Senegal - Year 2000 National Action Plan Support Project

Document of The World Bank Report No: 19744-SE PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 7.5 MILLION (US$10.15 MILLION EQUIVALENT) TO THE REPUBLIC OF SENEGAL FOR YEAR 2000 NATIONAL ACTION PLAN SUPPORT PROJECT October 5, 1999 Knowledge and Learning Center Country Deparment 14 Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effecive Augut 31, 1999) Cwency Unt =CPA Franc (FCFA) FCFA600= USS1 US$1.36 = 1 SDR FISCAL YEAR Jaituy 1 - Decemer 31 ABBREVIATIONS, ACRONYMS AND GLOSSARY CAS Country Assistance Strategy CdP Comiti de Pilotage du Projet (National Y2K Steemg Committee) CID Centre Infomaique des Douanes (Customs Departmnt of Informatics) Contingency Plan In the context of the Y2K Program, a plan for responding to the loss or degradadon of ssential services due to a Y2K problem in an automated system or equipmet, generally describing the steps an enterprise would take to ensure the continuity of its core processs. CQ Consultanfs Qualifications CY Calendar Year DAF Direction de VAutomatisation desFichiers (Computer Automation Deparment - Ministry of interior) DCA Development Credit Agreement DDI Direction de laDette etde l'Investissement (Office of Debt and Investment) DI Delegation a 17nfonnatique - MSRT department respnible for government policy in computer sysem development DTAI Direction du TraitementAutomatique de lInfonnation (Office of Information Automation) GoS Government of Senegal ICB Intenational Competitive Bidding I]DA International Development Association infoDev A global program managed by the World Bank to help developing economies fully benefit from modern informafion systems IT Information Technology LACI Loan Administration Change Initiative LCB Local Competitive Bidding LIB Limited International Bidding MEFP Ministry of Economy, Finance and Planning MSRT Ministry of Scientific Research and Technology NCB National Competitive Bidding ONAS Office National d4ssainissementdu Senegal (National Office of Sanitation) PETROSEN Sociiti Nationale des Petroles (Senegal Petroleum Company) PMR Project Management Report PMU Project Management Unit PPF Project Preparation Facility PSF Private Sector Foundation (Fondation dai Secteur Prive) QCBS Quality- and Cost-Based Selection SA Special Account SAED SocietY Nationale d'Aminagement et d7poitation des Terres du Delta du Fleuve Senegal etdes Vallees du Fleuve Sedngal et de la FalUme (Senegal River Valley Company) SWE Small and Medium Enterprise SNCS Societe' Nationale des Chemins de Fer du Sengal (Senegal Railway Company) SODAGRI Societe de Dbveloppement Industiel du Senegal (Senegal Industrial Development Company) SOE Statement of Expenditure SONES Socidtd Nationale des Eaux du Sdnegal (Senegal Water Company) TA Technical Assistance TOR Terms of Reference Y2K Year 2000 Y2K Bug The potential problems that might be encountered by computer hardware, software, etc., in processing year-date information for years beyond 2000 (the 'Year 2000 Problem"). Vice President Jean-Louis Sarbib Country Director Mahmood A. Ayub Sector Manager John Roome Team Leader Charlie Garrigue  Senegal Year 2000 National Action Plan Support Project CONTENTS A: Project Development Objective ................................................................2 1. Project development objective ................................................................2 2. Key performance indicators ................................................................2 B: Strategic Context ................................................................2 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project ...............2 2. Main sector issues and Government strategy ................................................................ 2 2.1 Main Sector Issues ................................................................2 2.2 Government Strategy ................................................................3 3. Sector issues to be addressed by the project and strategic choices ......................................4 C: Project Description Summary ................................................................4 1. Project components ................................................................4 1. 1 Project Components Description ................................... .............................5 Component 1: Project Management Strengthening ...........................................................6 Component 2: Public Sector Remediation ................................................................ 6 Component 3: Contingency Plans ................................................................8 2. Key policy and institutional reforms supported by the project ............................................9 3. Benefits and target population ................................................................9 4. Institutional and implementation arrangements ..............................................................9 D: Project Rationale ............................................................... 11 1. Project alternatives considered and reasons for rejection .................................................. 11 2. Projects financed by the Bank and/or other development agencies .................................... 12 3. Lessons learned and reflected in the project design .......................................................... 