Equatorial Guinea - Technical Assistance Project

Docrzt of The World Bank FOR OmaAL USE ONY Uqct No. 12917 PROJECT COMPLETION REPORT EQUATORIAL GUINEA TECHNICAL ASSISTANCE PROJECT (CREDIT 1489-EG) MARCH 29, 1994 Country Operations Division Occidental and Central Africa Department Africa Regional Office This document has a rstricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed witbout World Bank authorization.  II  FOR OFFICIAL USE ONLY EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) Currency Equivalent Currency Unit= CFA Francs= 100 cents* Average Exchange Rate 1984 US$1 321.5 1985 US$1 449.3 1986 US$1 346.3- 1987 US$1 300.5 1988 US$1 297.8 1989 US$1 319.0 1990 US$1 272.3 1991 US$1 282.1 1992 US$1 264.6 FISCAL YEAR January 1 - December 31 *The CFA Franc (CFAF) is tied to the French franc (FF) in the mtio of FF 1 to CFAF 50. 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.  EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHMCAL ASSISTANCE PROJECT (Credit 1489 - EG) WEIGHT AND MEASURES One Hectare (ha) = 10,000 square meters Metric Ton (mt) =2,200 pounds Metric Ton (mt) = 1,000 kg Kilometer (kin) =0,6215 miles Kilometer (km) = 1,000 meters Cubic Meter (m3) = 1,000 liters Meter (m) = 1,09 yard Square Meter (m.) = 10,76 square feet Liter (1) = 1,000 milliliters ABBREVIATIONS AND ACRONYMS USED AfDB - African Development Bank BEAC - Bank of the Central African States ESAF - Enhanced Structural Adjustment Facility FAO - Food and Agricultural Orgaization ICB - International Competitiw Bidding IDA - International Development Association IDEP - Institut Africain de Developpement Economique et du Plan ISSEA - Institution Sous-Rdgionale des Statistiques et de l'Economie Appliqu6e MALFF - Ministry of Agriculture, Livestock, Fisheries and Forestry MES - Ministry of Education and Sports MF - Ministry of Finance MEPC - Ministry of Economy, Commerce. and Finance MMH - Ministry of Mines and Hydrocarbons MPED - Ministry of Planning and Economic Development OPE - Office of Project Execution UNDP PAU - Project Administration Unit PCR - Project Completion Report PPF - Project Preparation Facility RIC - Rehabilitation Import Credit SAR - Staff Appraisal Report SAL - Structural Adjustment Lending SDR - Special Drawing Rights TFAP - Tropical Forestry Action Plan UNIGES - Unit for the Management and Promotion of State Assets UDEAC - Customs Union of the Central African States UNDP - United Nations Development Program  FOR OFFICLAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation March 29, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on the Republic of Equatorial Guinea Technical Assistance Project (Credit 1489-EG) Attached is the Project Completion Report on the Republic of Equatorial Guinea - Technical Assistance Project (Credit 1489-EG) prepared by the Africa Regional Office, with Part II prepared by the Borrower. This project was approved in April 1984 and closed in March 1993--three years after the original closing date. Its main objectives were: (i) to help the Government elaborate macroeconomic and selected sectoral strategies; and (ii) to prepare projects and improve the institutional capacities needed to implement those strategies. In the event, the project experienced many difficulties and its impact on institutional development (ID) was negligible. This outcome was in large part because governance problems created an inhospitable environment for capacity building. Other factors constraining the project's impact included (i) weak management and inadequate commitment to the project objectives by the Government; and (ii) shortcomings in both project appraisal and supervision by the Bank. Some studies financed by the project were of satisfactory quality and impact (e.g. a banking sector study laid foundations for ongoing bank liquidations). But owing to the project's negligible impact on ID and capacity building, its overall outcome is rated as unsatisfactory and its sustainability is rated as unlikely. Tlhe quality of the PCR is on the whole satisfactory. It does not however deal much with the serious systemic constraints, including the governance problems, that impinged upon project effectiveness and that continue to prevent the Bank from pursuing a follow-up operation to assist with badly-needed capacity building. Part II of the PCR gives a slightly more positive interpretation of the project's outcome than Part I. The PCR identifies as lessons the needs for (i) "early recognition [by the project's designers] of political interests in decision-making" in a volatile political environment such as Equatorial Guinea's; (ii) restraint in the ambitiousness of objectives and in the number of agencies to be served in such projects; (iii) ownership and commitment on the part of the Government; and (iv) intensive supervision on the part of the Bank. To these might be added the need for the Bank to substantially re-design if not close a project when it becomes clear either that its original objectives call for redefinition or that its existing modalities are not succeeding. No audit is planned. Attachment 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.   EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) Table of Contents Preface .......................................................................... i Evaluation Summary .................................................................... iii PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity. 1 2. Background. 1 3. Preparation and Appraisal. 2 4. Project Objectives and Description. 2 5. Project Cost and Financing. 4 6. Project Design and Organization. 4 7. Project Implementation and Results. 5 8. Impact and Sustainability of the Project. 9 9. IDA's Performance. 10 10. Borrower Performance .11 11. Consulting Services .12 12. Project Documentation and Data .12 13. Lessons Learned .12 PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE ..... ........... 14 PART III: STATISTICAL INFORMATION Annexes 1. Related Bank Credits .31 2. Project Timetable .32 3. Cumulative Estimate and Actual Disbursements .33 4. Project Cost and Financing .34 5. Allocation of Proceeds .35 6. Use of Bank Resources .36 7. Status of Credit Covenants .37   - j - EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) PREFACE This is the Project Completion Report (PCR) for the Technical Assistance Project, for which Credit 1489-EG in the amount of SDR5.7 million (US$6 million equivalent) was made to the Republic of Equatorial Guinea. The project was designed to help the government elaborate key elements of a medium-term development strategy and investment program and improve the institutional framework necessary to implement them. Assistance would be provided to the government to prepare specific development projects and create conditions conducive to private sector investments in the key growth sectors of agriculture, forestry, and mining. The project would also help the government elaborate a coherent, realistic development strategy in the education sector. The credit was approved on May 31, 1984, signed on June 27, 1984 and became effective on December 21, 1984. Delays in hiring the Administrative Officer for the project and in government contribution to the Project Accounts led to the delays in declaring the Credit effective. It was closed on March 31, 1993, three years after the original Closing Date. The last disbursement was made on May 14, 1993. This PCR was prepared by the Country Operations Division 1, Occidental and Central Africa Department (AF1), Africa Regional Office (Preface, Evaluation Summary, Parts I and III), and the Borrower (Part II). Preparation of the PCR started in April 1993 and is based inter alia, on the President Report, the Development Credit Agreement, Project Supervision Reports, correspondence between the Bank and the Borrower, interviews of Bank staff involved in project implementation and internal Bank memoranda.   - iii - EVALUATION SUMMARY 1.01 The Technical Assistance Project (TA) aimed at providing government the assistance required to address the major constraints to developing a rational medium-term development strategy. The project's principal objectives were to: (i) elaborate key elements of a medium-term development strategy and investment program and improve the institutional framework necessary to implement them; (ii) prepare specific development projects and assist with technical discussion and negotiations; (iii) help create conditions conducive to private sector investments in the key growth sectors of agriculture, forestry, and mining; and (iv) elaborate a coherent, realistic development strategy for the education sector (paras. 4.014.06, Part 1). RSUL1S 2.01 Lack of coordination of project activities both at government and technical levels, poor aid coordination and the high turnover rate in the position of the principal expatriate adviser-the macroeconomist, led to severe difficulties in project execution. The translation of project objectives into policies and the formulation of a rational medium-term development strategy for the country proved to be elusive. Part of the problem was due to the inadequacy of the country's institutions and weak public administration. Government failure to provide strong leadership to coordinate project activities, lack of government ownership of the project's objectives, ineffective technical assistance are the underlying causes for the project's failure to deliver on its key objective. 2.02 Although the project was declared effective within three months after signing, the project never effectively got off the ground for at least three years. Recruitment of consultants both long- and short-term proved to be more difficult than anticipated due to the weak administrative capacity of the government, the ineffectiveness of the PMU's local staff, insufficient knowledge of IDA's guidelines for the selection of consultants, procurement and disbursement procedures, and the country's poor international image which made it difficult to attract high-caliber expatriate staff. In addition, execution of the training component only began four years into project implementation and the lack of a coherent training program from the start meant that no capacity-building took place, except for a few notable exceptions. Finally, IDA's failure to supervise the project for the first three years of implementation aggravated an already difficult situation. 2.03 Following IDA's decision to intensify project execution beginning in 1987, the TA supported activities in the areas of forestry, the banking sector, administrative reform, the oil and agriculture sectors in spite of all the difficulties encountered in project execution. The government legally set up an institution to liquidate the debts of the two bankrupt banks, UNIGES. This has fostered growing confidence in the banking sector and allowed government to negotiate an ESAF with the IMF. The diagnostic study which was carried out in coordination with French technical assistance has laid the groundwrk for institutional reform in the core Ministry of Economy and Finance and will prove useful in the formulation of the proposed Economic Management Project. 2.04 T"w of the five resident advisers recruited under the project-the second macroeconomist and the forestry specialists provided the country with valuable assistance in preparing the then proposed structural adjustment program and in designing a medium- and long-term strategy for the forestry sub-sector as well as the preparation of the Tropical Forestry Action Plan (TFAP). The agriculture specialist mostly substituted for local staff in the mainland office of the Ministry of Agriculture although he provided the major input which led to the development of the ongoing IDA-financed Export Crops and Diversification project. The education planner helped improve the collection of statistics for the sector but did not provide a positive contribution in the coordination of sector activities with other donors, particularly the major donor, the Spanish Cooperation. The mining specialist did not provide any input to the medium-term development strategy.  - iv - 2.05 Short-term consultants proved to be the most effective and the successes which the TA can boast of are largely the results of their efforts. Short-term consultants were responsible for the banking sector study which led to the banking refbrm, the diagnostic study, which will pave the way for institutional reform and the oil and gas study, which analyzes the alternative uses of gas. This became an issue when the country began to exploit its oil resources in January 1990. Short-term consultants also carried out a number of training programs in the country, including the very successful seminar on project formulation and preparation. 2.06 Audits. IDA staff stressed the importance of audit compliance reporting to the Authorities upon the start-up of project supervision which began in 1987. The project accounting system was initially very weak, there were no internal financial controls in place and the first audit of project accounts was more than three years late. Nonetheless, once financial control procedures were put in place, a rigorous accounting system established and the PMU's bookkeeper trained to become an accountant, the project's auditors no longer had to set up the accounts before proceeding with the audits. By 1988, they were finally able to certify the accounts and make practical recommendations for strengthening the accounting system. After 1988, subsequent audits were largely submitted on time and were satisfactory to IDA (paras. 