Niger - Industrial Development Project

Document of The World Bank FOR OFFCLAL USE ONLY Report No. 11861 PROJECT COMPLETION REPORT REPUBLIC OF NIGER INDUSTRIAL DEVELOPMENT PROJECT (CREDIT 1225-NIR) MAY 6, 1993 Industry and Energy Division Country Department V 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 World Bank 2uthorization.  CURRENCY EOUIVALENTS At Appraisal US$ I = CFAF 270 Intervening Years Average US$ 1 = CFAF 390 Completion Year Average US$ 1 = CFAF 275 ABBREVIATIONS BCEAO - Banque Centrale des Etats de l'Ouest BDRN - Banque de Developpement de le Republique du Niger CFAF - Communaute Financiere Africaine Franc CMAN - Centre des Metiers d'Art du Niger GON - Government of Niger IDA - International Development Association OPEN - Office de Promotion de l'Enterprise Nigerienne PAIPCE - Programme d'Appui aux Initiatives Privees et a la Creation d'Emplois PCR - Project Completion Report SAR - Staff Appraisal Report SME - Small- and Middle-Sized Enterprise STB - Societe Tunisienne de Banque TA - Technical Assistance UMOA - Union Monetaire Ouest Africaine UNDP - United Nations Development Programme UNIDO - United Nations Industrial Development Organization  FOR OFICIAL USE ONLY THE WORLD BANK W"hington, D.C. 20433 U.SA Offlice of Director-General Operatlon Evaluaton May 6, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Niger - Industrial Development Project (Credit 1225-N1R) Attached is a copy of the report entitled 'Project Completion Report on Niger - Industrial Development Project (Credit 1225-NIR)" prepared by the Africa Regional Office. No contribution was received from the Borrower. The main objectives of the project were to provide a line of credit to the Banque de Developpement de la Republique du Niger (BRDN) in support of small-medium scale industry (SMI), and strengthen two agencies that promoted and extended technical assistance to SMI. These objectives were not attained. Deficiencies in design, absence of an enabling environment, adverse macroeconomic developments, BRDN's unsound lending practices and financial position, and lack of commitment by the Government and BDRN's management resulted in the liquidation of all three intermediaries. The PCR is of high quality, comprehensive in its coverage, and candid in its assessment of project outcomes. Given the demise of the institutions involved, the project outcome is rated as very unsatisfactory, and its impact on institutional development as negligible. Attachment This docmat ha a rerictd distribution and may be used by redpients ooly in the pwformance of thir ofeil ds. Its contetu uay not otwerwise be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT REPUBLIC OF NIGER INDUSTRIAL DEVELOPMENT PROJECT (CREDIT 1225-NIR) TABLE OF CONTENTS PREFACE . ................................................. EVALUATION SUMMARY ......................................iii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE ................ 1 1. Project Identity ............................................ 1 2. Background .............................................. 1 3. Project Objectives and Description ................................ 2 Project Objectives ....................................... 2 Project Description ....................................... 2 Changes in Project Scope ................................... 3 4. Design and Organization ...................................... 4 Institutions ............................................ 4 Changes in Design ....................................... 6 Evaluation of Project Design ................................. 6 5. Project Implementation ....................................... 7 Credit Effectiveness and Project Start-up ......................... 7 Implementation ......................................... 7 Procurement ........................................... 8 Disbursement and Project Costs ............................... 8 6. Project Results ............................................ 8 Attainment of Objectives ................................... 8 7. Project Sustainability ........................................ 10 8. Bank Performance .......................................... 10 9. Findings and Lessons Learned .................................. 11 10. Borrower Performance ....................................... 11 11. Performance of Consultants .................................... 12 12. Project Documentation and Data ................................. 12 ANNEX 1: STATUS OF LINE OF CREDIT ........................... 13 PART II - PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE ....... 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 PART HI - STATISTICAL INFORMATION ........................... 14 1. Related Bank Loans and Credits ............... .................. 14 2. Project Timetable ...................... .................... 14 3. Credit Disbursements ....... ............ .. ................... 15 4. Project Costs and Financing ...... ........... ................... 16 5. Project Result ........................ ..................... 16 A. Direct Benefits ......................................... 16 B. Technical Assistance (TA) and Studies ........................... 17 6. Status of Covenants ..................... .................... 18 7. Use of Bank Resources ....... ........... .. ................... 19 A. Staff Inputs ............................................ 19 B. Supervision Missions ...................................... 20  PROJECT COMPLETION REPORT REPUBLIC OF NIGER INDUSTRIAL DEVELOPMENT PROJECT (CREDIT 1225-NIR) PREFACE This is the Project Completion Report (PCR) for the Industrial Development Project in Niger for which Credit 1225-NIR in the amount of US $16 million (SDR 14 million) was approved on April 20, 1982. The Credit was due to close on December 31, 1987. After three extensions, requested by the Government of Niger, the Credit was finally closed on December 31, 1990. The amount of the credit utilized was US $14.6 million (SDR 12.2 million at prevailing exchange rates) with the final disbursement (of previously committed funds) being made in April 1991. The PCR was prepared by the Industry and Energy Division of the Sahelian Department, Africa Region (Preface, Evaluation Summary, Parts I and m of the PCR) and is based on information from the Staff Appraisal Report, the President's Memorandum, Credit and Project Agreements, Supervision Reports, correspondence between the Bank and the Borrower and Beneficiaries, internal Bank correspondence and interviews with project task managers and Resident Mission staff. There was no Project Completion mission. The Resident Mission in Niamey attempted to have Part II completed by the Borrower. However, since all three credit beneficiaries have been dissolved (between 1985 and 1990), and it has been over 24 months since the Credit closing date, it is unlikely that useful information will be forthcoming.  I I  - Hi - PROJECT COMPLETION REPORT REPUBLIC OF NIGER INDUSTRIAL DEVELOPMENT PROJECT (CREDIT 1225-NIR) EVALUATION SUMMARY Project Objectives Conceived as a follow-up operation to the Industrial and Artisan Sector Employment Creation Project (Credit 809-NIR approved in May 1978), the goal of the Industrial Development Project (also called the "Second IDF Project") was to continue to diversify the economic base of the Nigerien economy through further strengthening of the sectors outside agriculture and mining and the institutional infrastructure related to these sectors. To this end, the project was to (i) provide a line of credit to enable BDRN to continue its term financing operations, including lending to new small, medium-sized and labor intensive enterprises, lending to other new enterprises, and easing access to investment resources needed to strengthen existing enterprises; and (ii) finance technical assistance to BDRN, OPEN and CMAN, and modest capital assistance to OPEN, to help strengthen internal efficiency and improve their services to Nigerien entrepreneurs. The project placed special emphasis on providing technical assistance to the growing indigenous construction subsector (through OPEN) and to the leather artisanal subsector (through CMAN). ImDlementation Experience The appraisal was completed in February 1982 and the Credit and Project agreements signed in April 1982. After some delays in seizing necessary decisions on the part of the Government of Niger (GON), the Credit became effective in December 1982. The worldwide economic downturn, which began in 1980-81, quickly exposed the fragile condition of the institutions supported by the project. BDRN, a commercial and development bank appraised as a reasonably sound institution, had been selected as the key vehicle for project implementation. Its critical financial condition, largely the result of years of improper lending practices and inadequate internal monitoring, was revealed in 1983. It became apparent in the early phases of implementation that a shift in project emphasis was necessary. The Project Agreement was amended in December 1987, thereby officially shifting the project's focus from developing industry to basically salvaging BDRN (paras. 