Madagascar - Economic Management and Social Action Project

 Economic management and social action project Report No: ; Type: Report/Evaluation Memorandum ; Country: Madagascar; Region: Africa; Sector: Financial Sector Development; Major Sector: Finance; ProjectID: P001544 The Madagascar Economic Management and Social Action project (EMSAP), supported by Credit 1967-MAG for US$22 million equivalent, was approved in FY89. The credit was closed on June 30, 1996, two years behind schedule, and US$0.33 million was canceled. Cofinancing was provided by Switzerland ($4.75 million, fully disbursed), the UNDP (US$1 million, of US$3.8 million planned) and UNICEF, WHO, France, Italy, and Japan (US$1.8 million expected, but final figures are not available). The Implementation Completion Report (ICR) was prepared by the Africa Region, Country Department 8. The Borrower's evaluation of the program is included as Appendix B. EMSAP was a multisector technical assistance project designed to accompany a Public Sector Adjustment credit. Its objectives were to: (i) initiate a program of emergency actions for the poorest and most vulnerable groups; (ii) improve the Government’s capacity to monitor economic and social conditions and design programs to respond to them; and (iii) strengthen key institutions responsible for management of the structural adjustment program. The project had three major components: (i) a social action program that included malaria control, family planning, food security, studies on irrigation and smallholder livestock, a survey on targeted food distribution, job creation through labor-intensive construction and repair of rural roads, coordination of NGOs, and a redeployment program for employees of public enterprises; (ii) creation of a studies unit and a permanent household survey; and (iii) budget reform, reform of the office in charge of privatization, and establishment of a study fund to improve the economic and social data base, support adjustment policy, and develop social policies. The project was reorganized in 1992, in response to confusion created by an excessive number of expenditure categories, slow procurement, and the lack of a central coordinating agency. The number of expenditure categories was cut from 42 to 28, a national coordination bureau was established, and steps were taken to improve procurement procedures. Supervision by the Bank, which had been highly decentralized, was moved to a new division, and eventually assigned to the field. The Credit Agreement was amended in 1993 to increase the Bank’s share of financing for roads, in the light of problems with counterpart funds. Despite the early difficulties, the project achieved a substantial share of its objectives. The physical goals were mostly reached or exceeded: malaria control, family planning, cereal banks (food security), labor intensive road work, and coordination of NGOs. Institutional development objectives were achieved in the areas of budget reform and establishment of the permanent household survey. Sector policy objectives were either partially met or transferred to other projects (including privatization and redeployment) or, in a few cases, were unrealized (poultry farming, promotion of subsidized food through canteens). The study fund made it possible to carry out studies important to the Madagascar portfolio, including a participatory assessment of poverty, an evaluation of the socioeconomic impact of AIDS, a study of national accounts, a study of the restructuring of the water and electricity company, and an evaluation of the beneficiaries of the road works and redeployment programs. Some studies planned under the first two components were not implemented. The ICR rates project outcome as satisfactory, sustainability as likely, institutional development as substantial, and Bank performance as satisfactory. OED concurs with these ratings. Serious problems with both design and supervision in the early years of the project were overcome through restructuring of the project and of its task management. Sustainability will, in the long run, depend on political and economic stability and on government commitment, including the timely allocation of funds for the new services and for the maintenance of rural roads. The project's main lessons, as noted in the ICR, are that: (i) project design should be simple and manageable, particularly when institutional capacity is weak; (ii) greater participation by stakeholders would have made some of the objectives more realistic; (iii) rural roads rehabilitation should be accompanied by measures to ensure funding for maintenance; and (iv) privatization requires political will on the part of the Government , as well as a framework for the privatization process and mechanisms to ensure transparency. The quality of the ICR is good; it gives a balanced picture of a complicated project that had a very mixed implementation experience. No audit is planned.