IMPLEMENTATION COMPLETION AND RESULTS REPORT PROGRAMMATIC CREDITS IN THE AMOUNT OF SDR 54.8 MILLION (US$80 MILLION EQUIVALENT) THE REPUBLIC OF SENEGAL

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT ON PROGRAMMATIC CREDITS IN THE AMOUNT OF SDR 54.8 MILLION (US$80 MILLION EQUIVALENT) TO THE REPUBLIC OF SENEGAL FOR THE POVERTY REDUCTION SUPPORT CREDITS I, II and III June 27, 2008 Poverty Reduction and Economic Management 4 AFCF1 Africa Region Report No: ICR

2 CURRENCY EQUIVALENTS (Exchange Rate Effective as of 5/18/08) Currency Unit = FCFA CFAF 1.00 = US$ FISCAL YEAR (January 1 December 31) ABBREVIATIONS AND ACRONYMS AGS Accelerated Growth Strategy BCI Budget d Investissement Consolidé (Consolidated Investissement Budget) CAS Country Assistance Strategy CDD Community Driven Development CFAA Country Financial Accountability Assessment CM Commission des Marchés (Procurement Commission) CNCA Commission Nationale des Contrats de l Administration (National Commission for Public Contrats) CNP Comité National de Pilotage (National Steering Committee) CPN1 Consultation Prénatale (Antenatal Consultation) COF Contrôle des Opérations Financières (Financial Operations Control) CPAR Country Procurement Assessment Review CPC Consultation Primaire Curative (Primary Curative Consultation) CSPLP Cellule de Suivi du Programme de Lutte contre la Pauvreté (Monitoring Unit for Poverty Reduction) DCMP Direction Centrale des Marchés Publics (Central Directorate for Public Contracts) DTP3 Diphtheria Polio Tetanus 3 FDD Fonds de Dotation à la Décentralisation (Decentralization Funds) IMCI Integrated Management of Childhood Illness IMF International Monetary Fund JSAN Joint Staff Advisory Note LDP Letter of Development Policy MDG Millennium Development Goal MDRI Multilateral Debt Relief Initiative MEF Ministry of Economy and Finance MOE Ministry of Education MOH Ministry of Health MOU Memorandum of Understanding MTEF Medium-Term Expenditure Framework PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PNDL Programme National de Développement Local (National Local Development Program) PNDS Plan National de Développement Sanitaire (National Plan for Health Development) POR Plans d Opérations Régionaux (Regional Operational Plans) PRECOL Programme de Renforcement et d Equipement des Collectivités Locales (Local Authorities Development Program) PRGF Poverty Reduction and Growth Facility ii

3 PRS PRSC PRSP PRSP PR PSI ROSC SDR SENELEC SIG SIGFIP SIGMP SNPS SPS WAEMU Poverty Reduction Strategy Poverty Reduction Support Credit Poverty Reduction Strategy Paper Poverty Reduction Strategy Paper Progress Report Policy Support Instrument Report on the Observance of Standards and Codes Special Drawing Rights Société Nationale d Eau et d Electricité (Water and Electricity Company of Senegal) Système Intégré de Gestion (Integrated Accounting System) Système Intégré de Gestion des Finances Publiques (Integrated Public Finance Management System) Système Intégré de Gestion des Marchés Publics (Integrated Management System of Public Contracts) Stratégie Nationale de Protection Sociale (National Social Protection Strategy) Stratégie de Protection Sociale (Social Protection Strategy) West African Economic and Monetary Union Vice President: Country Director: Sector Manager: Project Team Leader: ICR Team Leader: Obiageli K. Ezekwesili Madani M. Tall Antonella Bassani Jacques Morisset Mamadou Ndione iii

4 THE REPUBLIC OF SENEGAL IMPLEMENTATION COMPLETION AND RESULTS REPORT ON THE FIRST, SECOND AND THIRD POVERTY REDUCTION SUPPORT CREDITS CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring 1. Program Context, Development Objectives and Design 2. Key Factors Affecting Implementation and Outcomes 3. Assessment of Outcomes 4. Assessment of Risk to Development Outcome 5. Assessment of Bank and Borrower Performance 6. Lessons Learned 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Bank Lending and Implementation Support/Supervision Processes Annex 2. Beneficiary Survey Result Annex 3. Stakeholder Workshop Report and Results Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders Annex 6. List of Supporting Documents Annex 7. Evolution of prior actions Annex 8. PRSCs Initial and Revised list of Indicators Annex 9. Key Indicators, Benchmark and outcomes MAP IBRD iv