3.3, 4.21-4.25). This objective proved to be extremely costly and could not be achieved (para. 6.13-6.14). Deficiencies in project design (para. 4.3) and general economic malaise in the country, made effective project supervision difficult but all the more necessary. A combination of high quality technical assistance, close and responsive Bank supervision, and firm political commitment on the part of the Government and BDRN management was essential if the project was to be prevented from completely unravelling. Technical assistance was inadequate and of doubtful quality (para. 11.02), Bank supervision was generally lacking in depth and was not sufficiently timely in response (paras. 8.02-  - iv - 8.03), and the Government and BDRN management lacked the ability and political will to take difficult decisions (paras. 10.01-10.02). The original Closing Date of December 31, 1987 was extended three times in order to adjust the scope and conditions of the project. The first extension was mainly aimed at continuing to support BDRN's rehabilitation and OPEN's privatization (para. 3.3). The second and third extension were allowed to facilitate BDRN's restructuring and privatization. The Credit was finally closed on December 31, 1990. Project Results The attainment of project objectives ranged from marginal to dismal. The line of credit component to support industrial development was reduced from SDR 10.46 million to SDR 7.05 million of which only SDR 4 million was actually disbursed (para. 3.33 and Annex 1). According to Resident Mission staff, the small and medium sized enterprises (SMEs) financed are doing reasonably well but most of the larger enterprises have either failed or in arrears (para. 6.1 and Annex 1). The credit appraisal capabilities of BDRN's development department were strengthened and data-processing of the bank's lending operations was partially computerized. However these improvements, and additional technical assistance financed by the project, were not sufficient to save this institution (para. 6.12). Attempts begun in 1989 to privatize BDRN concluded with its eventual liquidation in mid-1990 and the creation of SONIBANK, with Societe Tunisienne de Banque (STB) as the major single shareholder and manager. SONIBANK is currently owned by STB (25%), BCEAO (25%) and GON (20%); to date, the 30% equity capital expected from the private sector is still to come. In all, about SDR 3.85 million was spent on training and consulting services provided to BDRN. The two other institutions supported by the project, CMAN and OPEN were dissolved in 1985 and 1989 respectively. Supervision reports do not elaborate on the evolution of the sub-sectors (leather, construction, industry, etc.) supported by these institutions (para. 6.15). Studies financed under the project in the areas of banking, industrial incentives and petroleum distribution have not led to any significant sectoral reforms (para. 6.16). The project provided some financing to civil servants who had voluntarily retired from the government to establish their own enterprises. According to supervision reports there was modest success in the creation of such businesses, however, no information is provided about their performance. Project Sustainability On balance, apart from the SMEs and possibly financing the inventories of the Grande Marche fire victims, there are almost no testaments to the project's success. Technical assistance and capital provided for institution strengthening have not resulted in a single institution supported by the project outliving the Credit closing date; recommendations of the studies financed have not been implemented nor resulted in improved sectoral policies. Lessons Learned Key lessons learned include the need to integrate the financing of investment projects and technical assistance for institutional support with the reform of critical sectoral policies. If funds are given to the wrong institution, working under skewed incentives, without proper accountability  - v - mechanisms, the result will be disastrous, even if the activity financed (either trade or industrial development) is by itself profitable. The objective of sectoral development can only be adequately fulfilled in the presence of an enabling environment (paras. 4.334.34). In addition, project design should attempt to identify, and adequately prepare for, the downside risks to a project. Since all contingencies cannot be predicted during preparation, the responsibility of supervision staff to effect on- going course corrections becomes essential for achieving project goals. Investment and technical assistance projects should incorporate some key performance measures in the project design by which supervision teams can evaluate project progress and the quality of technical assistance. In the case of the subject project, about 50 percent of total project costs were disbursed for technical assistance and consultancy services, yet there was virtually no critical assessment of whether, and to what extent, the objectives of this assistance were being met. A corollary to this is the need for Task Managers to devote careful and critical attention to the preparationlapproval of Terms of Reference for technical assistance and consultant services.  I  PROJECT COMPLETION REPORT REPUBLIC OF NIGER INDUSTRIAL DEVELOPMENT PROJECT (CREDIT 1225-NIR) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Name Industrial Development Project Credit Number 1225-NIR RVP Unit Africa Region Country Republic of Niger Sector Industry and services supporting, but not based on, uranium or agriculture; other industry outside the uranium and agriculture sectors; finance and banking; artisanal and construction. 2. Bacgund 2.01 Niger belongs to the West African Monetary Union (UMOA) which shares a common Central Bank (BCEAO) and a common currency (the CFA Franc). Full convertibility of the CFA Franc into French Francs and liberal trade policies followed by UMOA members have strengthened trade links between Niger and its UMOA neighbors. An agreement among UMOA members allows BCEAO to impose some discipline over the monetary and fiscal policies of member countries in order to maintain convertibility. Until 1989 BCEAO's monetary management was characterized by the use of economically inefficient instruments which included regulated and preferential interest rates and credit allocation for selected "priority" sectors such as the Government, small-scale enterprises, short-term crop financing and housing. 2.02 Awareness of shortcomings in BCEAO's financial policies resulted in an IDA supported reform program initiated in 1989 aimed at bringing BCEAO's policies more in line with 'international' standards. The program has resulted in some reform such as the abandonment of preferential discount rates, tightened control of credit to the public sector, and streamlined supervision of banks in the BCEAO zone by a supranational supervision commission. BCEAO rules remain less stringent than international rules, especially in the area of external independent audits, which are still not required. 