12 4. Indications of borrower commitment and ownership ........................................................ 12 5. Value added of Bank support in this project ............................................................... 13 E: Summary Project Analysis: ............................................................... 13 1. Economic ............................................................... 13 2. Financial ............................................................... 13 3. Technical ............................................................... 13 4. Institutional ............................................................... 14 5. Social ............................................................... 14 6. Environmental assessment ............................................................... 14 7. Participatory approach ............................................................... 14 F: Sustainability and Risks ............................................................... 14 1. Sustainability ............................................................... 14 2. Critical Risks ............................................................... 15  3. Possible Controversial Aspects ................................................ 15 G: Main Credit Conditions ................................................ 15 1. Effectiveness Conditions ................................................ 15 H: Readiness for Implementation ................................................ 16 I: Compliance with Bank Policies ................................................ 16 Annexes Annex 1: Project Design Summary .17 Annex 2: Detailed Project Description .18 Annex 3: Estinated Project Costs .25 Annex 4: Financial Summary .26 Annex 5: Procurement and Disbursement Arrangements .27 Table A. Project Costs by Procurement Arrangements ................................................ 30 Table B. Thresholds for Procurement Methods and Prior Review ............................................. 31 Table C. Allocation of Credit Proceeds ................................................ 31 Annex 6: Financial Management ................................................ 33 Annex 7: Project Processing Budget and Schedule ................................................ 35 Annex 8: Documents in Project File ................................................ 36 Annex 9: Statement of Loans and Credits .39 Annex 10: Senegal at a Glance ..................... 41  pa 1 Senegal Year 2000 National Action Plan Support Project Project Appraisal Document Africa Region Country Departnent 14 Date: October 5, 1999 Team Leader: Charlie Garrigues Country Director: Mahmood A. Ayub Sector Manager: John Roome Project ID: PE-P067498 Sector: ME - Economic Management Lending Instrument: Technical Assistance Loan (TAL) Theme(s): Economic and financial management Poverty Targeted Intervention: [1 Yes [XI No Project Financing Data a Loan [XI Credit [1 Grant [I Guarantee [] Other [Specify] For Loans/Credits/Others: Amount (US$/SDR): US$10.15 million/SDR 7.5 million Proposed terms: [I To be defined [] Multicurrency [X] Single currency []Standard Variable [X] Fixed []LIBOR- based Grace period (years): 10 Years to maturity: 40 Commitment fee: Standard IDA Service charge: 0.75% Front-end fee on Bank loan: 0% A i,t Pla gu::::.............. :. . :. ~~~~~~.... . . 4. ..... . .. .. ..... . .. ..... . Government 2.90 2.90 IDA 10.15 10.15 Other (France, Canada, infoDev) 2.10 2.10 Total: 2.90 12.25 15.15 Borrower: Government of Senegal Responsible agencies: Oversight: Ministry of Scientific Research and Technology Day-to-day coordination: Project Management Unit Estimated disbursements (Bank FYi/USSM): .:!.,, !-:a ' : . '!....... . .... ................................ ' :! .......... .. .......................... .. .....-............... ! ' :''': . '' . ......... ............. ...... ..... ..... ............. ..... ... ..'''.:'''. '''-:'':! : '' ' ' . ...... .....'''' ! ' Annual 5.15 5.00 Cumulative 5.15 10.15 Project implementation period: November 30, 1999 - June 30, 2001 Expected effectiveness date: November 30, 1999 Expected closing date: June 30, 2001 Implementing agency: Ministry of Scientific Research and Technology (MSRT) Contact person: Sada WANE, Coordinateur National de l'An 2000 Address: Ministry of Scientific Research and Technology, Dakar, Senegal Tel: 221 822 2205 Fax: 221 823 3067 E-mail: sadawanetelecomplus.sn  Page 2 A: Project Development Objective: (see Annex 1) 1. Project development objective: The objective of the project is to assist the Government of Senegal (GoS) in its efforts to prevent disruptions in the country's economic and financial sectors as a result of the Year 2000 "bug." In particular, the project's focus is to assist the GoS in its efforts to prevent or mnimize Year 2000 (Y2K) induced failures in its government revenue and expenditure systems, customs systems, health, and critical infiastructures (such as telecommunications, electricity, transport, water, financial institutions, and postal services). 