixte) with at least SO percent Government and/or public enterprise ownership, and 18 have a majority private ownership (Annex I). The 32 wholly Government-owned enterprises can be further subdivided into five entities of an administrative nature, 16 public enterprises of a commercial or industrial nature, five regies of which four also manage an industrial/commercial activity and six completed projects which are about to be reclassified as some form of public enterprise. Importance of t-he Public Enterprise Sector to the Economy 1.12. Public and mixed enterprises account for about 10 percent of Rwanda's GDP. If all mixed enterprises are excluded, then the share drops to only 2-3 percent of GDP. In 1987, the value added of the 17 largest public enterprises was about RwF 2.9 billion (about US$40 million). However, subsidies and other transfers from the Government are equivalent to almost 45 percent of this value added. Four enterprises alone constituted almost 90 percent of the total value added of this group. 1.13. Despite their low share of GDP, certain public enterprises play a key role in the economy. Coffee, tea and pyrethrum promotion and sales, all managed by public enterprises, account for about 85 percent of Rwanda's total exports. Consumption taxes on beer and soft drinks produced by a mixed enterprise furnish about 15 percent of the Government's budgetary revenues.  - 4 - Thus, a few public enterprises are an importanE source of foreign exchange and government revenues. In addition, public enterprises are estimated to employ about 15,000 people. This represents about nine percent of employment in the formal sector (159,000) and over one-quarter of total employees in the public sector (56,000). 1.14. Government investment in mixed enterprises shows that thic sector has absorbed a sizeable amount of public resources during the past decade. To date, the Government has invested about RwF 4.1 billion (about US$56 million) in nominal terms in joint ventures with the private sector. Foreign investors have provided a little less than the Government, RwF 3.9 billion (US$53 million), while Rwandese investors have contributed only RwE 1 billion (US$13.5 million). 1.15. Foreign loans to public enterprises constitute one-third of Rwanda's external debt. The Government has contracted an external debt of almost RwF 16 billion (US$213 million) on behalf of six public enterprises. Unless these enterprises' financial performarnce improves dramatically, during 1988-95 the Government will be required to make about RwF 5.7 billion in principal and interest payments on this debt. 1.16. Unlike many developing countries, public enterprises are not directly crowding out the private sector's access to domestic bank resources. Credit from the Central Bank (Banque Nationale du Rwanda, BNR) to PEs is negligible (RwF 1.7 million); outstanding loans to PEs (excluding mixed enterprises) from commercial banks more than doubled from RwF 400 to 852 million between 1982 and 1983 but remained fairly stable at this level until the present. In March 1987, outstanding loans fr,'m commercial banks to PEs amounted to only RwF 748 million (about US$10 million) while loans to the private sector totalled RwF 12 billion (about US$162 million). The amount of outstanding loans from Rwanda's development bank (Banque Rwandaise du Developpement, BRD) and the mortgage bank, Caisse HypothAcaire du Rwanda, to PEs declined from RwF 214 million in 1982 to 107 million in 1987, while their loans to the private sector increased from RwF 1,442 to 2,847 million during the same time period. All loans to public enterprises have been guaranteed by the Government. 1.17. The public enterprise sector has been a large burden on public finances. Many of Rwanda's public enterprises would have ceased operations if it were not for Government subsidies. During 1983-87 net Government transfers to 17 industrial and commercial public enterprises (in the form of equipment and operating subsidies, non-reimbursed advances and repayment of debts on behalf of PEs) totalled about RwF 7.6 billion (about US$82 million) (Annex I). Government subsidies to PEs were RwF 8.1 billion, while the flow from these public enterprises to the Government (mainly taxes and dividends) was only RwF 508 million. This represents a sizeable amount -- six percent -- of government revenues during those years. The total net transfers from the Government to these 17 public enterprises, two mixed companies and the administrative bodies  - 5 - represented about 10 percent of Government revenues in 1987. 1/ Since all public enterprises except mixed enterprises are exempt from paying income taxes, this also represents an important source of foregone income to the Government. Financial Performance 1.18. The performance of public enterprises with majority government ownership has been disappointing. Aggregated losses of 18 wholly Government- owned public enterprises of a commercial/industrial nature were RwF 850 million in 1987 (about US$11.3 million), excluding the RwF 3 billion in losses suffered by the Stabilization Fund for coffee 21 (Annex I). Accumulated losses for these enterprises during 1983-87 amount to RwF 2.7 billion (about US$29 million). Heaviest losses during this period were incurred by hotels owned by Office Rwandais du Tourisme et des Parcs Nationaux (ORTPN), the pyrethrum processing plant (Office du Pyr&thre du Rwanda - OPYRWA); the agricultural marketing company (Office de la Valorisation Pastorale et Agricole du Mutara - OVAPAM); the tea processing and marketing company (Office des Cultures Industrielles du Rwanda- The - OCIR-The); and by the airport. This pattern of losses has caused many of Rwanda's public enterprises to be severely undercapitalized. The Office des Cultures Industrielles-Cafe (OCIR-Cafe), with a negative net woith of RwF 1.3 billion is technically bankrupt, while OPYRWA and the Office National des Transports en Commun (ONATRACOM), the domestic bus company, have an extremely weak capital base. The only public enterprise that generated income during this period was the government pension fund, Caisse Sociale du Rwanda (CSR) (RwF 2.1 billion from 1983-73). However, even this social security fund has high operating costs and a relatively low return on investment. Since this agency has not performed any actuarial forecasts, it is impossible to determine its true financial performance. 1.19. Despite receiving subsidies each year, the four public entities of an administrative nature for which data are available also had significant losses: RwF 260 million (about US$3 million) in 1987 and, on a cumulative basis, RwE 714 million from 1985-87 (about US$8 million). The financial performance of mixed companies, while better than that of wholly Government-owned enterprises, has also been disappointing. The consolidated profits of 17 mixed companies for which the Ministry of Finance has statistics was only RwF 124 million in 1987 (about US$1.7 million). Among enterprises that were majority- owned by the Government, only Rwanda Export (RWANDEX), the coffee processing and export company, and the gasoline distribution company, Societ4 Rwandaise du 1/ The Govenmment has also assumed the debt obligations of Rwakina and Air Rwanda, two mixed companies, which amount to a net transfer of RwF 71 million. The net transfers to the five administrative bodies was Rwf 3.8 bMllion during 1983-87, or about RwF 770 per year (about US$8 million). 2/ It should be noted that Electrogaz showed a profit of Rwf 71 million in 1987 only because it received a RwF 359 million payment from the Government on a debt owed by SOMIRWA against which it had constituted provisions earlier. Without this extraordinary income, it would have had a RwF 200 million loss.  - 6 - P4trole (PETRORWANDA) were profitable in both 1986 and 1987. In general, dividends remitted by mixed companies to the Government have been very disappointing. The Government received only RwF 142 million during 1983-87 (US$1.5 million). Return on the Government's investment of around RwF 4 billion, thus, has been negligible. 