5 A. Basic Information Program 1 Country Senegal Program Name SN-PRSC I Program ID P L/C/TF Number(s) IDA-40100,TF ICR Date 06/11/2008 ICR Type Core ICR Lending Instrument PRC Borrower Original Total Commitment Implementing Agencies Ministry of Economy and Finance Cofinanciers and Other External Partners Program 2 GOVERNMENT OF SENEGAL SDR 20.5 M Disbursed Amount SDR M Country Senegal Program Name SN-PRSC II Program ID P L/C/TF Number(s) IDA ICR Date 06/11/2008 ICR Type Core ICR Lending Instrument DPC Borrower Original Total Commitment Implementing Agencies Ministry of Economy and Finance Cofinanciers and Other External Partners Program 3 GOVERNMENT OF SENEGAL SDR 20.8M Disbursed Amount SDR 20.8M Country Senegal Program Name SN-PRSC III Program ID P L/C/TF Number(s) IDA ICR Date 06/11/2008 ICR Type Core ICR Lending Instrument DPC Borrower Original Total Commitment Implementing Agencies Ministry of Economy and Finance Cofinanciers and Other External Partners GOVERNMENT OF SENEGAL SDR 13.5M Disbursed Amount SDR 13.5M v

6 B. Key Dates SN-PRSC I - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 02/23/2004 Effectiveness: 01/06/ /06/2005 Appraisal: 07/19/2004 Restructuring(s): Approval: 12/14/2004 Mid-term Review: SN-PRSC II - P Closing: 12/31/ /31/2005 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 03/14/2005 Effectiveness: 09/05/ /05/2006 Appraisal: 07/29/2005 Restructuring(s): Approval: 03/29/2006 Mid-term Review: SN-PRSC III - P Closing: 12/31/ /31/2006 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 04/06/2006 Effectiveness: 08/20/ /20/2007 Appraisal: 07/17/2006 Restructuring(s): Approval: 06/20/2007 Mid-term Review: Closing: 12/31/ /31/2007 C. Ratings Summary C.1 Performance Rating by ICR SN-PRSC I - P Outcomes Risk to Development Outcome Bank Performance Borrower Performance SN-PRSC II - P Outcomes Risk to Development Outcome Bank Performance Borrower Performance Moderately Satisfactory Moderate Satisfactory Satisfactory Moderately Satisfactory Moderate Satisfactory Satisfactory vi

7 SN-PRSC III - P Outcomes Risk to Development Outcome Bank Performance Borrower Performance Moderately Satisfactory Significant Moderately Satisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) SN-PRSC I - P Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: NA Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory SN-PRSC II - P Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: NA Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory SN-PRSC III - P Bank Ratings Borrower Ratings Quality at Entry Moderately Satisfactory Government: Moderately Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: NA Overall Bank Overall Borrower Moderately Satisfactory Performance Performance Moderately Satisfactory C.3 Quality at Entry and Implementation Performance Indicators SN-PRSC I - P Implementation QAG Assessments (if Indicators Performance any) Potential Problem Program No Quality at Entry (QEA) None at any time (Yes/No): Problem Program at any Quality of Supervision No None time (Yes/No): (QSA) DO rating before Satisfactory Closing/Inactive status Rating: vii

8 SN-PRSC II - P Implementation Performance Potential Problem Program at any time (Yes/No): Problem Program at any time (Yes/No): DO rating before Closing/Inactive status Indicators No No Satisfactory QAG Assessments (if any) Quality at Entry (QEA) None Quality of Supervision (QSA) None Rating: SN-PRSC III - P Implementation Performance Potential Problem Program at any time (Yes/No): Problem Program at any time (Yes/No): DO rating before Closing/Inactive status Indicators No No Satisfactory QAG Assessments (if any) Quality at Entry (QEA) None Quality of Supervision (QSA) None Rating: D. Sector and Theme Codes SN-PRSC I - P Original Actual Sector Code (as % of total Bank financing) Central government administration General public administration sector Health Other social services Vocational training 4 4 Theme Code (Primary/Secondary) Decentralization Primary Primary Health system performance Primary Primary Judicial and other dispute resolution mechanisms Secondary Secondary Public expenditure, financial management and procurement Primary Primary Social safety nets Secondary Secondary SN-PRSC II - P Original Actual Sector Code (as % of total Bank financing) Central government administration viii

9 Health Law and justice Other social services Sub-national government administration Theme Code (Primary/Secondary) Decentralization Primary Primary Health system performance Secondary Secondary Improving labor markets Secondary Secondary Public expenditure, financial management and procurement Primary Primary Vulnerability assessment and monitoring Secondary Secondary SN-PRSC III - P Original Actual Sector Code (as % of total Bank financing) Central government administration General industry and trade sector Health Other social services Sub-national government administration Theme Code (Primary/Secondary) Decentralization Secondary Secondary Health system performance Secondary Secondary Improving labor markets Secondary Secondary Public expenditure, financial management and procurement Primary Primary Vulnerability assessment and monitoring Secondary Secondary ix