2. Key performance indicators: The key performance indicators for this project would be: (a) No major disruptions in critical services (such as water, electricity, telecommunications, transport, customs, taxes, salaries payment, financial institutions, and postal services) will occur during the first quarter of Year 2000 as a result of the Y2K bug. (b) No significant decrease in activity caused by the Y2K bug will occur in the three large computer centers (Finance, Interior, Customs) beyond April 1, 2000. These indicators will be split into more precise ones, and methods of assessing detailed results will be defined during conception of contingency plans (national and sector specific). B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) CAS Document: NO 17269-SE, December 29, 1997 Date of latest CAS discussion: January 29, 1998 The CAS puts considerable emphasis on macroeconomic stability, improved private sector environment, and alleviation of infrastructure botflenecks. Inplementing a Y2K project will reduce potential risks to all of the above objectives. Economic and Financial Policy Framework Paper. 1999-2001, June 4, 1999 This paper states, in particular, that the GoS intends to implement policies to sustain strong, durable, diversified and balanced growth. It will accelerate the reforms in the water, transport, and energy sectors. The Y2K project's objective is to ensure that strategic sectors will avoid major disruptions due to the Y2K bug that can slow sustainable improvement of functioning of these sectors and negatively impact private business activity. 2. Main sector issues and Government strategy: The Y2K problem stems from the fact that many computerized and digital systems could malfumction because of failure to properly process the correct date as the century changes. 2.1 Mdw SectorIssues Although the problem is technically simple, it poses a significant financial and management burden due to the resource-intensive nature of the process and the number of actors concemed.  Page 3 In almost all economic activities (public and private), electronic or computer-based systems are used for processing and storing information. Failure or errors in processing that may not be identified immediately can provoke major malfunctions that may stop or deteriorate the functioning of major economic activities themselves. This is the case in Senegal where many activities cannot be maintained without the help of reliable electronic or computer-based systems. Aware of the problem caused by Y2K bug risks, the GoS set up a Y2K institutional framework in January 1999, under which a National Y2K Steering Committee has carried out or coordinated the identification of key risk exposures in the following areas: (a) Government-managed operations (revenue and expediture, civil service payroll and pension, management of passports, visas, identity cards, and customs systems); (b) Dysfunction in ministries and public adminisaions for day-to-day office automation processes related to services provided to the population; (c) State-owned enterprises in charge of water treatment, railways, postal services, ports, air and maritime traffic control, etc.'; (d) Health services; (e) Private sector in charge of strategic infrastructure services (power, energy, telecommunications, transport); (f) Manufacturing imdustry and, in particular, small and medium enterprises (SMEs); and (g) Financial sector. Almost all Y2K inventories have been completed and appraised by seven sector-specific tchnical commissions, and actions to correct or replace critical systems non-compliant with Y2K have been implemented since March 1999 or earlier. 2.2 GovernmentStrategy The National Y2K Steering Committee (Comite de Pilotage du projet "Passage du Senegal a I 'An 2000') was established on January 6, 1999 by decree of the Prime Minister. This Committee (CdP) is chaired by the Minister of Scientific Research and Technology (MSRT). CdP was given the task of defining and implementing a National Y2K Strategic Plan; it is the regulatory, monitoring, and decision-making body on all Y2K matters. Weeldy reports are presented to Government meetings. CdP's mission is to: (a) ensure that the key sectors of the national economy are not affected by the Y2K bug; (b) raise awareness among different segments of the Senegalese society; and (c) disseminate information on Y2K issues. This committee is also in charge of assessing financal needs and seeking sources of funding in cooperation with the Ministry of Economy, Finance, and Planning (MEFP). A National Y2K Coordination Committee (Comite de Coordinaffon du projet "Passage du Senegal a I 'an 2000') was created simultaneously by the same decree. Its mission is to coordinate the activities IEnterprises in other sectors will also be eligible for project support. 2An Internet-based Y2K Resource Center has been created to provide eqipment and software testing and other information.  Pag 4 of seven technical commissions (Public Sector and Adiniions, Financial Sector, SMEs, Industry, Strategic Activities, Health and Environment, and Security), to manage the Y2K Resource Center, and to set the agenda for CdP meetings. The commission in charge of security issues was created more recently, and is chaired by the Ministry of Defense. 