7.01 - 7.09, and 7.12- 7.15 Part 1). F1NDINGS AND LESSONS LEARNED 3.01 Although the TA provided the Government with the capability of formulating a medium-term development strategy and investment program and improving the institutional framework necessary to implement these, the project failed in achieving these goals. The low impact of the project was due to several factors-notably, the inability of the public administration to translate this assistance into the formulation of strategies and the lack of government commitment and ownership of the objectives of the project. This commitment could have been obtained by fostering the creation of a coordinating committee made up of the heads of the department of the sectoral ministries both at the political and technical levels. However, government's lack of understanding of the efforts needed to attain the goals set forth under the TA and the overwhelming influence of politically-motivated decision-making proved to be detrimental for the realization of project objectives. At the same time, project objectives must be carefully measured against institutional capacity for implementation, and local management must be fostered in order to ensure that institution-building takes place. The project was too complex for a country for such weak administrative and management capacity. Finally, arrangements should be made early on in project design to ensure that adequate accounting systems and audit procedures are set up to ensure transparency in financial management {(paras. 14 (a)-(e)}.  EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) PARW I: PROJECT REVIIEW FROM TME BANK'S PERSPECI1E 1. PROJECT IDENTrY * Project Name: Technical Assistance Project * Credit No.: 1489-EG * Amount: SDR 5.7 million (US$6.0 million equivalent) * RVP Unit: Africa Region * Country: Equatorial Guinea * Sector: Technical Assistance * Subsectors: Agriculture, Forestry, Mining and Education 2. BACKGROUND 2.01. Introduction. Equatorial Guinea is a small and sparsely populated country of 28,051km2, with a population of 350,000. The country is situated on the southern corner of the Gulf of Guinea and consists of two parts: Continental Guinea and Insular Guinea. Insular Guinea comprises five islands: Bioko, where the capital, Malabo, is located, and fbur smaller islands: Corisco, Grand Elobey, Little Elobey and Annobon. 2.02 Following its Independence from Spain in 1968, the country suffered fbr eleven years under one of the worst dictatorships in the world. When the present Government came to power in late 1979, the economy was devastated and a large part of the population either had been killed or fled the country. The rest of the population was surviving at a subsistence level; cocoa, coffee and timber production and exports had fallen to only a fraction of pre-Independence levels. Infrastructure was dilapidated. The country was virtually cut off from the outside world with unreliable telecommunications links. The access road to the port of Bata, the major city in the continental region, was near collapse. Electricity and water were in infrequent supply due in part to even more irregular billing of consumers. Transport was in many parts of the country virtually nonexistent. A truck fleet that had been brought in with foreign aid languished in 1984 on the roadside for lack of spare parts, maintenance, and repair. Although in 1968 Equatorial Guinea had one of the highest per- capita incomes in sub-Saharan Africa, it now is classified as one of the least developed countries. 2.03 The Government embarked on its first economic reconstruction program which covered the period 1980-1984 and which aimed at revitalizing domestic food production, stimulating exports of cash crops, and rehabilitating basic infrastructure. Macroeconomic policies during this period were not conducive to establishing sustained growth. The lack of a well-defined, centralized system to control expenditures, and the haphazard and intermittent collection of revenues led to budget deficits averaging about 50 percent of budgetary revenues during the period 1980-1984, financed through money creation and a rapid accumulation of external debt. As a result, the country's debt burden increased very rapidly and became huge. The government's rehabilitation and development efforts during this period were also misdirected, principally because investment evaluation and programming were inexistent. The inappropriate macroeconomic framework and the lack of sectoral strategies provided donors with little indication of priority areas and  government's aid coordination was extremely weak. In addition, an acute shortage of skilled administrators severely hampered the government's efforts. In view of these difficulties, the Govermnent sollicited the Bank's help in developing a technical assistance program to elaborate a medium-term development strategy and to strengthen the government's capacity to implement it. The first element of this program was an eighteen-month stabilization program beginning in January 1985 with entry into the Franc Zone. The stabilization program, supported by an IMF Stand-by aimed at reducing EQG's balance of payments and budgetary deficits through an expansion of agricultural exports, expenditure restraint and budgetary control. This program was complemented by a number of additional macroeconomic and sectoral reforms, to be supported by the Technical Assistance Project, as well as key rehabilitation efforts to be supported by the Rehabilitation Import Credit (RIC). 2.04 Overall economic performance deteriorated during 1985-86 with the end result that the IMF performance criteria could not be met. There were several contributing factors. Upon the devaluation of the local currency, the Epkwele, by 82 percent upon the country's entry into the Franc Zone, the Government imposed a special tax on deposits, thereby severely limiting the liquidity of many private sector companies. Weaknesses in the cocoa sector became more apparent with the new currency. Cocoa producers who had access to hard currency in the past could no longer benefit from the differential between the official and black market exchange rates or procure imported inputs. In 1987, macroeconomic perfbrmance began to improve and the Government negotiated a PFP for the period 1988-1991 and a first year structural adjustment facility (SAF) program with IMF assistance in July 1988. However, performance under this program also fell far short of expectations. In 1990-1991, the Government took further measures to bring the structural program back on track and to consolidate the reforms and strengthen the economy. The refbrms consisted mainly of efforts to strengthen the productive sector, restructure some parastatal enterprises and to diversify economic activity and the exploitation of the country's oil resources. To this end, the Govermment signed a contract with a U.S. oil company to bring EQG's known oil resources into production. The development of the oil sector is a new factor in EQG's development strategy. Total oil revenues expected to accrue to the Government from 1992 to 1994 will be about US$12 million, and some US$60 million on a cumulative basis during the period 1995-2000. 2.05 Progress achieved in 1990-1991 in (i) strengthening the management and perfbrmance of key public utilities; (ii) liquidating the twv insolvent banks; (iii) adopting a budget for 1992, which was consistent with the targets and objectives of the adjustment program, demonstrated government's resolve to push fbrward with their reform program. In addition, Parliament's approval of a new investment law, the coming on stream of oil production and the completion of negotiations with debtors on CFAF 935 million of unreimbursed bank loans led the IMF to support the government's 1993-1995 economic reform program with an IMF Enhanced Structural Adjustment Facility (ESAF) program of SDR 12.9 million. The accompanying PFP was approved by the Executive Boards of the IMF and IBRD in January/February 1993. 3. PREPARATION AND APPRAISAL 3.01 The project was first identified in February 1980. Government presented its initial request for IDA assistance at an April 1982 donor's conference in Geneva. The project was appraised in May-June 1983 and a brief post-appraisal followed in July 1983. The primary objectives of the post-appraisal mission were to review with the Government the specific terms of reference for each of the proposed experts and the organization of the project in order to ensure that the proposed technical assistance package vwuld not duplicate efforts being made by other donors. 4. PRoJECr OBJECTIvES AND DESCRIPTION 4.01 Project Objectives. The objectives of the project were to assist the Government to: (i) elaborate key elements of a medium-term development strategy and investment program and improve the institutional framevwork necessary to implement them; (ii) prepare specific development projects and assist with technical  - 3 - discussion and negotiations; (iii) help create conditions conducive to private sector investments in the key growth sectors of agriculture, forestry, and mining; and (iv) elaborate a coherent, realistic development strategy for the education sector. 4.02 Project Components. The project as appraised consisted of: (a) five long-term resident specialists in the sectors of economic planning, agriculture, forestry, mining, and education; (b) short-term consultants, including an architect/specialist in school construction, a training specialist and a public debt specialist; (c) training and on-the-job expertise, both locally and abroad, for EQG nationals; (d) housing, vehicles, and associated operating costs for the resident specialists; (e) the services of a locally recruited Administrative Officer; (f) office equipment and supplies, local support staff, and other operating costs for project administration; and (g) studies, short-term consultants' services, and other activities to be identified during project implementation. 4.03 The following five resident specialists were expected to be recruited: (a) a Macroeconomist-Planner- Economic Development Adviser for the Ministry of Planning and Economic Development (MPED). In addition to his advisory role, he would assist in the elabora-tion of the key elements of a development strategy and an investment program for the country as the project's Chief Technical Adviser;(b) an Agricultural Planner-Agriculturl Projects Specialist for the Ministry of Agriculture, Livestock, and Rural Development (MALFF) to assist in supervising the Ministry's day-to-day activities on the mainland, to help in identifying and reviewing agricultural projects on the mainland and to provide inputs covering agricultural development on the mainland for use in the national development strategy and investment program;(c) a Forestry Specialist for the Ministry of Water, Forestry, and Reforestation, to advise the Ministry on reorganization of the forest service, preparation of sector plans, financing of sector investment projects and provide inputs covering the development of the forestry sector for use in the national development strategy;(d) a Mining Specialist for the Ministry of Mines and Hydrocarbons (MMH), to assist in the surveys of the country's mineral resources and in the organization of a technical and legal framework for attracting new investmnents and provide inputs on the sector for use in the national development strategy;and (e) an Educational Planner for the Ministry of Education and Sports (MES), to advise on sectoral development, the elaboration of a long-term sectoral strategy and plan, and the preparation of major projects. 4.04 The services of three short-term consultants were to be provided under the project: (i) an Architect/specialist in school construction attached to the MES, to assist in the design and construction of a prototype model of a prima-y school; (ii) a Itaining specialist to assist the Government in the design of training programs for the counterparts of the resident specialists; (iii) a Public debt specialist attached to the Ministry of Finance (MF), to make an inventory of the country's public debt, and to help set up an institutional framework for debt service operations. 4.05 Training. Given the low level of training of EQG's civil service, the skill enhancement activities of the project were considered a high priority. The following arrangements were expected to ensure that opportunities for raising local staff capabilities wvuld not be missed: (i) wvrk training programs to be prepared by each resident adviser in agreement with the relevant minister including an assessment of progress made and future needs; (ii) the design of the on-the-job training programs as well as other training programs to be prepared by the resident advisers and the Government with the assistance of the training specialist. Sufficient funds were allocated to this component to allow for up to four nationals in each of the five recipient ministries to receive such training during the project implementation period. Care would be taken not to aggravate the already acute shortage of trained staff in the ministries by limiting training attendance to one participant at any given time. The qualifications and experience of all training candidates and the details of the proposed training programs would be submitted to IDA for prior approval (Section 3.04 of Agreement). 4.06 Housing and Vehicles forthe Resident Specialists. At the time of project appraisal, acceptable living quarters for foreign advisers were virtually unavailable. Many multilateral and bilateral agencies recognized that the task of recruiting high caliber experts to the country would be even more difficult were adequate  housing not provided. As a result, the project provided funding for the construction and maintenance of houses for the resident specialists. 4.07 Other. In addition, the project included financing the recruitment of an Equato-Guinean Administrative Officer who muld be primarily responsible fur maintaining project accounts, carrying out procurement, preparing withdrawal applications and quarterly reports on project implementation for the government and IDA. An amount of US$1.0 million was reserved for studies and further short-term consultants' services. In addition, the credit included financing of a portion of the project's operating costs. All other local staff were to be financed with the counterpart funds. 