10 E. Bank Staff First Poverty Reduction Support Credit - P Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Gobind T. Nankani Country Director: Madani M. Tall Madani M. Tall Sector Manager: Antonella Bassani Robert R. Blake Task Team Leader: Mamadou Ndione Jacques Morisset ICR Team Leader: Mamadou Ndione ICR Primary Author: Mamadou Ndione SN-PRSC 2 - P Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Gobind T. Nankani Country Director: Madani M. Tall Madani M. Tall Sector Manager: Antonella Bassani Robert R. Blake Task Team Leader: Mamadou Ndione Jacques Morisset ICR Team Leader: Mamadou Ndione ICR Primary Author: Mamadou Ndione PRSC III - P Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Obiageli Katryn Ezekwesili Country Director: Madani M. Tall Madani M. Tall Sector Manager: Antonella Bassani Antonella Bassani Task Team Leader: Mamadou Ndione Jacques Morisset ICR Team Leader: Mamadou Ndione ICR Primary Author: Mamadou Ndione F. Results Framework Analysis Program Development Objectives (from Program Document) The overall program development objectives (PDO) of the PRSCs series were twofold: (i) to improve the effectiveness and transparency of the national budget process and expenditure management (including at the decentralized levels) as the main instrument for achieving national development goals and reducing poverty; and (ii) help to support achievement of the PRSP outcomes for improved living conditions of the poor within the PRSP time horizon. x

11 Revised Program Development Objectives (as approved by original approving authority) N/A (a) PDO Indicator(s) See Annex 9 PRSC I - P Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years PRSC II - P Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years PRSC III - P Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years (b) Intermediate Outcome Indicator(s) See Annex 9 PRSC I - P Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years PRSC II - P Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years PRSC III - P Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years xi

12 G. Ratings of Program Performance in ISRs PRSC I - P No. Date simplified Actual Disbursements ICR DO IP (USD millions) Archived 1 11/03/2005 Satisfactory Satisfactory 31.3 PRSC II - P No. Date ISR Actual Disbursements DO IP Archived (USD millions) 1 09/30/2006 Satisfactory Satisfactory /04/2007 Satisfactory Satisfactory PRSC III - P Date ISR Actual Disbursements No. DO IP Archived (USD millions) 1 10/24/2007 Satisfactory Satisfactory H. Restructuring (if any) xii

13 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal: Senegal had registered a sustained and relatively strong economic performance in the decade preceding the design of this series of Poverty Reduction Support Credits (PRSCs) in From 1995 to 2000, real GDP growth averaged 4.3 percent per year, enabling a sustained increase in average per capita growth. In the period immediately preceding this series of operations, GDP growth remained strong, averaging 4 percent per year; the Government maintained a prudent external borrowing policy and tight control over domestic financing; and the annual inflation rate averaged 1.5 percent. The country was also largely unaffected by regional instability and enjoyed a stable political climate. A politically significant milestone was reached in 2000, when the country experienced its first transition to another political party since independence, and in 2001 a new Constitution both reduced the length of the presidential term (from seven to five years) and limited the number of terms to two. These years of sustained and relatively rapid economic growth had a positive impact on poverty and reduced the level of absolute poverty from 61.4 percent of households in 1994 to 48.5 percent of households in Most of this decrease was registered in Dakar and other urban areas, however, and public perceptions of poverty showed a disconnect with this poverty decline. 1 Moreover, the absolute number of poor people increased in that period, since the decrease in the rate of poverty was lower than the rate of population growth. The likelihood of being poor was highly correlated with the lack of access to formal education, chronic health problems, living in a remote region, and unemployment or low-quality employment. The persistence of poverty, combined with serious deficiencies in terms of both human and infrastructure development, made Senegal s attainment of the Millennium Development Goals (MDGs) by 2015 uncertain. It was in this context that the Government of Senegal designed its poverty reduction program as initially laid out in its first Poverty Reduction Strategy Paper (PRSP-I) for The PRS-I was prepared through extensive consultations with a broad range of stakeholders, including representatives from the parliament, central and local Governments, donors, the private sector, think tanks, trade unions, and civil society organizations. The PRS-I was a well-articulated set of strategies and priorities for addressing the country s development challenges by focusing on four pillars: (i) wealth creation through economic reforms and private sector development; (ii) capacity building and development of basic social services; (iii) improving living conditions of vulnerable groups; and (iv) implementation of the strategy and monitoring its outcomes. PRSP-I was followed by a second generation program, PRSP-II, covering the years The second PRS was also prepared with extensive inputs from donors, local governments, the private sector, and representatives of civil society, and its vision was well aligned with the MDGs agenda. Like the first PRSP, PRSP-II was also articulated 1 Two-thirds of households identified themselves as poor and one-third of poor and non-poor alike felt that poverty had actually substantially increased in their community over the previous five years. 1

