Senegal - Private Sector Capacity Building Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6626-SE MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 8 MILLION (US$12.5 MILLION EQUIVALENT) TO THE REPUBLIC OF SENEGAL FOR A PRIVATE SECTOR CAPACITY BUILDING PROJECT JUNE 2, 1995 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT Currency Unit CFA franc (CFAF) US$ 1.00 CFAF 486.2 CFAF 1 million US$ 2,057 SYSTEM OF WEIGHTS AND MEASURE: METRIC Metric US Equivalent I meter (m) 3.28 feet (ft) I kilometer (km) 0.62 miles (mi.) I square kilometer (km2) = 0.39 square mile (sq. mi.) 1 hectare (ha) 2.47 acres (a) I metric ton (t) 2,205 pounds (lb.) I kilogram (kg) 2.2046 pounds (lb.) ABBREVIATIONS AND ACRONYMS ASAC Agricultural Sector Adjustment Credit CRG Competitiveness Review Group GOS: : Government of Senegal LRC Legal Reform Committee MEFP Ministry of Economy, Finance and Plan PFP Policy Framework Paper PSAC : Private Sector Adjustment and Competitiveness project PSF Private Sector Foundation ZOPP Zielorientierte Projekt-Plannung FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY REPUBLIC OF SENEGAL PRIVATE SECTOR CAPACITY BUILDING PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal Beneficiaries: The Government of Senegal and the private sector Credit Amount: IDA Credit: SDR 8 million (US$ 12.5 million equivalent) Terms: IDA Credit: Standard with 40-year maturity Financing Plan: Local Foreign Total (in US$ million) IDA 3.1 9.4 12.5 Government/ Private Sector 7.8 --- 7.8 Total 10.9 9.4 20.3 Economic Rate of Return: Not applicable Poverty Category Not applicable Staff Appraisal Report: Report No. 14499-SE Map: IBRD 27057 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.   MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF SENEGAL FOR A PRIVATE SECTOR CAPACITY BUILDING CREDIT 1. I submit for your approval the following memorandum and recommendation on a proposed development credit to the Republic of Senegal for SDR 8 million, the equivalent of US$ 12.5 million. The credit which is to support the development of the private sector will be on standard IDA terms, with a maturity of 40 years, in support of a Private Sector Capacity Building project. 2. Background. Since the late 1980s, the Senegalese economy experienced a serious deterioration with growth stagnating at 1.7% per annum on average, and declining output, employment, and investment in key sectors. With the devaluation that took place in early January 1994, Senegal has now gained a unique opportunity to restore competitiveness and export-led growth. To take advantage of this opportunity, the Government of Senegal (GOS) prepared a three-pronged strategy for the development of the private sector that it has started to implement. The first element of this strategy, aimed at restoring macro-economic equilibria, is being implemented in the context of a Policy Framework Paper (PFP) for the 1994-1997 period approved by the Bank and the IMF in August 1994. The second element consists of a program of policy and regulatory reforms to liberalize prices and trade, remove labor rigidities from the labor code, liberalize maritime transport, and strengthen the incentive systems for investment and export promotion. This program has largely been implemented in the context of the ongoing Private Sector Adjustment and Competitiveness credit (PSAC), approved by the Bank's Board of Directors in February 1995. The third element of the strategy aims at facilitating private enterprises and business institutions access to business advisory services to improve their competitiveness and efficiency while pursuing the improvement of their policy and legal environment. The implementation of this component of the strategy, which is essential to enhance the private sector response to a better environment will be supported by the proposed project. 3. A key challenge for Senegal's economic development is to enable the private sector to take advantage of the recent devaluation and of the elimination of protection, monopolies and other market distortions, to expand its activities in the domestic as well as in the export market and increase its contribution to economic growth. This requires the removal of all constraints that were identified in 1993-1994 in the context of the preparation of the Private Sector Assessment. This study reported that, in addition to policy constraints, the most important of which were since removed, the private sector was impaired by an inadequate regulatory, judicial and legal environment, lack of managerial and technical skills, and weak institutions. 4. Project Objectives. The overall development objective of the proposed Private Sector Capacity Building project is to accelerate the growth of the private sector. To this end, the proposed project will help the Government of Senegal (GOS) implement its strategy to strengthen  2 the sector's supply response to the recent improvement of the policy environment and to enable it to take advantage of new opportunities. Its specific objectives will be to: (i) increase the competitiveness and efficiency of private enterprises and business institutions; (ii) deepen the policy reform process by analyzing constraints to private sector activities and devising appropriate measures to eliminate them; (iii) improve the legal framework for private sector activities; (iv) accelerate the implementation of the government divestiture program; and (v) carry out a program of communications and information to ensure that the main actors in the economy understand and support the reform process at all times. 