5. PROJECT COST AND FtNANCING 5.01 Total project costs were estimated at US$6.3 million equivalent, of which about US$5.0 million in foreign costs (79%) and US$1.3 million in local costs (21%). In view of the country's extreme poverty and extraordinary balance of payments problems, it was recommended that IDA finance 95% of total costs (US$6.0 million equivalent), and the government the remaining 5% (US$0.3 million equivalent). 5.02 Procurement. The Bank's procurement guidelines were to be applied in the hiring of consultants and purchase of goods and services. Local competitive bidding was envisaged fur individual equipment contracts amounting to a total of US$263,000 equivalent. 5.03 Disbursements. The credit was expected to be disbursed over six years from 1985 to mid-1991, in line with then applicable disbursement profiles. A Special Account of US$300,000 equivalent, corresponding to three months of eligible expenditures was established as a result of the difficult financial situation of the Government, which was not in a position to prefinance expenditures eligible for reimbursement from the credit proceeds. A Project Account fur the counterpart funds was established in a local commercial bank acceptable to IDA. 6. PROJECr DESIGN AND ORGANIZATION 6.01 Weak institutions, the shortage of technical capacity and the severe scarcity of qualified national stafF in the administration were the major constraints facing the country at project appraisal. Against this background, the scope of the project proved to be ambitious given the country's poor institutional base and poorly trained administration. Nonetheless, IDA and the Government felt that the project scope was justified in order to meet EQG's development priorities, alleviate the dearth of appropriately qualified national staff and address EQG's urgent economic management needs. Consequently, the emphasis was put on the fbllowing three major objectives: (i) to develop a medium-term strategy; (ii) to create an investment program and establish an improved climate fur both public and private investment; and (iii) to develop on-the-job training of key sector staff. 6.02 The project was to be implemented over a period of five and half years. Overall coordination would rest with the MPED. The Macroeconomist-Planner-Economic Development Adviser, in his capacity as Chief Technical Adviser, reporting to the MPED and assisted by the Administrative Officer, mould be responsible for managing and facilitating the implementation and follow-up of the various project components. The recruitment of a national Administrative Officer to facilitate the selection of experts and their settling-in was a condition of Credit Effectiveness. 6.03 To ensure the timely and efficient start-up of the project, a Project Preparation Facility (PPF) was approved in May 1984 in the amount of US$650,000 with the purpose of financing: (a) initial salary payments for the five resident specialists; (b) six months' salary fur the public debt specialist; (c) initial salary payments of the Administrative Officer; (d) subsistence costs for the resident specialists, while construction of project houses was being completed, and fur the public debt consultant; (e) initial expenditures for construction of  - 5 - houses; and (f) the purchase of six vehicles including six months of their operating costs. Prior to Credit effectiveness (December 1984), no funds were disbursed against the PPF advance. As a result the PPF was cancelled upon Credit effectiveness (Section 2.02 (b) of the Credit Agreement). 7. PROJECr IMPLEMENTATION AND RESULTS 7.01 Background. Project implementation started in an inhospitable institutional environment where decision-making was frequently influenced by political motives. Coordination of development policies at government level was non-existent and there was no clear vision on how to move the country towards the realization of its development objectives. The administration was not prepared to absorb the complexity of the technical assistance being provided under the project nor could it cope with the sheer amount of administrative tasks involved in getting the project executed. The establishment of a Project Management Unit (PMU) to assist the administration in project execution did not yield expected results. PMU staff were not well-trained and were not familiar with IDA procedures with respect to the recruitment of consultants, disbursement and procurement. Government's failure to make the initial deposit of US$15,000 under the counterpart funds led to further delays in getting the project off to an adequate start. In addition, the unreliable communications links to the outside world only compounded the initial problems met at the beginning of project execution. As a result, recruitment of international consultants both short- and long-term was seriously delayed by these problems and by the PMU's lack of experience in this type of work. Moreover, despite IDA's assistance in helping the government identify potential consultants, it was difficult to attract high caliber experts to the country due to its poor international image and the difficult living environment in the country, including health risks associated with endemic malaria. As a result, there were always significant time lags in the recruitment of consultants. 7.02 Logistics. On the logistics side, severe housing shortages, frequent water and power failures, and poor quality of health services rendered the expatriate specialists' initial installation and subsequent daily life a strenuous experience to the detriment of the project. Material problems, such as old and crowded offices, lacking the most basic equipment, were further constraints. The situation improved somewhat after the project moved to new offices on the grounds of the Ministry of Plan. Still, after five years of implementation, only three resident specialists (agriculture, mining, education) from the total of five, were on board. Finally, during the first three years of project implementation, the resident experts had to make bi-monthly trips to Douala, Cameroon to purchase food items and other consumer goods not available in EQG. This created major disruptions in the execution of the respective experts' work program, and was a disincentive to undertaking activities with a longer-term horizon. 7.03 Project Staff. Problems with local staff also hampered project execution. The first Administrative Officer, who was appointed in December 1984, was not equipped to handle his responsibilities and his presence throughout the first phase of project implementation (1984-1987) severely affected the project. Weak management, poorly trained staff and lack of transparency in handling the project accounts proved to be major problems during his tenure (paras. 7.12, 7.13). He frequently failed to provide administrative support to the resident experts, adopted a confrontational attitude towards them and was slow in responding to the experts' needs. He was removed upon IDA's recommendations in 1988 when he was replaced by another Equato- Guinean national. Although this new administrator played an important role in creating a better working environment for project consultants and staff, he was not very effective in coordinating project activities and frequently proved reluctant to take decisions. He often called upon the Task Manager to make decisions on his behalf. 7.04 Project Coordination. Although the project became effective in December 1984, the first IDA supervision mission did not take place until February 1987. Throughout that period, the project had been left to navigate on its own with long-distance supervision from headquarters. This was erratic at best given the difficult communications links with EQG. Until December 1987, when telex links were installed, the only form of communication was through cables and occasionally through operator-assisted telephone calls. A  - 6 - reliable telephone system was installed in December 1988, significantly improving communications with the country. Moreover, the geographical distribution of project activities made it very difficult to supervise the project. Three of the five experts-mining, forestry and agriculture, were assigned to the mainland while the macroeconomist and education experts were located in Malabo. The unreliable air transport links between the island and the mainland created insurmountable difficulties with respect to providing funds to the experts to allow them to carry on with their tasks and to coordinate their activities with the relevant sectoral ministries on the island and with the key technical advisor. 7.05 IDAs prolonged absence from directly supervising the project meant that no adequate systems and procedures were put in place to monitor project activities and ensure that actions were taken to facilitate project implementation, at least during the first phase of project execution. Throughout that period, the PMU was influenced by its environment and mirrored some of the worse aspects of the Equato-Guinean administration. In the absence of adequate financial control systems and in view of government delay in replenishing the counterpart funds, Special Account funds were used to finance ineligible expenditures (para. 7.12). Moreover, the lack of coordination of project activities at a political and technical level and the lack of leadership on the part of the PMU further exacerbated the difficulties encountered in project execution. Government's failure to set up a coordinating body made up of all sectoral ministers involved in the project as recommended by IDA created further obstacles to smooth implementation. This was a reflection of the lack of consensus which existed at government level over how to achieve government policies. Finally, the request made by project beneficiaries to allocate a portion of Credit funds to each sectoral ministry underscores government lack of ownership and internalization of project objectives. 7.06 In 1987, IDA fielded its first supervision mission to EQG. This first mission discovered problems serious enough to merit cancellation or suspension of the project. However, IDA took the decision to continue with project implementation under the understanding that adequate staff resources would be allocated to allow for intensive supervision at least until most of the bottlenecks had been cleared. This decision was taken given the fact that the TA was the only vehicle available to assist Government with economic management and help with the identification of a new pipeline of development projects. IDA's first step was to ensure the carrying out of the first audit of project accounts and to strengthen the PMU's capacity to implement the project adequately and efficiently by placing emphasis on the administration of the project between 1987 and 1989. A procedures manual was prepared by IDA staff with the auditors' input, accounts were set up and PMU staff were trained in IDA procedures for disbursement, procurement and selection of consultants. 7.07 Training. Weak project management further impacted negatively on the implementation of the training component. The training specialist was never recruited and the administration did not have the capacity to formulate a coherent training program on its own. In July 1989, both the Government and IDA took the decision to define a limited training prograAn based on the administration's most urgent training needs. An IDA mission met with government agencies and several donors interested in supporting training activities. The mission fbcused on perceived short-term training needs in planning, statistics, and project monitoring in the ministries of Finance, Planning, Health, Public Works, Water Resources and Forests, Education, and Agriculture. It was agreed that training mwuld be provided either in the country, through organized seminars and courses, or in the sub-region. Instructors would be invited from abroad or would be recruited among the technical experts residing in EQG. IDA-financed resident advisers and IDA staff on mission to EQG were also invited to give mini-seminars in their areas of expertise. A training budget of about US$280,000 equivalent was agreed upon and training seminars were organized locally. In addition, the project financed some short-term and long-term training abroad for Equato-Guineans. The project also financed the training of the PMU's bookkeeper as an accountant. 7.08 Long-Term Resident Experts. Overall, the long-term resident advisers did not perform as expected. The first macroeconomist left after one year and Government requested that he not be replaced given the presence of a UNDP-financed macroeconomist in the Ministry of Plan. However, in 1989, the government requested that IDA finance a macroeconomist with TA funds to help in the preparation of a structural  adjustment program to be financed by IDA. Although he was very effective and began the task of coordinating project activities, he was forced to resign after one year. The last macroeconomist was helpful in advising the government in the liquidation of the tvu banks but could not adapt to the local environment. When he left in 1991, he was not replaced. This high turnover in this key advisory position deprived the project of leadership and vision. As a result, the fundamental objective of the project which was to deliver a medium-term development strategy for the country was not realized. 