14 around four pillars: (i) wealth creation and pro-poor growth; (ii) improving access to basic social services; (iii) protecting vulnerable groups against catastrophic and exogenous shocks; and (iv) greater transparency combined with participatory processes. The first three pillars were consistent with those included in the first PRSP, while the last one was added owing to the need to strengthen the effectiveness of public spending (through efficient budgetary procedures and controls), as well as to promote private sector development (through less distortions and better access to justice). It was in this background and perspective that the PRSC I, II and III were designed in support of both PRS-I and PRS-II. As set forth in the Bank s 2003 Country Assistance Strategy (CAS) for Senegal (Report No SN), the PRSCs were seen as critical instruments to support the PRSP agenda, notably the pillars of budgetary reforms, wealth creation, and the delivery of basic social services to the poorest segments of the population over the medium term. These credits were a series of three one-tranche, development policy operations implemented over the period. 2 The reforms supported by the operation would help Senegal implement its poverty reduction program in three ways by helping to: (i) to maintain economic growth and improve living conditions for the Senegalese; (ii) enhance ownership and functionality for the Government in policy planning and budget management, and thereby help the country progress towards achieving the MDGs; and (iii) promote coordination and collaboration within the Government and among donors, which would lead to a comprehensive approach to the delivery of basic social services. The Bank, the Government, and Senegal s others stakeholders, including development partners, identified the PRSCs as the preferred lending instrument to: align with the Government s strategies and institutions for poverty reduction; provide predictable support through and to the Government s own functional administration and budget systems to help consolidate and smooth resource mobilization; maintain continuity in the dialogue between the Government and the Bank on critical policy issues; promote ownership and a better functioning of Government institutions; and help focus internal and external resources and attention on meeting key PRSP objectives. In addition, the move to supporting poverty reduction through the national budget process was consistent with the Government s decision to better align its budget allocation with developmental priorities. It was also believed that a multi-sectoral approach would promote coordination and collaboration across Government agencies in areas that suffered from fragmented approaches, including strengthening the decentralization process and improving the Government s delivery of services to the poor and vulnerable. 2 PRSC I and PRSC II were each a SDR 20.5 million and SDR 20.8 million (US$30 million equivalent) credit and PRSC III was a SDR 13.5 million (US$20 million equivalent) credit. PRSC III was originally envisioned at the time of its design as a US$30 million credit; however, Senegal s subsequent qualification for the MDRI significantly reduced the fiscal gap, as well as the IDA-14 resources available to Senegal in FY07. 2

15 Finally, a multi-sectoral approach was selected as a way to address cross-cutting constraints and issues that affected service delivery, notably in health and education, but which could not be addressed effectively at the sector level (e.g., issues dealing with recruitment, remuneration and deployment of personnel). 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved): The overall program development objectives (PDO) of the PRSCs series were twofold: (i) to improve the effectiveness and transparency of the national budget process and expenditure management (including at the decentralized levels) as the main instrument for achieving national development goals and reducing poverty; and (ii) help to support achievement of the PRSP outcomes for improved living conditions of the poor within the PRSP time horizon. While the PDOs as stated in the first Board document (PRSC I) were clear and well defined, the PRSCs did not set out quantitative high level performance indicators and targets to see whether these overall objectives were met or not. To assess progress achieved by the program, a list of indicators (Cf. Annex 8) built on those set out by Government in the PRSPs for each area of focus. The initial list counted 45 indicators at different levels in the results chain. They principally focused on processes and outputs, rather than outcomes with the exception of the health sector where outcome indicators were specific, measurable, and quantifiable, with baselines and targets. The indicators used in the other areas were viewed as leading to, or correlated with outcome indicators, including those defined for the MDGs. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification: The above PDOs remained unchanged over the PRSCs period. The number of indicators decreased from 45 in PRSC I to 42 in PRSC II and 36 in PRSC III. The list of indicators was revised mostly because of data availability issues. Of the 45 initial indicators, 25 remained unchanged, 5 were modified to make them more precise and/or to replace them by proxy indicators, 15 were dropped mostly for lack of appropriate data and six new indicators were integrated. 1.4 Original Policy Areas Supported by the Program (as approved): The PRSCs provided support to the Government in the following five priority areas: (i) (ii) Strengthening budgetary and financial procedures (including those linked to remuneration of the public sector), and procurement processes and systems; Decentralization process, by securing financial transfers to local Governments, as well as disseminating and implementing the PRS agenda at the local level; 3