2.03 Niger's economy has developed along dual lines, with slow, but steady, growth in the traditional rural sector based on agriculture and more substantial, but fragile (because of its dependence on world uranium markets), growth in uranium production and earnings. On balance, the economy's performance during the 1970s was good, particularly by Sahelian standards. This was largely due to increased revenues from uranium exports and the Government's relatively prudent economic policies. The 1980s started with signs of a longer term economic crisis. Between 1979 and 1982 uranium prices fell by more than 50%, exports stagnated and revenues declined sharply from CFAF 25 billion to CFAF 13 billion. Agricultural production also declined and continued unfavorable climate forced Niger to increase grain imports.  - 2 - 2.04 The uncertainties associated with uranium mining and agriculture resulted in emphasis being placed on the development of "secteurs d'accompagnements" and local handicrafts as a means of augmenting employment and income for the population (estimated at 5.5 million at the time of appraisal) and diversifying the country's economic base. The "secteurs d'accompagnements" were those sectors which supported, and benefitted from, the growth in agriculture and uranium mining. The Government's diversification strategy was reflected in the objectives of IDA's Industrial Development Project (subject project - Credit 1225-NIR) and its precursor, the Industrial and Artisan Sector Employment Creation Project 1/. 2.05 In addition to employment creation, the purpose of the Industrial and Artisan Development project was to strengthen sectoral institutions through the provision of technical and financial assistance. The institutions receiving technical assistance, and identified as vehicles for the implementation of this project, were the Banque de Developpement de le Republique du Niger (BDRN), which was to serve as the focal point of project coordination, the Office de Promotion de l'Enterprise Nigerienne (OPEN) and the Centre des Metiers d'Art du Niger (CMAN). Project objectives were only partly achieved: (i) six enterprises were financed, instead of the forty estimated during appraisal, and about 40% of the job creation target was met; (ii) the technical assistance included in the project was able to develop the identified institutions to a considerable extent but substantial gaps remained. 2.06 The appraisal of the Industrial Development Project judged the Industrial and Artisan Development project to have had a positive impact on institution building, vis-a-vis BDRN and OPEN, while being less successful in employment creation. It was also felt that it was premature to assess the full impact of the project, especially in developing the leather artisanal sub-sector. 3. Project Objectives and Description 3.1 Proiect ObWectives: Conceived as a follow-up operation to the first project, the goal of the Industrial Development Project was to continue to diversify the economic base of the Nigerienne economy through further strengthening of the sectors outside agriculture and mining and the institutional infrastructure related to these sectors. To this end, the project would (i) provide a line of credit to enable BDRN to continue its term financing operations, including lending to new small, medium-sized and labor intensive enterprises, lending to other new enterprises, and easing access to investment resources needed to strengthen existing enterprises; and (ii) finance technical assistance to BDRN, OPEN and CMAN, and modest capital assistance to OPEN, to help strengthen internal efficiency and improve their services to Nigerienne entrepreneurs. The project placed special emphasis on providing technical assistance to the growing indigenous construction subsector (through OPEN) and to the leather artisanal subsector (through CMAN). 3.2 Project Description: The Project, involving a total credit of SDR 14 million (equivalent to US $ 16 million at the time of appraisal) included a line of credit, to be administered by BDRN, and three technical assistance programs to support and strengthen BDRN, OPEN and CMAN. The IDA credit of US$ 16 million was made available to finance 75% of the total project cost estimated at US $ 21.3 million. 1/ IDA Credit 809-NIR - Credit for US$ 5 million for the Industrial and Artisan Sector Employment Creation Project was approved in May 1978, became effective in February 1979 and was fully disbursed in June 1983.  - 3 - 3.21 Part A: Bangue de Developpement de le Republigue du Niger (BDRN) (a) Line of Credit: US$ 12 million (SDR 10.5 million) for investment in sub-projects with 20% being earmarked for small-scale and labor-intensive enterprises. Resources on-lent to BDRN (by the Government) to provide medium, long-term or equity financing for viable development projects in support sectors including small and medium-sized enterprises (SMEs), industrial rehabilitation, agro-processing, manufacturing, repair facilities, etc. On-lending annual interest rates between the Borrower and BDRN were set at 7.5% for loans to small-scale or labor-intensive enterprises and 10% for all other investment enterprises. BDRN's margins on these sub-loans were to be at least three percentage points. (b) Technical Assistance: Grant of US$ 0.8 million (SDR 0.7 million) to BDRN for: i) Strengthening the Development Department by financing advisors and providing staff training. ii) Establishing an in-house training unit by financing specialists, consultants, materials and equipment. iii) Improving the computerized data processing and management information system. 3.22 Part B: Office de Promotion de l'Enterprise Nigerienne (OPEN) (a) US$ 1.88 million (SDR 1.66 million) as a grant to address operating constraints, help establish a Technical Assistance Unit for indigenous construction contractors and contribute (SDR 0.47 million) to the construction of OPEN's premises. (b) General Support (i) Improve OPEN's organization and strategy in assisting SMEs and artisans. (ii) Conduct strategy related studies to identify import substitution and export opportunities, and forms of assistance most appropriate to the artisan sector. (iii) Finance the development of OPEN-sponsored training of workers in technical subjects such as bookkeeping, woodworking, electricity and plumbing. 3.23 Part C: Centre des Metiers d'Art du Niger (CMAN) A grant of US$ 1.2 million (SDR 1.05 million) to be passed on to CMAN to provide technical service to improve the organization's management, production and marketing activities, and finance the establishment/development of separate training facilities and support services for all leather artisans. 3.3 Changes in Project Scope: Slow disbursements in the line of credit, BDRN's growing financial difficulties and CMAN's dissolution in 1985 made changes in project scope necessary during the course of project implementation. Agreement between the Government and IDA to place greater emphasis on BDRN's rehabilitation was reflected in the Amendment to the Development Credit and Project  - 4 - Agreements formalized in December 1987. Emphasis was also placed on financing studies to determine conditions needed to promote entrepreneurship and the private sector. Specific changes included: 3.31 On-lending annual interest rates under the Subsidiary Credit Agreement between the Borrower and BDRN were reduced from 7.5% to 4.5% on the outstanding principal amount to be on-lent to investment enterprises which qualified as small-scale or labor-intensive, and from 10.0% to 6.5% on the outstanding principal to be on-lent to all other investment enterprises. This adjustment was precipitated by a reduction of 2% in BCEAO's lending rates in 1986. BDRN's margins on these sub- loans were increased from at least three percentage points to at least four percentage points. 3.32 In November 1983, a consultant study on BDRN operations revealed the bank's precarious financial condition, which was, in fact, already known internally and to the GON. Based on the consultant study, in October 1984 IDA presented the Government and BDRN with an action plan spelling out specific measures aimed at restoring the bank's capital base and operational capability. This plan (see para. 4.21) became an integral part of the IDA Structural Adjustment Credit (SAL) undertaken in 1986 and the new center-piece of the Industrial Development Project. 