Senegal - Investment Promotion (Second and Third SOFISEDIT) Projects

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9324 PROJECT PERFORMANCE AUDIT REPORT SENEGAL SOCIETE FINANCIERE SENEGALESE POUR LE DEVELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE ) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) FEBRUARY 4, 1991 Operations Evaluation Department This document has a restricted distributi-on 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. CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) US$1 - CFAF 235 CFAF 1 million = US$4,255 The CFA Franc is pegged to the French Franc at the fixed rate of CFAF 1= FF 0.02 and floats vis-a-vis the U.S. dollar. ABBREVIATIONS BCEAO - Banque Centrale des Etats de l'Afrique de l'Ouest BIAO - Banque Internationale pour l'Afrique de l'Ouest BICIS - Banque Internationale pour le Commerce et l'Industrie- Senegal BNDS - Banque Nationale de Developpement du Senegal BOAD - Banque Ouest Africaine de Developpement CCCE - Caisse Centrale de Cooperation Economique DEG - Deutsche Entwicklungsgesellschaft DFI - Development Finance Institution KfW - Kreditanstalt fur Wiederaufbau OED - Operations Evaluation Department PCR - Project Completion Report PPAR - Project Performance Audit Report SGBS - Socigt6 Generale de Banque au Senegal SAR - Staff Appraisal Report SOFISEDIT - Soci6t6 Financi4re Sdn6galese pour le D6veloppement de l'Industrie et du Tourisme SONEPI - Soci6t6 Nationale d'Etude et de Promotion Industrielle USB - Union Senegalaise de Banques UMOA - Union Monetaite Ouest Africaine FISCAL YEAR Government and SONEPI = July 1 - June 30 SOFISEDIT = October 1 - September 30 FOR OFFICIAL USE ONLY THE WORLD BANK washmnton. U C 20433 USA Ohee no OsrectreCera Operaton Ivauasn February 4, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Senegal - Soci6tA Financi6re S6n6galese pour le D6veloppement de l'Industrie et du Tourisme (SOFISEDIT) (Loan 1332-SE) and Investment Promotion Project (Loan 1973-SE and Credit 1136-SE) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Senegal - Soci6t6 Financi4re S6n6galese pour le D6veloppement de l'Industrie et du Tourisme (SOFISEDIT) (Loan 1332-SE) and Investment Promotion Project (Loan 1973-SE and Credit 1136-SE)" prepared by the Operations Evaluation Department. Attachment This document has a restrited distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without WorkM Bank autbofisAion FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT SENEGAL SOCI9T9 FINANCIRE S9N9GALESE POUR LE D9VELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) TABLE OF CONTENTS Page No. PREFACE ..... ............................................ ....i......i EVALUATION SUMMARY ................................................. iii I. INTRODUCTION ................................................. 1 Related Bank Lending ............................ ........... 1 The Macroeconomic and Industrial Sector Setting ............ 2 The Financial Sector Setting .........................3......3 II. PROGRESS IN MEETING OBJECTIVES .......................3......3 Objectives ................................................... 3 Achievements ................................................. 4 a) Term Lending ........................................... 4 b) Institution Building ................................... 5 c) Technical Assistance .......6......................... 6 Sustainability ......6..................................... 6 III. FINDINGS AND LESSONS ........................... ............ 7 Findings ..................................................... 7 Lessons ... ................................................. 8 PROJECT COMPLETION REPORT PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE .............. 11 1. Project Identity ....... .......................... 11 2. Background ...... ................................... 11 3. Project Objectives ................................. 12 4. Project Description ................................. 12 5. Project Design and Organization .................... ...13 6. Project Implementation ................................ 13 7. Project Results ....................................... 14 Line of Credit/Financial Restructuring ........... 14 Technical Assistance Component .... ............... 14 Disbursements ...... ................... ........ 14 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. TABLE OF CONTENTS (cont'd.) Page No. PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE (cont'd.) 8. Project Sustainability .............. .. 15 9. Bank's Performance .............................. 15 10. Borrower's Performa.c ...................... ...15 11. The Bank Group's Future Role ................... .. 16 PART III: STATISTICAL INFORMATION ..............................0.. 17 A. Related Bank Loans and/or Credits o.................. 17 B. Project Timetable ........................... ...... 17 C. Use of Bank Resources ....................... 17 D. Disbursement Information (Ln. 1332-SE) .............. 18 E. Disbursement Information (Ln. 1973-SE and Cr. 1136-SE) ................................. 19 ANNEX List of Authorized Subprojects .......................... 21 PROJECT PERFORMANCE AUDIT REPORT SENEGAL SOCIfTf FINANCIkRE S9N9GALESE POUR LE D9VELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) PREFACE This is a Project Performance Audit Report (PPAR) on: i) Loan 133z-SE in the amount of US$4.2 million to Soci4t6 Financi4re S6nggalese pour le D6veloppement de l'Industrie et du Tourisme (SOFISEDIT) with the guarantee of the Republic of Senegal. The Loan was approved on September 21, 1976 and became effective on April 21, 1977. The original Closing Date of June 30, 1981 was postponed twice, first co June 30, 1982 and then to March 31, 1983. ii) Loan 1973-SE in the amount of US$6.5 million to SOFISEDIT and a Credit 1163-SE in the amount of US$2.5 million to the Government. These were approved on April 21, 1981 and became effective on February 11, 1982. The original Closing Date was June 30, 1985 and was postponed three times, the actual Closing Date being November 4, 1987. The PPAR consists of the Project Performance Audit prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR) prepqred by the Energy and Industry "i. saon, Sahelian Department, Africa Regional Office (Parts I and III). Since 1985, SOFISEDIT was faced with increasing difficulties and in 1988 it became virtually bankrupt and was closed down in the context of a financial sector operation supported by the Bank. The Borrower has, therefore, not contributed to the PCR and there is no Part II. The PPAR is based on the attached PCR, the Staff Appraisal Reports (SARs), the President's Reports, the Loan and Credit documents, the summaries of the Executive Directors' meetings at which the projects were considered, a study of the projects' files and discutsions with Bank staff. An OED mission visited Senegal in May 1987 whilst preparing the case study on SOFISEDIT for the OED report entitled "The Sustainability of Development Finance Institutions in an Evolutionary Environment" (OED Report No. 7658, dated May 15, 1989); that mission reviewed, inter alia, the effectiveness of the Bank's assistance under these two Loans and Credit. The PCR provides a satisfactory account of SOFISEDIT's utilization of the proceeds and performance under the technical assistance components. The PPAR focuses on progress in meeting objectives and draws conclusions and lessons from the project implementation experience. The draft PPAR was sent to the Borrower for comments, but none were received. - iii - PROJECT PERFORMANCE AUDIT REPORT SENEGAL SOCI9T9 FINANCI9RE S9N9GALESE POUR LE D9VELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) EVALUATION SUMMARY Introduction 1. Soci6t6 Financi6re S6n4galese pour le Dgveloppement de l'Industrie et du Tourisme (SOFISEDIT) was created at the initiative of the Government as a privately controlled development finance institution to provide long-term financing to industry and tourism (and later to fisheries). It was incorporated in June 1974 at approximately the same time as the Bank extended the first of three Loans and one Credit (Loan 987-SE) in support of it. That first loan was evaluated by OED as being of questionable necessity since an adequate banking infrastructure in Senegal was already involved in term lending to industrial projects. The two loans and the credit under review were the last in the series of direct lending to SOFISEDIT which was liquidated in 1988, shortly after the last operation was completed. 