16 (iii) (iv) (v) Health services, with a focus on improving information, financial and human resources management in the sector, as well as increasing access to basic health services that have been identified as the most important factors for determining the performance of this sector; Wealth creation through the support of ongoing reforms in the labor market and improvements in the judiciary system; and Improving living conditions of the most vulnerable groups. These policy areas were selected in view of their contribution to the PRSP-I and PRSP-II objectives and were complementary with other assistance programs carried out by the Bank and other donors, notably at the sectoral level. As seen in Table 1 below, the PRSCs directly supported the PRSP s three pillars. PRSC I focused on three cross-cutting and institutional areas: fiduciary reforms, by strengthening budgetary and financial procedures (including those linked to remuneration of the public sector) and procurement procedures; enhancing financial decentralization toward local Governments; and, improving health service delivery, including both by improving financial and human resources management in the sector as well as improving access to basic health services. These three areas constituted the backbone of the Government s poverty reduction strategy and were chosen for their ability to contribute to poverty reduction. Strengthening the Government s fiscal and budgetary procedures would contribute to poverty reduction because weaknesses in recruiting and remuneration policies prevented the public administration from delivering core basic services, especially outside of Dakar. Similarly, if budgets were misallocated, needed services would not be adequately funded, and if funds were misappropriated, the quality and quantity of services offered would suffer. Strengthening the decentralization process including improving the capacity of local Governments and the gradual transfer of responsibilities to local communities, particularly in the health and education sectors was viewed as important to targeting the vulnerable and poor in rural regions where poverty was greater, and improving the delivery of public services, another component of poverty. Finally, improving the delivery of health services would enhance both the access and utilization of better quality health services and strengthen the health sector s financing and management. PRSC II and PRSC III further strengthened the reform agenda in the fiduciary, decentralization, and health areas and added two focus areas on the promotion of wealth creation and improving the living conditions of vulnerable groups (two of the pillars of the PRS-I and PRS-II). These two areas were added as part of a deliberately designed sequencing approach in which the Bank s support over the course of the PRSCs would be gradually broadened to include these areas, assuming that the Government made adequate and prior reform progress under PRSC I. By adding these areas, the PRSC series agenda sought to strengthen basic elements of the investment climate and reinforce the social protection strategy and poverty alleviation for the poorest segments of the population. 4

17 Table 1: Objectives and Expected Medium-Term Results of the PRSC Program and Links with the PRSP PRSP Pillars PRSC program PRSP Objectives/MT Results Wealth creation Labor Ensure better labor market management by strengthening the efficiency and transparency of the job market, promoting independent employment in rural and urban areas, and encouraging vocational and professional training. Justice Improve the legal and judicial framework and reduce time required to process court cases. Fiduciary Promote transparency in the management of public affairs by Reforms combating corruption and improving the management of public (CFAA/ CPAR) finances. Capacity building and promotion of basic social services Improving living condition of vulnerable groups Decentralization Civil service reforms Health Vulnerable Groups Secure financial transfers from the central Government to the local Governments and strengthen the institutional framework supporting the implementation of the PRSP in the regions. Clarify responsibilities between the central administration and local communities, especially regarding their assignment in terms of revenue and spending responsibilities. Implement civil service reforms that will be consistent with the objectives stated in the PRSP, notably in the education and health sectors. Improve the quality and supply of health care, including the development of community-based health care services, the improvement of prevention efforts against infectious diseases, and combating maternal and infant/child mortality. Improve the ability of vulnerable groups to access social and economic opportunities and prevent, mitigate, or cope with the risks to their wellbeing. 1.5 Revised Policy Areas (if applicable): As noted above, PRSC II and PRSC III expanded the initial policy coverage to include the areas of promoting wealth creation and the improving the living conditions of vulnerable groups. These areas had been identified in PRSC I as areas of focus that would be gradually introduced into the PRSC program. The rationale for the gradual and sequential approach to focusing on wealth creation, included: (i) the need for greater Government specificity as to the types of policy reforms to be pursued; (ii) the political sensitivity of this type of reform and the potential for delay by vested interests; and (iii) the risk that the rapid inclusion of this focus might make more difficult the task of monitoring the PRSC progress in other priority areas. Consequently, PRSC I only focused on working with the Government on defining and agreeing on action plans, leaving an expansion of coverage to PRSCs II and III, should sufficient progress occur (as turned out to be the case). PRSC II and III accordingly focused on improving the justice system and strengthening the functioning of the labor market two areas that were relatively underfunded by donors and which were expected to have significant externalities in the promotion of wealth creation and equity in Senegal. 5

18 The rationale for the gradual and sequential approach to improving the living conditions of vulnerable groups under PRSCs II and III was driven by the fact that the Government was still in the process of making operational its strategy toward vulnerable groups. Consequently, PRSC I primarily supported the development of strategies and instruments to improve the coherence and effectiveness of the actions proposed for vulnerable groups in the PRSP, whereas PRSC II and PRSC III focused on increasing access to social protection measures, improving the targeting of actions to improve the lives of vulnerable groups, and facilitating the access of these groups to basic services. The addition of these two policy areas does not represent a revision in policy areas. Rather, their addition was opportunistic in that it took advantage of the progress achieved under PRSC I to add additional areas that were perceived as crucial to successful PRS implementation. 1.6 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations): There were originally 21 triggers identified under PRSC I for PRSC II. These were reduced to 12 prior actions for PRSC II in order to (i) better conform to Bank guidelines recommending a smaller number of actions; and (ii) make the triggers more precise in order to minimize the difficulties of interpretation at the time of negotiations. Four out of the nine triggers that were dropped, however, were still completed. Similarly, the 15 triggers identified in PRSC II for PRSC III were reduced to a more manageable 10 prior actions for PRSC III, although a number of the dropped actions were implemented nonetheless. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance (supported by a table derived from a policy matrix): Beyond the significant progress achieved (see below) in the five areas of focus, PRSC I, II and III promoted (i) alignment of Bank support with the Government s strategies and institutions for poverty reduction; (ii) ownership and a better functioning of client s institutions, particularly collaboration between the Ministry of Economy and Finance and the line Ministries; (iii) maintaining policy dialogue between the Government and the Bank in areas identified earlier as key challenges for economic development; and (iv) providing a framework for coordination with development partners, particularly with the IMF through its Poverty Reduction Growth Facility (PRGF), and other donors providing budget support. The overall PRSC series contributed to the Government s effort to achieve results in PRSP implementation through the support it provided in the five main areas detailed above. Senegal made important progress in achieving outcomes in budgetary reforms (except procurement reforms and external and internal control of the budget), decentralization, and health service delivery, but program performance in the areas of wealth creation and protection of vulnerable groups was weaker. These achievements are 6