5. Project Description. In line with the objectives mentioned above, the proposed project, which will involve an IDA credit to the Government of Senegal of US$12.5 million equivalent, will have the three following components: (i) a private sector capacity building component; (ii) a policy and legal reform component; and (iii) a component of specialized services to strengthen the GOS capacity. The proposed project will finance, over a five year period, consultants' services, expert advice, equipment and operating expenses needed by the project institutions described in the following paragraphs. The project was designed with the active participation of the private sector in particular through a series of ZOPP workshops (Zielorientierte Projekt-Planung or Project Planning by Objectives) that helped clearly identify, for the first two components, their work program and a timetable to implement it, and identified appropriate criteria for periodic monitoring and evaluation of progress achieved. Similar workshops will be carried out for the third component when the consultants commissioned by the Government have completed the design of an action plan. 6. The Private Sector Capacity Building Component. The purpose of this component is to help private enterprises and business associations increase their competitiveness and efficiency through better access to business advisory services with the assistance of a Private Sector Foundation (PSF). The PSF is a non-profit public service institution established in May 1995 by 35 founding members. These members include representatives of private professional associations of the formal and informal sectors, representatives of the banking sector and of the African Project Development Facility, an affiliate of IFC in association with other development institutions, and individuals selected for their competence and experience in business. 7. The PSF will act as a catalyst and an intermediary between firms and institutions of the private sector that need assistance, and local and international suppliers capable of providing it. To prepare the PSF work program, a survey was carried out during project preparation to assess the demand of the private sector for business advisory services and the conditions under which these services could be efficiently delivered. The creation of the PSF was prepared by a Working Group composed of representatives of private sector institutions and enterprises that was formed in mid- 1994. Under the supervision of this Working Group, consultants financed by a Japanese grant to the GOS, were commissioned to prepare the PSF's Statutes, Bylaws and Operational Manual. The ZOPP workshop, carried out during project appraisal helped define the objectives and action plan for the PSF which will aim at helping private enterprises improve: (i) managerial and technical skills; (ii) productivity, product quality and therefore, competitiveness; (iii) potential to export; and (iv) capacity to obtain bank credit. The PSF's help in getting business advisory services and organizing training seminars for the private sector will be: (i) on a demand-driven  3 basis with private institutions defining for themselves the type of service that they need; and (ii) on a cost-sharing basis with the beneficiaries contributing part of the cost of business advisory services that they receive. The rationale for providing matching grants to private entrepreneurs is based on the fact that the private sector should not bear the fill cost of external services needed to alleviate significant barriers to its development such as the relative infancy of entrepreneurship, market imperfections and externalities. This concept was used to provide Bank support to similar projects in India, Indonesia, Bolivia, and Kenya for example. During negotiations, agreement was reached on a cost sharing formula by which PSF's contribution to the financing of business services to the private enterprises and business associations will vary from 75%, for consultants contracts under $2,500, to 30% for contracts over $20,000. There will be a maximum cumulative contribution of $40,000 per beneficiary. Over time entrepreneurs should "graduate" and become able and willing to bear the cost of business advisory services they need. Public enterprises and enterprises that employ more than 250 permanent workers will not be eligible for PSF's support. 8. In order to learn proper procurement practices, individual enterprises and associations will directly recruit the consultants they need. PSF will act only as an advisor in helping prepare the consultants' terms of reference, short lists and invitations to bid. This will also contribute to limit PSF's staff, increase its cost-efficiency and maintain the ratio of operating expenses to total budget to about 10%. Given the limited absorptive capacity of sub-Saharan countries in general, this ratio cannot be reduced without jeopardizing the functioning of the PSF. PSF will pay its contribution to beneficiaries only when it has been satisfied that proper procurement procedures have been followed and that the consultants have satisfactorily completed their task. Finally to ensure that PSF's operations are transparent, agreement was reached during negotiations that, in addition to the periodic reviews that will be carried out by its Consultative Committee made up of ten representatives of the business community, the PSF will advertise widely its services through the media and will periodically make public the list of its beneficiaries and of the consultants that won technical assistance contracts. 