The World Bank FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT (IDA-43390) ON A SERIES OF PROGRAMMATIC CREDITS

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized The World Bank FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT (IDA-43390) ON A SERIES OF PROGRAMMATIC CREDITS IN THE AMOUNT OF SDR80 MILLION (US$122 MILLION EQUIVALENT) TO THE REPUBLIC OF BENIN FOR THE POVERTY REDUCTION SUPPORT CREDITS, 4, 5, 6 AND SUPPLEMENTAL FINANCING TO PRSC-6 June 29, 2012 Report No: ICR1941 Poverty Reduction and Economic Management 4 Country Department AFCF2 Africa Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective As of June 14, 2012) Currency Unit = CFA Franc US$ 1.00 = CFAF 523 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BTOR CAS CFAF DBI DPL FY ENAM GDP HIPC IBB ICR IDA IMF ISR LOLF MAEP MCA MDG MDRI MEPS METFP MMEE MSP (MOH) Back to Office Report Country Assistance Strategy CFA Franc Doing Business Indicators Development Policy Lending or Loan Fiscal Year National Administration and Judicial School (Ecole Nationale d'administration et de Magistrature du Bénin) Gross Domestic Product Heavily Indebted Poor Countries Wood Company of Benin (lndustrie du bois du Benin) Implementation Completion Report International Development Association International Monetary Fund Implementation Status Report Budget Framework Law Ministry of Agriculture, Livestock and Fisheries (Ministre de l'agriculture, de l'élevage et de la Pêche) Millennium Challenge Account Millennium Development Goals Multilateral Debt Relief Initiative Ministry of Primary and Secondary Education (Ministère de l Enseignement Primaire et Secondaire) Ministry for Technical and Vocational Education (Ministère de l'enseignement Technique et de la Formation Professionnelle) Ministry of Mines, Energy and Water (Ministere des Mines, de l'energie et de l'eau) Ministry of Health (Ministère de la Santé Publique) ii

3 MTEF NGO OCBN PAD PAP PCR PDNA PDO PEFA PER PFM PPP PRGF PRSC PRSP PSD PSRSA SBEE SCRP SDR SIGMP SONAPRA TA TIN UEMOA WAEMU Medium-Term Expenditure Framework Non-Governmental Organization Benin-Niger Railway Company (Organisation Commune Benin-Niger des Chemins de fer) Program Approval Document Priority Action Plan Primary school Completion Rate Post-Disaster Needs Assessment Program Development Objective Public Expenditure and Financial Accountability Public Expenditure Review Public Financial Management Public-Private Partnership Poverty Reduction and Growth Facility Poverty Reduction Support Credit Poverty Reduction Strategy Paper Private Sector Development Strategic Program for Reform of the Agriculture Sector (Plan Stratégique de Relance du Secteur Agricole) Energy and Electricity Company of Benin (Société Béninoise d Energie et d Electricité) Strategy for Economic Growth and Poverty Reduction (Stratégie de Croissance pour la Réduction de la Pauvreté) Special Drawing Rights Integrated Public Procurement Management System (Système Intégré de Gestion des Marches Publics) National Cotton Company (Société Nationale pour la Promotion Agricole) Technical Assistance Taxpayer Identification Number West African Economic and Monetary Union (Union Economique Monétaire Ouest Africaine) West African Economic and Monetary Union (Union Economique et Monétaire Ouest Africaine) Vice President: Country Director: Sector Manager: Task Team Leader: ICR Team Leader: Makhtar Diop Madani Tall Miria Pigato David Cal MacWilliam Amadou Ibrahim iii

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5 BENIN IMPLEMENTATION COMPLETION AND RESULT REPORT ON THE POVERTY REDUCTION SUPPORT CREDITS, 4, 5, 6 CONTENTS Data Sheet... v 1. Program Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1: Bank Lending and Implementation Support/Supervision Processes iv

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7 D A T A S H E E T B. Key Dates Fourth Poverty Reduction Strategy Credit - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/08/2007 Effectiveness: 11/29/2007 Appraisal: 04/30/2007 Restructuring (s): Approval: 06/28/2007 Mid-term Review: Closing: 06/30/ /30/2008 Fifth Poverty Reduction Support Grant-PRSC 5 - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/09/2008 Effectiveness: 03/13/ /13/2009 Appraisal: 11/18/2008 Restructuring(s): Approval: 01/22/2009 Mid-term Review: Closing: 12/31/ /31/2009 BJ- Poverty Reduction Support Grant - PRSC 6 - P Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/06/2009 Effectiveness: 12/31/ /17/2010 Appraisal: 03/15/2010 Restructuring(s): Approval: 04/29/2010 Mid-term Review: Closing: 03/31/ /31/2011 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Risk to Development Outcome Bank Performance Borrower Performance Moderately Satisfactory Moderate Moderately Satisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Moderately Satisfactory Government: Moderately Satisfactory Quality of Supervision: Implementing Moderately Satisfactory Agency/Agencies: Moderately Satisfactory Overall Bank Performance Moderately Satisfactory Overall Borrower Performance Moderately Satisfactory v