3.33 Reflecting the shift in project emphasis, reallocation of Credit proceeds resulted in an increase in training and consultant services to BDRN from SDR 0.7 million to SDR 3.0 million and a 83% increase (from SDR 1.2 million to SDR 2.2 million) in technical support to OPEN. Two new categories, "Studies" (SDR 0.5 million) and "Goods and Services for the Creation of Enterprises" (SDR 0.45 million) were created. The latter category was included in a further attempt to stimulate private entrepreneurship mainly by providing assistance to former civil servants, who had voluntarily resigned, to start their own enterprises. This component was added as Part D to Schedule 2 of the Credit Agreement and in Project Description (para. 3.2). The line of credit was reduced from SDR 2.18 million to SDR 1.55 million for small-scale and labor-intensive investment projects and from SDR 8.28 million to SDR 5.5 million for other investment projects. 3.34 Formalized in December 1987, the focus of the project had in fact shifted by 1985 from developing industry to salvaging BDRN. 4. Design and Organization 4.01 Conceived as a follow-up operation, the project design drew on the implementation experience gained during the first project. The project design selected BDRN, OPEN and CMAN as the institutions responsible for implementing project strategy and achieving project goals. At the time of project preparation and appraisal, BDRN was judged to be a competent and sound financial institution. The performance of OPEN and CMAN was showing signs of improvement. Correction of institutional weaknesses was incorporated into project design by earmarking credit proceeds to finance the technical assistance needed for institutional strengthening. 4.1 Institutions Bangue de Developpement de le Republigue du Niger (BDRN) 4.11 Since its inception in 1961, BDRN had been both a commercial and development bank. At the time of appraisal, Government and parastatal entities controlled 59% of BDRN shares; the rest of the shares were distributed between Nigerien private investors (4.2%), BCEAO (12.3%) and foreign shareholders (24.5%). The Minister of Finance was the Chairman of the Board of Directors and the  - 5 - bank manager was generally a ministerial appointee. The Government and non-government shareholders (BCEAO and foreign shareholders) were represented on the Board. Commercial operations represented 70% of BDRN's operations and its primary source of profits. BDRN was the leading term lending institution in the country and its Development Department was responsible for all medium- and long-term financing. Interest rate structures for both commercial and development loans were established and regulated by BCEAO. 4.12 Although it was judged to be one of the strongest development institutions in the Region, technical assistance was to be provided by the project to strengthen the Development Department and to improve the data processing and management information systems of the bank. The creation of OPEN in 1978, and further support provided under the project, allowed OPEN to function as a technical assistance partner to assist BDRN financed projects. Office de Promotion de l'Enterprise Nigerienne (OPEN) 4.13 Essentially a state organization, OPEN was incorporated in 1978 with most of the technical and financial assistance provided by a UNDP/UNIDO project of US$ 1.5 million (including five expatriate advisors). IDA contributed US$ 0.5 million to finance one senior advisor and some initial operating costs. At the time of appraisal, OPEN's budgetary requirements were being met by a Government subsidy of CFAF 50 million (US$ 0.2 million) per annum. OPEN's General Manager (always a civil servant) was responsible to a board composed of representatives of various ministries and professional organizations. The Chairman of the Board was the Minister of Mines and Industry. The Staff Appraisal Report mentioned that OPEN had insufficient professional staff and that staff turnover was high. The Report indicated that the Government would agree to second three additional professionals to OPEN before December 1983. Records do not elaborate the extent to which this was achieved. 4.14 OPEN was established to help promote new enterprises and investments, provide technical assistance to new and on-going enterprises, prepare projects for BDRN financing and contribute to building managerial, business and technical expertise in the country. Project appraisal recognized weaknesses in OPEN's organization and operations. Provisions were made for augmenting the professional staff, including hiring a senior advisor to assist OPEN's management in the critical areas of strategy, organization and assistance to artisans. Funds were earmarked to improve OPEN's promotion of training programs and a training unit was established to provide technical assistance to small indigenous contractors in the construction sub-sector. The project also made a significant contribution to finance the construction of OPEN premises. 4.15 Strategy related studies to identify investment opportunities connected with export promotion and import substitution were included in the project design. Studies were to include a survey products imported from neighboring countries and determine the level and nature of incentives required to promote identified opportunities/sub-sectors. Centre des Metiers d'Art du Niger (CMAN) 4.16 The first project appraisal identified the leather artisan subsector as the most promising segment of the traditional sector. CMAN was established as a self-governing cooperative under this project (in 1980) to improve product design and production techniques and develop exports of leather artisan products. Appraisal of the second project recognized weaknesses in CMAN's management, accounting systems and in-house technical expertise. CMAN was essentially functioning as a parastatal employing artisans and not as a promoter of artisanal entrepreneurship. The project was designed to address these  - 6 - institutional shortcomings by having CMAN prepare a three-year action plan and budget (1982-85) and ratify statutes establishing itself as an independent corporation. The new focus was to be on providing training, support services and assistance to independent artisans. Disbursement of IDA funds was to be contingent upon satisfactory implementation of these requirements. 4.2 Changes in Design: The project was officially redesigned in December 1987 to reflect changes in scope (para. 3.3). 4.21 BDRN: The rehabilitation of BDRN was based, inter alia, upon tightening of BDRN credit to the Government sector, improved loan recovery (from the public and private sectors), liquidity injection (by Government), equity injection (from private and international entities) and a reduction in operating costs (mainly through staff reductions). 4.22 OPEN: Weak management (a senior advisor was never hired, an industrial engineer was hired instead), greater emphasis on promoting large scale enterprises (employing at least 50 persons) and the absence of an effective mechanism to assist potential small enterprises prepare bankable projects precipitated an IDA led effort to improve OPEN performance through privatization. Technical assistance to OPEN was discontinued in 1987 pending the results of an IDA funded study aimed at restructuring the organization. Based upon the study's recommendation, OPEN was liquidated in 1989. 4.23 CMAN: Inability to meet IDA conditions (para. 4.16), partly due to lack of Government commitment, led to the dissolution (at the Government's request) of this organization in 1985. With the dissolution of CMAN, this component was dropped from the project. 