9. Agreement has been reached, during appraisal, with the GOS and with PSF's founding members on PSF's statutes, Bylaws and on the Agreement to be signed by the GOS and the PSF and on the steps leading to the formal creation of this institution. During negotiations, agreement was reached that no changes in the PSF's Statutes, Operational Manual and higher management will be made without IDA's prior approval. The signature by the Government and PSF's Managing Director of an Agreement (Convention) that will give the PSF complete independence in recruitment and dismissal of staff, in operating the agency and helping private sector enterprises or associations hire consultants services is a condition of project effectiveness. The formal adoption by both parties of its Operational Manual, the recruitment of PSF's permanent staff, and the appointment of a Consultative Committee is a condition of disbursement for this component. 10. Under this component, IDA funds in an amount of US$6.3 million will be made available as a grant by the Government to the PSF. These funds will finance incremental salaries of PSF's staff, office equipment and incremental operating expenses of the PSF (US$1.3 million). They will also finance, on a cost sharing basis, consultants' services, technical assistance and training for eligible enterprises and associations of the private sector (US$5 million).  4 11. The Policy and Legal Reform Component. This component consists of the two following sub-components: (a) a Policy Reform Sub-component to assist the GOS and the private sector, working together in a Competitiveness Review Group (CRG), in continuing to analyze policy and regulatory constraints to the development of the private sector and in formulating and implementing remedial measures. The CRG, which is comprised of representatives of the private formal and informal sectors, labor unions and concerned government officials, started to work in February 1994. It has since been instrumental in the design of the policy reform program carried out in the context of the PSAC and it will play a key role in monitoring the implementation of the agreed reforms. Building on this experience, the CRG prepared a work program, the detail of which was defined during appraisal by a ZOPP workshop attended by all the members of the group. This program includes three main components: (i) the rationalization, in collaboration with the Legal Reform Committee, of the legal and regulatory framework for the private sector; (ii) the increase of competition on the domestic market; and (iii) the facilitation of the development and creation of private enterprises. Specifically, the CRG would: (i) elicit from participants different perspectives on key competitiveness issues; (ii) commission experts, when necessary, to conduct diagnostic studies presenting alternative policy options; (iii) invite individuals with appropriate expertise from Senegal and abroad to present their experiences; (iv) propose to the GOS specific measures to improve the environment and competitiveness of the private sector. The project will finance the incremental salaries of the CRG's permanent staff, supplies and operating expenses for the administration of the CRG (US$400,000). It will also finance consultant services to carry out studies that would serve as basis for the preparation of concrete measures and action plans for the Government (US$580,000). (b) a Legal Institution Strengthening Sub-component which will aim at strengthening the legal framework for private sector activities. Measures to this end have been identified by a Legal Reform Committee (LRC) formally established by decree in February 1995. This Committee, whose Secretary General is a lawyer recruited from the private sector, is comprised of an equal number of representatives of the government and of the private sector (businessmen and private legal practitioners) and chaired by the Minister of Justice. During a ZOPP workshop carried out during appraisal, representatives of the Government and of the private sector prepared a work program for the LRC that includes five objectives: (i) the preservation and strengthening of private enterprises' rights in their dealings with the State; (ii) the modernization of the legislation to reflect the needs of the enterprise; (iii) the establishment of a "Centre de Formalites" to increase of the efficiency of the judicial processes relating to private enterprises; (iv) the improvement of debt recovery mechanism; and (v) the improvement of the dissemination of business law. In addition, the LRC will follow up on the rationalization of the business law in close cooperation with the ongoing regional project for the harmonization of business laws of the West African Economic and Monetary Union. Under the proposed project, the GOS will pass on as a grant to the LRC an amount of US$1.53 million to finance the implementation of this component. The project would finance incremental salaries and operating expenses for the LRC (US$300,000), equipment (US$250,000) and studies (US$980,000).  