7.09 The performance of the sectoral advisers was generally weak. Most of the advisers did not deliver on their terms of reference. Implementation of the forestry sector component did not get off the ground until 1989 due to delays in the recruitment of a suitable forestry specialist through FAO to replace the one who had left the country in 1987 due to ill health. Nonetheless, the specialist who arrived in 1989 managed to assist the country in the design of a medium- and long-term strategy for the forestry sub-sector and preparation of the Tropical Forestry Action Plan (TFAP). The agriculture adviser provided the input for the agricultural sector strategy which was to be incorporated in the proposed structural adjustment programn and contributed to the development of the Export Crops and Diversification project being financed by IDA. However, he spent most of his fbur years in the country substituting for ministry staff, particularly on the mainland. The mining adviser did not provide any input to the medium-term development strategy for the country. He was relieved of his duties upon IDA's recommendations. The education planner prepared a strategy for the sector which was not acceptable to IDA. More importantly, this adviser was not helpful in assisting the most important donors in the sector-the Spanish Cooperation, UNESCO and UNDP-by failing to collaborate with them in the formulation of the strategy. The Spanish Cooperation ended up completing the strategy which was presented at the donors' conference in the sector. IDA frequently expressed concern over her performance but MES refused to take action. Finally, IDA informed Government in March 1990 that the project would no longer finance the adviser's contract. The government, in turn, refused to recruit a new specialist experienced in sectoral management and sectoral economics and finance. 7.10 Shoi1-Term Consultants. A Public Debt consultant was recruited to help the government to study the pertinent legislation and procedures fur contracting new debt, both domestic and foreign. The consultant was assigned to the Ministry of Finance (MOF), where progress was made in inter-agency communications on debt issues and a Debt Management Unit was created within MOF, the Caja Autonoma de Amortizacion. In addition, the consultant helped to set up a computerized recording and monitoring system. This system was to help not only in recording debt already contracted but also to formulate a future borrowing policy to reduce the debt-service ratio. Consultants were hired to review the restructuring of the banking sector and support the liquidation of the two banks. A Unit for the Management and Promotion of State Assets (UNIGES), created in March 1991, was legally set-up and procedures were established, including a list of debtors. UNIGES prepared contracts fur each debtor and launched an infurmation campaign of its operations by radio. The government was committed, under the action plan established when the PPF was negotiated, to have the small depositors' debt portfblio liquidated by end-1993. However, approximately 90% of the debt owed to UNIGES was held by powerful interests in the country. As of June 1992, UNIGES completed negotiations regarding some CFAF 880 million of unreimbursed bank loans. It is committed to complete negotiations for the recovery of CFAF 920 million by end-1993. 7.11 Procurement Issues. Procurement-related problems also slowed down project implementation and was one major focus of IDA's supervision efforts. The government had no comprehensive framevwork for conducting public procurement. Local competitive bidding was envisaged for individual equipment contracts amounting to a total of US$263,000 equivalent but did not draw an adequate response, because equipment suppliers were not represented in the country. Therefure, procurement of these items was carried out through international shopping on the basis of at least three quotations from qualified suppliers in at least three different countries. The contracts fur civil service wrks and protective enclosures (US$410,000) equivalent were awarded on the basis of local competitive bidding. The absence of firm supervision by IDA staff early in project implementation left the first Administrative Officer 1984-1988 (de facto project manager) to resort almost exclusively to sole-sourcing in awarding service contracts. This was clearly contrary to IDA's  - 8 - procurement guidelines, which only allows for sole-sourcing under special conditions. Procurement showed some improvement during the last years of project implementation as 1DA increased supervision on this matter. Actual progress in the procurement process was only seen after the establishment of accounting and financial control procedures. 7.12 Disbunsements. Commitments and disbursements fell severely behind schedule primarily because of the government's unfamiliarity with IDA procedures. Disbursements under the Credit did not take place for almost three years after project approval. As of December 31, 1987, US$4.7 million remained undisbursed. Given the irregularities identified in the first audit of project accounts, IDA delayed replenishment of the Special Account until an agreement was reached with Government with respect to the reimbursement of funds used for ineligible expenditures into the Special Account. IDA staff had to frequently reconcile the use of funds under both the Special Account and counterpart funds accounts in order to ensure that government reimbursed funds to the Special Account when required. The appointment of the new Administrative Officer and the introduction of financial control procedures resulted in a marked improvement in this area. After a slowdown in disbursements in 1990 and upon government's satisfactory reconciliation of the Special Account with the initial deposit, disbursements rapidly accelerated in 1991-1992. The last disbursement was made on May 14, 1993 and the Credit was closed on March 31, 1993. 7.13 Audit Reports. Although the project was declared effective in 1984, the first audit report was not carried out until 1987. The audits listed a number of irregularities in project implemeitation: (i) bad accounting practices -no accounting system to differentiate between expenses under the Project Account and the Special Account, checks drawn against both accounts were indiscriminately registered in the same ledger-; (ii) misappropriation and misuse of project funds-; (iii) ineligible expenditures -some CFAF funds were used from the Special Account to finance ineligible expenditures which should have been financed out of local counterpart funds-; (iv) poor administration -project receipts were kept in disarray and withdrawal applications often had errors such as claiming reimbursement for the same expenses twice in the same withdrawal application; experts had to finance local expenses related to the project out of their own pockets-; and (v) non-payrment of counterpart funds. Given the situation, IDA took steps beginning in 1987 to correct these irregularities. Notable progress was made and improvement in the project accounting system led to the external auditors certifying project accounts on a regular basis from 1988 onwards. 7.14 Studies. The project financed a number of key studies in the last years of project execution. The study of Cost of Lwmber Production as Logs and as Saw iibod comprised the analysis and assessment of different components of the cost of lumber production under various conditions in which forestry operations are carried out in EQG. The study of Alternative Uses of Natural Gas included as its main objective an exploration of alternative uses of natural gas and their priorities in terms of economic viability. The study also provided for a review of the technical, economic, and financial viability of other uses for natural gas, including potential markets for natural gas in neighboring countries. The Banking Sector Study lay the groundwork for the liquidation of the two bankrupt banks and the recovery of a substantial amount of bad debts. This was a major factor in restoring some level of confidence in the banking sector. The Diagnostic Study was carried out, in collaboration with the French Cooperation, to examine and define the organization and duties of the Ministry of Economy, Commerce, and Finance (MEPC), including its efficiency in carrying out its mandate of policy formulation and economic and financial management. Some recommendations were included in the PFP. The government is planning its implementation over 1993-95. A LAnd 7nure Study was carried out and its recommendations on legal aspects regarding individual property rights will be implemented over 1993-95. 7.15 Donor Coordinaion. The TA was not intended to be a vehicle for improving aid coordination in EQG despite the presence of a number of donors duplicating efforts in the same areas.This proved to have negative consequences for the project. For exarnple, both IDA and UNDP financed a macroeconomist at the Ministry of Plan. The terms of reference of both these experts overlapped as both were responsible, among other tasks, to help the country put together a public investment program and serve as key technical adviser.  - 9 - Given the distinct approaches adopted by the various experts which occupied these two positions over the project's life, this overlapping of duties created unnecessary conflict and friction which were aggravated by the lack of intervention on the part of the Government. Moreover, the sectoral experts' lack of coordination with the other major donors such as the Spanish Cooperation, the French Cooperation and UNESCO frequently led to interruptions in project implementation thus compromising the medium- to long-tern sustainability of these activities. More success was achieved, however, in coordinating with the policy reform initiatives supported by the IMF. IDA staff participated in all IMF missions during the implementation of the TA. 7.16 Other. Periodical repairs had to be made to the houses due to their poor design (inadequate drainage) which did not take into account the heavy rainfall and resulting humidity of the country's climate. Eight vehicles were financed under the project for the use of the specialists, short-term consultants and the PMU. However, they were not effectively maintained and operated, the use of project vehicles was not adequately supervised, and they were often commandeered by higher level officials while the resident adviser stood haplessly by. This often prevented the resident advisers from perfbrming their duties, particularly in the case of the forestry and agriculture specialists who frequently had to travel to the interior. The computer equipment (six units) financed under the credit was used for the training component and were installed in a training unit within the PMU. In addition, computer equipment was financed to support the Caja Autonoma and UNIGES. 7.17 The project was scheduled to be completed by March 1990 but project closing was postponed four times, from the original Closing Date (March 31, 1990) to March 31, 1993 and the implementation period was close to eight years. 8. IMPAcr AND SUSTAINABILrrY OF THE PROJEcr 8.01 The overall impact of the project was below expectations. The project's objectives were predicated on what proved to be an overly optimistic assessment of EQG's capacity to overcome its severe institutional weaknesses and scarcity of skilled technical and administrative staff. When the project was designed, insufficient attention was paid to these factors and to the sheer physical difficulties of supervising such a far- reaching and complex project over geographical boundaries. More importantly, the lack of a coherent political agenda foreshadowed the difficulties encountered in attempting to coordinate project activities. The Government failed to internalize the project's objectives (para. 4.01) and primarily viewed the project as a source of funds to finance activities not included in its annual budget. Moreover, the lack of internal coordination in the execution of the project is manifest of the government's lack of ownership of the TA's major objectives which consisted in providing a rational medium-term development strategy for the country. Political interests in governing decision-making led to the Government not taking action to remove resident experts even in the face of flagrant bad performance and conflict of interest (para. 7.09). Political interference in the project robbed it of the clear focus required to move it towards achieving its goals. It also served to demotivate both local and foreign staff as there was no rationale to decision-making. The government's refusal to take action to ensure better coordination of project activities is a case in point. IDA also showed a certain amount of ambilavence with respect to these problems given its initial lack of interest in the project in the first three years of project execution and its own lack of coordination of project follow-up at its own level (para 9.02). 