19 described below and shown in Table 2 (Anticipated Reform Measures and Outcomes) 3 and Annex 8 (Key Indicators). Prior to Board presentation of PRSC I, the Government completed all planned prior actions in budgetary reform, decentralization, and the health sector. As the first credit in a series of three operations, PRSC I focused on laying out the groundwork for developing strategies for key areas of reform, and supported the institutional and legislative changes needed for subsequent reforms. Follow-up actions were implemented in the context of PRSC II and PRSC III. For both PRSC II and PRSC III, all planned prior actions were also completed before presentation of these credits to the Board. Program performance in each of the five policy areas supported by PRSCs I-III is described below (also see table 2 for summary of anticipated reform measures, actual outputs and actual outcomes). Budgetary Reforms By the end of the PRSCs I-III, it was expected that Senegal would have achieved the following budgetary and civil service reforms: A comprehensive three-year MTEF, indicating budgetary allocations through PRS programs and objectives; Budget execution closer to the approved appropriation; Increased decentralization of execution in line ministries; Increased transparency and efficiency in public procurement; Improved external audits and independent controls of budgets; Implementation of a recruiting strategy; and Better control of the wage bill and a new set of financial incentives for civil servants. PRSC I, II and III supported progress on budget preparation, execution and external control, as well as on human resources management. On budget preparation, the credits enabled the Government to progressively introduce a three-year Medium Term Expenditure Framework (MTEF) into the budget preparation process, indicating budgetary allocations through PRS programs and objectives. Four line ministries (Health, Education, Justice and Environment) initiated MTEFs under PRSC I. Under PRSC II, the budget was for the first time prepared on a programmatic basis for these four key Ministries. At the same time, the Finance Law was prepared and adopted on the basis of a uniform nomenclature for current and investment expenditures 4. PRSC III continued the reforms initiated under PRSC I and II and extended the use of the MTEF on budget preparation to three other ministries, including Agriculture. The number of ministries 3 The reform measures contained in Table 2 conform to those discussed above (in Section 1.4 Original Policy Areas Supported by the Program), as set forth in the Program Document for PRSC I. Likewise, the key indicators contained in Table 3 are also those identified in the original Program Document. 4 Before that, the Finance Law was prepared and presented to the Parliament in two separated documents (current expenditures and investment). 7

20 under the MTEF reached 12 (out of 36) and their share covered 45 percent of the total budget in the 2008 Financial Law. With regard to budget execution, significant progress was achieved on computerization and decentralization of budget execution procedures (déconcentration de l ordonnancement). Progress on internal control and procurement, however, was weaker than expected. The share of procurement contracts approved by CNCA without competition and percentage of exceptional expenses in total public expenses remained high within the period. Under PRSC I, the Government initiated the decentralization of financial execution procedures (déconcentration de l ordonnancement) from the Ministry of Economy and Finance to four line Ministries (Education, Health, Justice, and Environment), as well as the implementation of the integration of the public expenses software (SIGFIP) in the selected four ministries, and adopted the rule for the Contrôle des Operations Financières through a Decree signed in the Government also began the audit of the wage bill in the public sector. PRSC II and PRSC III supported the deepening of these reforms. Connection to SIGFIP was extended to targeted ministries, including Agriculture and Equipment, and to the regions. During the PRSC I-III implementation period, the budgetary execution rate was also raised significantly, closer to the approved appropriation in the line ministries. 5 With regard to external control of the budget, progress was also achieved, although the results were less than expected. The PRSC program strengthened the Government s external controls on State accounts. Under PRSC I, the authorities submitted to the Cour des Comptes the budget execution report for the years 1999 to 2001, under PRSC II the one for the year 2002 was submitted, the one for 2003 was submitted in 2007 and the one for 2004 was partially submitted in Under PRSC III, for the first time, the Cour des comptes issued its avis de conformité on the 1997, 1998 and 1999 State Accounts (and begun the revision of state accounts up to 2003). Parliament adopted the lois de règlement. However, the duration between the budget approval and the review of the audited budget execution examination by Parliament remained long (7 years against 2 years according to guidelines) In the areas of human resources management, the PRSC assisted the authorities in implementing a new civil service recruitment and remuneration strategy, including a pilot project for the decentralization of health and education sector staff in the regions and based on performance-based allowances to staff. In the area of procurement, progress was slower. The PRSC program supported the Government s efforts to strengthen the legal framework for the competitive award of public contracts. Under PRSC I, a study devoted to the reform of the legal and institutional procurement system was initiated. This study was finalized under PRSC II, and was fully adopted under PRSC III, including the adoption of the Code des Obligations de l Administration, the new procurement code which limits the conditions under which bids can be approved, and the legal instruments needed for its implementation. However, the implementation of the code did not take place in the 5 For example, the budget execution rate for the health sector increased from 73 percent in 2003 to 94 percent in