5 12. Specialized Services to Strengthen Government Capacity. This component will also include two sub-components: (a) a Privatization sub-component to help the GOS accelerate the implementation of its privatization program. As part of the adjustment program supported by the PFP and the PSAC, the GOS is committed to resume the implementation of its divestiture program and in particular to complete disinvestment from 18 enterprises during the period 1994-1997. The proposed project will assist the Government in following-up on the implementation of the divestiture plans already underway in the context of the preparation of a Bank supported Agricultural Sector Adjustment credit for four enterprises and in achieving the privatization of 14 other enterprises. The appraisal mission agreed with the GOS that to speed up the process, the execution of the privatization program would be sub-contracted to private specialized firms by the Cellule de Controle et de Gestion du Portefeuille de l'Etat, a unit of the Ministry of Economy, Finance and Plan (MEFP) in charge of the privatization program. The Cellule will be strengthened by the assistance of an investment banker who would help prepare an action plan and the bidding documents required to sub-contract to the private sector the sale of the enterprises earmarked for privatization. During negotiations, agreement was reached on terms of reference acceptable to IDA for the recruitment of this expert. The submission of an time-bound action plan acceptable to IDA for the implementation of this sub-component is a conditions of effectiveness. The project will earmark an amount of US$1.25 million for consultant services, office equipment and incremental operating expenses for the implementation by the Cellule of the privatization program (US$1.25 million). (b) a Communications sub-component the purpose of which is to help the GOS consolidate the dialogue that was initiated with representatives of the private sector --through the CRG -- by widely publicizing its economic objectives, the proposed measures to achieve them and the results achieved. In addition to disseminating information on the GOS economic policy reforms, the program would aim at improving the Government's communications system. To prepare an adequate action plan, a short term consultant will be hired, on terms of reference, agreed upon during negotiations, to design, in collaboration with concerned Government officials and private sector representatives, a communications program that will achieve these objectives. The communications program will be carried out by the Ministry of Communications. During negotiations, agreement was also reached that the private sector, through the CRG, will participate in the design of the communications program. The submission of a communications program acceptable to IDA, including an implementation timetable and criteria for evaluation of results achieved is a condition of project effectiveness. The project will finance consultant services, office equipment, incremental operating expenses and communications costs for the implementation of the communications program (US$650,000). 13. Project Costs and Financing Plan. The proposed project is estimated to cost US$20.3 million equivalent, contingencies included, but excluding taxes and duties, with a foreign exchange component of US$9.4 million. This cost will cover the provision, over a five year period, of consultant services, office equipment and supplies and operating expenses for the project institutions and business advisory services to the private sector. It will be financed by an IDA credit of US$12.5 million and a US$7.8 million contribution of the private sector, for the  6 most part and of the Government. The estimated cost of the capacity building component is about US$12.4 million with an IDA financing of US$6.3 million. The estimated cost of the policy and legal reform component is about US$2.96 million, of which the project will contribute US$2.51 million. The cost of the assistance to the Government for the implementation of the privatization and communications programs is estimated at about US$2.35 million, of which the project proceeds will finance US$1.9 million. The remainder of the IDA credit will finance project monitoring and auditing (US$250,000) and the PPF refund (US$600,000). 14. Project Implementation. There will be no project coordination unit. The project institutions directly concerned by each component of the project will be responsible for its implementation. As recommended by OED's guidelines for technical assistance projects in the Africa Region, this will enable each project institution to institutionalize the objectives of the project. This will also help build up a sustainable domestic institutional capacity within the institutions which will remain active after the project, such as the PSF, in the event that it becomes capable to fully recover its costs, and the government agencies in charge of the privatization and the communications programs. The Planning and the Table of Key events and Evaluation Criteria prepared during appraisal for the first three institutions, as well as those which will be prepared for the privatization and communications sub-components, will serve as a basis for monitoring, evaluating and reporting on the implementation of the related components. The CRG, the LRC, the PSF and the MEFP will each be responsible for monitoring, evaluating and reporting the implementation of their respective work programs. During negotiations, agreement was reached that all the following dispositions for project monitoring, evaluation and periodic review will be complied with: (i) three months before the end of each calendar year, the GOS and IDA will convene an annual review meeting to prepare a detailed work program to be carried out during the next year by each project institution; (ii) two IDA-Government reviews of the project, in lieu of a mid-term review, will be carried out about one and half year and three years following the date of credit effectiveness to measure progress accomplished against targets and to make in due course any adjustments that might be required to ensure that the objectives of the project will be achieved; and (iii) these reviews will be preceded by a full technical audit of all components and a ZOPP workshop to re-evaluate the objectives of each component in light of progress achieved and to adjust the project implementation planning for the reminder of the period. 