3. Sector issues to be addressed by the project and strategic choices: Priority is given to addressing Y2K risk exposures in the most vital operations for the economy, which are: * Overall functioiing of critical activities in the country * Public Administration and Finance * Strategic Sectors, public and private (water, energy, telecommunications, transport, financial services) * Health * Industry, in particular SMEs C: Project Description Summary 1. Project components: (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown) The GoS has requested a Y2K Credit in the amount of US$10.15 million equivalent from the World Bank. This Credit will assist the Government in its efforts to mitigate Y2K risks in its critical financial and public service operations. Financial and human resource shortages in Senegal's Y2K program make the Bank's assistance necessary. Given the short time remaining before January 2000, it is unrealistic to design a project that will cover all needs of all sectors of the economy. Therefore, the efforts are focused on those areas and priorities that are vital to the economy and are still non-Y2K compliant. These include: (a) Public sector's large computer systems' centers. They are in charge of vital information systems dealing with government financial revenue and expenditure, population official registration and documents, and customs. In particular, customs' operations are critical for the economy, and adequate resources must be allocated to assess their Y2K compliance and to meet any remediation and contingency plans needs. (b) Senegalese ministries and public administrations that may face disruptions in their daily functioning due to failure in office automation tools and database servers. According to a review carried out by the Public Sector and A inins Commission for 14 institutions, around 75% of their total computer inventory of 2500 pieces is non-compliant, and 15% will have to be replaced. (c) State-owned enterprises, including railways and postal services, that have started their Y2K remediation process but require more funds to cover their needs. (d) Health is an area where electronic and computer-based administrative and medical equipment require closer examination. The synthesis of recent surveys to make an inventory of Y2K bug problems is under review and validation; and, at this stage, only a preliminary budget estimate has been provided.  Page 5 (e) Privatized basic infastructure service providers (water, electricity and telecommunications compames) have been very active in fixing their Y2K problems. This is maily because these operations are managed by inteional partner companies. Although there is a high degree of Y2K readiness in these operations, the Govermnent nevertheless needs to ensure and verify that all such systems are fully compliant. This work will be carried out in the first assessment phase of national and sector-specific contingency plans (Component 3). (f) The scope of potential Y2K risks in private sector operations, especially in small and medium enterprises (SMEs), is not covered well at this point. Building awareness and disseminating information is a continuous process. The project will include actions and means for strengthening the capacity of Y2K coordination to adequately monitor the readiness status and to assess the potential Y2K risks for SMEs and industries. The project will cover the most urgent priorities (identified as priority number one) that represent around 50% of the total needs identified. It is assumed that this approach will allow Senegalese adminiations and public services to provide daily services offered to the population, and to carry out their own management under satisfactory conditions. 1.1 Project Components Descripfon This project will reinforce and accelerate ongoing work carried out by the GoS since the beginning of 1999. It will take into account the existing Y2K institutional framework and ongoing actions. Due to the specific deadline of Decenber 31, 1999 and the Y2K bug context, the project's time frame will be split into four phases: Phase 1 will cover urgent actions already started or to be started before the end of October 1999. A Project Preparation Facility advance (PPF) of US$750,000 and retroactive financing up to US$2 million (20% of the total amount of the project) were approved in order to cover urgent actions already identified. Phase 2 will cover actions to be implemented prior to December 31, 1999. As al identified actions cannot be implemented by this date, activities identfied as highly critical by inventory and contingency plan sudies have been selected, and corresponding actions will be implemented by end-1999. Phase 3 wiU cover actions to be implemented before March 31, 2000. This will correspond to the continuation of already identified needs in less critical activities and to remediate actual dysfunctions due to the Y2K bug. During that period, contigency plans will have to be targeted to mitigate these eventual dysfunctions in critical areas at national or sector-specific levels. Phase 4 (April to December 2000) wiU cover actions dealing with consolidation and modernization of computer systems and infrastructures already upgraded for Y2K. Several needs have been identified in enlarging network and open systems infrastructures and allowing more decentralizaion of administration operations. The Project Management Unit (PMU) will select actions according to government priorities and available financing. However, all actions will have to be implemented before end-December 2000 so that the last disbursements can be completed by June 2001. Some actions have yet to be identified, so flexibility is provided to the project to permit the PMU to adapt schedule and budget to real priorities, in line with the project's four phases as described above. A detailed Implementation Plan is provided in Annex 8 and wiU be adjusted regularly according to the progress of the project with regard to actual needs.  