8 C.3 Quality at Entry and Implementation Performance Indicators Fourth Poverty Reduction Strategy Credit - 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 Yes None time (Yes/No): (QSA) DO rating before Moderately Closing/Inactive status Satisfactory Fifth Poverty Reduction Support Grant-PRSC 5 - 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 Moderately Closing/Inactive status Satisfactory BJ- Poverty Reduction Support Grant - PRSC 6 - P Implementation QAG Assessments (if Indicators Performance any) Potential Problem Program Yes 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: Rating: Rating: D. Sector and Theme Codes Fourth Poverty Reduction Strategy Credit - P Original Actual Sector Code (as % of total Bank financing) Central government administration General agriculture, fishing and forestry sector Health Primary education Roads and highways vi

9 Theme Code (as % of total Bank financing) Administrative and civil service reform Export development and competitiveness Public expenditure, financial management and procurement Rural policies and institutions State-owned enterprise restructuring and privatization Fifth Poverty Reduction Support Grant-PRSC 5 - P Original Actual Sector Code (as % of total Bank financing) Agro-industry Central government administration Health Power Water supply Theme Code (as % of total Bank financing) Education for all Health system performance Public expenditure, financial management and procurement Rural services and infrastructure State-owned enterprise restructuring and privatization BJ- Poverty Reduction Support Grant - PRSC 6 - P Original Actual Sector Code (as % of total Bank financing) Central government administration Crops General energy sector Sanitation Water supply Theme Code (as % of total Bank financing) Public expenditure, financial management and procurement Regulation and competition policy Rural services and infrastructure State-owned enterprise restructuring and privatization Tax policy and administration vii

10 E. Bank Staff Fourth Poverty Reduction Strategy Credit - P Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Madani M. Tall James P. Bond Sector Manager: Miria A. Pigato Eva Jarawan Task Team Leader: David Cal MacWilliam William Experton ICR Team Leader: Amadou Ibrahim ICR Primary Author: Amadou Ibrahim Fifth Poverty Reduction Support Grant-PRSC 5 - P Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Madani M. Tall Madani M. Tall Sector Manager: Miria A. Pigato Antonella Bassani Task Team Leader: David Cal MacWilliam Nancy Claire Benjamin ICR Team Leader: Amadou Ibrahim ICR Primary Author: Amadou Ibrahim Fifth Poverty Reduction Support Grant-PRSC 5 - P Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Madani M. Tall Madani M. Tall Sector Manager: Miria A. Pigato Antonella Bassani Task Team Leader: David Cal MacWilliam Nancy Claire Benjamin ICR Team Leader: Amadou Ibrahim ICR Primary Author: Amadou Ibrahim F. Results Framework Analysis Program Development Objectives (from Program Document) The specific development objectives of the PRSC 4-6 series were to support the acceleration of real growth and a reduction in the incidence of poverty in Benin through three pillars: (i) improving the policy environment for private investment and infrastructure; (ii) pursuing progress toward the MDGs by improving access to basic services and ensuring greater efficiency of public expenditures on human capital formation; and, (iii) promoting better governance through financial management, civil service and justice reforms. viii

11 Revised Program Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Fourth Poverty Reduction Strategy Credit - P Indicator 1 : Indicator Baseline Original Target s (from approval documents) Formally Revised Target s Actual Achieved at Completion or Target Years Increase of private sector investment over GDP ratio from 12% in 2006 to 15% in (quantitative or 12% 15% 10.9% Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) not achieved Indicator 2 : Increase the percentage of population having access to electricity from 22% in 2006 to 30% in (quantitative or 22% 30% 27.4% Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) Progress, but not fully achieved. Targets to end-2007 and end-2008 achieved, but not end-2009 and Indicator 3 : Increase cotton production by 15% per year from 300,000 tons in % increase per (quantitative or 300,000 year Qualitative) 137,000 Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) not achieved Indicator 4 : Increase access to safe water for the rural population from 45% in 2006 to 51% in (quantitative or 45% 51% 57.2% Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved ix

12 Indicator 5 : (quantitative or Qualitative) Increase coverage of priority health services, especially the utilization of curative health services by children under 5 and pregnant women. 81% for children 85% for children 77% for children 79% for pregnant 80% for pregnant 77% for pregnant women women women Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) both targets achieved Indicator 6 : Increase the primary education completion rate from 55% in 2005/06 to 60% in 2009/2010 and for girls from 44% to 50%. 55% overall 60% overall 64% for Boys and (quantitative or 44% girls 50% for Girls 57.3% for Girls Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achieved for both Boys and Girls achievement) Indicator 7 : The average payment delay for public expenditures is reduced from 25 in 2005 to 21 days by (quantitative or 25 days 21 days 17.6 days Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 8 : Reduce public contract bidding process time from 8 months in 2006 to 5 months in (quantitative or 8 months 5 months 3 months Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 9 : The relative increase of budget allocation to social sectors (MEPS, MSP, METFP, MMEE) is superior to the increase of the overall budget. (quantitative or Qualitative) Not applicable increased share Actual share increased over the period from an average of 25.4% over to 31.9% in Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved x