15. Procurement and accounting for the PSF, the CRG and the LRC will be the responsibility of the PSF. Formal agreements to this effect, the draft of which were agreed upon at negotiations, will be signed, as condition of disbursement for these components, between the PSF and the CRG and LRC respectively. Business advisory services for private enterprises and institutions to be procured through the PSF will be made on the basis of short list drawn from a roster prepared by the PSF. Agreement with the PSF on this roster is a condition of disbursement for this component. Standard Letters of Invitation to Bid that the beneficiaries of the PSF will use were agreed upon with IDA during negotiations. Agreement was also reached, during negotiations, that both the GOS and the PSF will use a project accounting system acceptable to IDA. The establishment of this accounting system is a condition of project effectiveness. All project accounts including the two Special Accounts and SOE will be audited annually by independent auditors acceptable to IDA recruited, as a condition of effectiveness, on a pluriannual  7 basis and in accordance with Terms of Reference and short list acceptable to IDA agreed upon during negotiations. 16. Project Sustainability. Of the five project institutions, only the PSF and the unit of the MIEFP in charge of the communications programs are expected to remain active after the end of the project. Over the five year life of the project, PSF's contribution to the financing of technical assistance for the private sector should decrease, on a beneficiary by beneficiary basis, to the point that beneficiaries will have to pay the full cost of the services that they want to receive. The private nature of its management should help PSF reach self sufficiency over time in the event that the volume of its business warrants its long-term viability. With regard to the Government unit in charge of the communications programs, it is expected that at the end of the project, it will have acquired the skills needed to plan its strategies and that the GOS will have succeeded in reestablishing sound budget management to finance its operating expenses. 17. Lessons from Previous IDA Involvement. In the past, the Bank undertook to provide assistance to the private sector through Industrial Development and Finance (IDF) type projects, the latest being the Investment Promotion project approved in 1981. As reported in the PCR of this and other similar projects, the Bank's support failed because: (i) the policy environment of the private sector was inadequate; (ii) the private sector was practically not involved in the project design; and (iii) the assistance to the private sector was delivered through a supply-driven process and by government institutions which proved to be weak, bureaucratic and inefficient. The proposed project draws therefore on this experience. First, it will take place in the context of a reformed policy and regulatory environment. Second, the private sector has been fully involved in the preparation of the project. Third, the assistance to the private sector will be delivered on a demand-driven and cost-sharing basis. The project design also takes into account OED's findings regarding the Bank's previous technical assistance projects, as well as the recommendations of the Bank's report on Free Standing Technical Assistance for Institutional Development in Sub-Saharan Africa. 18. Rationale for IDA's Involvement. Since the devaluation, the GOS, with the Bank's support, decided to resume its adjustment efforts. In support of this decision, in March 1994, the Bank's Board of Directors approved an Economic Recovery Credit to help improve the country's macro-economic equilibria and control inflation in the post devaluation period. This was followed by the PFP for the period 1994-1997 which presents the Government's macro-economic objectives as well as the strategy for the development of the private sector. The Bank initiated at the same time the preparation of a Country Assistance Strategy (CAS) and of the PSAC, both approved by the Board of Directors in February 1995. With a policy environment that has already been substantially improved, the proposed Capacity Building project will complement the Bank's support for the implementation of the Government's strategy towards the private sector by helping it pursue the reform of the policy and legal environment while strengthening the competitiveness of the private enterprises. It will therefore respond fully to the Bank's objective, spelled out in the Country Assistance Strategy, of helping Senegal achieve sustainable growth with equity and targeted poverty reduction.  8 19. Status of Project Preparation. The project was identified in October 1992, and its preparation began in 1993 with the support of a Japanese grant of US$435,000, and a PPF advance of US$600,000. The project was somewhat delayed when priority was given, after the devaluation of January 1994, to the preparation of the Private Sector Adjustment and Competitiveness project. This development has, however, increased the chances of success of the proposed project by removing the main constraints to the development of the private sector. It has also contributed to enhance project ownership through the dialogue between the GOS, the private sector and IDA, which was initiated during the preparation of the PSAC. 20. Agreed Actions. The Government of Senegal has agreed on the following actions: (a) as conditions of effecliveness: (i) the signature of an Agreement (Convention) between the GOS and the PSF and the formal adoption by both parties of the PSF's Operational Manual; (ii) the submission by the GOS of an action plan for the privatization program acceptable to IDA; (iii) the submission by the GOS of an action plan for the communications program acceptable to IDA; (iv) the establishment of an operational project accounting system; and (v) the recruitment of an auditor acceptable to IDA for the project's accounts; and (b) as conditions of disbursement for the PSF, CRG and LRC components: (i) the recruitment of PSF's permanent staff and the appointment of PSF's Consultative Committee; (ii) the signature by the PSF of an agreement with the CRG and the LRC assigning to the PSF procurement, disbursements and accounting for the two latter institutions; and (iii) the submission to IDA's approval of PSF's roster of consultants. 