8.02 Sustainability occurs when benefits of the project extend beyond the implementation period and results in stronger institutional and human capacity to carry activities beyond the life of the project. The sustainability of a number of activities under this project is unlikely. For example, little capacity-building took place under the project with the exception of the training of the PMU's accountant and no transfer of skills took place as was envisaged under project objectives. This was largely due to the very weak skills base of the national staff but also to the lack of an adequate training strategy to address these problems. Moreover, the resident experts may not have been the best placed to ensure that such transfer took place given the fact that they were not  - 10 - necessarily proven trainers in their areas of expertise. With twv notable exceptions, training of civil servants in statistics at the ISSEA in Cameroon failed in providing a critical mass of sound statisticians to the Planning Unit, since the low level of skills of those selected did not allow them to benefit from the basic training to which they were sent. This, despite the attention given to the selection process. The sad fact was that these were the "best and the brightest" in their group and, in most cases, were selected on the basis of their better performance on the job. 8.03 At the same time, it is worth noting that some of the short-term sector work done did provide some benefits to the country. The most notable among which were: (i) the banking sector study which lay the groundwork for reform in the sector and which helped the government to negotiate an ESAF; (ii) the establishment of a working system for the Debt Management Unit at the MPED; (iii) the drafting of the Forestry and Wild Fauna Law which makes provision for adequate legislation and provides an analysis of the economic prospects in the sector as well as recommendations for the appropriate utilization of natural resources; (iv) the Forestry Action Plan which was adopted by the government in 1990 and included the elaboration of structural measures aiming at revitalizing forestry production with appropriate environmental considerations; and (v) the study of Alternative Uses of Natural Gas which was carried out for the petroleum sector and which proved useful in laying the foundations for the identification and implementation of the most cost-effective methods for using natural gas. 9. IDA's PERFORMANCE 9.01 IDA approached the project with a strong commitment to assist EQG in rehabilitating the country's damaged economy. It hoped to assist the government through helping it obtain the expertise needed to redesign its economic development strategy in several key sectors, a prerequisite for harnessing available development opportunities and mobilizing aid more efficiently. IDA prepared the project rapidly to respond to EQG's unusually difficult conditions. IDA made every attempt to specify what were the absolute critical gaps in the technical assistance and to coordinate its intervention with the major donors (Spain, France, UNDP) to avoid duplication of efforts. 9.02 However, IDA did not follow through on its initial commitment in the first three years of project implementation. The number of IDA supervision missions was inadequate during that period, which was a serious shortcoming, given the complexity of the project and the government's very weak implementation capacity. It has to be recognized, however, that conditions for conducting adequate supervision were among the most difficult faced by IDA staff anywhere in the world. At the time of appraisal and during the first years of project implementation, shortages of basic consumer items were so severe as to require visiting staff to bring with them virtually all basic items. Air transport ties were scarce and unreliable. Housing conditions were austere. 9.03 IDA intensified supervision efforts during 1988-91, an average of four missions a year in an attempt to redress the major constraints to implementation. IDA took the decision not to cancel the project given its importance to the realization of EQG's development objectives. Among the corrective actions taken were: (i) the replacement of the Project Administrator with another national; (ii) the drafting of a procedures and operations manual for project administration; (iii) on-the-job training for PMU staff by IDA mission staff, including seminars on economic management; (iv) arranging for quarterly visits on the part of the project auditors to monitor the accounting and financial management systems while the project's bookkeeper was being trained as an accountant; (v) ensuring clear and transparent procurement by taking measures to correct identified problems; (vi) improving disbursement procedures through on-the-job training by IDA staff on mission and training at headquarters for two of the PMU staff in both procurement and disbursement procedures. In addition, efforts were made to streamline project objectives by dropping the mining component once the low economic potential of the sector as a whole was established by a sector mission. Efforts were also made to improve execution of sectoral objectives by intensifying the supervision of these components.  - 11 - As a result of these efforts, project execution improved sufficiently-albeit late--to allow for the realization of a number of activities of long-term benefit to the country (paras. 7.14, 8.03). 9.04 Another factor that added to the complexity of the project, increased the difficulty of supervision and added to the implementation delays was the large number of executing agencies involved on the government side (no fewer than seven). Government's reluctance to agree to a coordinating mechanism for the project further exacerbated the problem (paras. 7.05 and 8.01). IDAs coordination of its own supervision efforts was poor. Task management of the project was divided by assigning the agricultural and forestry sectors to the Task Manager of the Cocoa Project, leaving in isolation the supervision of these two components from the overall Task Manager. 10. BORROWER PERFORMANCE 10.01 Despite repeated requests by IDA, there were significant delays in the submission of progress reports, audited project accounts, and not enough information on procurement and approval procedures from the government. As already mentioned, the major shortcomings of the project were the lack of internalization and commitment by the EQG authorities. Under these circumstances, it is not surprising that the Borrower did not ensure adequate conditions to fulfill the project's institutional strengthening objectives. In many cases there were no counterpart personnel designated to work with the expatriate advisers and in those cases where counterpart staff were assigned, the selection was made at the political level and did not involve the resident advisers. The level of competence of the counterparts designated by the administration was poor, and they did not carry out their tasks as requested by the advisers. Despite the training provided by several IDA missions, the Project Management Unit local staff performed their tasks poorly. 10.02 Lack of coordination in the field was aggravated by the inability of the Project Administrator to play a leading role. One of the most serious problems was project management. Several instances are representative of this problem: (i) on several occasions the resident foreign specialists did not receive their salaries for several months or were not reimbursed for project-related expenses; (ii) the same applied for the short-term consultants who remained unpaid for several months after satisfactory completion of their assignments, despite repeated applications to the Administrative Officer and advice from IDA staff to the Chief Technical Advisor; (iii) improper per diem calculations and ineffective provision of transportation for field trips by foreign specialists created severe disruptions and inefficiencies in project execution. The arbitrary removal of support secretaries and drivers without prior notice by the ministries further complicated the advisers' tasks; (iv) local administrative staff often faced intimidation and were frequently not paid their salaries for even longer periods of time. On one occasion, IDA mission staff discovered that about CFAF 6.0 million of counterpart funds were used to pay for the MPED's new office furniture, essentially emptying the account, and resulting in the lack of funds to cover the salaries of local employees. Efforts to impose discipline on the PMU systematically failed because the Administrative Officer was continually put under political pressure to take actions contrary to IDA's rules and procedures. As a result of these political pressures, the Administrative Officer was widely ineffective and depended heavily on IDA staff to help him resist those pressures. Political considerations led the government to keep the first Administrative Officer in post some eight months after IDA's recommendations to remove him. 10.03 The lack of monitoring and coordination of project activities and consultants' performances were very serious. As a result, progress under each project component depended on the foreign resident specialists' capacity and relationship with the Minister and Administrative Officer. Despite intensive training by IDA staff and expatriate project staff to establish an adequate filing system, project filing remained inadequate. Documents and reports in the project archives were never readily available. However, notable progress was made in the accounting system and these files were kept adequately in the last few years of the project.  - 12 - 11. CONSULTING SERVICES 11.01 Consultant performance under the project was overall mixed. The work of the Macroeconomist- Planner adviser was instrumental in helping the Government revise the Letter of Development Policy prepared for the Bank and for the IMF for a SAL operation which ultimately did not materialize. He successfully maintained close coordination with other donors. The Debt specialist was instrumental in helping the Government to negotiate a rescheduling of the country's debt at the Paris Club in 1985 but he did not train local staff in debt management (paras. 7.07, 7.08 and 7.10). Consultant reports were not systematically prepared neither were they received on time by the Bank. 13. PRojECT DOCUMENTATION AND DATA 13.01 Project documentation and data used in preparation of this report included legal documents, the President's Report, mission back-to-office reports, supervision reports, and progress reports provided by the Borrower. 13.02 The Legal Agreement and the President's Report were adequately prepared. They are generally very comprehensive, and served satisfactorily during project implementation. They reflected the Bank's interest in successful execution of the project. Mission Supervision reports provided a comprehensive picture of the administration of the project, but initially they rarely touched on technical aspects of the project. The treatment of such aspects improved in later supervision reports. 14. LESSONS LEARNED The principal lessons learned are summarized below: (a) In a volatile political environment like EQG's, early recognition of political interests in decision-making is essential. Recognizing that fact would make IDA more effective in its approach to project design and scope. The failure of ensuring coordination under the Technical Assistance project should have been anticipated given the country's inward-looking political system and the pervasive lack of trust which predominates relations among government officials and the donor community. As a result, care must be taken to limit the number of agencies involved in project implementation in order to maximize a project's chances of success. (b) Technical assistance projects should not be overly ambitious, particularly in an environment of weak institutions and local capacity. The scope of the project was very ambitious with a number of components that placed burdens on the borrower as well as IDA. Even in the face of the devastation presented by EQG at the time of identification and appraisal of the project, it is imperative that project design and scope take into account the administration's implementation capacity. Moreover, it has to be recognized that without the adequate human resource base, substitution technical assistance in the more complex skills area is all that can be provided. This can be counterbalanced with an adequate training program to address the lack of skills in the priority areas of intervention of the project. (c) Successful project implementation requires not only a broad commitment by the Government, but also effective, continued coordination on the part of the agencies involved in the execution, as well as the coordinating of supervision activities on the part of IDA. The government did not respond with the type of commitment required to ensure the success of such a large and complex technical assistance project. The lack of government ownership and commitment had a significant impact on all aspects of the project, ranging from incompetent management, inadequate and excessive mobility of local counterparts, ineffective training and  - 13 - poor accounting practices. IDA did not sufficiently contribute to ensuring coordination in its own supervision of the project. This aggravated the difficulties in following-up on project execution for both parties. In a country with the severe constraints as those presented by EQG, it is essential that project activities be coordinated and responsibility for such coordination be assigned to one person both by the Borrower and by IDA in order to ensure a coherent vision for the realization of project objectives. (d) IDA has to recognize that the implementation of operations in countries with the weak capacity exhibited by EQG in all areas requires heavy mobilization of IDA staff resources. This implies that appropriate budgetary allocations be made to allow for intensive follow-up in the field. In the absence of these provisions, even the best prepared projects are doomed to failure if no adequate follow-up is provided on a regular basis. (e) Familiarity with IDA disbursement procedures and with guidelines for recruiting consultants assure proper implementation. Th avoid delays in implementation, it is important that IDA staff help the Borrower to become fully familiar with IDA disbursement procedures and guidelines for recruiting and contracting consultants at appraisal. Also, it is important that IDA, from the outset of project preparation, review local accounting and financial management practices in order to ensure that the Borrower has an adequate system in place by the time of Board presentation.  - 14 - PART II: PROJECI REVIEW FROM THE BORROWER'S PERSPECTIVE (TRANSLATION) Prior to independence, the Republic of Equatorial Guinea had reached a very high level of development in comparison with other countries in the region. But this development rested upon a very fragile economic structure, characterized by specialization in the form of exportation of non-processed primary commodities; economic dependence, as demonstrated by the fact that most economic activities were in the hands of foreigners; lack of industrialization; and regional imbalance. The regime's performance in the first decade following independence (1968-1979), together with a vulnerable economic structure, had highly negative effects on the country's economic and social evolution, in particular: The deterioration of production and exports, due to the departure both of the labor force and of foreign owners. Consequently, the drastic reduction in foreign currency affected the country's finances, and caused the physical deterioration of productive infrastructure; The paralysis of public services, due to reduced imports and internal resources which were essential for the operation of such services, a logical consequence of the sudden drop in foreign exchange reserves and decreased fiscal income based primarilyon foreign trade. This situation worsened with the sudden departure of technical staff which contributed towards gradually halting the normal operation of the administrative structure and of essential services. The deterioration of basic economic infrastructure, due to neglect. The deterioration of the population's living conditions, caused by the interruption in basic public services such as health, education, drinking water, electricity, refuse collection, etc. As a result of these problems, most of the population had to fall back from productive activities to a subsistence economy, the only type which was capable of meeting individuals' nutritional requirements. This period was further characterized by the country's ever-greater external isolation. The reinstatement of freedom on August 3, 1979 allowed the country to fully rejoin the international community and, with the latter's assistance, begin the process of socioeconomic development on a new footing. The Government was first concerned with re-establishing basic administrative infrastructure and services, as well as with taking a series of measures to increase the production of food and cxport products. Unfortunately, during the first years of reconstruction (1979-1982), these efforts were inconsistent due to the lack of an overall, coherent development strategy. It was under this scenario that, at the 1982 donors' conference held in Geneva, Switzerland, the Government of Equatorial Guinea presented to the international community an economic reform program which ranked actions in terms of several priorities consistent with key objectives, which would allow the Government to define goals for the country's economic and social development as well as mechanisms to put in place to allow for national development planning to be prepared. The Technical Assistance Project, the subject of this report, was to assist the Government in reaching the main objectives of the economic reform program, i.e., the establishment of planning structures capable of gradually coordinating the activities of different ministerial departments and the preparatory work for the establishment of a national development plan.  - 15 - Throughout the project period, institutional changes occurred within Equatorial Guinea's administration which affected the Ministry of Planning and Intemational Cooperation, the agency in charge of project execution. In 1989, the Ministry of Planning merged with the Ministry of Economy, and in 1992 separated again to become an independent ministry once more and assumed intemational cooperation responsibilities. The project's objectives were the following: a) To assist the Government in preparing the basic elements of a development strategy and a medium-term Investment Program, and in improving the institutional framework needed to put them into practice; b) To help the Government in preparing certain development projects and to assist it in its technical discussions and negotiations; c) To help create favorable conditions for private investment in key growth sectors: agriculture, forestry and mining; and d) To help the Government prepare a rational, realistic strategy for the education sector. In order to reach these objectives, the project financed: a) five resident specialists in the areas of economic planning, agriculture, forestry, mining and education; b) short-term consultants, including an architect specialized in school construction, a training specialist, and a public debt specialist; c) local and overseas classroom and on-the-job training for Equatorial Guinean nationals; d) housing construction, vehicle procurement and other operating expenses for resident experts; e) the services of a locally-hired administrative officer in charge of project management and administration; f) studies, short-term consultancy services and other project-related activities to be identified during project execution.  - 16 - I PROJECr IDENTIFICATION, PREPARATION AND EVALUATION 1.1 The project was originally requested by the President of the Republic of Equatorial Guinea at the Donors' Conference which was held in Geneva in April 1982. 1.2 The project was prepared by World Bank Group missions that visited Equatorial Guinea in September 1982 and February 1983, together with Government authorities. Technical assistance requirements were determined for the most needy sectors of the administration. 1.3 Project evaluation took place in May and June of 1983, and a mission that visited the country for a short time in July and August of 1983 examined, together with the Government, the sperific terms of reference for each resident expatriate advisor which were approved by the Government. In January and February of 1984, technical discussions were held in Malabo with the Government on hiring procedures, housing construction, and project procedures. Project negotiations were held in Washington from April 24 to 26, 1984, with a Government delegation headed by the then Vice-Minister of Water, Forests and Reforestation. II PROJECIT EXECUTION As mentioned above, the objectives of the project, which began operating in April 1984, were to assist the Government in preparing the basic elements of a development strategy and a medium-term investment program, and in improving the institutional framework to put them into practice; to help the Government prepare certain development projects and assist it in its technical discussions and negotiations; to help create favorable conditions for private investment in key growth sectors; and to help the Government prepare a rational, realistic strategy for the education sector. To reach these objectives, the project hired and financed five resident specialists for a period of up to four years each, as well as various short-term consultancy missions. The project also called for the hiring of a local administrator to be in charge of the project's many administrative and logistical details, supported by a local junior staff member. 2.1 Terms of Reference for Resident Specialists 2.1.1. Principal Technical Advisor Macroeconomics, planning and economic development advisors assigned to work at the Ministry of Planning and Economic Development, depending on the head of the Ministry, assisted in the preparation of basic elements for a development strategy and an investment program for the country, the preparation and supervision of routine economic policy objectives, the coordination of economic planning, and the evaluation of proposed investment projects. The Principal Technical Advisor played a key role in project structure as the technical coordinator in charge of organizing the work of other resident experts at the sectoral level, in order to ensure the compatibility of their work with national development strategy, the preparation of which was his main responsibility. It was also thought that the macroeconomist could play an important role in the preparation of the Structural Adjustment Program and in external debt coordination.  - 17- The first resident specialist who arrived in Malabo one year after project start-up did not carry out his duties effectively and was later removed. The hiring of a replacement took over a year. When the second specialist took over in April 1989 the project was still disorganized: the agricultural, education and mining experts had not fulfilled their terms of reference, due in part to a lack of central direction; the forestry expert had not even been hired; no training program had been prepared and administrative staff had not yet mastered the basic techniques of handling multilateral projects. For these reasons, improved project administration and the establishment of clear agendas for each of its components became important objectives for the macroeconomist. His endeavors in this regard were praised by the Government. The project's last macroeconomist arrived in August 1990. Unfortunately, his year-and-a-half stay was not a positive one either for the project or the Government, since he did not even present a work program or outline a current action plan to improve or clear up possible difficulties or simply to try to maintain continuity with his predecessor's work. 2.1.2. Sectoral Advisors a) Agricultural planning specialist This expert worked at the Ministry of Agriculture's regional bureau in Bata. His work consisted primarily of helping to supervise the Ministry's routine activities in the country's Continental Region, identify and review agricultural projects in that region, and supervise the work of short-term consultants hired to assist in project preparation. b) Forestry specialist This advisor, residing in Bata and travelling periodically to Malabo, worked at the Ministry of Water, Forests and Reforestation, advising on issues related to the reorganization of the forest service, preparation of sectoral plans and sectoral project financing. c) Mining specialist The responsibility of this advisor, who worked at the Ministry of Mines and Hydrocarbons, was to advise the Minister on issues related to the follow-up of studies on the country's mineral resources. His work also consisted of helping to organize a technical and legal framework to attract investment. This specialist resided in Bata and made periodic visits to Malabo. d) Educational planning specialist This specialist worked at the Ministry of Education and Sports and advised the head of this Ministerial bureau on questions relating to sectoral development, including the preparation of a strategy for a long-term sectoral plan and the preparation of a project to be carried out in connection with this plan. e) Public debt specialist This advisor worked in the Ministry of Finance with the General Director of the Autonomous Fund for Public Debt, for the purpose of performing an inventory of the country's public debt, establishing a mechanism to serve it, advising the Government during negotiations to refinance old debts or enter into new ones, and training staff who worked with him to continue these activities. Each resident specialist was to prepare a detailed annual work plan for the first year of his contract, within three months of his arrival in the country, and update it annually thereafter. Each sectoral specialist was also expected to provide the macroeconomist-planner with information, including data on the  - 18 - development of his particular sector, for use in the preparation of the development strategy and the public investment program. 2.2 Sectoral Technical Assistance 2.2.1. Planning * Proposed Actions - To provide technical support for negotiations and effective application of World Bank and IMF Structural Adjustment Programs; - To assist the Government, together with project staff from the UNDP's planning systems improvement project, in preparing the national development strategy and public investment program, and to establish the necessary institutional structure to put them into practice. - To formulate and initiate a training program to support the Government's general objectives. - To coordinate the work of the project's resident experts in accordance with general objectives. * Results It is quite difficult to distinguish among the concrete actions made under the project since, as indicated in the introduction to this report, the macroeconomic component did not unfold as such due primarily to constant instability and the delayed arrival of macroeconomic advisors; their work consisted mostly of some coordination of the project's administration, although project operations duplicated those of the UNDP planning project which at that time played the lead role in the Ministry of Planning's macroeconomic component. Mention should also be made of the macroeconomists' weakness in not clearly establishing their mission's objectives, and although they tried to do so, their contracts were expiring. The project's minimal involvement in the macroeconomic area was in conjunction with said UNDP project under the Ministry's Master Program. This included: - Proposal for the formation of a Technical Committee to Negotiate and Monitor the Structural Adjustment Program. Computerized system to monitor economic policy measures. Establishment of communication channels to obtain information on policy measures issued by the President's office, the monitoring of which will become part of the overall system to monitor economic policy measures. - Establishment of institutional coordinating mechanisms for the preparation of the Three-Year Public Investment Program. - Preparation of the 1991-1993 Three-Year Public Investment Program, approved for the first time in the country's history by the Council of Ministers and in line with World Bank requirements. - Conclusion of the evaluation of the actual financial expenses of public investment from 1987-1990. - 1992-1995 Three-Year Public Investment Program (underway). - Establishment of a centralized data system on sectoral issues.  - 19 - Inclusion of sectoral strategies in the national development strategy and in the Three-Year Public Investment Program. 2.2.2. Agriculture * Planned Actions - To oversee the supervision of the daily operations and activities of the Ministry of Agriculture's staff in order to achieve strategic objectives. - To oversee the supervision of programs and implementation of agricultural policy directives issued by the Government in Malabo. - To assist in the identification and review of agricultural project proposals with the objective of designing an ideal investment program for the agricultural sector. * Results In this sector it is better not to speak of results because of the unfortunate lack of all sorts of working data prepared by the resident sectoral advisor who did not leave behind his final mission report as required in the agreement. Nevertheless, Ministry of Agriculture sources indicate that the advisor worked on the following issues: Socio-Economic/Agricultural Survey; Formulation of the World Bank project for the diversification of auxiliary service exports; Adoption of an agreement with principal cocoa exporters on deducting marketing costs, the experimental use of more economical fumigation methods, and the gradual elimination of the STABEX subsidy. 2.2.3. Forestry * Proposed Actions: - To reorganize the forest service to improve the country's efficiency. - To prepare a short-, medium- and long-term policy for the development of the country's forest resource administration. - To coordinate technical assistance by potential donors and to eventually identify a suitable project to be financed by the World Bank or other donor. - To provide opinions on forestry development for use in the national development strategy and the investment program. - To examine current fiscal and legal policies and concession documents, and to advise on policy matters and agreements, in order to encourage private involvement and investment in the sector and thereby increase log production and local wood processing. - To select Ministry of Agriculture and Forestry staff who could benefit from short-term local or overseas training.  - 20 - * Results: Revision of the ongoing three-year forestry plan to replace unproductive licensees, improve inspection services and simplify the tax structure; Joint seminars with Government and private sector representatives to consider modifying the forestry plan and adopting more realistic production goals; Initiation of a forest inventory and preparation of a financial proposal in line with the tropical forest action plan in order to complete the framework for long-term forest resource conservation and development. 2.2.4. Mines and Hydrocarbons: * Proposed Actions: - Strengthening of the Ministry of Mines and Hydrocarbons' administrative capacity. - Review of and observations on ongoing studies of the country's mineral resources, particularly in the Continental Region. - Preparation of international tenders and mining concession documents. - Design of an institutional structure for the sector. - Review of sectoral legislation and other regulations. These pre-established, negotiated objectives in the agreement do not appear to coincide with sectoral priorities and needs, nor were the objectives of the agreement reached. Results: In this list of objectives, only the second objective was reached, i.e., the review of observations on studies made in the country; the advisor wrote and issued a report on the fourth stage of systematic prospecting performed by the Bureaux de Recherches G6ologiques et Min&res (BRGM) of France whose report was very positive. 2.2.5. Education Actions undertaken: Creation and start-up of a planning office with the educational planning units; human resource development; project monitoring and evaluation; statistics and research. Identification of models and design of a primary school model in keeping with the country's circumstances. Results: Installation of a new building, with staff training and organization of the educational planning and development office.  - 21 - - Start-up of each unit (educational planning, human resource development, project monitoring and evaluation, and statistics and research). - Design of a human resource development program geared primarily towards the staff of the educational planning and development office. - Establishment of a permanent workshop exclusively for planning office staff. - Design of a self-help program for equipping and rehabilitating a total of 197 schools in district capitals, zones and rural areas in the Insular Region. - Workshop in the city of Bata to update the school map, with the participation of 15 educational inspectors from the Continental Region, primary education project staff, educational advisors and staff from the educational planning and development office. - Design and printing of statistical data collection forms (starting with course completion, matriculation records and number of students). - Ongoing construction of new primary schools in the Continental Region, totalling 100 classrooms with a capacity for 60 students, as well as housing for teachers. 2.2.6. Other Sectors The Government's achievements in the civil service, through its involvement in the World Bank Technical Assistance Project, should be underscored. These include: a) Administrative reform: A census of civil servants was carried out; An office for federal employee registration was prepared with financing from the Technical Assistance Project. An institutional analysis was made of the Ministries of Economy and Commerce, and of Planning and International Cooperation, financed by the Technical Assistance Project. b) Private sector promotion: - Establishment of a new agency to liquidate the External Bank of Equatorial Guinea and Spain, and the Credit and Development Bank (UNIGES), using the services of BEAC. Hiring of an independent consultant (DFC) by the Government and the World Bank to direct UNIGES, with financing from the Technical Assistance Project. Financing of a land tenure study. 2.3. Training One of the main objectives of the Government's program is the training of civil servants. The training program under the scope of the Technical Assistance Project therefore had a specific importance.  - 22 - However, this component unfortunately did not reach full development during the project period. Three types of training were designed: On-the-job training in which experienced expatriate advisors were supposed to transfer their technical and professional knowledge to local counterparts in order to ensure the continuity of these techniques following the completion of technical assistance. This did not occur, due either to the professional inability of several expatriate advisers, or due to their lack of interest. Short-term local and overseas training courses. The Project financed overseas training between 1988-1991 for a total of 16 students attending one-year statistics courses at the Subregional Institute of Statistics and Applied Economics (ISSEA) in Yaounde, and for 3 students attending a two-year technical officer training course to strengthen the Ministry of Agriculture's statistical and professional staff. Between 1990-1991, financing was provided for a student attending an 18-month educational planning course at the Venezuelan Institute of Planning; for a two-month structural adjustment course at the IMF Institute in 1990 for project counterpart staff and one planning staff member. The following local courses and seminars were developed: June-August 1990: ten-weekcourse on project formulation, implementation, evaluation and monitoring, including sectoral case studies, for over 25 participants from the planning service and Ministries of Agriculture, Health and Public Works, taught by Mr. Adolfo Solfs, a former OAS expert. - June-July 1990: Computer course on MS-DOS and Lotus 1-2-3 for over 20 Planning, Agriculture, Education, Health and Public Works staff, dealing with the use of spreadsheets during project preparation. - July-August 1990: Computer course on D-Base III for Statistics, Planning and Civil Service, with over 15 participants. - June-July 1990: Computer course on MS-DOS and Lotus 1-2-3 for Finance staff dealing with administration and presentation of fiscal data. - Three seminars taught by an expert on the review of the three-year forestry plan, calculation of production costs and use of the subregional model. - May 1990: The project's administrator and accountant attended a two-month accounting course in Petiteau Scacchi, Cameroon. - July-August 1990: Computer course on WordPerfect for over 20 secretaries and administrative staff. After the departure of all expatriate staff in 1991, project administration, now in the hands of local technicians, designed another internal training program which, when approved, became the Project's most important activity to date. The results reached in this area during that period are: In 1991:  - 23 - A one-month course on advanced MS-DOS for 5 staff members of the General Bureau of Statistics (September 20 - October 19). Introductory MS-DOS course for 30 administrative staff members (August 19 - September 19). WordPerfect word processing course for 17 civil servants. Lotus 1-2-3 spreadsheet course for 13 civil servants. An intensive course on MS-DOS, WordPerfect and Lotus 1-2-3, in Bata - Continental Region, with 40 participants. An intensive one-month course on MS-DOS, WordPerfect and Lotus 1-2-3 for Autonomous Fund staff. In 1992: - An informal, one-month retraining course for civil servants, with 20 participants. - Two one-month simultaneous retraining and introductory computer courses, with 35 participants. - Two one-month, simultaneous retraining and introductory computer courses in Bata, with 50 participants. All these computer courses were developed under the direction and guidance of the local project counterpart. A one-month course on project evaluation and monitoring in Malabo, with 20 participants, taught by staff of the Ministry of Planning and International Cooperation. A three-month financial assistant course in Malabo, with 45 participants, taught by staff of the Ministry of Economy and Commerce. - A ten-day seminar in Malabo on the Structural Adjustment Program, with 15 participants, taught by staff of the Ministry of Planning and International Cooperation. Mention and acknowledgment should be given to the Technical Assistance Project's effort to repair and equip two training centers, one at the Ministry of Economy and Commerce, and the other at the Ministry of Planning and International Cooperation. TECHNICAL ASSISTANCE FOR THE AUTONOMOUS FUND The project financed technical assistance for the Autonomous Fund for nearly fouryears. However, despite the high cost of this technical assistance and the lengthy period of time, no significant changes were noted in the improvement of public debt management; no transfer of experience or staff training took place and therefore the Autonomous Fund still has the same basic problems in administering public loans. Despite this, technical assistance in this area was clearly positive in the "preparation and celebration of the first Paris Club meeting" held in 1985.  - 24 - mI OPERATIONAL AND FINANClAL ISSUES a) Operational Issues: Under this project, an administrative officer (local administrator) was hired to handle the Project's many administrative and logistical details. His work was to handle project accounts and procurement, draft correspondence to consultants and potential suppliers, and prepare withdrawal requests and quarterly reports for the Government and AIF on project execution. In the case of public tenders, purchases of vehicles, office equipment, etc., the required international competitive bidding procedures were followed (in accordance with Annex 3 of the Credit Agreement). Similar procedures were used to hire international experts. b) Financial Issues: - The project's total cost is estimated to be the equivalent of US$6.3 million, of which about US$5 million are foreign exchange expenditures. Local currency expenditures (US$1.3 million equivalent) include the equivalent of US$10,000 in duties and taxes on imported, locally-purchased office equipment. The Government has been paying 100% of local staff salaries, except that of the administrator; 100% of the cost of temporary housing after the credit became effective; 100% of the cost of office equipment in local currency; and 35% of the cost of total office operations. Disbursements made during the project period are fully documented in accordance with requirements stipulated in the credit. The project had both a special account and a counterpart account. - Special account: to finance advances for reimbursable expenditures, with resources from the AIF credit. This account was periodically replenished at the borrower's request with funds from the AIF account. - Counterpart (government) account: opened by the Government at the Bank of Central African States in favor of the project to pay for project counterpart expenses; the equivalent of US$15,000 was replenished quarterly. Credit expenditures were planned as shown in the following table:  - 25 - Table III-1 Planned Credit Expenditures (thousands of DEG) Amount % of Planned Planned Expenditure 1. Resident specialists 1980 100 2. Short-term consultants 130 100 3. Training 280 100 4. Housing for resident specialists 430 100 5. Operation & maintenance expenditures 80 100 6. Office equipment 70 100 Foreign Currency 7. Office equipment operating cost 180 65 8. Per diems 230 100 9. Administrator's salary 50 100 Local 10. Requirements to be identified during project execution 940 100 11. Reimbursement of advance for project preparation financing 610 12. Initial deposit to special account 290 13. Unallocated 430 Total 5700 Source: World Bank Report on the Technical Assistance Project. May 31. 