2. Both projects were implemented against a deteriorating economic background. The diminution of Senegal's regional markets and a series of crippling droughts, together with institutional weaknesses in planning and policy making which failed to provide adequate incentives and efficient interventions in agriculture and industry, contributed to one of the slowest rates of economic growth of any African country. Senegal's industrial development was retarded not only because of the shrinkage of the West African market, but also by a limited resource base, low labor productivity and inefficient, costly and conflicting policies in the areas of protection, export promotion and trade regulation (paras. 1.05-1.08). 3. The financial sector setting was one suffering from too many banks and yet, insufficient competition between theLn resulted in structurally deficient development. This was exacerbated by excessive government interference in the allocation of credit, poor bank management and financial indiscipline (paras. 1.09-1.11). 4. The rehabilitation and restructuring of both the industrial and the financial sectors are being undertaken with the support of Bank sectoral adjustment loans. - iv - Objectives 5. Both projects shared the common objectives of strengthening SOFISEDIT financially and institutionally and assisting it in meeting its requirements for term financing of foreign exchange components of approved industrial and tourism projects. The Investment Promotion project added fisheries to the list and also attempted to broaden the Bank's impact on lending to industry by strengthening Socidt6 Nationale d'Etude et de Promotion Industrielle (SONEPI) and assisting the Government in a number of aspects of industrial policy (paras. 2.01-2.03). Implementation Experience 6. Loan 1332-SE took two years longer to disburse than had been estimated at appraisal, but the delays pertained to only small portions of the loan. The Investment Promotion project, however, was significantly behind schedule, closing three years after the original Closing Date, mainly because of cancellations by SOFISEDIT of subloans submitted to and approved by the Bank. 7. Terx lending under the projects conformed with the priorities of the Government. Investments in tourism increased and continued in the face of serious portfolio problems and lending to fisheries ventures was sizeable until the number of non-performing loans caused the eventual cesoation of such lending. Of the 50 subprojects financed under the Bank's lines of credit, at least half were in difficulties when reviewed ex-post, with protracted arrears on loan service or being rescheduled. Although available data on subproject performance is severely limited, the only inference that can be drawn is that at least a significant amount of Bank funds utilized for onlending were not put to good economic use (para. 2.04). 8. The second major objective was to achieve a level of growth in SOFISEDIT which would make it a leading development institution in Senegal. There is little to record in the way of achievement. The monopoly in long- term lending conferred on SOFISEDIT at its inception was removed during the banking reforms of 1975, exposing it to strong competition. It was handicapped in not being able to extend working capital credits and had to contend with a depressed economy and a poor investment climate. It did not contribute to any deepening of the financial system and provided little, if anything, that the existing and competing array of commercial banks could not have furnished (paras. 2.05-2.07). 9. Little ir. the way of positive, worthwhile advances in institutional growth or expertise emerged from the many technical assistance components of the projects. Neither SOFISEDIT nor SONEPI produced the necessary skills for small scale industry promotion, and no records exist of the studies and training for the Ministry of Industry. No discernible improvements to the perceived weaknesses of the institutions against which the technical assistance was directed were achieved (paras. 2.08-2.09). -v - Sustainabilicy 10. The project experience is one of objectives unfulfilled, and of a deteriorating institution unable to maintain a steady level of viable investments. The conclusion can only be that SOFISEDIT never was nor could be sustainable and that its contribution to the economy has, at best, been nil (para. 2.10). Findings 11. The appraisal deficiencies, which originally supported the creation of a redundant financial intermediary, had their roots in the absence of in- depth, specific sector studies, especially of the structure of and plans for the firancial sector. But the suspicion is hard to avoid that the Bank deferred to the wishes of the Government to support a new DFI in order to sustain a relationship important for the lending program and the broader issues that needed Bank involvement (para. 3.01). 12. Continuity in a relationship (in this case with a DFI) is important but should not be allowed to influence objectivity. Realism dictates that there is a time when losses should be cut rather than maintain a re' tionship of dubious merit (para. 3.02). 13. The Bank's reluctance to reach new firdings, which might lead to the conclusion that the establishment of SOFISEDIT might have been a misteke, inhibited reconsideration of the role and strategy of the institution perpetuating the support of an unsustainable institution (para. 3.03). Lessons 14. The expectation of a continuing relationship must not be permitted to affect objectivity and realism of appraisals (para. 3.04). 15. Technical assistance can be of only limited value to an institution with negative prospects. It can postpone decline but, without hopes for development, will lack the momentum and motivation to sustain itself (para. 3.05). 16. Close supervision by the Bank must lead to tangible positive results, treating causes, not symptoms (para. 3.06). 17. Incipient problems can escalate rapidly for a DFI which appraises inadequately and which supervises infrequently and improperly (para. 3.07). 18. The better projects and investors will seek to obtain financing from regular, full service banks rather than from a weaker, less competitive financial intermediary (para. 3.08). 19. A DFI must insist on protection if forced to lend to substandard parastatal investments (para. 3.09). PROJECT PERFORMANCE AUDIT REPORT SENEGAL SOCI9T9 FINANCIRE S9N9GALESE POUK LE D9VELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) 1. INTRODUCTION 1.01 This Project Performance Audit Report (PPAR) is essentially a brief desk audit since the development finance institution (DFI), supported by the two Loans and one Credit under review, was subjected to a thorough examination and analysis as one of the case studies for the Operations Evaluation Department (OED) r.ort "The Sustainability of Development Finance Institutions in an Evolutionary Environment."