21 PRSCs implementation period, and persistent problems in the enforcement of procurement rules remained a major concern of Senegal s development partners. There was actually an upward trend in the issuance of noncompetitive procurement contracts over the period. The share of contracts awarded by CNCA on a sole basis increased from 17 percent in 2004 to 24 percent in 2005 and 29 percent in 2006 and This happened mostly because of weaknesses of the legal framework, as it did not differentiate clearly the conditions under which a contract can be awarded without competition from those under which a competition is mandatory. To correct these weaknesses, the PRSCs supported the preparation of a new legal procurement framework which was adopted by Parliament in June The new procurement code reduced the cases in which a contract can be awarded without competition and involved the private sector and the civil society as members of the ex post tripartite (Government, Private sector and Civil society) controlling agency. Decentralization By the end of the PRSCs I-III, it was expected that the following would be achieved in the area of decentralization: Develop a clear and efficient mechanism for financial transfers from the central to local Governments, and within local Governments, including the decentralization of the execution of the consolidated investment budget; Institute regional committees to help implement and monitor the PRS through regional action plans (Plans d opérations régionaux -- POR); Improve coordination and harmonization of development activities in the regions; and, Use resources and financial transfers more efficiently through improved budgetary control procedures, including audits, and procurement. The PRSCs encouraged the Government to increase and accelerate transfers of financial resources (FDD and FECL) to local Governments. In 2004 (PRSC I), these transfers were made in May and in 2005 (PRSC II) they were in April. In 2002, the transfers were affected in September, nine months into the fiscal year. Moreover, these transfers grew significantly under the PRSCs, reaching 14.1 billion FCFA in 2004, 18.7 billion FCFA in 2005, and 19.4 billion FCFA in 2006, compared to only 12 billion FCFA in Under PRSC III, a new law was adopted by Parliament increase the predictability of financial transfers by linking them explicitly to Value Added Tax (VAT) revenues. Decentralization of the consolidated investment program (BCI) was initiated for the education and health sectors under PRSC III. Under PRSC I, the Government supported the preparation of the regional investment plan which was harmonized with the sectoral investment plan. PRSC I also encouraged the implementation of the institutional framework supporting the PRSP at the decentralized level by creating regional committees in all 11 regions which 9

22 contributed to the second PRSP progress report under PRSC II, and to the establishment and design of the PRSP II. However, delays in the transfer of resources to local government that were reduced from 9 months in 2002 to 4 month in 2005, increased to 7 months in Also, no significant outcomes were achieved under the PRSCs period in the area of improving coordination and harmonization of development activities in the regions. While local authorities prepared the Plan d Opération Régional (POR), it was not integrated into the Plan d Opération Sectoriel (POS), or in the annual budget. With donor support, including the World Bank, trough the PNDL, the government is preparing the Plan Local de Développement (PLD). This plan is expected to lead to more meaningful outcomes, in term of harmonization. Health By the end of PRSCs I-III, it was anticipated that Senegal would have progressed towards the achievement of PRSP and MDG health targets through increased utilization of a package of basic health services, including the following: Better immunization coverage, infectious disease control, and nutrition activities, notably of children and women; Increased utilization of reproductive health services; Increased primary health care (PHC) services utilization rate; Reallocation of expenditures to pro-poor and cost-effective interventions and underserved areas; and Increased number of health districts fully functioning in a decentralized manner. To this end, PRSC I began to support the finalization of the second phase of the National Health Strategy (PNDS) and the implementation of the new institutional framework within the Ministry of Health. As a result, a decree was signed organizing the Ministry of Health in a way that streamlines the internal operation of health agencies. At the same time, the Government revised the norms for the allocation of health personnel and launched the design of a medium-term recruitment plan. In addition, the Interagency Coordinating Committee (ICC) adopted the three-year action plan for immunization and technical evaluation of the Immunization Financial Sustainability Plan (FSP). Under PRSC I, the operation of the human resource management directorate and the health information management system were initiated, both at the central and regional levels. Furthermore, public expenditure for health as a share of GDP increased from 1.7 percent in 2003 to 1.9 percent in 2007 and as a share of total expenditure (excluding debt) from 7.7 percent in 2003 to 10.3 percent in These efforts were reinforced under PRSC II with the adoption of a MTEF in accordance with the need to improve coverage in priority health services in underserved areas and improve health sector performance. In addition, the Integrated Management of Childhood Illness (IMCI) program was implemented in at least 50 percent of health posts. At the same time, the authorities put in place a mechanism for monitoring health sector 10