4.24 Studies (New category 6): Following the amendment to the Credit Agreement in December 1987, IDA financed studies were conducted to deepen the Bank's knowledge of the structure of entrepreneurship in Niger. Studies focussed on developing incentives for industrial investment. Studies were also directed at banking sector reform, creating a "societe de caution mutuelle" and at improving petroleum distribution in the country. 4.25 Goods and Services for the Creation of Enterprises (New category 7): This category became operational in 1989. The beneficiaries of this component were largely government employees who had voluntarily retired to start their own enterprises. Part of these funds were also used to rehabilitate BDRN employees who lost their jobs as a result of the bank's restructuring. 4.3 Evaluation of Project Design: The project, as conceived and designed, recognized the risks posed by contemporary macro-economic developments and managerial weaknesses within OPEN and CMAN. However, risks to the project posed by banking sector (particularly BDRN) policies and practices, and the ability and willingness of the Government to undertake sectoral reform were not adequately addressed. Where project risks were identified, conditionality or contingency planning was virtually absent. The BDRN rehabilitation action plan attempted to correct this weakness, but conditionality was not effectively applied. 4.31 Insufficient analysis was conducted on BDRN's asset structure and lending practices during preparation. BDRN's fragile financial condition was revealed by the consultant study completed in November 1983. The study indicated that BDRN had been plagued by inadequate management systems, improper banking practices and general management weaknesses for several years. The downturn in general economic conditions further aggravated the bank's financial difficulties. Failure to identify and  - 7 - address sectoral and BDRN deficiencies during project preparation, meant that bolder, possibly unrealistic, actions were required later on to rehabilitate the bank. 4.32 Although technical assistance was emphasized, performance based incentives and revenue schemes were not instituted to allow OPEN and CMAN to develop as independent, self-sustaining entities. If available, the inclusion of private capital and private sector management into these organizations at the early stages may have improved their effectiveness. In the case of BDRN, the fixing of lending margins by BCEAO resulted in margins which were often insufficient to cover the costs of lending to SMEs and acted as a disincentive to promoting the bank's development portfolio. This was further aggravated by BDRN's internal inability to monitor the costs and revenues associated with its various activities. 4.33 Although the project could not be expected to bear the burden of overall sectoral reform, a line of investment credit was made available without addressing the investment code, taxation policies, licensing procedures, etc. The absence of an enabling policy environment, in addition to the economic downturn, resulted in the extremely sluggish demand for the line of credit. 4.34 Banking sector reform was not specifically addressed until a Banking Sector Study was initiated in 1989. This aspect seems important in retrospect since BDRN, a commercial and development bank, was chosen as the central coordinating agency. Since it was not possible to separate the bank's development and commercial operations, project preparation should have conducted a deeper, more comprehensive analysis of the bank's practices and incorporated a reform component into the project design. 4.35 The project was designed to take an integrative approach to achieving project objectives by having BDRN, OPEN and CMAN responsible for their respective components. However, inter- institutional relationships, particularly at the operating level, were not developed or addressed. The lack of understanding or rapport between OPEN and BDRN was frequently manifested in BDRN's Development department rejecting loan applications prepared by OPEN and criticizing OPEN's project preparation capabilities. 5. Project Implementation 5.1 Credit Effectiveness and Project Start-up: A change of government, coinciding with the appraisal mission in April 1981, resulted in the need for a post-appraisal mission in July 1981 to reconfirm the Government's commitment to the objectives and strategy of the project. Aside from that the project got off to a good start. The Staff Appraisal Report (SAR) was completed in February 1982 and the Credit and Project agreements signed in April 1982. There was some delay in the signing of the Subsidiary Credit Agreement between the Borrower (Government of Niger) and BDRN and the credit finally became effective in December 1982. Since proceeds were still available from the Industry and Artisan Sector Employment Creation Project the timing of credit effectiveness was of little consequence. 5.2 Imglementation: 5.21 The worldwide economic downturn beginning in 1980-81 and the continued decline in global uranium markets magnified deficiencies in the banking sector and adversely affected the general investment climate. Essentially, it was BDRN's commercial trade related portfolio and not its development or term lending portfolio, which was predominantly responsible for the urgent need for  - 8 - the bank's rehabilitation and its eventual liquidation. BDRN staff's preoccupation with the commercial portfolio, insufficient margins from its development operations and OPEN's difficulty in preparing bankable projects contributed to the virtual stagnation in the development portfolio after 1983. Given BDRN's important role in project implementation, its growing. difficulties seriously jeopardized the achievement of project objectives. 5.22 IDA's support to BDRN survival was contingent upon Government/BDRN implementation of the IDA action plan (para. 4.21). Some reforms were implemented - BDRN discontinued prefinancing government investment and the Government assumed the financial liability for previous debts contracted by the bank on its behalf. On the other hand, there were long delays in reducing operating costs and improving loan recovery and BDRN's situation continued to deteriorate. Government and BDRN management lacked the political will to effect necessary cutbacks in employment and the collection of overdue loans. Bank supervision staff were not satisfied with GON and BDRN management performance. However, IDA funding continued based upon the rationale that rehabilitation measures were being adequately implemented, that the only development bank in the country could not be allowed to collapse, and to prevent a "run" on the Nigerien banks --and its impact on the banking system-- if BDRN collapsed. 5.23 In the case of the two other institutions, OPEN and CMAN, Bank supervision staff linked credit disbursement more directly with project implementation by these agencies. Technical assistance and studies aimed at performance improvement were financed by the project (para. 4.22-4.23). Strategy related studies directed at surveying official and unofficial imports, proved impractical and were abandoned. Studies to identify regional investment opportunities proved largely fruitless. The assistance to small indigenous contractors was hampered by the slowdown in construction activity. 5.24 The original Closing Date of December 31, 1987 was extended three times in order to adjust the scope and conditions of the project (para. 3.3). The Credit was finally closed on December 31, 1990. 5.3 Procurement: There were no particular procurement problems identified in the supervision reports. 5.4 Disbursement and Project Costs: Disbursements under the line of credit were significantly slower than planned owing to problems discussed above and eventually resulted in a change in project scope and a reallocation of funds (para 3.3). In all, SDR 12.2 or about 87% of project proceeds were disbursed with the final disbursement in March-April 1991. Variations in project costs between appraisal and implementation reflect the reallocation of credit proceeds rather than any divergence in actual costs. 