Pag 6 The project will be composed of three components: Project Managmet Strengtiening, Public Sector Remediation, and National and Sector-specific Contingency Plans. Component 1: Project Management Strenathenina The PMU will be in charge of the following main tasks: (a) overall supervision of the project, reporting weeldy to the Y2K Project Steering Committee chaired by the Minister of Scientific Research and Technology (MRST); progress reports will be sent to World Bank project team monthly; (b) selection of priorities and validation of actions to be launched by beneficiaries in accordance with the project's four phases; (c) supervision of budget, procurement and disbursements; in order to accelerate the start of the project, related operational work will be subcontracted to a separate organization, the Private Sector Foundation (PSF), which is already in charge of the same tasks for other Bank projects; (d) supervision and follow-up of remediation actions carried out in public sector areas; (e) supervision and follow-up of contingency action plans' development and implementation; (f) definition and implementation of a Communication Plan dedicated to Y2K readiness infornation dissemination; and (g) training for increasing awareness of stakeholders and the public on Y2K risks and Senegal's strategic areas' readiness. Total Budget for this component is estimated at US$750,000, of which US$250,000 is financed under the PPF. Component 2: Public Sector Remediation The remediation and upgrading of public sector systems is split into four main subcomponents: * Main Administrations' Information Centers (DTAI, DAF, CID) * Other Public Ministries and Administrations * State-owned Enterprises * Health Subcomponent 1: Main Administrations' Information Centers (a) Direction du TraitementAutomatique de l'Information (DTAI-Ministry of Finance) is in charge of critical operations such as civil servants' payroll, treasury, tax recovery, debt management, etc. (b) Direction de l'Automatisation des Fichers (DAF-Comnputer Automation Department - Ministry of Interior) is in charge of the election system, identity cards, visas and passports, etc. The election system correction is almost complete (own human resources); however, critical applications (identity cards, visas and passports, human resources management) remain to be addressed.  Page 7 (c) Centre d'lnformatique des Douanes (CID-Customs Deparunent of Informatics). The GAINDE 3 system is vital for Senegal and represents a major share of government financial resources. A Y2K remediation contract with ACFO (a French software company) of more than US$1 million is at high risk according to information provided to the Bank's mission, and the following urgent actions have bee agreed: audit of ACFO's planning and delivery by an independent consultant; upgrading of CID's technical platform; and training and assistance to the 200 clients connected to CID's system (these three actions are financed under PPF funds). A specific Contingency Plan is necessary due to the very high impact of a failure in customs' operations. This plan and related budget will be put under direct control of CID in close coordination with general Contingency Plan development. TABLE 1: BUDGET SUMMARY OF MAIN ADMISTRATION INFORMATON CENTERS (US$ MIuON) GOS Other donors Project Service Total Budget Financing Financing Funds DTAI 3.1 1.2 0.5* 1.4 DAF (a) 2.1 0.9 0.6** 0.6 7 __ _ __ _1. .0***0. ICID -Ta-X 1.7 _ 0.7 Total 6.9 2.1 l 2.1 2.7 *infoDev; **Canadian; ***French, (a) including US$50,000 financed under PPF. Subcomponent 2: OtherPublicMinistries and Administrations Requests have been colected by DelUgation 1 'Informatique4 through a comprehensive inventory of all equipment installed in aministrations and public services. It is proposed that the project cover remediation actions representing about 50% of the needs identified for 14 main Ministries and Services5 * Due to time constraints, it is assumed that only 50% to 60% of this program can be achieved before the end of CY99 and that further actions wiUl be taken according to real dysfunctions observed in early CY2000. * As most computer applications correspond to office automation (word processing and spreadsheets), some light dysfunctions may not be critical for a short period. Prioritization based on risk analysis according to the importanc of each sevice and application concerned will have to be managed by the Y2K Public Sector and Administrations' Comnission in close connection with the PMU. * Preparation of implementation and some urgent remediation actions were started in March 1999 and wiU be covered retroactively. A budget of US$1.5 million has been allocated for this subcomponent, including a provision of US$0.4 million with regard to remediation needs for administrations where the inventory has not yet been completed. 3CGestion Automatisee des Informations Douanieres et des Echanges-an automatic customs' system in place in Senegal since 1990. 4 MSRTs department that deals with government policy in computer systems development. S Presidency; Prime Minister; Economy, Finance and Planning; Foreign Affairs; iterior; Scientific Research and Technology; State Modernization; Justice; Education; Industry, Transport; Communication; Parliament; Social and Economic Council.  Pagea Subcomponent 3: State-owned Enterpnses (Poste, SNCS, PETROSEN, SODAGRI, S