-' For this reason also, and since the Project Completion Report (PCR) is relatively short and contains material derived from the DFI Sustainability Study, the PCR has not been delinked irom the PPAR and distributed separately, but both are contained in this PPAR. The coverage of the PPAR, therefore, is limited to items of particular interest in relation to the Loans and Credit, in particular to an elaboration of the extent to which objectives were achieved. Related Bank Lending 1.02 Coincidentally with SOFISEDIT's establishment in 1974, the Bank made its first loan to this DFI (Loan No. 987-SE); a loan that was criticized by OED in its PPAL No. 4488 dated May 12, 1983 as being of questionable necessity since an adec <ate banking infrastructure in Senegal was already involved in term financing of industrial projects. This theme, that SOFISEDIT proved to be a redundancy almost from its inception, runs through both this PPAR and the accompanying PCR. 1.03 The two Loans and the Credit under review which followed the first Loan were the last in this short series of direct lending to SOFISEDIT which was liquidated in 1988, shortly after the last lending operation was completed. Its demise was part of a major restructuring of the banking system in Senegal and the laying of a firmer foundation for the development of well functioning financial and capital markets through a Financial Sector Adjustment Credit (Credit No. 2077-SE) approved in December 1989. It OED Report No. 7658 dated May 15, 1989. In this PPAR, this Report is referred to as the DFI Sustainability Study. -2- 1.04 Less directly involved with the financial sector but relevant in the context of industrial policy reform is an Industrial Sector Restructuring Credit (Credit No. 1868-SE) approved the year before, which addrasses industrial policy adjustments in parallel with the Bank's Third Structural Adjustment Credit (Credit No. 1802-SE) approved in May, 1987. The Macroeconomic and Industrial Sector Setting 1.05 The steady deterioration in Senegal's economy since the 1960s has multiple causes. The diminution in its regional market, as a growing number of newly independent West African States developed the production of their own goods and services, initiated the process, but almost as important was the series of droughts between 1970-85 which disrupted production of groundnut., the major cash crop and the principal foreign exchange earner. Other problems stemmed from internal factors: unsustainable public sector over-extension and financial imbalances exacerbated by institutional weaknesses in planning and policy making; excessive consumption; inadequate incentives and inefficient interventions in both agriculture and industry which impeded growth in exports and import substitution; and low returns on invest=Aents and related failures to mobilize savings. Having a chronic balance of payments problem, reliance on easily availablu foreign aid made the situation worse and led to a debt servicing crisis which only deepened with the Government's procrastination in dealing with both domestic and foreign deficits. With an average GDP growth of 2.3% during the 1960s, Senegal experienced the slowest rate of growth of any African State not affected by war or internal strife and what little expansion did take place was severely eroded by a high and rising population growth. As a result, Senegal has become one of the lower income group of countries, with both urban and rural incomes lower in 1985, in real terms, than they were in 1965. 1.06 The abrupt shrinkage of the market for the industrial sector in the French West African region from 1960 onwards played a major role in the retardation of Senegal's industrial development. The country's limited resource base discouraged diversification beyond the traditional export oriented activities, themselves constrained by successive droughts and falling international prices. But endogenous factors also had L restrictive effect on growth, especially low labor productivity and the high level of domestic prices and wages which .ed to an inability to penetrate new export markets. 1.07 For more than two decades after independence, the sector operated under inefficient, costly and conflicting policies in the areas of protection, export promotion, and trade regulation. High nominal tariffs were reinforced by quantitative restrictions. Bureaucratic constraints, particularly wage and price controls, held back private sector investment. Even tourism, which is a subsector with modest growth potential, is constrained by Senegal's relatively high cost and price structure; and existing overcapacity limits new investments, at least for the time being. 1.08 Policy adjustments initiated in 1986 include the gradual deregulation of prices and the elimination of quantitative restrictions and are supported by the Industrial Sector Restructuring project referred to in paragraph 1.04 above. -3- The Financial Setor Setting 1.09 France supports the free convertibility of the CFA franc into French francs through the Central Bank of the West African Monetary Union (BCEAO), which has its Headquarters as well as its national agency in Dakar. In addition, there are 14 deposit money banks and six other specialized financial institutions. There are also a Post Offica savings bank and a postal checking facility. SOFISEDIT is classified as a commercial bank. 1.10 Monetary policy is determined by BCEAO for each member country, proposing money supply growth and the amount of central bank credit to be granted. The sectoral allocation of credit within the country is determined by a National Credit Committee. BCEAO exercises quantitative control and the enforcement of liquidity and solvency ratios through its rediscounting facility. Reforms were introduced in 1975 to limit the banks' overwhelming dependence on the central bank for liquidity and to direct lending to "priority" sectors through a system of preferential interest rates. By 1986, priority sectors absorbed 75% of total bank lending to the economy. Although there was an increase in domestic credit of 70% between 1981 and 1986, the growing proportion going to the public sector was indicative of a weak public finance situation requiring recourse to both Bank borrowing and IMF counterpart resources. This weakness has also been a major constraint on expansion of credit tj the private sector. Domestic savings mobilization has been hampered by the slow growth of production and the inability of the financial institutions to attract and invest these savings, hindered by unsatisfactory spreads under the regulated interest rate system. 1.11 In brief, the sector suffers from having too many banks and yet, insufficient competition between them has resulted In the sector's structurally deficient development; an excessive growth in credit without a corresponding increase in resources; deteriorating portfolios because of non- performing loans and mounting arrears; low profits and administered interest rates. The causes, by no means unique to Senegal, are excessive government interference in the allocation of credit, poor bank management and financial discipline, inappropriate interest rate policies and underdeveloped financial markets. The rehabilitation and restructuring of the financial sector in Senegal has become a major and pervasive problem which the Government is committed to address with remedial reform under the Third Structural Adjustment Credit and the Financial Sector Adjustment Credit (paras. 1.03 and 1.04). II. PROGRESS IN MEETING OBJECTIVES Objectives 2.01 The principal objectives of the projects supported by the two Loans and one Credit, as stated in the Staff Appraisal Reports (SARs) were: -4- a) Under Loan 1332-SE to: i) provide term financing on appropriate terms to enterprises in industry and tourism for projects in Senegal which have been well- conceived on economic, financial and technical grounds; ii) continue to support the growth of SOFISEDIT as a leading development institution in Senegal through strengthening its resource base, its project appraisal capabilities, internal organization and procedures; iii) provide technical assistance to the Soci4t6 Nationale d'9tudes et de Promotion Industrielle (SONEPI) to carry out a study of the informal sector with a view to develop a pilot small enterprise project; b) Under Loan 1973-SE and Credit 1136-SE to: i) provide equity financing and term resources for sound industrial, fisheries and tourism investments; ii) strengthen SOFISEDIT financially and institutionally; iii) improve small and medium enterprise promotion in Senegal; iv) identify appropriate changes in government policy and procedures to enhance productive investments. 