1.20. Even with these losses, the wage bill of these 18 enterprises increased steadily during the 1980s. It is clear that poor financial performance did not cause public enterprise managers to trim their staff. Most managers lack sufficient authority to control the number and quality of staff members and few have an incentive to argue in favor of such cuts. 1.21. Cross-debt tables on 17 of the largest public enterprises show that the Government is by far the largest debtor and creditor vis-a-vis public enterprises (Annex 1). The pension fund is the Government's largest creditor (RwF 2.2 billion) and OCIR-The and OPYRWA are the Government's largest debtors (RwF 1.1 billion and 516 million, respectively). Unlike many developing countries, public enterprises have relatively small arrears owed to other public enterprises and mixed enterprises and the Rwandese private sector is a net debtor to public enterprises. Since the Government has assumed the repayment obligations of public enterprises when they are unable to meet their debt payments, no arrears are owed to Rwanda's banks. C. Institutional and Legal Framework Legal Structure 1.22. The Government does not have a single all-encompassing definition of what constitutes the public enterprise sector. The term is used rather loosely to refer to entities which have a separate administrative structure and are wholly or partly owned by the state. Rwanda's public enterprise sector can be divided into four categories: etablissements publics (public entities) which are wholly government-owned agencies with a separate juridical and financial status. These include entities that are intended to serve a social purpose, such as research institutes, as well as in-ustrial and commercial enterprises; regies which are public entities that lack an autonomous legal status but do have financial and technical autonomy; mixed companies (societes d'economie mixte) which are joint ventures between the Government and private domestic or international investors that are subject to the commercial and labor lawLs that govern the private sector; and completed prujects which lack any legal status but have a separate administration and are about to be transformed into one of the above categories. Government Oversight 1.23. Public enterprises (except mixed companies with minority government ownership) are subject to extensive control by the Government. The President plays a predominant role in determining the supervisory staff and management of the fully government-owned enterprise. According to law, he appoints the entire board of directors, the general manager, the top technical staff and the Government Commissioner of all etablissements publics and regies. All are government civil servants. The President may take decisions in place of the  board of directors if this body has failed to take action on an important issue. Private shareholders of majority Government-owned mixed enterprises are represented on the board and may choose a few of the enterprise's staff, but most of the board members, the general manager and top staff are suggested by the Minister of Finance and confirmed by the Cabinet. Hixed enterprises with minority Government ownership include Presidential appointees on their boards of directors, but the controlling owners choose the Chairman of the board, the general manager and most of the technical staff. 1.24. Public enterprises are supervised by technical and financial tutelle ministries. The technical tutelle, which is th. ministry in charge of the enterprise's sector of activities, has the power of prior authorization, approval, cancellation and substitution of key decisions taken by the public enterprise's management. This extends to investment programs, budgets, loans, financial accounts, price-setting procurement decisions, contracting, internal regulations, personnel decisions and resolutions of the board of directors. The technical tutelle usually plays a limited role in the operations of mixed enterprises with minority government ownership. The Ministry of Finance, the financial tutelle, must approve the enterprise's budget, any budget overruns, all loan obligations, contract obligations over a certain amount and any other extraordinary financial transactions. The financial tutelle' s control on mixed enterprises with minority Government participation is usually limited to decisions involving government guarantees. 1.25. Although the technical tutelle ministries are supposed to monitor the performance of the public enterprises within their portfolio, they lack adequate support to perform these responsibilities. Two divisions within the Ministry of Finance are supposed to monitor the Government's public enterprises, but, in practice, they have insufficient staff and resources to perform this function. In practice, the tutelle agents rarely play an efficient supervisory role. As shown by the poor financial and administrative performance of most public enterprises, they do not provide the kind of support needed to the enterprise's board of directors and its managing director. The State Controllers are government officials who, often due to lack of time, are not performing their function properly. Administration and Management 1.26. According to the General Public Entity Law of 1975 and other legislation, the board of directors of 100 percent Government-owned public enterprises has significant responsibilities. In practice, the boards of most etablissements publics do not function well. Although the board is supposed to meet each quarter, meetings are not regularly scheduled and often the proceeding lacks legal authority because a quorum is not achieved. Since all board members are civil servants that often have insufficient business experience and technical familiarity with the enterprise's production process, this entity's usefulness is extremely limited. Board membere that work in the tutelle ministries may often defend their ministries' interests rather than those of the enterprise. 1.27. Some managers of wholly or majority Government-owned public enterprises are regarded to have poor managerial and business skills. Their longevity on the job and salary increases are not necessarily tied to their  enterprise's performance. Since, according to law, they do not recruit the management team and cannot fire these staff members, they lack a necessary managerial function. Their main power consists in choosing the enterprise's support staff. 1.28. Many mixed companies with majority Government ownership exhibit the same deficiencies. Some majority Government-owned institutions, however, are an exception to this administrative set-up. The foreign owners of the Banque de Kigali (50 percent Government ownership), for example, appoint its general manager. Government interference in the management of this bank is relatively low. Labor Law 1.29. Employees of etablissements publics are subject to the Presidential Decree of December 1976 which is modeled after the civil service law. Employees are divided into civil servants (sous-statut) and contractors (sous-contrat) 3/. While civil servants are rarely fired but rather transferred to another post when problems occur, contractors have little job security. Unless their contract specifies otherwise, they receive a minimum of 15 days nctice. Thu3, public enterprise managers can and do fire those under contract without paying any significant indemnities. 1.30. Employees are divided into six categories, each of which is further subdivided into levels. The Government sets a minimum wage for each sublevel, making distinctions for different economic subsectors. It also specifies the qualificLtions needed for each job category. This rather inflexible system responds poorly to the recruitment needs of many public enterprises. Higher- level staff are chosen on the basis of academic qualifications rather than business experience. Although all higher-level staff members are supposed to pass an exam before they are hired, in practice this rule is not followed. 1.31. In general, wage levels within public enterprises have not kept up with those in the private sector. This makes it difficult for public enterprises to retain qualified staff. Since mixed companies are subject to the same labor code as that which perteins to private enterprises, they have much greater flexibility in the hiring and firing of staff and determining salaries and wages. D. Government's Prior Attempts at PR Reform 1.32. Dissatisfied with the performance of the PE sector and faced with a more difficult budgetary situation, in 1985 the Government initiated a number of actions to contain PE losses and to address sh.e problems of the sector. The Programme de Relance recommended: (i) defining the respective powers of the tutelle ministry and the enterprise's board of directors more clearly with a view to giving the latter greater autonomy; (ii) setting annual management objectives for each enterprise; (iii) instituting a reward system linked to performance; 3/ In 1986, according to the Ministry of Public Administration, about 70 percent of the 8,013 staff employed by administrative agencies were on contract (sous contrat).  - 9 - and (iv) giving financial objectives priority over social or political ones. While relatively little progress has been made so far, the Government now appears ready to act on these suggestions. 1.33. The Government obtained assistance from the European Economic Community (EEC) to create the Centrale Comptable et Organisation (CCO) within the Presidency to improve the financial accounting systems of selected public enterprises, provide ad hoc technical assistance and conduct external audits. Until recently the financial performance of most public enterprises could not be analyzed accurately since PEs lacked reliable financial statements. The CCO has concentrated its efforts on six public enterprises but monitors the performance of 16 public enterprises. However, the CCO has no legal status and its role after the termination of EEC funding in 1990 is uncertain. In addition, the scope of its activities is limited to enterprise-specific accounting and financial management issues. It lacks the mandate and resources to pursue a more comprehensive approach to sector reform and does not intervene in the activities of the regies, mixed companies or projects. 