5.41 A fixed sum contract, to be paid from IDA project funds, was awarded for the final audit needed to close out BDRN's accounts. The contract was terminated because the audit had not been completed by April 1991 and disbursements could not be continued as the project was officially closed. The audit cabinet worked until the final disbursement in April 1991, the full contract sum was not disbursed and, to date, BDRN's accounts are not closed and its real portfolio situation is unknown. 6. Plroject Results 6.1 Attainment of Objectives: The attainment of project objectives ranged from marginal to dismal.  - 9 - 6.11 Industrial Development/Investment Projects: The extent to which the objective of industrial development was attained is difficult to assess from the Bank supervision reports, probably owing to the preoccupation of supervision staff with institutional (mainly BDRN) support. About eleven small- scale enterprises were financed (SDR 0.33 million versus an initial target of SDR 2.18 million, modified to SDR 1.55 in 1987). Seven larger investments were financed (SDR 3.7 million versus an initial target of SDR 8.28 million, modified to SDR 5.5 million in 1987). Of this latter amount, about SDR 1.6 million was used to finance the inventories of the victims of Niamey's Grand Marche fire in 1982 (mainly artisans and shopkeepers). The enterprises financed are listed in Annex 1. Interviews with Bank Resident Mission staff (in June 1992) indicate that of the 11 small-scale enterprises financed, 7 were doing reasonably well. These businesses included agricultural products processing, fisheries, poultry, electronics, printing and orthopedics. The larger investments were in areas including pharmaceuticals, food processing and stationary. Excluding the financing of the inventories of the Grande Marche shopkeepers, only 2 of the other investments are performing satisfactorily. 6.12 BDRN: The credit appraisal capabilities of BDRN's development department were strengthened and data-processing of the bank's lending operations were partially computerized. However this was not sufficient to save this institution. Internal management information systems inadequate and could not provide the early warning signs needed to avoid financial difficulties, especially during an economic slow-down. Billing information was often produced a year later than when loans/interest were due, internal audit reports were late, management was weak and equipment inadequate. The technical service provided was unsuccessful in dealing with BDRN's weaknesses. Attempts to improve the bank's credit recovery operations and reduce operating costs were hampered by the lack of political commitment by the Government and BDRN senior management. In 1989, upon the recommendation of a banking sector study, the Government agreed to privatize BDRN. The move to privatize BDRN concluded with its liquidation in mid-1990 and the creation of SONIBANK, with Societe Tunisienne de Banque (STB) as the major single shareholder and manager. 6.13 SONIBANK: The current ownership of SONIBANK is: STB-25%, BCEAO-25% and GON- 20%; the 30% equity capital expected from the private sector is still to come. In all, SDR 3.85 million was spent on training and consulting services provided to BDRN. Part of the funds were used to finance STB technical assistance to SONIBANK and to help get the bank off to a healthy start. Current performance of SONIBANK is good but on a virtually riskless portfolio, based upon customer deposits, low external loans and no term lending. STB's technical assistance contract expires at the end of 1992. Nigerienne counterparts are being trained and are expected to take over the management of SONIBANK. (A major part of BDRN's office building is currently occupied by the Government mainly because high maintenance costs make the building unattractive to the private sector). 6.14 The attempt to save or restructure BDRN cost the GON about CFAF 30 billion in lost deposits, even more, if the lost deposits of the public enterprises which were forced to keep their accounts with BDRN are taken into account. In essence, the costs of keeping BDRN afloat were exorbitant and its liquidation should have taken place much earlier. 6.15 OPEN/CMAN: As discussed above (paras. 4.224.23) OPEN and CMAN were dissolved. With CMAN's liquidation, support to the leather artisan subsector was dropped from the project. Supervision reports do not elaborate on the subsequent status of this subsector. The liquidation of these institutions was justified based on insufficient commitment to reform, however alternative actions to support industrial development or the leather artisan subsector were not proposed nor attempted. The project financed OPEN office building is currently occupied by a political organization.  - 10- 6.16 Studies: Banking sector studies financed by the project supported the SAL program. The study was weak in-so-far that it concentrated on the financial structure of banks but made no judgement on sectoral policy (this may have been a fault of the study's Terms of Reference). Recommendations have not lead to any significant reforms and there is still no banking sector policy in Niger. Consultant study on incentives to stimulate industrial investment was completed in 1989. Discussions are still continuing between IDA and GON on finalizing an Investment Code. Studies were financed for the possible creation of a "societe de caution mutuelle", however no "societe" was created. A Petroleum Sector study was completed but there has been no implementation of the recommendations. 6.17 Goods and Services for the Creation of Enterprises: According to supervision reports there was modest success in the creation of new businesses by retired civil servants however no information is provided about their performance. 6.2 Impact: In the area of industrial development, the small-scale enterprises financed by the project are doing reasonably well. They however constituted less than 3 percent of project disbursements. In terms of institution building, technical assistance and studies financed by the project have not resulted in improved sectoral policies nor has a single institution supported by the project outlived the project closing date. On the other hand there may have been some social and economic destabilization caused by the project. BDRN was a poorly functioning institution even before IDA involvement and may have failed sooner without IDA intervention. In the case of OPEN and CMAN, their creation and functioning were influenced by IDA intervention; their failure may have had a negative impact of the sectors they were supposed to support. Supervision reports do not attempt to assess this impact. 7. Project Sustainability As indicated above, not a single one of the institutions which were to be developed outlived the project closing date. Studies financed have not been followed by implementation. 8. Bank Performance 8.01 Preparation was conceptually accurate in its attempt at integrating the objective of industrial development with institution strengthening. However, deficiencies in project design made subsequent project supervision by Bank staff extremely difficult. The CFAF 8 billion cost of BDRN's new office building (being built during project preparation/appraisal) was not included in the appraisal assessment of the bank's financial condition. 8.02 The shortcomings in project design made it imperative for Bank supervision missions to ensure that bold, difficult and timely corrective actions were taken by the GON and BDRN management. This necessitated close and responsive monitoring of project implementation by Bank staff in order to quickly identify and address key problem areas. Bank supervision was mainly preoccupied with BDRN rehabilitation (possibly owing to time constraints). The depth of supervision, especially in monitoring the quality of technical assistance, is difficult to assess from supervision reports. Interviews, and final results, suggest that supervision staff were unable to get the GON and BDRN support needed to salvage BDRN and the project. Demands/conditions imposed by the Bank were often too late to be realistically implemented. For example, the target of CFAF 5 billion per year of bad loan recovery set by IDA in 1984 was never achieved nor modified. The continued deterioration in BDRN's creditworthiness should have resulted in credit termination much earlier. In other areas, there was virtually no  - 11 - supervision/evaluation of the sub-projects supported by the line of credit and the technical assistance provided to the various organizations. 