2.02 The general objectives followed those of the first SOFISEDIT project (Loan 986-SE) which were to acsist in the successful establishment of SOFISEDIT as an institution geared towards the provision of term financing to companies in the industrial and tourism sectors: to this end to make foreign exchange available for on-lending and technical assistance for the recruitment and development of adequate management and technical staff and the formulation of appropriate operational guidelines and procedures. While the main thrust of all three projects are the same, the last project--the Investment Promotion project--singles out fisheries for special attention and broadens the technical assistance components by including assistance in investment planning for the central government through policy oriented studies to improve investment approval procedures and training of the staff of the Ministry of Industry. 2.03 A subsidiary objective common to the series was to promote close cooperation between SOFISEDIT and SONEPI, a mixed public company charged with the task of developing small industrial enterprises owned by Senegalese. Achievements a) Term Lending 2.04 There is little to add to the PCR's analysis of SOFISEDIT's term lending under the projects (PCR, paras. 7.2-7.5). For the entire series of - 5 - projects available data on subproject performance is extremely limited. It is clear that lending conformed with the pr-orities of Government. Investments in tourism increased to the detriment of investments in industry and continued in the face of serious portfolio problems. And, under the Investment Promotion project, initial lending to the new sub-sector of promise--the fishing industry--was sizeable until the number of non-performing loans caused these ventures to be curtailed and, finally, stopped. In the end, at least half of the 50 projects financed under the Bank's lines of credit were in difficulties, with protracted arrears on loan service or having been reschedulfd. Bank supervision missions have reported that some of SOFISEDIT's appraisals of these problem projects were, in fact, quite well thought out and clearly presented, but that there was a tendency for estimates to be overoptimistic and for the terms of lending, as a result, to invite a lack of viability through unduly short grace and repayment periods. Furthermore, disbursements under the last of the loans were substantially behind schedule mainly because of the high rate of cancellations by SOFISEDIT of subloans submitted to and authorized by the Bank for financing. Over one- third of these approved subloans were cancelled, a circumstance that cannot but reflect badly on both the quality of the subprojects and, probably, SOFISEDIT's appraisal of them. The only inference that can reasonably be drawn from thib dismal performance is that a significant amount of Bank funds utilized for on-lending were almost certainly not put to good economic use, thus vitiating to a great extent one of the principal objectives of the loans. b) Institution Building 2.05 The second major objective was to achieve a level of growth in SOFISEDIT which would make it a leading development institution in Senegal and to strengthen it both financially and institutionally. Again, there is little to record in the way of achievement. The PPAR on the first project notes that the institution building objectives of the loan had only partially been fulfilled "despite the fact that SOFISEDIT had been in operation for eight years and had received substantial technical assistance inputs." The picture is one of stagnation, not growth. The reasons are manifold. 2.06 Importantly, the monopoly in long term lending conferred on SOFISEDIT at its inception was inexplicably removed by the Government in the banking reforms of 1975 when all commercial banks were permitted to rediscount loans up to ten years from a previous maximum of seven years. Immediately, SOFISEDIT was left open to competition from the well established local banks. And, the "right of first approval" of lending to projected investments, given to SOFISEDIT to bolster further its monopoly position, failed to materialize. The institution was also handicapped in not being able to extend working capital credits. 2.07 On top of these patent disadvantages, SOFISEDIT also had to contend with a depressed economy and a poor investment climate. As a result, SOFISEDIT's establishment, based as it was on a deficient Bank appraisal effort, did not contribute to the deepening of the financial system as was optimistically anticipated, and provided little if anything that the existing and competing array of commercial banks could not have furnished. It should also be added that the unrealistic assumptions, made both by the Government - 6 - and the Bank concerning the growth of the industrial and tourism sectors, profoundly affected SOFISEDIT's projected operation and results. But even after it must have become obvious that SOFISEDIT lacked a solid basis for growth, early on in its existence, the real issues were ignored and the Bank's lines of credit perpetuated for at least a further decade. c) Technical Assistance 2.08 Little in the way of positive, worthwhile advances in institutional growth and expertise emerged from the plethora of technical assistance components with which the loans and credit were embellished. SONEPI received US$500,000 for "operating support" and a further US$200,000 was allocated to it for the development of the small enterprise project, but it proved to be so inept in fulfilling its responsibilities of project preparation and other assistance to small entrepreneurs that little of consequence emerged to benefit that subsector. This was a state of affairs that was exacerbated by SOFISEDIT's own failure to produce the necessary skills for the unrewarding tasks of small scale industry promotion. Consequently, almost the entire portfolio of subloans to small scale businesses was seriously affected by arrears. 2.09 Other technical assistance components provided six man-years of technical/management experts and a staff training program for SOFISEDIT, for which some US$600,000 was budgeted, and a further US$300,000 for the Ministry of Industry for sector studies and training. Only fragmentary records now exist of the execution of these components, all of which were initiated, although some with reduced allocations of IDA funds. No records exist of the execution of the studies and training for the Ministry of Indu-try. It is, however, apparent that in terms of improved performance SOFISEDIT, as in the case of SONEPI, failed to achieve any clearly discernible improvements to the perceived weaknesses of the institution against which the technical assistance was directed. Nothing of any sustainable benefit seems to have been derived from the not unsubstantial funds expended. Sustainability 2.10 With the liquidation of SOFISEDIT shortly after the closing of the last loan in the series, another chapter in the Bank's long involvement with Senegal and the search for solutions to the country's economic and financial problems also came to an end. The endeavor to build SOFISEDIT into a viable organization capable of contributing to the development of the financial and industrial