1.34. The Government has also received assistance from the United Nations Development Programme (UNDP) to suggest administrative reforms within the central government. This five year project (1988-93) is supposed to examine personnel issues within etablissements publics. 1.35. Finally, technical ministries launched, often at their own initiative, attempts to rescue enterprises under their tutelage. These include technical assistance to Projet Pouzzolane, Chaux et Tourbe, and actions have been taken to improve the management and financial performance of OPYRWA. A restructuring plan has been proposed to improve its internal audit, plantation services and the quality of pyrethrum extract. New input supply and marketing arrangements are also being investigated as well as the possibility of selling the enterprise. 1.36. Privatization of public enterprises has been on the Government's agenda for some time. In mid-1988, the President announced in a public speech the first phase of a broader privatization progrPm: ORTPN hotels and the Imprimerie Nationale du Rwanda (INR), a government printing company (which are etablissements publics of a commercial nature) would be sold, as well as the Government's shares in some mixed enterprises, including the Societe Nationale des Tubes (SONATUBES) (PVC tubes; 23 percent government), the Societe des Transports Internationaux du Rwanda (STIR) (road transport; 85 percent government) and the Societe Rwandaise des Textiles (RWANTEXCO) (textiles; 49 percent government). The Ministry of Finance was entrusted with the responsibility to implement these decisions, which were confirmed in subsequent speeches of the President and communiques of the party's central committee. The Government has initiated financial and management audits of INR, SONATUBES, STIR and RWANTEXCO to determine their value. Moreover, in 1938, two government projects involved in commercial or industrial activities were converted into mixed companies with private partners, namely the Boucherie Charcuterie du Rwanda (BCR) butchery and the Societe Rwandaise des Allumettes (SORWAL) match factory. 1.37. Despite these efforts, the situation of the PE sector continued to deteriorate and prompted the Government to reexamine its case-by-case strategy  - 10 - and focus on issues of coordination, reform of the legal and institutional framelwork and its own role in the sector. As part of the Government-IDA dialogue on PE reform, in mid-1988, the Government established three working groups to ti) examine the impact of macroeconomic policies on the performance of public enterprises, (ii) propose improvements in the legal and institutional framework governing PEs and (iii) conduct diagnostic studies on selected PEs which suggest potential rehabilitation or privatization plans. The three groups were assisted by a team of international consultants financed under the IDA TA project to the Finance Ministry (Cr. 1565-RW). Their work is the basis for the preparation of a comprehensive PE reform strategy to be supported under the proposed program. II. THE PROJECT A. Background 2.01. The formation of the three Rwandese working groups represented an important step in the Government's process of examining the effect of Rwanda's macroeconomic policies and its legal and institutional framework upon the financial and economic performance of the public enterprise sector. The Rwandese working groups' reports indicate that the disappointing financial performance of public enterprises stems from: (i) the lack of clear Government-set objectives and targets against which enterprises are evaluated; (ii) an incoherent, inconsistent and often counterproductive legal framework which fosters neither managerial autonomy nor accountability; (iii) managers that usually lack business background and expertise in the enterprise's product line; (iv) labor laws and practices which do not adequately reward or punish employees on the basis of their performance; (v) inadequate financial accounting systems and controls; and, (vi) poor economic and financial analysis of the project at the design stage. This has contributed to the establishment of enterprises which are inappropriate due to scale, technical complexity, domestic resource costs and other factors. During negotiations, the Rwandese delegation submitted the minutes of a Ministerial meeting which indicated general agreement with the recommendations made by the working groups. 2.02. The above analysis has led Rwandese policymakers to conclude that a more comprehensive PE reform program is needed to address the policy issues affecting PEs as well as questions of economic viability which are presently left aside in favor of financial issues. It is now recognized that productive PEs should be given the necessary incentives to operate as private enterprises, even though their performance is monitored and supervised by the Government. This means that, while having a greater role in running the enterprise, PE managers would have a greater degree of accountability if their performance is unsatisfactory. The changes in the operational environment will require a clear delineation of the respective powers of the tutelle ministry, the board of directors and the PE management, more flexible labor regulations and better financial incentives for PE management. This new approach and the accompanying PE reform strategy emerging from this analysis was initially formulated in the reports of the working groups and has been reflected in the Policy Statement on Public Enterprise Reform prepared by the Government in the context of this proposed project. The Government's Policy Statement on Public Enterprise Reform was supplemented with an implementation schedule of major reform actions (see  - 11 - Annex V for schedule of key actions). Ministry of Finance and IDA representatives will review and modify, if necessary and by mutual accord, this schedule every six months. Non-compliance with key actions of the public enterprise reform program would constitute a specific event of suspension in the Development Credit Agreement. B. Objectives 2.03. The major objective of the proposed project is to assist the Government to improve its technical and administrative capacity to implement its reform program described in its Policy Statement on Public Enterprise Reform. This program aims to ti) reduce the burden that public enterprises have placed on the Government budget and administrative capacity and (ii) to develop a streamlined and efficient PE sector that will contribute to the growth of Rwanda's economy. Specifically, the project aims at helping the Government to: a. redefine the role of the Government in the PE sector and formulate principles for future interventions in new enterprises; b. improve the institutional and legal framework for public enterprises with a view to (i) increasing the autonomy and accountability of PEs; (ii) better defining the role and responsibilities of the different bodies involved in PE decision-making (technical tutelle ministries, Ministry of Finance, Ministry at the Presidency, PEs' Boards of Directors and PEs' management); and (iii) ensuring a better supervision of PEs by the Government; c. increase the efficiency of the sector through (i) rehabilitation of public enterprises that could be made economically viable; (ii) divestiture of those which can be privatized; and (iii) liqu.adation of nonviable ones; d. develop national capacity to design, implement and monitor PE reforms. C. Rationale for IDA Involvement 2.04. Improvements in the efficiency of resource use by the PE sector is a key element for financial equilibrium and growth in Rwanda. The proposed operation is an integral part of Government's approach of addressing sectoral adjustment issues, while seeking to reach consensus on structural macroeconomic adjustment. IDA support has already played an important role in this process during the project preparation stage by financing consultants attached to the working groups, reviewing and commenting on drafts of the working groups' reports and the dialogue leading to the preparation of the Policy Statement on Public Enterprise Reform. The proposed project will finance additional consultants and provide a mechanism for continued dialogue between the Government and IDA on these issues. By adopting a comprehensive approach to improving the institutional and legal framework affecting all public enterprises, this project will strengthen measures being taken by other IDA projects to improve the operations of key public enterprises. For example, while this project will  - 12 - address Electrogaz' legal and institutional problems, a separate future energy project will deal with improving