23 performance, including the health sector management information system (MIS) in charge of collecting data, as well as measuring the quality of health services throughout the country. The reports on health statistics for 2004, 2005, and 2006 were also prepared on the basis of the data collected by the MIS. Under PRSC III, the decentralization process was supported by a stronger allocation of responsibilities and resources at the regional and district level. A pilot project was also designed to favor staffing in regions where the needs are the most severe. These measures had a notable impact on health service delivery. The execution rate of the investment budget allocated to the Ministry of Health reached 94 percent in 2006 (up from 87 percent in 2004, which itself was an improvement over the 73 percent achieved in 2003). The DTP3 coverage rate rose to 80 percent in 2006 and 94 percent in 2007, up from 59 percent in 2003; the share of skilled assisted service delivery increased from 39 percent in 2001 to 59 percent in 2006; and the CPN1 rose from 52 percent in 2002 to 84 percent in The primary health consultation rate increased from 46 percent in 2003 to 54 percent in 2006 and 64 percent in It should be noted that the selection of triggers and prior actions in the health sector was efficient and results oriented. PRSC I supported the elaboration of the sector policy and fostered the adoption of a new institutional structure which included a quantitative monitoring Unit. PRSC II focused on strengthening the health information management system and started using measurable performance indicators as prior action. Finally, under PRSC III the use of quantitative indicators as conditionality was strengthened. Wealth Creation In this area, the PRSC program expected to achieve the following: Consolidate consensus around labor reforms; Increase funding and coverage of labor training, notably through publicprivate partnerships, leading to higher skilled workers; Provide more flexibility to labor markets in strategic areas; Speed up processing of cases in the judicial system; and Increase access to, and the quality of, the judicial system by strengthening the capacity of the Ministry of Justice and tribunals through the recruitment of additional staff. On the labor side, the authorities introduced a series of actions aimed to promote vocational training during the PRSC implementation period, improve the legal framework, and provide more flexibility to labor markets in strategic areas. PRSC I also supported the creation of a new agency in charge of vocational training (FONDEF) that aimed to reinforce vocational training by promoting coordination and cooperation with the private sector and by securing additional funding. FONDEF started to operate in early 2005 by funding more than 30 training programs in 10 enterprises. This program was strengthened under PRSC III when the number of beneficiary enterprises reached 82. Also, a new Labor Code was adopted in 2007 and under PRSC III, the Government adopted twenty-seven complementary legal texts for the application of the Labor Code 11

24 with the objective of making labor markets more flexible in specific activities. Concrete reform progress was limited, however, in part by institutional instability at the Ministry of Labor (discussed below in Section 2.2). In regard to access to justice, the Government established a committee responsible for implementing the new sectoral strategy, developed the new communication strategy, and adopted an action plan to provide legal assistance to the most vulnerable groups. This effort began under PRSC II and continued its implementation under PRSC III. The National Commission to Combat Non-Transparency, Corruption, and Misappropriation of Public Funds (Commission Nationale de Lutte contre la Non-transparence, la Corruption et la Concussion, CNLCC) received adequate facilities and budget allocations under PRSC II and its Secretary General was appointed. Under PRSC III, for the first time, the Commission began to investigate the cases referred to it. However, the CNLCC lacks legal competences, resources and regular funding in order to be effective. It is accountable to the President and cannot take cases to court. Also, no reports from the agency are made public, despite the fact that the law states it. Finally, the budget of the Ministry of Justice was doubled between 2004 and 2006, making it possible to increase the number of judges and clerks by about one-third, thereby increasing access to the justice system. While the justice sector benefited from good and sound analytical work and support from other Bank projects and other donors at the beginning of the series, the labor market sub-component did not benefit from significant technical and financial support from other donors, nor was there good coordination between the donors in these policy areas. The recent Country Economic Memorandum, prepared by the Bank in close consultation with the Government and a broad range of stakeholders (notably trade unions and employer associations) and donors, focused on labor market issues and helped to close this gap. Protection of Vulnerable Groups The PRSC program expected to achieve the following: Increase access to risk management instruments and social protection measures; Improve the identification, targeting, and monitoring and evaluation (M&E) of social protection programs to improve the lives of vulnerable groups, both in rural and urban areas; Facilitate access by vulnerable groups to basic services (in complement with broad sectoral strategies); Ensure equitable access to an adequate legal framework for vulnerable groups; and Reinforce efficient mechanisms to provide resources to vulnerable groups. An Inter-Ministerial Committee was created in 2005 to pilot and coordinate the preparation of the NSSP. The strategy focused on the biggest gaps in the support provided to vulnerable groups by: (i) developing a coherent and integrated methodology for the targeting and monitoring and evaluation of social protection programs; (ii) 12