sectors was patently unsustainable. As far as the projects in their entirety are concerned, the DFI Feasibility Study puts the matter perceptively and succinctly: "There is no exact, quantifiable way of establishing whether the stream of benefits to the Senegalese economy derived from the activities of SOFISEDIT has been positive. However, the project experience is substantially one of objectives not achieved and of an institution in search of a role, in operational stagnation and deterioration, and in financial trauma, unable to maintain a steady or growing - 7 - level of investments in financially, technically and economically viable projects. The conclusion can only be that this DFI never was, nor can it be expected to become, sustainable. In this sense, its contribution to the economy has at best been nil and, more likely, negative."' III. FINDINGS AND LESSONS Findings 3.01 It is a matter of some concern that the Bank should have remained associated with such a relentless history of failure in one institution for so long a period of time, and important that the reasons for the maintenance of such a profitless relationship are sufficiently analyzed to be well understood. In the first place, it is clear that the need for creating a new financial intermediary, when an adequate banking infrastructure was already in place and demonstrably capable of providing long-term financing to industry, was not examined in sufficient depth at appraisal. Also, at the appraisal stage it could not have been appreciated how difficult it must inevitably be to construct and develop a new financial intermediary in the environment of Senegal, severely constrained as it was. But these appraisal deficiencies in themselves were the result of more fundamental shortcomings, the absence of in-depth, specific sector studies, especially of the structure of and plans for the financial sector. Such studies would have reinforced the strong misgivings which must have existed. The suspicion is hard to avoid that the Bank acceded to the request of Government to come to the assistance of a new DFI, on country grounds and the desire to defer to the wishes of the Government in order to sustain a relationship which it was felt was important for the lending program and the -.oader issues that needed Bank support. 3.02 The matter of a "continu.ng relationship" with a country extends also to institutions and seems especially to operate in the case of DFIs. While continuity in a relationship is undoubtedly of great importance, the need for it should not be allowed to influence objectivity. The Bank had several opportunities either to break the relationship or to insist on radically different and remedial restructuring of the projects and failed to seize these opportunities. Realism dictates that there is a time when one should cut ones' losses rather than maintain relationships . dubious merit. 3.03 The 1976 appraisal of Loan 1332-SE provided the Bank with an opportunity to reassess, completely and realistically, 6.-. role, outlook and strategy of SOFISEDIT. This opportunity the Bank failed to seize, even though it was then already apparent that there were matters that were seriously wrong. The Bank's reluctance to reach new findings which might, in any way, lead to the conclusion that the establishment of SOFISEDIT had been a mistake had major adverse repercussions. The sponsors, the Board and the management of SOFISEDIT, as a result, had no inducement to seriously reconsider the role or strategy of the institution, having been told by the Bank that it was on 1t DFI Sustainability Study, page 91, paragraph 5.05. the right track. In effect, the Bank had trapped itself into the continued support of an unsustainable institution. Lessons 3.04 The expectation of a continuing relationship with an institution, once support has been given to it by the Bank, and of making repeated loans can have an insidious effect on the objectivity and realism of re-appraisals. The tendency to assume the validity and immutability of the findings and recommendations of earlier appraisals must be controlled and the independence of assessment preserved. 3.05 When, as in the case of SOFISEDIT, a financial intermediary is hamstrung from the outset by factors beyond its control and with few prospects of developing into a sound strong intermediary, technical assistance can be of only limited value. It can sustain growth in the early stages of development and even postpone inevitable decline, but without the prospects of the organization developing into a strong, integrated component of the financial system, it will lack the momentum and motivation to sustain itself. 3.06 Close supervision by the Bank is of critical importance and must be a process leading to tangible, positive results, avoiding palliatives and the treatment of symptoms rather than their causes. 3.07 Inadequate appraisal and infrequent, improperly organized supervision of its subprojects by a DFI creates an environment in which innate or incipient problems are not dealt with in a timely and resolute manner and, therefore, these problems escalate rapidly and unduly. 3.08 When a financial institution is in aweak competitive position vie-a- via other financial institutions, the probability is that the better entrepreneurs, firms and projects will seek to obtain their financing from the revular, full service banks and that, consequently, the weaker institution will be left to a significant extent with the riskier projects and less experienced investors. 3.09 When a DFI cannot avoid financing parastatal projects, due to the insistence of the government, that routine appraisals have demonstrated to be of substandard investment quality, it must insist on being protected from potential losses through government guarantees, use of managed funds, or some other mechanisms. -9- PROJECT COMPLETION REPORT SENEGAL SOCI9T9 FINANCIRE S9N9GALESE POUR LE D9VELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) October 19, 1990 Industry and Energy Division Country Department V Africa Regional Office - 11 - PROJECT COMPLETION REPORT SENEGAL SOCIeTf FINANCIRE StNGALESE POUR LE D9VELOPPEMENT DE L'INDUSTRIE ET DU TOURISME (SOFISEDIT) (LOAN 1332-SE) AND INVESTMENT PROMOTION PROJECT (LOAN 1973-SE AND CREDIT 1136-SE) PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity Name: SOFISEDIT project / Investment Promotion project Numbers: Ln. 1332-SE, Ln. 1973-SE and Cr. 1136-SE RVP Unit: Africa Region Country: Senegal Sector Industry 2. Background 2.1 Since its independence in 1960, Senegal has experienced one of the lowest average real growth rates of any African State not affected by war or civil strife (2.3 percent per annum since 1960). Senegal's per capita GNP in 1988 is estimated at about US$630 and its traditional economy is dependent on millet cultivation and nomadic cattle-raising for domestic consumption, groundnut cultivation and phosphate production for exports which, are vulnerable to climatic and international market vicissitudes. The modern sector of the economy remains concentrated in the Dakar and coastal belt, resulting in important interregional and urban/rural disparities. 2.2 The industrial sector. In the years following independence, industrial enterprises in Senegal faced problems of excess capacity due to the loss of the West African market for manufactured goods as local industries developed in the newly independent nations. Despite this handicap, growth of the sector has been steady, and its contribution to GDP increased from 13 percent in 1960 to 17 percent in 1970, 20 percent in 1974 and 24 percent in 1980. In 1976, the preparation work of Un. 1332-SE attributed the growth of industry largely to manufacturing activities, and predicted that over the next five years, development would focus on activities in textiles, construction materials and fish canning. In 1981, in the course of the preparation of Ln. 1973-SE/Cr. 1136-SE, four main activities T:.re found to account for the bulk of the sector's output: food processing, chemicals, phosphate mining and textiles. Two other branches also were identified as holding good promise for productive investment: fishing and fish processing and tourism. 