its operational efficiency. Similarly, this project will improve the institutional environment for the Imprimerie Scolaire by assisting its transformation from a regie into an etablissement public while the Education III project is funding long-term technical assistance and supplies. Other complementary projects are the forthcoming Transport Sector Project which requires the signature of a performance contract with ONATRACOM as part of the project's action plan and the Telecommunications Project which aims to improve the operations of the Post and Telecommunications institution. Care has been taken so that this project complements such activities and does not overlap with them. Finally, the institutional arrangements of the proposed environmental agency (part of the current functions of ORTPN) will be developed within the larger framework of the Environmental Action Plan (EAP) which is currently being prepared by the Ministry of Plan. D. Description of the Project (1) Reduction of the State's Role in the Productive Sectors 2.05. The Rwandese working groups on public enterprise reform program have recommended that six of the ten enterprises that were studied by the groups should be privatized in full or in part, namely: ORTPN (hotels), Bureau National d'Etudes des Projets (BUNEP) (consulting firm), Riziculture (rice production), Forge Gouvernementale (blacksmith), OVAPAM (agricultural marketing) and Papeteries du Rwanda (ceiling tiles and paper products). In addition to the enterprises already mentioned, the Government has initiated talks with private partners for the divestiture of OPYRWA (pyrethrum plant) and has opted for the transformation of the telecommunications directorate of the Ministry of Transport and Communications into a joint-venture company with a private telecommunications company. 2.06. The proposed project will strengthen the capacity of the Government to implement the privatization program by funding technical assistance and training. While the Ministry of Finance will take the lead role in implementing the privatization program (para. 2.26), it will also establish ad hoc working groups for each enterprise to be privatized. The enterprise working groups would include staff from the Directorate in charge of public enterprise reform (para. 2.21), from the concerned enterprise and from its oversight ministry, and wotild prepare and supervise all steps of the concerned enterprise's privatization, with the assistance of qualified advisors. In its schedule of key actions, the Government has proposed that a privatization strategy will be adopted by March 1991. 2.07. To develop and carry out this program, the Government will need the assistance of experienced investment bankers, lawyers, economists and financial analysts, whose services will be financed under the Project. These experts will assist the Ministry of Finance staff and the privatization working groups to prepare, supervise and coordinate the whole program at the technical level. They would assist the Government to inter alia: (i) recommend priority sectors or enterprises for privatization; (ii) adopt procedures and guidelines to be followed by the enterprise working group; (iii) explore ways to deal with public enterprises' debts and other claims on such enterprises prior to their privatization; (iv) suggest ways to redeploy redundant staff; (v) study and  - 13 - assess the various mechanisms that may be available for financing privatizations (hire-purchase, employee and management leveraged buy-outs, bank loans with shares as collateral); (vi) assess the applicability of various privatization techniques in regard of Rwandese realities; (vii) develop criteria for the selection of investors and the evaluation of competing bids; (viii) suggest legislative or regulatory changes that might be required for the success of the privatization program; and (ix) evaluate the need to grant tax holidays or investment code benefits to attract investors to public enterprises. (2) Improvement of the Legal and Institutional Framework 2.08. The Government's reform program is based on a new clacsification of public enterprises and increased autonomy for commercial and industrial enterprises. A major objective of the long- and short-term technical assistance provided by the Project is to help the Government implement changes in the legal and institutional framework. Specifically, the full-time Rwandese lawyer attached to the Ministry of Finance as well as Rwandese and expatriate short- term legal consultants (para. 2.28) will help the Government to revise its public enterprise law and accompanying statutes and adapt company by-laws to the new legal framework. Training courses will be offered to public enterprises' management and relevant ministry staff to explain these new laws and systems. 2.09. During the early stages of project implementatior, the Government will establish (i) the broad outline and basic principles of a new public enterprise law and (ii) a provisional legal classification of public enterprises. In the implementation schedule referred to in para. 2.08, the Government has committed itself to approval of this legislation by the Council of Government by January 1991 and to its presentation to the National Assembly in March 1991. The principles on which the reclassification of public enterprises will be based may be described as follows: a. administrative, cultural, educational or social entities will be organized as dtablissements publics or EP; b. strategic enterprises providing essential industrial or commercial services will be organized as state corporations (Societe Nationale or SN) and, where appropriate, as mixed enterprises; c. non-strategic enterprises will be privatized (fully or partly) if they are viable, or liquidated if they are not. 2.10. The etablissement public category would be maintained but with some significant changes. First, it would not apply to businesses (industrial or cormercial entities), but only to social, cultural, educational or administrative entities. Second, the EPs would be granted much more autonomy than at present, thougL significantly less than will be the case for SNs. These entities would be governed by public law, as they are now. 2.11. The general manager would be nominated by the board of directors. He would have the authority to hire and fire the agency's personnel, subject to board approval in the case of senior managers. Candidates for all of these positions would be selected on the basis of their technical qualifications and  - 14 - past management experience. The generai manager and board would have broader management powers than at present. The position of Government Commissioner would be abolished to reduce the number of bodies controlling public enterprises and to strengthen the role of the remaining management and control bodies. This increased autonomy would go together with increased accountability through the negotiations of multi-year performance contracts which commit management to specific targets. 2.12. SNs would be 100 percent public enterprises with the Government either as the sole shareholder or as the majority shareholder with other public entities as minority shareholders. In its Policy Statement, the Government states that SNs would be managed like private firms. However, it is still undecided whether these public enterprises should be governed by the same commercial and labor codes used for private firms. During negotiations it was agreed that SNs, in any case, would adopt key features that have been proposed to improve their efficiency. 2.13. The SN status would be given to existing public enterprises (sensu lato) in the industrial or commercial sectors, which are currently clasaified as etablissements publics or refies and are thus currently subject to public law. The transfer of each enterprise from one of these categories to SN status will be a time-consuming process, under which many different issues will need to be carefully examined. These include resolving the status of civil servants currently employed by such enterprises and disposing of claims held against the enterprises. 2.14. It has been proposed that the SN's board would have the broadest powers to manage the enterprise, and inter alia: i. nominate the general manager; ii. approve the company's development plan and performance contract; iii. adopt the operating and investment budgets; iv. adopt the company's organization chart and personnel regulations; v. decide on new investments; vi. approve contracts above a given ceiling; vii. approve the financial statements for the preceding fiscal year; and, viii. authorize borrowings and guarantees. The SN's general manager would have authority for the day-to-day management of the company, including the power: ix. to hire and fire all staff; x. enter into contracts up to a given ceiling; and, xi. represent the SN in all official transactions. 