1984 The actual performance of these planned expenditures is explained in the following table:  - 26 - Table III-2 Actual Expenditures (thousands of DEG) Amount of Actual Expenditure 1. Resident specialists 1894 2. Short-term consultants 1438 3. Training 222 4. Housing for resident specialists 739 5. Operation & maintenance expenditures 370 6. Office equipment 136 7. Office equipment operating cost 132 8. Per diems 233 9. Administrator's salary 96 10. Related activities 381 11. Reimbursement of advance for project preparation financing 12. Initial deposit to special account 13. Unallocated Total 5641  - 27 - Table III-3 Analysis of Compliance with Planned Expenditures (in thousands of DEG) Overpayment % Expend. or Relative or Relative Planned Actual Savings Savings 1. Resident specialists 1980 1894 86 5 2. Short-term consultants 130 1438 (1308) (106) 3. Training 280 222 58 79 4. Housing for resident specialists 430 739 (308) (79) 5. Operation & maintenance expenditures 80 370 (290) (46) 6. Office equipment 70 136 (66) (91) 7. Office operating expenses 180 132 48 73 8. Per diems 230 233 (3) (1) 9. Administrator's salary 50 96 (46) (92) 10. Related .ctivities 940 381 559 40 11. Reimbursement of advance for project preparation financing 610 - - - 12. Initial deposit in special account 290 13. Unallocated 430 - - Total 5700 5641 59 1.03 As shown, there is a relative savings of 1.03%, equivalent to DEG 59,000 in absolute terms for expenditures actually incurred with respect to planned project expenditures. However, the following analysis by categories shows that this relative savings is due to: a) A relative savings of 5% under the category of resident specialists, equivalent to an absolute savings of DEG 86,000, perhaps as a consequence of the one-year delay in hiring the project's second resident macroeconomist. b) A relative savings of 79% under the training category, equivalent to about DEG 58,000 in absolute terms, perhaps due to the delay in carrying out this component during the first three years of the project, or to the improved use of resources allocated to this category starting in mid-1991. c) A relative savings of 73%, equivalent to DEG 48,000, under the category of office operating expenses, because, since around the middle of 1991 until the end of 1992, the project's special account was not replenished due to non-payment on the part of the Bank or because of proper use of funds by the project's administration in recent years. d) Under the category of related activities, there was a relative savings of 40%, equivalent to a balance of DEG 559,000. The main reason for this improvement was the overall use of project funds, due perhaps to the fact that real activities were not identified throughout the execution of the project. This savings caused the Government to propose that several identified activities be carried out, which could not be done due to the impossibility of another extension of the project.  - 28 - Nevertheless, this small savings could have been greater were it not for the serious status of the following categories: f) Under the category of short-term consultants, the planned DEG 130,000 rose drastically to DEG 1,438,000, an overrun of DEG 1,308,000 in absolute terms. This category absorbed nearly one-fourth of the total credit. h) Other categories affecting this absolute savings were not properly planned, that is, no provision was made for possible changes in domestic prices, rates, taxes, etc. IV INSITUIMONAL PERFORMANCE AND DEVELOPMENT Since its identification, both the Government and the World Bank have made great efforts to fulfill the project's objectives as stated in the credit agreement. This is clearly shown in the Aides-M6moire signed by representatives of both parties during project supervision missions. V CONCLUSIONS It may be concluded that the fulfillment of project objectives translates into actual results. Their interrelation with other projects in the Government's overall program led to the consolidation of negotiations for the Structural Adjustment Program and its current implementation; the improvement of the country's technical, administrative and managerial capacity. However, a detailed analysis of the technical assistance offered by the project to the Government shows gaps in many sectors which may be due the following reasons: - Overestimate of objectives during the initial stage of project formulation. - Improper planning of various activities which, besides being presented separately, were overly ambitious in light of the country's particular limitations. - Improper selection of resident experts. These experts should have been the driving force of the project, not only in providing advice but also in detecting irregularities in the course of project execution which might affect the fulfillment of its objectives. Practice has shown, however, that most specialists come to this country to earn a comfortable salary, not caring about the project's objectives. Many times they considered themselves to be representatives of the World Bank, forgetting that they were hired by the Government of Equatorial Guinea. This attitude caused them to lack interest in fulfilling the objectives expected of them, thereby diminishing the efforts of the Government and the World Bank. One of the principal tasks of the resident experts should have been to share their knowledge with local counterparts. Some, however, were indeed effective, such as Messrs. Andrew I. Lawson and Jorge Maleuz, the only specialists who, despite their short stay in the country, were able to present and implement well-defined work programs and objectives. Others, unfortunately, were totally negative, and some left behind no mark whatsoever.  - 29 - - Counterparts had few responsibilities; according to their contracts they were supposed to do only what the principal technical advisor (ATP) told them to do. This was another notable error of the project, since there were more ATPs who did little or nothing than those who actually worked. - Finally, training courses, while numerous and with many participants, did not meet expectations, basically because of the separation between course content and participants' specific daily activities. In view of the above, it may be concluded that, in future, the following issues should be considered, in order to improve the implementation of similar programs. 1. Ensure that documents for possible new technical assistance projects, or new phases thereof, be prepared, as far as possible, with the participation of local staff with experience in World Bank projects, in order to have a clearer understanding of the country's potential and limitations, and to identify the its real needs and priorities. 2. As far as possible, ensure that documents for a possible new project show the various objectives, results and actions in a logical sequence, avoiding vague objectives since overestimates can lead to lesser achievements. 3. Local staff with suitable experience as required by the World Bank, should be priority candidates for the position of principal technical advisor since these few local professionals are graduates of European, American, Asian and African universities, as are those expatriates who have been hired and whose cost is around 40% of the total credit, a percentage that could be considerably reduced if local staff are hired. These savings could be used for other purposes. 4. Insist on local, in-service training since the staff's work and course content are interrelated. T heoretical ideas with little or no practical application should be avoided. More emphasis should be placed on this type of training in other areas.  - 30- VI COM.ARATIVE ANALYSIS OF ExPENDITRES 2000 _60 . ..... _ ........,__ Qs 1400 ...... i1200 - ........._ .. 100 1000- ... 6 00- o 400 200- 1 2 3 4 5 6 7 8 9 10 11 12 13 CATEGORIES PLANNED EXPENDITURES ACTUAL EXPENDTURES  - 31 - Annex 1 EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) PART m: STATISTICAL INFORMATION RELATED BANK CREDIS [ ~ ~~'tlie Purpose .Sau 1304-EG. Technical Assistance Study of the petroleum supply, 11/30/1982 Completed Petroleum Sector (US$2.4 million) distribution, and organization in the country. 1548-EG. Cocoa Rehabilitation Support the rehabilitation of large scale 2/19/1985 Completed Project (US$9.3 mnillion) cocoa plantations into production. 1690-EG. Rehabilitation of Imports Support Governrnent's Reform 5/08/1986 Completed RIC (US$6.0 million) Prograrn. 1797-EG. Primary Education Project Improve primary education and 5/21/1987 Completion expected (US$5.1 million) expanding physical facilities in rural in December 1993 school. 2181-EG. Crop Diversification Support Government efforts to diversify 10/30/1990 Slow implementation Project (US$6.3 million) agricultural production. due to management and fmnancial problems  - 32 - Annex 2 EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) PROJECT TIMETABLE Activity Date Planmed : Date Revised: Dat Actual- Identification July 10, 1982 - July 10, 1982 Preparation September 2, 1982 - September 2, 1982 Appr-isal May 20, 1983 - May 20, 1983 Negotiations April 24, 1984 - April 24, 1984 Board Approval May 31, 1984 - May 31, 1984 Credit Signature June 14,1984 - June 27, 1984 Credit Effectiveness September 25, 1984 - December 21, 1984 Credit Closing March 31, 1990 March 31, 1992 March 31, 1993 Last Disbursement March 29,1990 - May 14, 1993  - 33 - Annex 3 EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (US$ million) FY85 FY86 FY87 FY88 FY89 }FY90 FY91: FY92 Appraisal Estimate 0.4 1.3 2.3 3.6 4.7 5.5 6.0 Actual 0.3 0.9 2.3 3.0 3.9 5.3 6.4 6.8 Actual as % of Estimate 0.7 0.6 1.0 0.8 0.8 0.9 Date of First Disbursement April 2, 1985 Initial Credit Closing Date March 31, 1990 Actual Credit Closing Date March 31, 1993 Date of Last Disbursement May 14, 1993  - 34 - Annex 4 EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) PROJECT COST AND FINANCING (US$ million) A1praisal Actual |:FoLoreig Local, Ttal1W. F ig loca1+*- Total Total Cost 5.0 1.3 6.3 5.8 2.0 7.8 *Sectoral development strategy 3.0 0.3 3.3 3.9 0.5 4.4 *Training national staff 0.4 - 0.4 0.2 - 0.2 *Project administration 0.3 0.4 0.7 0.9 0.6 1.5 'Identification of needs 0.6 0.4 1.0 0.6 0.4 1.0 *Contingencies 0.7 0.2 0.9 0.2 0.5 0.7 Financing Plan 5.0 1.3 6.3 5.8 2.0 7.8 *IDA 5.0 1.0 6.0 5.8 1.0 6.8 *Government - 0.3 0.3 - 1.0 1.0 Total Cost 5.0 1.3 6.3 5.8 2.0 7.8 * Due to SDR fluctuations, actual foreign cost and financing were higher than appraisal. ** Preliminaries Data  - 35 - Annex 5 EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) Allocation of Proceeds (US million) r-teg- les: O i A * Resident specialists 1.9 1.9 * Short-term consultants 0.1 1.5 * Training 0.3 0.2 * Housing for resident specialists 0.4 0.7 * Operating-maintenance costs - 0.3 * Project administration 0.5 0.9 * Needs to be identified 0.9 1.0 * Repayment of PPF advance 0.6 * Initial deposit account 0.3 0.3 * Unallocated 0.4 TOTAL 5.7 6.8 * Due to SDR fluctuations, actual disbursements were higher than estimated.  - 36 - EQUATORIAL GUINEA Annex 6 PROJECT COMPLETION REPORT INDUSrRIAL REHABILITATION CREDIT PROJECT (Credit 1489 - EG) USE OF BANK RESOURCES Staff Inputs Sfte of Pnxjed Cycb Staff Weeks Staff Wees (pl naed (actual) Thnrugh Apprisl n.a. 27.0 Boad Appmvai through Effectiveness n.a. 5.0 Supervision n.x. 146.6 TOTAL n.a. 175.6 Missions Aeivity MontbiAYr No.Pfatw No,Vk SpeciaEuth,u athig Statu Pmbleua Identification 2V1980 2 2 - - Apprmisal 5/1923 2 2 ECN,LOA - - PDst-Appaisl 7/1983 1 2 ECN Supervision' /19S4 2 1 ECN,LOA n.a. M Supervision' 121985 1 2 LOA 2 M,P Supervision* 9/19S6 2 2 ECN,LOA n.a. M,P Supervision 10/1987 1 2 LOA n.a. M,Pr Supervision 121987 2 2 ECN,TAM na.. M,T Supervision* 21988 2 2 ECN,TAM n.a. M,Pr Supervision 4/1988 1 1 TRG n.n T Supervision* 7/1988 2 2 TAM,ECO 2 M Supervision* 11/1988 2 2 ECO,TAM n.a. T,M,Pr Supervision 7/1989 1 2 AGR n.a. T Supervision 1211989 1 2 TRG n.a. T Supervision* 4/1990 1 2 OTH n.a. n/s Supervision 7/1990 2 2 TAM,ECO 3 M,T,Pr Supervision* 12/1990 1 2 TAM 3 M,Pr Supervision* 1/1991 1 2 ECN n.a. n/s Supervision* 7/1991 1 2 TAM n.a M Supervision* 2V1992 1 2 TAM 3 M,Pr Supervision* 4/1992 1 2 TAM 2 M Supervision- 8/1992 1 2 TAM 3 M,Pr Specislties: LOA = Loan Oicer;ECN = Economist;TK; 5 Trainmg Specialist; AGR -Agricultural Spcali Type of PNoblem: T=technical; M=mgerial; P=political; Pr=Procurement; n/s=not specified * Include supervision for other project,  - 37 - Annex 7 EQUATORIAL GUINEA PROJECT COMPLETION REPORT TECHNICAL ASSISTANCE PROJECT (Credit 1489 - EG) Status of Credit Covenants Covenant Subject Deadline Status Section m (a) Draft work plan and progress Annually, Quarterly Complied with but with reports prepared by resident considerable delays. specialists will be submitted by the Government to IDA for review and discussion. Section III (b) Qualifications and experience of Ongoing/Recurrent Complied with but with candidates for training and some delays. proposed training programs will be submitted by the Government to IDA for prior approval. Section m (c) Residences constructed for long- Ongoing/Recurrent Partly complied with. term specialists will be used for Specialists still resided their intended purposes under the at houses after their project and possible subsequent contract expired. projects. Disbursement Conditions For expenditures from the Credit Disbursement Complied with. allocation for unidentified project activities will be recommendation of Chief Technical Advisor and approval of Minister of Planning and IDA. Credit Effectiveness Hiring of competent Effectiveness Complied with but with Administrative Officer. some delays. (i) Competence of two Administrator Officers were not satisfactory. Credit Effectiveness Opening of Special and Project Effectiveness Complied with but with Account, the later with an initial considerable delays. (ii) Government deposit of Government failed to US$15,000 equivalent in local replenish the currency counterpart funds timely.