2.3 The tourism sector. Tourism is a sector which developed rapidly in the 1970s and one which, in a country like Senegal with relatively scarce resources, promised to expand in the future. Tourism assets include a pleasant climate most of the year, attractive sandy beaches, excellent international airport location and a rich folklore. In 1972-74, gross foreign exchange receipts from tourists more than tripled and in 1974 they represented an estimated 7 percent of total export earnings. Forecasts indicated that by 1980 this proportion would increase to almose 20 percent. Net foreign - 12 - exchange revenues from the sector were estimated at about 60 percent of gross receipts. The sector had also an important impact on employment since approximately 2,800 Senegalese were employed in the hotel industry and further 5,500 jobs indirectly attributed to the tourism sector with people involved in the production and sale of handicrafts as well as construction and transport. 3. Project Objectives 3.1 It is to support this projected development potential that the Bank approved these two projects whose objectives were: 3.2 SOFISEDIT, Bank Ln. 1332-SE: to help SOFISEDIT meet its requirements for term financing of foreign exchange components of approved industrial and tourism projects. 3.3 Investment Promotion Project, Bank Ln. 1973-SE/Credit No. 1136-SE: to support Senegal's efforts to promote productive investments, notably in export-oriented industries. It was also an attempt to broaden the Bank's impact on lending for industry by strengthening SONEPI and assisting the Government in many aspects of industrial policy. 4. Project Description 4.1 Bank Loan No. 1332-SE (1976): The project aimed at promoting productive investments in Senegal through: (a) a $4 million line of credit and a component for equity financing to SOFISEDIT for onlending to productive enterprises. The remaining $200,000 were to provide SONEPI with help needed to develop an integrated scheme for assisting small-scale Senegalese entrepreneurs in the informal artisanal sub-sector; (b) technical assistance to SOFISEDIT and SONEPI; (c) studies to correct inconsistencies between policies and instruments and to improve the investment approval process; and (d) training of the Ministry of Industry staff. 4.2 Bank Loan No. 1973-SE/IDA Credit No. 1136-SE. The project included: (a) an IFC investment in SOFISEDIT's equity; (b) an IBRD line of credit to SOFISEDIT for financing investments in industry, tourism and fisheries; (c) a subordinated Government loan to SOFISEDIT for the exclusive purpose of financing equity investments in Senegalese firms; (d) a two-year technical assistance and training program to strengthen SOFISEDIT; (e) a performance audit of SONEPI; technical assistance to its staff, and provision of goods and services to improve its operations; and - 13 - (f) policy-oriented studies to identify appropriate changes in Government policies and procedures to enhance productive investments and training for the Ministry of Industrial Development. 5. Project Design and Organization 5.1 These projects were conceived as typical development finance inrtitution (DFI) type projects which included a financial intermediary, SOFISEDIT. Created in 1974 by the Government, Socidt6 Financibre S6ndgalese pour le D6veloppement de l'Industrie et du Tourisme (SOFISEDIT) was established to meet the urgent need for an independent institution specialized in providing long-term financing of industrial and tourism sectors. SOFISEDIT started operations in November 1974 with an authorized and paid in capital of CFAF 650 million (US$2.6 million equivalent), of which the Government and public sector institutions 1/ held 46Z and one private Senegalese shareholder 6Z. IFC, CCCE, DEG, Fidelity International, and three other foreign controlled commercial banks operating in Senegal held the remaining 48Z. In 1981, SOFISEDIT's authorized capital was increased to CFAF 1,300 million (US$4.7 million), with BOAD, the West Africa regional development bank, joining the group of foreign shareholders. As a result of the change in ownership structure, the Government controlled shareholdings reached 50Z; the single private shareholding dropped to 3Z. 6. Project Implementation 6.1 SOFISEDIT, Bank Ln. No. 1332-SE was declared effective on April 21, 1977. The original closing date of June 30, 1981 was postponed first to June 30, 1982 and for a second time to March 30, 1983. It was fully disbursed within about six years, or approximately one year-and-a-half more than the appraisal estimate. However, the delays pertained only to minor portions of the loan. 6.2 Ln. No. 1973-SE was declared effective on February 11, 1982 after its initial effectiveness date of October 14, 1981 was postponed to January 20, 1982. The original closing date of June 30, 1985 was postponed three times; one to December 31, 1985, then to June 30, 1986 and lastly to June 30, 1988. The project, significantly behind schedule, closed as of November 4, 1987, and the outstanding amount of US$9,267.87 cancelled as of that date. The main reasons for these delays were cancellations by SOFISEDIT of subloans submitted to and authorized for financing by the Bank. The implementation of the project lasted almost eight years instead of the four originally planned. 1/ BCEAO (the central bank), Banque Nationale de Developpement du S6n6gal (BNDS), Union S6ndgalaise des Banques pour le Commerce et l'Industrie (USB). -14 - 7. Project Results 7.1 The projects' overall objectives and expected benefits, as reflected in this report, were obviously not accomplished. The following paragraphs provide a brief analysis of the results of these projects. Line of Credit/Financial Restructuring 7.2 Over its twelve years, SOFISEDIT approved financing for 154 projects, 36 of these had to be suspended either because the sponsors failed to follow through with their projects or found preferable financing elsewhere. Therefore, 118 projects resulted in actual financing of which approximately 50 subprojects were financed under the line of credit. 7.3 With regard to sectoral distribution of approvals, in absolute terms, industry and tourism received more or less equal proportions. Industry, however, suffered a decline, while the tourism sector increased, especially since 1982. This was very much in line with the high priority given by the Government's economic planning. Assistance to the fishing industry took off in 1981; however, due to non-performing fishing loans, SOFISEDIT did not approve any more loans for the fishing industry in fiscal 1986. Lending continued for tourism, despite portfolio problems of even greater magnitude. 7.4 A review of individual projects, along with the many rescheduligs, arrears and moratoriums, also suggest that SOFISEDIT appraisal review reports were generally quite well thought-out and clearly presented. However, over- optimistic estimates and too short repayment and grace periods may have caused SOFISEDIT to approve non-viable projects. 