8.03 In the case of OPEN and CMAN, Bank supervision staff linked credit disbursement more directly with institutional development and performance. As discussed above (paras. 4.22 and 4.23) both these institutions were dissolved. IDA assisted in their creation because they were judged to be important for supporting industrial development. Their closure reflects project design deficiencies in helping build sustainable institutions, lack of government willingness to disassociate itself from the management of these institutions and probably the general scarcity of expertise within IDA/GON in developing entrepreneurship in developing countries. 9. Fmding-s and Lessons Learned 9.01 Key lessons learnt include the need to integrate the financing of investment projects and technical assistance for institutional support with the reform or introduction of critical sectoral policies. The objective of industrial development can only be adequately fulfilled in the presence of an enabling environment. In the case of BDRN, and the performance of development banks in general, the huge losses did not originate from term lending activities, but from (usually profitable) short-term lending. If funds are given to the wrong institution, working under skewed incentives, without proper accountability mechanisms, the result will be disastrous, even if the activity financed (either trade or industrial development) is by itself profitable. 9.02 In addition, project design should attempt to identify, and adequately prepare for, the downside risks to a project. Since all contingencies cannot be predicted during preparation, the responsibility of supervision staff to identify key problem areas and implement on-going course corrections in a timely manner becomes essential for achieving project goals. 9.03 Investment and technical assistance projects should incorporate some key measures by which supervision teams can evaluate project progress and the quality of technical assistance. In the case of the subject project, about 50 percent of total project costs were disbursed for technical assistance and consultancy services, yet there was virtually no critical assessment of whether, and to what extent, the objectives of this assistance were being met. A corollary to this is the need for Task Managers to devote careful and critical attention to the preparation/approval of Terms of Reference for technical assistance and consultant services. 10. Borrower Performance 10.01 The Borrower and IDA generally seemed to be in agreement on critical issues, such as the need for BDRN restructuring, private sector development, sectoral adjustment of the banking sector and an improvement in investment incentives. However the extent to which actions agreed upon were implemented and their timeliness left much to be desired. The Government's and BDRN's inability to institute sufficient measures to improve loan recovery and reduce operating costs through employment cut-backs resulted in the continued deterioration in BDRN's already critical financial condition. There were delays in the commencement of the incentive study to stimulate investment which was to have been completed by 1984 but finally began in November 1988. After some reluctance, a banking sector study was initiated in 1989. To date, banking sector policy and an investment code have not been issued. 10.02 The Borrower and other beneficiaries exhibited difficulty in complying with Agreement covenants. There were delays in obtaining audited, and unaudited, reports from CMAN, OPEN and  - 12 - BDRN: as BDRN's situation worsened, its reporting became increasingly erratic. Lack of Government commitment in instituting IDA recommendations aimed at improving the performance of CMAN and OPEN resulted in their dissolution. 11. Performance of Consultants 11.01 Supervision reports and interviews do not indicate significant problems with consultant performance in relation with their terms of reference. Consultants performed well in diagnosing weaknesses in BDRN's financial structure and recommending a rehabilitation plan. A consultant study undertaken on artisan clusters around Niamey in 1984 recommended the relocation of one such cluster from the downtown to outside Niamey. The Bank rejected this proposal indicating that financial costs were too high and that the action would disrupt a functioning, independent and profitable occupation. The consultant study on measures to stimulate investment was criticized by local organizations for being too general. The consultant held a follow-up seminar in order to elaborate on recommendations. 11.02 Interviews with Bank Resident Mission staff, and general project outcome, point to severe weaknesses in the quality of technical assistance provided to the various institutions. Ultimately, about SDR 6 million, or about 50% of total project disbursement, was spent on technical assistance and consulting services, however, there is virtually no evaluation of this component in Bank supervision reports. 12. Project Documentation and Data 12.01 Legal documents were adequate and appropriate for achieving project objectives in the key organizational and financial areas. The Appraisal Report provided a useful framework for the review of project implementation. As the project took seven years to implement, was closed over a year ago with no completion mission taking place, and all the institutions supported by the project have been dissolved, a project assessment by the Borrower will be difficult to obtain.  - 13 - ANNEX I STATUS OF LINE OF CREDIT (As of July 1990 in '000 SDR equivalent) Actual Amount CAT Subproject Disb. Type of Activity and Status 1-A Other' Investment Proiects A SUBPROJECTS (SDR 5,495 alloc. on 12/87) A-1 Soc. Nig. des Ind. Alimentaires 975.9 Food processing - Closed A-2 Gr. Marche Fire Victims 1,574.4 Inventory replacement of shopkeepers Emergency Financing A-3 Moulins du Sahel 367.4 Flour/wheat processing - In default with IFC and BDRN A-4 SONICO 326.8 Confectioner - Closed A-5 SOTRAMIL 83.6 Millet processing - Closed A-6 ENITRAP 197.6 Stationer - in arrears due to non- payment of dues by GON. A-7 Off. Nat. des Prod. Pharm. 160.4 Medicines - Well managed. TOTAL 3,686.1 1-B Small-Scale Enteririses B SUBPROJECTS (SDR 1,550 alloc. on 12/87) B-1 TOUTELEC 33.7 Electronics - well managed. B-3 Elhadj Hamidou Dourfaye 42.3 Contractor - failed B-5 Boulangerie de Doutchi 66.8 No info. B-6 Hama Amadou 9.6 Fishing-well managed (ex-civil servant) B-7 Trefiliere de Dosso 16.6 No info. B-9 Mme. Rico Angela 24.2 Poultry - good business B-10 IAON 31.0 Printing - good business B-1I Boulangerie a Kollo 51.2 No info. B-12 Soc. Nig. de Prod. Frais et 37.5 Fish & fruit imports - well managed Congoles (ex-civil servant) B-13 Cab. prive de Kinestherapie 8.2 Orthopedics - well managed ALZOUMA B-14 Boubacar Bello (garage) 5.9 No info. 327.0  - 14 - PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE No Part II has been provided by the Borrower (see Preface). PART III: STATISTICAL INFORMATION 1. Related Bank Loans and Credits Loan/Credit Year of Title Purpose Approval Status Comments Credit 809-NIR Employment creation and 1978 Completed Project objectives Industrial and institutional strengthening in 1983 only partially Artisan Sector through the provision of achieved. Project Employment technical and financial under review was a Creation Project assistance follow-up to this project. Credit 1660-NIR Adjustment to correct 1986 Reform of First Structural inefficiencies in public parastatals and the Adjustment Credit resource management and financial sector had parastatals, and private an important bearing sector promotion. on the project under review. 