21. Environmental Aspects. Because it will deliver exclusively technical assistance, the proposed project is categorized C. 22. Program Objective Category. The project will contribute to the Bank's program objective of private sector development. 23. Participatory Approach. As mentioned earlier the project was designed with the active participation of the private sector and of the concerned government officials. Although the PSF, CRG and the LRC were officially established in 1995, the members of these institutions worked in close cooperation with the preparation missions since early 1994. This cooperation culminated with the ZOPP workshops carried out during appraisal to define their work program, implementation timetable and appropriate criteria for periodic monitoring and evaluation of progress achieved. The objectives of the privatization and communications programs have been defined with the Government, and ZOPP workshops will be carried out when the consultants commissioned by the Government have completed the design of an action plan. 24. Project Benefits. The project's most important expected benefit is its contribution to promote Senegal's economic growth by improving enterprises performance, and strengthening the private sector -- notably through interventions in an estimated 600 firms over the life of the project. At the enterprise and business association level, it will: (i) increase efficiency and competitiveness; and (ii) most importantly improve management skill and raise awareness among private entrepreneurs that benefits from business advisory services might outweigh their cost. The project will also contribute to foster Senegal's economic growth by laying the ground for a sustainable supply response of the private sector which will be encouraged by: (i) a favorable  9 policy, legal and institutional environment; (ii) an increased potential for expansion in particular through the implementation of the government's divestiture program, and (iii) the creation through public debates within the CRG and the LRC and through the communications program of a national consensus on the importance of a private sector development culture. 25. Project Risks. The most important risk is the possibility that the GOS relaxes its adjustment efforts or back-tracks on reforms already implemented. This risk is very small, however, because these reforms have been initiated after an intense national debate and have now gained a wide constituency. The second risk lies with the Private Sector Foundation whose role will be to improve the access of the private sector to external support services. In the event that this institution becomes inefficient and unresponsive to the need of the private sector, an important objective of the project might be in jeopardy. This risk should be mitigated by the fact that its Managing Director, recruited from the private sector after a strict selection process, is highly qualified and that careful attention has been paid to the preparation of a detailed and precise Operational Manual that should reduce the potential for poor management practices. Finally, the private sector might prove to be unresponsive to the improvement of its policy environment and institutional support framework. This risk appears to be small in view of the substantial growth that has taken place since the devaluation in some sectors of the economy like manufacturing, fisheries and tourism. 26. Recommendation. I am satisfied that the proposed credit will comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. James D. Wolfensohn President Washington, DC June 2, 1995 Attachments   10 Schedule A SENEGAL PRIVATE SECTOR CAPACITY BUILDING PROJECT Estimated project costs and Financing Plan (in $ 000s) Local Foreign Total Estimated Project Costs (1) 1. Policy and Legal Reforms (a) Competitiveness Review Group 1,130 50 1,180 (b) Legal Reform Committee 1,500 280 1,780 2. Private Sector Foundation 5,000 7,400 12,400 3. Assistance to the GOS (a) Privatization Program 900 600 1,500 (b) Communications Program 750 100 850 4. Project Monitoring and Audits 100 150 250 5. Refund of PPF Advance 400 200 600 6. Price and Physical Contingencies 1120 620 1.740 TOTAL 10,900 9,400 20,300 (1) All costs are net of duties, and direct and indirect taxes. Financing Plan IDA 3,100 9,400 12,500 Government/Private Sector 7,800 - 7.800 TOTAL 10,900 9,400 20,300  11 Schedule B SENEGAL PRIVATE SECTOR CAPACITY BUILDING PROJECT Summary of Proposed Procurement Arrangements (US$ million) Project Element Procurement Method Total _______________________________________ ~~~~~Costs ICB LCB Other NBF Goods . Office Equipment & Vehicles . 35 1 .45 (.35) (1) (.45) Consultancies . Studies 1.4 1.4 (1.4) (1.4) . Consultant Services 4.6 6.9 4.6 (4.6) (--) (4.6) . Training 1.6 1.6 (1.6) (1.6) . Audits and implementation evaluation .3 .3 (.3) (.3) Service contracts . Communication l Services 4 .1 .5 Other . Operating Expenses 3.45