7.5 Available data on actual subproject performance is very scarce. However, it appears that at least half of the subprojects financed under the loans were listed as "in trouble", in protracted arrears, or as rescheduled. It also seems that many of the subprojects' problems were very serious. A list of projects approved under these projects is attached as Annex I. Technical Assistance Component 7.6 The impact of the technical assistance component was nil since it did not help SOFISEDIT reorganize and subsist despite a 1984 rehabilitation program established with the Bank assistance. SONEPI (industrial promotion agency), although still alive, does not serve any purpose despite continued technical assistance from KfW, UNIDO and IDA. On account of heavy concentration on SOFISEDIT's problems, the studies and training component in favor of the Ministry of Industry were not implemented. The funds initially allocated to this activity were reallocated to studies undertaken in the context of the SAL III preparation. Disbursements 7.7 Disbursements started slow and stayed basically flat. Disbursement information on these projects is given in Tables D and E in Part III. The reasons were mainly due to delays in implementation (para. 6.2). SOFISEDIT's disbursements (Ln. 1332-SE) against commitments were made until March 1983, three years behind schedule, and the loan was fully committed. On the - 15 - Investment Promotion project, disbursements were made until December 31, 1989, and an outstanding balance of US$9.267.87 was cancelled on Ln. 1973-SE and in the amount of SDR552,219.89 on Cr. 1136-SE, approximately four years behind the appraisal estimate. 8. Project Sustainability 8.1 While we could argue that weakness in SOFISEDIT's management was mainly the reason for flaws, SOFISEDIT also failed to adapt to economic and systemic realities quite different from those it had been given. The main reasons were: (i) the Board and management were trying to carry out a Government mandate, not compatible with external and economic developments; and (ii) absence of adequate studies of the subsectors targeted for support, mainly tourism and industry. From the outset, SOFISEDIT was lacking a 3ound foundation. 8.2 The SOFISEDIT case is a most graphic illustration of the dilemmas arising out of questionable or outright erroneous judgements in institutional investment decisions. 9. Bank's Performance 9.1 While the Bank Group's supervision and advice to SOFISEDIT were positive and constructive, these activities lacked consistency and in-depth analysis. In recent years, supervision efforts appear also to have suffered from a shortage of staff time and lack of staff continuity. The SOFISEDIT experience reaffirms the importance of close supervision, and of the need to use supervision as a device leading to tangible results. 10. Borrower's Performance 10.1 The disappointing performance of SOFISEDIT can be attributed to: (i) its role in the economic setting and financial community which were spurious from the beginning; (ii) the Government's and the Bank's failure to adapt to the realities of the situation and accept the consequences, which would have meant a downscaling of the entire operation, with more emphasis on quality and less on quantity; and (iii) an ineffective Board of Directors in conjunction with a weak management and inadequate planning. It could also be attributed to SOFISEDIT's weak position amongst financial institutions. SOFISEDIT was left with the riskier projects and more inexperienced investors, who were unable to find credit elsewhere. 10.2 Very shortly after the initiation of the new DFCs operations, the evidence of a lack of a sound foundation became visible. The Government and the Bank chose to ignore the situation and failed to undertake the critical sector studies the situation called for. Neither did they rigorously reassess the justification for and continuance of SOFISEDIT. Apparently, they hoped that with continued optimism and strong support, SOFISEDIT eventually would overcome its problems. Finally, SOFISEDIT's lack of frequent organized supervision created an environment in which problems evolved and were not dealt with in a timely and resolute manner. 10.3 There is no way of establishing whether the benefits derived from SOFISEDIT's activities have benefitted the Senegalese economy. The project's - 16 experience is one of failure. SOFISEDIT was an institution in search of a role, i- financial trauma, unable to maintain steady growth, and a fair level of investments in financially, technically and economically viable projects. We could only conclude that this operation was never a sustainable one. Therefore, its contribution to the economy, could be considered at best nil. 11. The Bank Group's Future Role 11.1 Since 1982, the Senegalese banking system had stagnated in terms of the real value of total domestic credit and the money supply. In 1988 it was reported that 9 out of the 15 banks constituting the banking sector were in a state of insolvet.cy if not de facto bankruptcy. These included banks ewned in the majority or controlled by the Government, among them SOFISEDIT. It was more evident then than ever that SOFISEDIT was not a financially or economically sustainable entity on its own. Actions were taken to deal realistically with this situation as the financial situation tended to deteriorate further. The main courses of action appeared to be: (a) restructuring along the lines of SOFISEDIT's 1988-1991 Action Plan! (b) merger of SOFISEDIT with one or more other financial institutions, as suggested by the consultants' study completed by Centre International de Formation de la Profession Bancaire (CIFPB) France; or (c) liquidation. Apparently, SOFISEDIT's restructuring proposals were in large part based on unrealistic assumptions. The Government considered the merger proposal as part of the ongoing discussion concerning the banking sector restructuring. There was no alternative to SOFISEDIT, but going out of business. 11.2 Consequently, the Bank has supported the efforts of the Government of Senegal to restructure its banking system and lay the groundwork for the development of well functioning financial and capital markets through a Financial Sector Adjustment Credit (Credit No. 2077-SE) approved by the Board in December 1989. - 17 - PAT III: STATISTICAL INFORMATION A. Related Bank Loans and/or Credits Loan/Credit Year of No. Title ( Type of Business Approval Status 987-SE SOFISEDIT - Development Fin. Co. 1974 Closed 1382-SE SOFISEDIT - Development Fin. Co. 1976 Closed Ln.1V73-SE A Cr. 1186-SE Investment Promotion - Dev.Fin.Co. 1981 Closed Cr. 1869-SE Industry Sector 1998 Supervision Cr. 2077-SE Financial Sector Adjustment Credit 1990 Supervision B. Project Timetable Loan 1978-SE and Loan 1882-SE Cr. 1186-SE item Actual Date Actual Date Apprisal Mission 1270877 04/14/80 Negotiations 07/19/76 08/08/81 Board Approval 09/21/76 04/21/81 Signature 10/14/76 07/17/91 Effectiveness 04/21/77 02/11/82 Closing 03/30/88 06/80/88 Completion 12/31/82 12/81/87 C. USE OF BANK RESOURCES Staff Input (SW) LOAN 1978-SE AND Stage of Loan 1332-SE CR.1136-SE Project Cycle Actual Actual Through Appraisal 14.8 11.6 Appraisal through Board Appr. 16.9 18.7 Board App. thr. Effectiveness 4.4 14- Supervision 66.8 79.4 91.9 124.2 Missions Month/ No. of Days in Perf. Year Persons Field Specialization Rating Loan 1332-SE Appraisal Dec. 1976 2 11 Supervision 1 Feb. 1977 1 4 Oper. Officer 2 Supervision 2 Aug. 1977 3 14 Opor. Officer 2 Supervision 3 June 1978 2 14 Oper. Officer 2 Supervision 4 Jan. 1979 2 12 Opor. Officer 2 Supervision 5 Dec. 1979 2 14 Oper. Officer 2 Supervision 6 May 1960 1 14 Oper. Officer 2 Supervision 7* Nov. 1980 1 6 Oper. Officer 2 Supervision 8* Oct. 1981 1 10 Oper. Officer 1 Supervision 9o Oct. 1982 2 9 Oper. Officer 3 Supervision 10o Aug. 1983 2 7 Oper. Officer 2 Supervision lie Aug. 1984 1 7 Opor. Officer 2 Supervision 12* Sept. 1985 1 6 Opor. Officer 2 Loan 1973-SE / Credit 1138-SE Aprasa April 1980 2 14 Supervision le Nov. 1980 1 6 Oper. Officer n.y.e. Supervision 2* Oct. 1981 1 10 Oper. Officer 3 Supervision as Oct. 1982 2 9 Oper. Officer 8 Supervision 4 April 1983 1 18 Consultant n/a Su$ervision Se Aug. 1983 2 7 Oper. Officer 2 Supervision 6* July 1984 1 7 Oper. Officer 2 Supervisioh 7* Aug. 1985 1 6 Oper. Officer 2 Supervision 8 March 1987 3 14 Oper.Off/Cons. 8 Supervision 9 March 1988 1 9 Oper. Officer 4 (*) combined missions. (nye) not yet effective. - 18 - D. SENEGAL SOFISEDIT - LN. 1332-SE PROJECT COMPLETION REPORT DISBURSEMENT INFORMATION (U.S. 8 MILLIONS) Appraisal Est. Actual Amt. Actual X of Actual X of FISCAL YEAR Cumulative Cumulative Estimatev Total 1977 September 1976 0.20 0.0W 0.0W December 1976 0.45 0.01 0.0W March 1977 0.86 0.0% 0.0% June 1977 1.40 0.0W 0.0% 1978 September 1977 2.00 0.08 4.0W 1.9% December 1977 2.55 0.80 11.8 7.1W March 1978 2.95 0.30 10.2X 7.1W June 1978 3.30 0.48 14.5% 11.40 1979 September 1978 8.60 0.62 17.2 14.8W December 1978 8.80 0.62 16.3k 14.bX March 1979 8.90 0.62 15.W 14.8 June 1979 4.00 1.59 89.8% 117.9W 1980 September 1979 4.05 1.68 40.2% T8.