2.15. A number of reforms would affect all categories of state-owned enterprises -- ^tablissement publics, state corporations or mixed enterprises. The criteria for the appointment of board members would change. In EPs and SNs, part of the Board seats would be reserved for representatives of the private sector; in mixed enterprises, private versus public representation on the Board would be determined by their relative shareholdings and company by-laws. Government representatives would be selected for their competence rather than ex-officio. Since lack of incentives has been identified as one of the main reasons for poor public enterprise performance in Rwanda, incentives-based compensation would be introduced. The Government intends to develop a new compensation system for public enterprises whereby a portion of board member and staff compensation would be based on productivity gains. The project will finance short-term consultants who are experts in compensation matters to design these new schemes. And, all SNs and EPs would prepare periodic development plans, which would form the basis of a negotiated performance contract with the Government. Development plans (or corporate plans) would set out the strategies  - 15 - which the company intends to pursue over the short, medium and long term in terms of diversification, investments, employment and productivity. Annual budgets and investment programs would translate this strategy into operational expenditures. The performance contract would include the different Government commitments which are necessary to achieve the objectives set forth in the development plan, a.g. borrowing authority and/or guarantee, approval of investments, price or tariff setting and treatment of Government arrears. 2.16. The company's management would commit itself to specific targets and achievements within an agreed timeframe. These would 'nclude output and productivity targets, financial ratios and, where applicable, special programs requested by the Government and to be financed by the national budget. Performance contracts would be introduced over time, starting with those enterprises (whether etablissements publics, SN or mixed enterprises) that put the heaviest burden on C'vernment finances. Further financial support to such enterprises would be suject to the prior negotiation and signing of a performance contract. (3) Enterprise Restructuring 2.17. The Government has divided public enterprises into two groups. The first group of 16 enterprises, shown in Table 1, includes 12 enterprises which constitute the heaviest drain on Government's budget and 4 public enterprises which the Government decided to privatize in June 1988. The second group, shown in Table 2, consists of an additional 23 enterprises. All 16 enterprises selected for the first round of restructuring have major management, financial and technical problems. In 1987, the combined losses of ten of these enterprises amounted to US$5.6 million; Electrogaz showed a profit only because it received some extraordinary income from the Government, while Caisse Sociale is accumulating funds for future severance payments. In addition, net transfers from the Government to these twelve enterprises was about US$7 million in 1987. The selected enterprises also account for about 15 percent of the PE sector's total value added and as much as 30-40 percent of the value added of public enterprises when mixed enterprises are excluded, All together, the 12 enterprises employ about 2,300 permanent workers, or 15 percent of total employment in the PE sector. 2.18. During preparation of the proposed project, diagnostic studies were prepared by one of the three Rwandese working groups on public enterprise reform, to provide the basis for decision on 11 of the enterprises. A diagnostic study of the Sucrerie, funded by the Caisse Centrale de Cooperation Economique, will provide the basis for a decision to be taken in mid-1990. Details on the enterprises selected for the first round of the restructuring exercise are in Annex II. 2.19. During appraisal, the mission agreed with the Rwandese authorities that a second series of diagnostic studies would be undertaken on several other public enterprises in difficulty vtth the intention of rehabilitating or divesting them from the Government's portfolio. During negotiations, it was agreed that the project would assist the Government to perform diagnostic studies and detailed action plans for rehabilitation or divestiture of the 23 public enterprises shown in Table 2. A timetable for the implementation of diagnostic studies, action plans and the signature of performance contracts for the first  - 16 - and second groups of public enterprises shown in Table 2 was presented by the Government at negotiations (Annex V). 2.20. The project will provide long- and short-term technical assistance to ass? the rehabilitation, privatization and liquidation of selected public enterprises. This will include economists, financial analysts and engineers to (i) prepare the rehabilitation plans for ORTPN and Regie des Aeroports; (ii) assist the organization of the rice milling enterprise and blacksmith operation into cooperatives; (iii) conduct diagnostic studies and action plans for the second set of enterprises; and (iv) formulate longer-range development plans for enterprises to be rehabilitated. Legal advisors will be needed to translate these plans into performance contracts while privatization experts could be used to find potential investors and help the Government negotiate deals with foreign partners. Liquidators will be required to dispose of the assets of OVAPAM and other public enterprises that the Government decides to liquidate. Management specialists will assist enterprises in corporate planning and organization while accounting specialists will help public enterprises not receiving CCO assistance to establish sound accounting systems and internal controls. The project will fund the organization of one to two week training sessions for Board of directors' members and PE managers in such basic areas as corporate planning and objective setting, financial management, audit and control, management information, personnel administration, economic analysis, accounting and marketing. (4) Project Implementation and Institutional Strengthening Institutional Coordination and Implementation of the Project 2.21. During appraisal the institutional arrangements for reform implementation were discussed and agreed with the Rwandese authorities. They are as follows: (a) the decision-making body on PE reform will be the Interministerial Coordination Committee on Economic Policy (Comit6 Interministeriel de Coordination au niveau ministeriel en Matibre de Politique Economique). It is composed of the Ministers involved in economic policy: Finance, Plan, Agriculture, Transport, Mines, Industry and Artisanat, Commerce, BNR and the Minister at the Presidency, and meets regularly to review proposals of an economic policy nature before consideration by the Cabinet; (b) the technical arm of the Interministerial Coordination Committee is the Technical CIC on Economic Policy (Comite Interministeriel de Coordination au niveau technique en Matibre de Politique Economigue). This body will invite to meetings those responsible for PE reform measures (the Directorate in charge of PE reform in the Ministry of Finance and the CCO) as well as representatives of the appropriate tutelle Ministry; and,  - 17 - TABLE it Characteristics of Pubilc Enterprises Selected for the First Round of Restructurino Enterprise Legal Status Activity Major Problems Recomendations BUNEP EP Feasibility Management/Financial Reexamine to determine Studles; whether to privatize Analysis C.S.R. EP Social Security Quality of portfolio. Improve operational Fund Too much financing procedures and set and dependence on quantitative objectives public sector, and monitor performance. Inofficient. Carry out actuarial studies to estimate future obligations and plan accordingly. Diversify invesoments. ELECTRO- EP Production and Poor management. Classify ELECTROOAZ as CAZ a/ distribution of Lack of autonomy. Soci6t6 Nationale. electricity, Difficult financial Prepare new statutes. water and gas situation. Low electricity tariffs. Forge Completed Metal Work Legal/Managament/ Sell the entity's assets to gouverne- Project Financial the blacksmiths. mental. Assist blacksmiths to form a cooperative. Maiserie Completed Maize Milling Poor management. Give management of MaYserie de Project Too much investment 1-2 years to redress Mukarimira to be profitable. situation (without subsidy b/ Poor quality of or new Investment). products due to After the deadline, sell obsolete equipment. off equipment to private No market for Investors. enterprise's production. ORTPN EP Tourism Management. Sell off hotels to private (Management of Too much Investment investors. NatVonal Parks In hotels. Constitute new EP only and Tourist Overly optimistic responsible for protection hotels) assumptions regarding of environment and national growth of tourism, parks. OVAPAM EP Management of Very limited Liquidate OVAPAM. Project Agro- responsibilities Sell the small production Pastoral du givon completion activities of OVAPAM (a Mutera; of project. farm and a dairy) to Marketing of private investors. agricultural products OVIBAR 9/ EP Banana wine Poor maiagement. Give management of OVIBAR High cost of 1-2 years to redress products. situation. No market for Eliminate subsidies. products. After deadline, liquidate company.  - 18 - TABLE 1 (cont'd) Enterprise Legal Status Activity Major Problems Rco wendations Pnpeteries EP Cardboard and Poor anangemnt. Stop production of du Rwanda insulating Obsolet technology Insulating cailing panels. cIllng panelI In Insulating celling Study possibility of panel unit. Improving productlon High production cost techniques. In cardboard unit. Sell cardboard unit. R69gi des R1gie Airport Management. Classify R&gle des A6roports Services Heavy debt. Aroporte as Soci6t& Low prof2t due to Nationale. high costs and high Renegotiate tariffs charged fee paid to Air to airline companies on Rwandr and Magervn basis of tariffs charged by for services other airports In region. rendered. Renegotiate fes paid to Air Rwands and Magerwr on basis of fews paid by other airports for similar *ervIces. Determine mIni,um services R69gi des A6roports should provide. Rizories Completed Rice Milling Legal status. Organize producers Into Project Extension service and cooperatives and transfer agricultural to them managemnt of the development costs rizeries. should not be Revise producer prices. supported by Government to support cost rizerles. of Initial assistonce to Producer prices for paddy producers as well as ady and rice too agricultural development H;ghy. cost. Sucrorie R6gle Sugar c/ Requires trade To be determined Processing protection Imprimerie EP Printing Privatization-mechanlsm National. undetermined. SONATUSES Mixed PVC Pipe Privatize through sale of Enterprise production and all Government shares. (21% Govt.) trade RWANTEXCO Mixed Slanket Privatize through sale of Enterprise production. all Government shares. (49X Govt.) STIR Mixed International Priv,%tIzo through sale of Enterprise trucking. all Government shares. (86% Govt. + EP). This project will only address the institutional problem of ELECTROGAZ. The retructuring of ELECTROGAZ itself will be addressed under a separate Energy project. f/ Recommendations by Appraisal mlsion which were discussed and agreed with some mmbers of the working groups. There Is not yet a consensus betwen Rwanda and the Bank on thes two enterprises. s/ The Clisse Centrals Is currently funding a diagnostic study of this enterprie's" problem. EP = Etablissoment Public.  - 19 - TABLE 2: Second Group of Rwand PEs to be Examined under tho Pro]oct Enterprise Legal Status Activity Major Probles AIR RWANDA Mixed (91W Gav't Airline Poor management, high * EP owned) debts, lock of marketlng Strategy Apicole Project Honey Production Poor management, financial 'Os- BRD Mixed (56X Gov't Development Brank Increasing arrears, + EP) managemnt problems Caisse d'Epargne EP Savings fank Bankrupt !/ CaiXn. EP Mortgage Dank Low level of activity, poor Hypoth6caire deign Cimenterie Project C eunt Production Inappropriate technology, high production costa Imprimerie R4*1- School Supplies Legal Status Scoltaire Laiteries Project Milk Prod-btion Production at BOX of capacity technical and marketing problems MAGERWA Mixed (6X Gov't Import/Export Profitability linked to - 31X Mixed) Storage R6gi1 de* A&roports tariffs, high earmarked taxes for company OCIR-Caf6 EP Coffee Marketing High producer prices, overvalued exchango rate, declining quality OCIR-Th6 EP Too Marketing High operating cota for some unite, overvalued exchange rate ONATRACOM EP Domestic bus company Financial losses, low tariffs paid by civil servant. Inefficient use of the f lest OPROVIA EP Marketing of Poor managment/financial Agricultural lo..s, lack of clear Product. objectivos OPYRWA EP Pyrethrum Extract Poor Management. (Insecticide) High cost of raw mterials. Depreused export market. Privatize (both extraction plant and refinery, If possiblo). PETRORWAIJA Mixed (72 X EP) Petroleum Poor management Distribution REDEMI R6gte Mining of Geographic dispersion, cassiterite and several low productivity colombite mines RWAKINA mixed Quinine Processlng Closd at present; Goverment plans revival.  - 20 - TABLE 2 (cont'd) Enterprise Legal Statue Actlvity Major Problems RWANDEX Mixed (51X EP) Cotff. Proces ng SODEPARAL Mlxed (80X Oov't) Leather goods Managoment, Input supply production SOMITRAP Mixod (51X EP) Public Works Lack of market Construction SONAFRUITS Mixed (92X Gov't Fruit Juice Technological and marketing . EP) Production problem SONARWA MUxed (70X Gov't Insurance High los .EP) SOPRlRIZ Mixed (B0X Oov't Rice Mil;ng Poor managament * EP) SORWAL Mixed (BO Oov't) Match production High operating costs TRAFIPRO Mixed (74X Gov't) Retail Trade Poor managemont, high marketing costs p/ Project could assist in liquidation. (c) the preparation and supervision of PE reform programs and proposals (enterprise restructuring, privatization, drafting of new Loi-cadres, preparation of statutes for PEs, etc.) would be an entity at the Directorate level within the Ministry of Finance. This Directorate will be concerned exclusively with public enterprise reform matters. 2.22. The public enterprise reform process would be as follows: documents prepared by the new Directorate of Public Enterprises (Direction des Entreprises Publiques, DEP) would be submitted to the Technical CIC which would have three weeks to review them before forwarding them to the Ministerial CIC for examination. Decisions then would need to be taken by the Cabinet and/or National Assembly, per standard operating prccedures. At negotiations, the Government reconfirmed that it agreed with these institutional arrangements. 2.23. The training component will be managed by the Directorate of Public Enterprises but be subcontracted to local institutions and rely almost exclusively on local talent. The program of seminars would be prepared each semester by DEP staff and consultants in collaboration with tIe University of Rwanda, CCO, or other Rwandese training institutions for submission and approval by IDA. The University of Rwanda's Management Department already conducts short 1-2 week training courses for government employees on accounting, stock management, working capital management, computers and economic analysis. In addition to Rwandese professors, the Management Department also employs several Canadian, German, Belgian and Cameroonian professors. It would have to adapt its program so that it is appropriate to public enterprise staff needs. The CCO has been training public enterprise staff in accounting methods for the past few years. However, this organization lacks the funds needed to cover logistical expenses associated  - 21 - with such courses. The CCO would be eligible for such assistance under the project. Institutional Strengthening of the Ministry of Finance 2.24. The Ministry of Finance was reorganized in March 1989 so that two General Directorates currently have overlapping responsibilities for implementing public enterprise reform measures. The Directorate of Management of Government Holdings and Decentralized Services (Inspection de la (>stion des Participations Publiques et des Services Decentralis6s) within the General Inspection of Finance (IGF) General Directorate is responsible for (i) supervising the management of all public enterprises (including r6gies and mixed enterprises); (ii) supervising the implementation of any special public enterprise programs; (iii) designing regulations to improve the performance of public enterprises; (iv) regulating their external transactions; and (v) analyzing the financial reports of public enterprises provided by the ministry-appointed controllers. Only one person in this division has the necessary skills to supervise the proposed public enterprise reform process. This Directorate also has an expatriate technical advisor financed by the IDA technical assistance project (Cr. 1565-RW) which is aimed at strengthening the Ministry of Finance. 2.25. The Directorate of State Investments (Placements de l'Etat) within the Budget General Directorate is also in charge of managing the Government's investments in public enterprises, examining requests for Government investments, subsidies and guarantees, monitoring the performance of public enterprises and providing advice on the creation and transformation of public enterprises into other forms. While this Directorate is formally in charge of implementing the Government's privatization program, it lacks staff experienced in such matters. It has only six staff members, of which three have university degrees but little relevant work experience. 