2. Project Timetable Item Date Planned Date Revised Date Actual Identification Preparation 11/80 Appraisal 2/82 Negotiations Board Approval 3/82 Credit Signature 4/82 Credit Effectiveness 7/82 12/82 Credit Closing 12/87 12/88-89-90 12/90 Credit Completion 4/91  - 15 - 3. Credit Disbursements (US$ '000) Bank Fiscal Year Estimated Actual Actual as % and Quarter Cumulative Cumulative of Estimated 1983 1 100 2 500 1,260 252 3 1,100 1,510 137 4 2,100 2,020 96 1984 1 2,900 2,790 96 2 4,100 2,980 73 3 5,100 3,340 65 4 6,400 3,580 56 1985 1 7,300 4,000 55 2 8,500 4,240 S0 3 9,700 4,670 48 4 10,500 5,400 51 1986 1 11,500 5,510 48 2 12,500 5,750 46 3 13,500 6,110 45 4 14,500 6,290 43 1987 1 15,100 6.450 43 2 15,700 6,700 43 3 15,900 7,010 44 4 16,000 7,450 47 1988 1 - 7,680 48 2 - 7,780 49 3 - 8,440 53 4 - 9,030 56 1989 1 - 9,170 57 2 - 9,620 60 3 - 9,900 62 4 - 10,910 68 1990 1 - 11,240 70 2 - 11,820 74 3 - 12,300 77 4 - 12,640 79 1991 1 - 13,050 82 2 - 13,370 84 3 - 14,580 91 SDR US$ Original Amount 14,000,000 16,000,000 Less Disbursed 12,233,431 14,580,000 Less Canceled 1,766,569 (2,020,000) at appraisal exchange rate  - 16 - 4. Project Costs and Financing Expenditures from Credit by Category/Component (in '000 SDR equivalents) CAT Description TPlanned Revised Actual 1. Goods and services for Investment Proiects (Part A of Project) a. Small-scale investment enterprises and labor- 2,180 1,550 327 intensive Investment projects b. Other Investment Projects 8,280 5,495 3,686 2. BDRN: Technical Assistance & Consultant services 700 3,025 3,851 (Part A of Project) 3. OPEN (PartB of Project) a. Studies and Training 440 680 715 b. Goods and services for OPEN's operations 90 285 242 c. Tech. unit to assist civil works contractors 660 1,210 1,210 4. OPEN: Goods & services for construction of new 470 499 498 facilities 5. CMAN (Part C of Project) a. Training 210 0 0 b. Common Services 580 95 95 c. Technical Assistance 260 201 200 l -- Unallocated 130 l 6. Studies (Amendment December 1987) - 505 423 7. Goods and services for enterprise creation - 455 948 (Amendment December 1987) TOTALS 14,000 14,000 12,195 5. Project Results A. Direct Benefits: Line of Credit Category Number inpact: Status and Comments Financed Small & labor 11 Generally performing quite well. Only one known failure (See intensive enterprises Annex 1) Other Enterprises 7 Except for 1 or 2, all enterprises have failed.  - 17 - B. Technical Assistance (TAl and Studies Category/Description Impact/Comments BDRN: Technical Assistance & TA not able to sufficiently strengthen BDRN. BDRN Consultant services (Part A of Project) liquidated in 1990 and SONIBANK, with reduced Government participation, created. IDA financed TA provided by STB to help SONIBANK get off to a healthy start. SONIBANK is currently well-managed. OPEN (Part B of Project) Based on recommendation of IDA funded study, OPEN liquidated in 1989. Component dropped from project. Studies and Training (a) Investment Code commission's Shifted to broader group of studies under SAL. work and price control revision (b) Survey of artisan clusters in Boukoki study completed in 1985. IDA not in agreement Niamey, etc. with study's rec. to dislodge artisans. (c) Survey of recorded and unrecorded IDA concurred with OPEN that subproject identification imports to identify SME best made through regional surveys. OPEN failed to investment opportunities. follow up on identified projects. TA used by OPEN mostly to salvage enterprises in which OPEN or GON were participants. Tech. unit to assist civil works No assessment in supervision reports. contractors Construction of new facilities New premises were constructed. Currently used by political organization. CMAN (Part C of Project) Liquidated in 1985. Support to leather artisans dropped Studies 1. Study for restructuring OPEN OPEN liquidated based on study recommesidations. 2. Industrial Incentives study Study completed in 1989 however recommendations have yet to be adopted in the form of a new Investment Code. 3. Study for the 'creation de societe Initial progress (with French assistance) on a pilot mutuelle" scheme started in 1989 however no 'societe" formed. 4. Banking sector study Completed end 1989. Recommended, inter alia, improved banking legislation and reduced state equity participation. Has not resulted, so far, in a new banking sector policy. 6. Petroleum distribution study Completed August 1989. No implementation. Goods & services for enterprise Operational in 1989. Over 100 voluntarily retired civil creation servants benefitted under this component's support of GON's 'Programme d'Appui aux Initiatives Privees et a la Creation d'Emplois (PAIPCE)". No evaluation of this component by Bank supervision missions.  - 18 - 6. Status of Covenants Credit Agreement (Between IDA and Borrower) Covenant Compliance (Section) Subject Deadline Status 3.01 a Facilitate BDRN, OPEN and CMAN to - Slow implementation carry out their obligations of corrective measures 3.01 b-e On-lending to BDRN; grants to OPEN/CMAN; - Complied with 3.01 e Accomplishment of purposes of Credit - Insufficiently implemented 3.02 Employment of consultants - IDA concurred with appointments 3.03 a-b Import and use of Goods & Services - Complied with 3.04 a OPEN & CMAN progress reports semi-annual & Not complied with quarterly after initial phases 3.04 b Maintain records to monitor progress of Complied with. Some Parts B & C. Furnish IDA with timely info. delays 3.04 d Assessment of Project execution 6 mths. of Not complied with closing date 3.05 OPEN: Furnish proposed budget Annual-by Sept Partially complied with 3.06 CMAN: Three year plan and budget Condition for CMAN dissolved due effectiveness to non-compliance 4.01 b Provide 3 additional qualified persons to Dec. 1983 Complied with OPEN 4.03 Provide externally audited financial accounts 6 mths. of end Extensive delays in of OPEN & CMAN to IDA of year compliance (OPEN) 4.05 GON & IDA to review investment promotion Initial review Not complied with. policies; GON to implement improvements by June 1984 Study completed '89. 4.06 OPEN-Equity Participation and Guarantee June 1983 Not complied with Funds: adopt statutes  - 19 - 6. Status of Covenants (cont'd.) Project Agreement (Between IDA and Banque de Developpement de la Republique du Niger) Covenant Compliance (Section) Subject Deadline Status 2.02 Presentation of investment projects to IDA Complied with - description, appraisal report, etc. 2.03 BDRN to monitor and ensure satisfactory No info. available operations of investment projects from supn. reports 2.06 BDRN to ensure its continued existence - BDRN liquidation and not sell assets agreed to by IDA 3.02 BDRN: Audit of financial accounts and 6 mths. of year end Delays in compliance submission to IDA 7. Use of Bank Resources A. Staff Inguts Stage of Project Cycle Staff Weeks Comments Through Appraisal 43.1 Some project preparation occurred while supervising Credit 809-NIR. Appraisal through 8.2 Board Approval Board Approval - through Effectiveness Supervision 81.9 Missions devoted time to sectoral reform supervision in addition to project supervision. Lending Preparation 14.8 TOTAL 148.0  - 20 - B. Supervision Missions Types of No. of Days in Perform. Problems Date Persons Field Specialization Rating 1/ m 5/82 1 7 Operations officer 6/82 1 4 Operations officer 10/82 2 4 Operations officers 2 M 2/83 1 8 Operations officer 1 7/83 1 4 Operations officer 1 12/83 (3/) 1 6 Operations officer - 10/84 1 6 Operations officer 2 F,M 4/85 1 10 Operations officer 3 F,M 2/86 1 7 Operations officer 2 M 11/86 1 7 Operations officer 2 M 4/87 (3/) - Operations officer 2 2/88 2 7 (4/) Operations officer + Consultant 2 F,M 6/88 (3/) 1 14 (4/) Operations officer - F,M 11/88 1 12 (4/) Financial Analyst 3 F,M 7/89 1 - Financial Analyst 3 F,M 11/89 (3/) 1 12 Financial Analyst - F,M 4/90 (3/) 1 6 (4/) Loan Officer - 6/90 1 Financial Analyst 3 F,M 7/91 1 Task Manager 3 F,M 1. Problem free or minor problems 2. Moderate problems 3. Major problems 2/ F. Financial (mainly related to BDRN rehabilitation) M. Managerial (minly related to OPEN and CMAN. Also BDRN after 1988) 3/ No form 590 4/ Mission devoted some time to supervision of another project.