(#% December 1979 4.10 2 63 39.E% 19.8% March 1980 4.15 1.68 40.0W )9.5% June 1980 4.20 2.36 56.0W EL,.0 1981 September 1980 2.35 56.ox December 1980 2.89 68.8% March 1981 2.89 68.6% Jun& 1981 3.10 73 8% 1982 September 1981 3.10 78.8X December 1981 8.10 73.8 March 1982 3.10 73.8X June 1982 3.T7 80.25 1983 September 1982 3.89 92.6W December 1982 3.89 92.6X March 1983 4.20 100.0W June 1988 4.20 100.0% - 19 - E. SENEGAL INVESTMENT PROMOTION - LN. 1978-SE AND IDA CR. 1186-SE PROJECT COMPLETION REPORT DISBURSEMENT INFORMATION (U.S. a MILLIONS) Appraisal Est. Actual Amt. Actual N of Actual K of FISCAL YEAR Cumulative Cumulative Estimated Total 1982 September 1991 0.25 0.0 0.0% December 1981 0.86 0.0% 0.05 March 1982 1.45 0.0 0.0% June 1982 2.26 0.0% 0.0% 1983 September 1982 2.86 0.22 7.7X 2.6% December 1982 8.66 0.59 16.65 7.1% March 1988 4.26 0.96 22.6X 11.5% June 1983 4.95 1.44 29.1% 17.8% 1984 September 1983 5.75 1.75 80.41 21.0% December 1988 6.65 1.84 28.10 22.1% March 1984 7.26 1.84 25.4X 22.1% June 1984 7.90 2.84 29.6X 28.1X 1986 September 1984 8.86 2.41 28.9% 28.9% December 1984 8.70 2.86 82.9K 84.8% March 1985 8.90 2.90 82.8 84.8 June 1985 8.90 2.96 88.1 85.4 1986 September 1985 8.44 41.2X December 1985 4.19 60.2X March 1986 4.48 58.1% June 1986 4.48 58.7X 1987 September 1988 4.50 54.0 December 1988 5.86 64.8X March 1987 5.65 67.7X June 1987 8.79 81.4% 1988 September 1987 6.84 82.0% December 1987 8.18 97.5 March 1988 8.18 97.65 June 1988 8.18 97.5 1989 September 1988 8.28 98.7K December 1988 8.28 98.7% March 1989 8.28 98.7% June 1989 8.28 98.7X 1990 September 1989 8.28 98.7% December 1989 8.28 98.7% SUBPROJECTS AUTHORIZED Credit 1332 SE Closing Date: March 30. 1983 DFC: SOFISEDIT Subproject Nam Nature Type Approval Date Authorized Amunt A-1 PROJET PILOTE Improvement of art*San productivity A March 10. 1978 USS 200.000 ARTISANAL and production. A-2 CHEVAL ET Empansion of hotel. riding. hunting A June 15. 1978 US1 46.522 LOISIfS A recreation area. A-3 SOCIETE AFtICAINE Manufacture of tyres and accoesories A Noveber 20. 1978 USS 545.450 DE FABRICATION DE for bicycle* and mo-pedo. CYCLES, CYCLOMOTEJtS ET ACCESSOIRES A-4 SOCIETE IMOUSTRIELAIE Exetne;on/Nodernization. introduction A August 7. 1979 l5 413.416 D'ENOCAIS CU SENECAL of a new production technique (procede (SIES) Oardinier) to increase output and reduce production costs. A-S SOCIETE INIJSTRIELIE Extension of canning and storage A August 13, 1979 use 571.500 DES PRODUITS LAITIERS capacity to match existing condensed (SIPL) milk production capacity. A-6 LA SOCIETE DES Creation of a second bus depot in A November 15, 1979 US1 476.190 TRANSPORTS CU CAP-VERT Thieroye on SOTRAC's mest travelled (SOTRAC) routes. A-7 LA SOCIETE FRANCO- Construction of a metsl working A May 2. 1980 USS 571.429 AFRICAINE DE foundry (now). METALLIRIE (SOFAM) A-8 HOTEL LE PALM BEACH Touris project including A July 15, 1980 US 399,780 infre*tructure inveetment, institution strengthening A partial financing of hotels. A-9 LA SOCIETE IIOJSTRIELLE Extension of SIPS's traditional ins A March 17. 1982 US 586.207 DE PAPETERIE CU SENECAL of products (paper, notebook. (SIPS) envelopes) and introduction of a nec line of hygienic paper products. 8-1 LA SOCIETE IDUSTRIELLE Establisheent of a new workshop to 6 August 10. 1977 USS 12.449 DE FAStICATION sake militery and administrative Note: US$ 42205.23 D'ATTRIBUTS uniform such as helmste, cape. etc. cancelled on June 13. D' EQUIPEMENTS MILITAIRES 1979. ET ACMINISTRATIFS (SIFAEMA) B-2 LA SOCIETE POLYSEI Bathroom fiatures. B October 3. 1977 US 110.204 8-3 TRICOTERIE MIMO Acquisition of new knitting S October 3. 1977 US 71.429 machines to increase capacety. 8-4 CAMPEMENT KOLDA Complstion of Campseent Touristique a October 3. 1977 US$ 40.816 de Hoobe e.pected to raise the city's room capacity. B-5 SOCIETE HOTELIERE ET 80-bed hotel and five houseboat& B October 28, 1977 us 12.449 TORISTIQUE DE with a total capacity of 20 beds. Note: Wa 3813.24 SINE-SALOUMI cancelled on June 13. 1979. 9-6 BOUANGERIE ADEL EL Bakery. 8 March 3, 1976 Wa 62,500 ALY Note: USS 3474.94 cancelled on June 13, 1979. B-7 SOCIETE DAAROISE DE Purchase of a boat. 8 May 19, 1978 Wa 73.469 LA PECHE (SODAPECHE) 8-8 YERI DIAMMATE A new fihing company acquiing 8 November 13. 1978 No a 126.735 US z three arlimanal fishing bas. Nate: US8 126.735.00 (D M0 cancel led on June 13, 1979. 8-9 SOCIETE SENEALAISE Purchase of a bost. 8 March 2, 1979 We 71.429 0 DE PECHE Note: Subproject r INXSTRIELLE cancelled on October (SOSEPI) 8. 1979. SUBPROJECTS AIMORtZED Loan 1973-SE and IDA Cr. 1136-SE Closing Date: June 30, 198 INVESTM04T PROMOTION PROJECT Subproject I Nam Nature Type Approwal Doat Authorised Amount A-1 NOVOTEL INTElMTIONAL Construction & operation of a A February 12. 1962 USS 321.430 4-star international close hotel. with bar/reetaurant & recreation faciliti. A-2 NOVOTEL-SIEH4 Huel -26D room A June 21. 192 USS 55.172 A-3 SOCIETE HOTELIME CU Uperade and espand a hotel under A Septeaber 20. 1982 US11 705.62 LIDO con*truction (8Le Savanai Cap/Vert). A-4 SOCIETE S84ALAISE DE Refrigerated Shrimp Boet. A October 1, 1962 US$ 441,176 COMMECALISATION DES PWtDITS CE LA PEIE (SOSEOPE) A-S COMAF PED(E Fish proceesina plant. A December 6. 1962 USS 156,513 A-0 SOCIETE SEBALAISE DE Regeneration of lubricating oil. A January 4, 1963 US$ 382.358 RBMNTIONI DES MXLES NINERALES (SRH) A- SOCIETE TEXTILE Modernization of installed capacity A July 25. 1963 us 555.55 SEEALAISE to increase volume and to improve (STS) que li ty of *ai Ile products (yern and gray cloth). A-8 OK-tAAR HOTEL Hotel Bungalow with 126 roo A February 3. 1964 US$ 306,100 capacity, location Soli (La Petite Cote). A-9 HOTEL FAICHER Creation of a aiddle-size average A August 16. 1984 US11 52.316 *tanding hotel. A-10 SOCIETE INSTRIELLE Expansion of a factory producing A August 23. 1064 U5S 354.067 DES PLASTIQES plasatic goods such as pans, buckeu. AFRICAINE (SIMPA) and household article. A-11 PAIL BEAO HOTEL Hotel emponsion. A September 6. 1964 USS 596.086 A-12 AFRICAN REAFOD Fish processing plant with a freezing A April 26, 1965 US 714.206 capacity of about 50,000 tons/year for exports. A-13 SAVANA SALY 100 roome hotel in Saly-Portudal (80 A June 19. 1965 US1 510,204 ham. from Dakar). A-14 CARNAW-SENECAL Expansion/fabrication of metallic A June 23. 1967 USS 1.241,419 cane. 8-1 SOCIETE DBALACES Modernization project for an emisting 9 February 12, 1962 USS 246.700 LEGM HALIQU can-asking plant. AFICAINS (ELMAF) 6-2 MOTEL S4tTAI Construction project after a fire 6 May 10. 1902 U58 166,666 broke out in August 1980. B-3 HOTEL CU RANCH Upgrading and etension of a B May 17, 1962 US$ 135.593 S*negal** owned hot.l located on the seashore about 100 kms. froe Dakar. 0-4 MAGUETTE-DIAM Financing of the purchase of a tune B October 1, 1982 us8 117.648 fishing bost. 6-5 SOCIETE CE DETICAGE Creation of a factory manufacturing B August 20. 1964 uS5 107,656 CE N(IIX DOANARCADES, casker nuts. CU SINE-SAL"M 0 8-6 SARDINAFRIC Fishery: purchase of &in v*s*el . a April 26, 198 US1 714.206 9-7 CLA NAUTIQUE Nautic Club B April 8, 1985 US@ 69,386 0