2.26. The new Directorate of Public Enterprises will eliminate this duplication in functions by combining the two Directorates so that all matters pertaining to public enterprise reform are centralized. The establishment of a new Directorate devoted exclusively to public enterprise issues helps to ensure that sufficient human resources will be devoted to this time-consuming and complex reform process and provides tangible proof that it is a high Government priority. It will be in charge of coordinating and implementing specific project components such ass (i) changes in the legal framework; (ii) restructurzng of selected public enterprises; (iii) privatization, (iv) training of public enterprise and other appropriate staff; and (v) monitoring/supervision of all public enterprises. The establishment of a Directorate within MINIFIN in charge of public enterprise restructuring, including the appointment of a Director and appropriate staff, is a condition of effectiveness. In addition, at negotiations it was agreed that the Director General of IGF will spend half of her time on public enterprise issues and serve as the Project Directur. 2.27. To enable the Directorate of Public Enterprises to implement the PE reform program, it is proposed to finance under this project the recruitment of a team of six lor.g-term consultants who will work under the authority of the Director of DEP. The head of the consulting team would also advise the Director General of IGF directly on PE matters. These long-term consultants would work as a team with Rwandese civil servants recruited by the Ministry of Finance to deal  - 22 - exclusively with public enterprise issues. The DEP will be staffed with a Director, two division chiefs and about six technicians. In addition to assisting the Ministry of Finance implement the policy changes and enterprise restructuring program outlined earlier, they will work with their Rwandese Ministry counterparts to: (a) supervise the selection, recruitment and work of short-term consultants; (b) manage the training component for PE, Ministry of Finance and other appropriate Government staff under this project; (c) establish a management information system to enable the Ministry of Finance to supervise public enterprises; and (d) administer the project's Special Account and ensure tne smooth disbursement of funds. 2.28. Detailed terms of reference for the six experts were agreed upon at negotiations. The six technical advisors will include a senior financial analyst/economist who will be the leader of the team of consultants, a senior engineer/financial analyst with experience in PE reform and enterprise restructuring, a training expert with a business degree, an economist with experience in public enterprise issues, a iawyer and an accountant to manage project accounts. 2.29. Agreement has been reached to appoint the expatriate advisor now working with IGF under financing from the IDA technical assistance project to the Ministry of Finance (Cr. 1565-RW), as the head of the technical advisors under this project. His financing will be transferred to this project when it becomes effective. It is anticipated that three of the five other experts would be Rwandese nationals as the accountant, the legal expert and the training specialist could be recruited in Rwanda. It would, however, be more difficult to find the two other experts in Rwanda (the senior engineer/financial analyst and the economist) and international recruitment is expected. The prime objectives of these consultants, whether Rwandese or foreign, will be to transfer their skills to their Rwandese civil servant counterparts as well as to work with Ministry staff to implement the reform program. In addition, special training would be provided to Ministry of Finance staff involved in public enterprise reform as well as appropriate individuals from other ministries. Courses on project economic analysis, privatization, lessons learned from public enterprise reform efforts in other countries, and public enterprise performance monitoring systems will also enhance the capacity of Ministry staff in charge of supervising the implementation of the reform program. 2.30. Short-term technical assistance will also be funded under the project to accomplish the tasks outlined in previous sections. A substantial portion of this technical assistance is expected to be provided by Rwandese experts. All financing under this component should be approved by IDA. The Project Director will be responsible for selecting the consultants and for submitting the financing requests to IDA along with a brief description of the task and the qualifications of the experts.  - 23 - TII. THE IDA CREDIT A. Project Costs, Financing and Use of Project Funds 3.01. The total cost of the project, net of taxes, is estimated at about US$4.9 million, with a foreign exchange component of about US$3.2 million. 3.02. An IDA Credit in an amount of US$4.4 million, covering 90 percent of the total project cost is recommended to finance 100 percent of the foreign exchange cost and 72 percent of the total local cost. A Government contribution equivalent to US$0.5 million will cover the remaining local costs consisting of local salaries, operating costs of the unit and short-term Rwandese consultants. The proposed 90:10 cost sharing formula is consistent with IDA financing policy in Rwanda. 3.03. The project includes US$2 million for three expatriate and three Rwandese expert consultants and support staff to work at the Ministry of Finance full-time over four years (para. 2.28) and US$1.4 million for short-term technical assistance, of which $415,000 will be provided through the PPF. This amount will finance about 10 person/years of Rwandese consultants and six personlyears of foreign short-term consultants (para. 2.30). Training courses subcontracted to local agencies for public enterprise staff are expected to cost about $185,000. This assumes that 10 seminars would be given each year to 25 PE managers/staff at a cost of about US $4,600 per seminar. An additional US$90,000 will be used to train IGF and other Ministries' staff involved in public enterprise reform. About US$140,000 is estimated to cover the cost of vehicles, office equipment and computers ($50,000 of which is provided under the PPF), and US$575,000 is needed for operating costs ($35,000 of which is through the PPF). 3.04. A summary of project costs and its expected financing is given in the table below: TABLE 8: ProJect Coats and Financing Plan (USn thousand equival*nt) Local Forelgn Total X Protect Ces Long-Term Consultants 790 1,260 2,060 41 Equipment - 90 90 2 Operating Costs 800 240 640 11 Short-Term Consulting Services 266 730 985 20 Training 165 90 276 6 Refinancing of Project Preparation Advance 60 440 500 10 Contingencies 170 820 490 10 Total 1,76 8,170 4i,930 100 (X) (86) (64) (100) (-) Fnincini Proposed IDA Credit 4,440 90 Government 490 10 Total 4,930 100  - 24 - B. Project Implementation Proiect Management 3.05. The Ministry of Finance, through the Directorate of Public Enterprises (para. 2.26), would be the implementitng agency for the project. Procurement and Disbursements Procuremnt Eleents Procurment Method ICe LC8 Other - (USI Thoueand) -- Vehicles and OffIee Equipment - 140 !/ Consultant Services and Technical Assistance -- 8,926 y Operating Cost of the Technical Unit - -a7 Total 4440 Direct purchase In accordance with IDA procedures. Disbursements Category Amount Pere ntage (USS Thousand) Vehicles and Office Equipment 90 1I0 of the CIF cost of goods directly Imported and up to 80X of the cost of Imported goods purchaed In Rwanda. Consultant Services and Technical Assistance 8,510 100X (of expenditures) Operating Costs 840 80X (of expenditures) Refinancing of PPF 600 amounts due Estimated Disbursements: (US$ Thousand) 1091 192 1903 l0 1995 Annual 1,070 1,230 1,075 980 eS Cumulative 1,070 2,800 3,875 4,856 4,440 3.06. Procurement for goods to be financed under the project (mainly cars, microcomputers and other office equipment) would be on the basis of competitive quotations from at least three different suppliers, a procedure acceptable to IDA. Given the modest size of procurement packages, there is little scope for ICB. Selection of technical assistants and consultants would be made in accordance with Bank Group Guidelines.  - 25 - 3.07. The proceeds of the proposed Credit would be disbursed as followss (i) Equipment: 100 percent of the cif cost of goods directly imported anl up to 80 percent of the cost of previously imported goods purchased in Rwanda. (ii) Technical Assistance and Consulting Services: 100 percent of total expenditures. (iii) Operating costs (excluding salaries): 80 percent of total expenditures. 3.08. The project disbursement schedule is shown in Annex III. It is expected that the project would be totally disbursed in 4.5 years, with the last disbursement completed by December 31, 1994. Special Account 3.09. To expedite disbursement of funds, a Special Account would be set up in a commercial bank in the name of the Central Bank into which IDA would make an initial deposit of US$300,000 equivalent from the proposed Credit, immediately after Credit effectiveness. This amount represents an estimated average disbursement of funds over a four-month period. Replenishment of the Special Account for expenditures under US$20,000 and for all operating costs would be made on the basis of Statements of Expenditures (SOEs). The documentation for withdrawals made under SOEs would be retained by the Directorate of Public Enterprises for ten years and would be reviewed by supervision missions. Replenishment of the Special Account for expenditures in excess of US$20,000 would be made on the basis of fully documented applications. Applications for replenishment of the Special Account would be submitted on a monthly basis. The Special Account would be audited annually by independent auditors and the audit reports would be submitted to IDA within six months of the end of the fiscal year. Auditing and Reporting 3.10. The Directorate of Public Enterprises will have its accounts, as well as the Special Account and SOEs (para. 3.09) audited annually by independent auditors acceptable to IDA and will furnish to IDA certified copies of its audited accounts together with the corresponding management letter within six months of the end of the fiscal year. The Directorate will also submit to IDA quarterly and annual progress reports on the project and will prepare the required Project Completion Report. IDA will evaluate: (i) divestiture experience; (ii) public enterprise financial results; (iii) public enterprise experience with performance contracts and (iv) the role of supervisory institutions. IV. BENEFITS AND RISKS Benefits 4.01. The project will assist Rwanda in achieving a more streamlined, efficient and business-oriented PE sector with a reduced financial and administrative burden on the Government. Another benefit of the project would be  - 26 - derived form the restructuring of the sector. The closure of uneconomic enterprises, the sale of others to the private sector and the restructuring of those remaining under Government control are designed to maximize the economic benefits of those enterprises. Risks 4.02. Care has been taken in the project design so that it can improve the economic and financial performance of selected public enterprises even with some additional postponement of structural adjustment. However, if the necessary macroeconomic reforms are postponed indefinitely, there is a risk that many of the project'. expected benefits will not materialize. The policy dialogue is continuing and it is expected that the Rwandese Government will take the necessary measures if the economic situation deteriorates further and risks endangering the proposed project. 4.03. At the program level, as the operation involves broad-ranging and complex reforms both at the sector and enterprise levels, there is a risk that vested interests within Government and the affected enterprises will resist measures aimed at changing the current situation as these may imply increasing PE autonomy and replacing some existing PE managers. This risk is mitigated by the Government's commitment to carry out the necessary reforms. A second risk relates to the privatization program which, if not implemented properly with clear and transparent criteria, would only result in creating a rent situation for some private investors. Finally, there is a risk that project implementation may be slowed down by the capacity of the Government administration to carry out the policy reform package and to monitor the execution of enterprise restructuring programs. These two risks are addressed through the establishing of a Directorate of Public Enterprises in the Ministrv of Finance which will be in charge of implementing the reforms and the provision of technical assistance and consulting services to help Rwandese institutions carry out the tasks envisaged under the project. V. AGREEMENTS REACHED AND RECOMMENDATIONS 5.01. Negotiations of this proiect were subiect to the following conditions: (a) communications by the Government of comments on the final report prepared by the Rwandese working groups on PE reform (para. 2.01); and (b) presentation by the Government of the draft Policy Statement on the public enterprise sector (para. 1.08). 5.02. During negotiations, the following agreements were reached with the Government: (a) revision of new public enterprise legislation in acccrdance with the timetable specified in paragraph A of Annex V (para. 2.09);  - 27 - (b) formulation of a general strategy of privatization of public enterprises, in accordance with the timetable specified in paragraph B of Annex V (para. 2.06); (c) formulation of action plans for the Borrower's divestiture of the public enterprises listed in paragraph C of Annex V, in accordance with the timetable specified therein, including the liquidation or privatization of enterprises (para. 2.19); (d) formulation of contract-plans with specific efficiency targets for the public enterprises referred to in paragraph D of Annex V (para. 2.19); (e) carrying out diagnostic studies to assess the technical, economic and financial viability of the public enterprises listed in paragraph E of Annex V (para. 2.19); (f) formulation of contract-plans with specific efficiency targets for the public enterprises referred to in paragraph F of Annex V (para. 2.19) (g) formulation of strategies of privratization or liquidation for the public enterprises referred to in paragraph G of Annex V (para. 2.19); and (h) institutional arrangements for the formulation and approval of the reform program (para. 2.22). 5.03. Presentation of this project to the Board would be subject to the following condition: - signing of the Policy Statement on the public enterprise sector by the Finance Minister (para. 1.08); 5.04. Effectiveness of this project would be subject to the following conditions: - establishment of a Directorate within the Finance Ministry in charge of public enterprise restructuring, including the appointment of a Director and appropriate staff (para. 2.26). 5.05. With the above agreements and conditions, the project is suitable for an IDA Credit of US$4.4 million equivalent to the Government of Rwanda.  - 28 - ANSIE I Peg. 1 of 6 RuAA PUlUC ENtERPSIS SECTOR REFORm POJECT STATISTICAL TALES TABLE 1: UET 01 RWANES! PE* INAME IACTIVITY CTflro TYPEi I _ / .,~~~~~~~~~~b/ I pIOCX COV'T-ED: I I I t~EP I IINRS IftcaRsrOh Iftst;tute SER EPA I IUNR IUni,egrity SEl %PA IONINFOR tOff Ie otf 2torztio $ti EPA |ONAPO IPopulation off I S EPA I IISAR lAgrculturol Collee six EPA IOCIR-CAFE ICo*ffo Marketing AG EPIC I IOVAPAM ItRegional Agricultural Project A EPIC I IOMROVXA IMaeketing of Agriculturel Product* AG EPIC I ICER ICca;e d'Epargo1 FIN EPIC I I8NR IContral Sank FIN EPtC I ICSR IClas. Social- FIt EPSC I ICio jlntareomurol Oev.lopet Credit FIN EPSC I 1MNR IPrinting D EPtC I IOVIsAR 19mnom Processing, Win etc.. :ND EPC I IOCIR-ThE lIIe Worketing I? EPIC I IPAPETERIE IP&pr Products De EPIc I lOPYRWA IPyrethrlm Processing D VPic I IELECTROGAZ IPublic Utility Sm EPIC I IONW IProject Analysis SIR EPIC I ONATRACOM IPublic Transport SER EPIC I ORTPN ITourim, Hotels and Perks SER EPIC I ISUCRERtIE ISuger De RI IIMPRIMERIE SCOLAIREISchl Supplies IND a IuINES Imining r1 RI IMUSEE IMl SENt R IAEROPORTS lAirporft SElt R I IRIZERIE IRic Milling AG PR I APICOLE Imeney AG PR1 ILAITERIE IMilk and Products, Sojo etc.. AG PR I IMAISERIE vaize milling AG PR I [FORCE GOM. IMaliworI' 11 PR ICSIMNTEiE ICt_t r1 PR I Subtotal 2 * __ _ _ _. _ _ _____ ___ ___ ___ *_ _.  - 29 - ANNEX I Page 2 of 5 TABLE 1: LIST OF RWANDES PEo (cont'd) INAME IACTIVITY _ Pr ~ ~ 4!R~ STRUCTURE I INAME IACTIVM SECTOR (percentage) 1 Gov't PE Mixed Private I Enterprise I IMIXED ENTERPRISES I I ITRAFIPRO IRetaol Cooporative SER 74.4 I 0.0 0.0 25.6 I IAIR-RWANDA IAir ine SER 66.2 8.6 8.0 0.1 j ISTIR {Internatlonal Transport SoN 60.4 6 .8 6.7 8.2 1 ISONAFtUITS Fruit Marketing Cooperative SR 90.0 2.4 0.0 8.1 1 IPETRORWANDA lRotail of Petroloum Products SER 54. 17.4 26.1 1.7 1 I8CR lBenque Commercia;l du Rwanda FIN 44.5 I 0.0 6.5 50.1 1 ISOMITRAP IPublic Works construction SW 61.0 1 0.0 0.0 49.0 1 ISOPRORIZ IRic Milling De 60.0 I 0.0 0.0 60.0 1 I8RO lDvelopment Sank FIN 47.0 I 8.1 11.7 S2.4 I ISOPROTEL IHotel SER 40.0 1 0.0 0.0 60.0 I IBOUCHERIE/CMARCUT. IButcher SER 88.8 t 0.0 0.0 06.7 I IRWANTEXCO iToxtils DIW 49 7 0.0 0.0 60.8 3 ISODEP|ARL IL&atber Goods DI 80.0 0.0 0.0 70.0 1 BDRALIWA 1er in 80.0 I 0.0 0.0 70.0 I ISORWAL 1Matchs Ibe 29.6 I 0.0 45.6 24.9 1 ITABARWANDA Tobacco TND 23.5 7.1 21.4 47.9 1 ISONATUBES Poaetic Pipes IND 28.1 0.0 8.9 69.5 1 18K IBanque de Kigali FIN 2. 1 26.9 0.0 50.0 I ICHR ICaisse Hypotecaire FTN 156 46.8 87.9 0.0 1 ISONARWA Insurance SER 10.0 60.0 20.0 10.0 1 IETIRV iCoffeo Processing Do 0.0 1 9.0 0.0 91.0 1 IMAGERWA IStocks SER 6.a 0.0 81.3 12.6 1 IBACAR Banque Continentale FIN 4.0 0.0 2.0 94.0 1 ICRUT IHotel SER 2.4 0.0 88.7 63.9 1 ISOPAS lAnimal Feed DID 2.2 26.4 84.9 43.1 I IRWANDEX ICoffo. Procesinag DO 0.0 61.0 0.0 49.0 I IRTS ITrovel Services SR 0.0 1 28.8 21.7 50.0 1 ISORWATHE IT" TDe 0.0 28.5 26.2 51.3 I IAMIRWANDA |Transport SER 0.0I 10.7 23.8 60.0 I RWANDEX CHILLINGTONICoffoe Procesing DID 0.0 I 0.1 49.9 50.0 I I Subtotal s 8o I I TOTAL I 62 I ----- ------------------- -------