13 Indicator 10 : The number of cases settled in relation to the number of cases filed and the number of cases recorded per court is improved from 40% in 2006 to 70% in 2010 (quantitative or 40% 70% Qualitative) Date achieved 12/31/ /31/2010 Comments (incl. % achievement) Fifth Poverty Reduction Support Grant-PRSC 5 - P Indicator Baseline Original Target s (from approval documents) Formally Revised Target s Actual Achieved at Completion or Target Years Indicator 1 : Private sector investment share in GDP (quantitative or 13.6% 14.8% 15.8% 10.9% Qualitative) Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % not achieved achievement) Indicator 2 : Access to Electricity (quantitative or 22% 30% 27.4% Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments Progress, but not fully achieved. Targets to end-2007 and end-2008 achieved, but not end- (incl. % 2009 and achievement) Indicator 3 : Cotton production (quantitative or Qualitative) 15% increase per year 15% increase per year increase cotton production to 355,000 tons per year 137,000 Date achieved 12/29/ /31/ /31/ /31/2010 Comments (incl. % achievement) not achieved Indicator 4 : Access to safe water for rural population (quantitative or 45% 51% 53% 57.2% Qualitative) Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % achievement) achieved xi

14 Indicator 5 : (quantitative or Qualitative) Visit rate at health centers by children under 5 and by pregnant women 81% for children 77% for children 79% for pregnant 77% for pregnant women women 85% for children 85% for children 88% for pregnant 80% for pregnant women women Date achieved 12/31/ /31/ /31/ /31/2010 Comments children achieved (incl. % pregnant women not achieved achievement) Indicator 6 : Primary education completion rate (quantitative or Qualitative) 55% overall 44% Girls 60% overall 50% for Girls 83% overall 76% for Girls 64% overall 57.3% for Girls Date achieved 12/31/ /31/ /31/ /31/2010 Comments Not achieved -- targets were re-adjusted based on new, though erroneous, baseline data. (incl. % Corrected again in subsequent operation. achievement) Indicator 7 : Payment delay for public expenditures (quantitative or 25 days 21 days 24 days 17.6 days Qualitative) Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 8 : Public contract bidding process time (quantitative or 8 months 5 months 3 months Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 9 : The relative increase of budget allocation to social sectors (MEPS, MSP, METFP, MMEE) is superior to the increase of the overall budget. (quantitative or Qualitative) not applicable increased share Actual share increased over the period from an average of 25.4% over to 31.9% in Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved xii

15 BJ- Poverty Reduction Support Grant - PRSC 6 - P Indicator Baseline Original Target s (from approval documents) Formally Revised Target s Actual Achieved at Completion or Target Years Indicator 1 : Private sector investment share in GDP (quantitative or 12% 15% 15.8% 10.9% Qualitative) Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % not achieved achievement) Indicator 2 : Access to Electricity (quantitative or 22% 30% 27.4% Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments Progress, but not fully achieved. Targets to end-2007 and end-2008 achieved, but not end- (incl. % 2009 and achievement) Indicator 3 : Cotton production (quantitative or Qualitative) 300,000 tons changed a second 15% increase per year time to 355,000 tons 137,000 tons Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % achievement) not achieved Indicator 4 : Access to safe water for rural population (quantitative or 45% 51% 53% 57.2% Qualitative) Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 5 : Visit rate at health centers by children under 5 and by pregnant women 81% for children 85% for children 85% for children 77% for children (quantitative or 79% for pregnant 88% for pregnant 80% for pregnant 77% for pregnant women Qualitative) women women women Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % achievement) Indicator 6 : (quantitative or Qualitative) children achieved pregnant women not achieved Primary education completion rate 55% overall 44% Girls 60% overall 50% for Girls revised a second time to: 67% overall 56% for Girls 64% overall 57.3% for Girls Date achieved 12/31/ /31/ /31/ /31/2010 Comments not achieved overall xiii

16 (incl. % achieved for girls achievement) Indicator 7 : Payment delay for public expenditures (quantitative or 25 days 21 days 24 days 17.6 days Qualitative) Date achieved 12/31/ /31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 8 : Public contract bidding process time (quantitative or 8 months 5 months 3 months Qualitative) Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved Indicator 9 : The relative increase of budget allocation to social sectors (MEPS, MSP, METFP, MMEE) is superior to the increase of the overall budget. Actual share increased (quantitative or Qualitative) not applicable increased share over the period from an average of 25.4% over to 31.9% in Date achieved 12/31/ /31/ /31/2010 Comments (incl. % achievement) achieved (b) Intermediate Outcome Indicator(s) Fourth Poverty Reduction Strategy Credit - P Indicator Baseline Original Target s (from approval documents) Indicator 1 : Budget program 2008 implemented (quantitative or N/A implemented Qualitative) Date achieved 12/21/ /28/2008 Comments (incl. % achievement) Formally Revised Target s Actual Achieved at Completion or Target Years xiv

17 Fifth Poverty Reduction Support Grant-PRSC 5 - P Indicator Indicator 1 : (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Baseline none Original Target s (from approval documents) Fifth Poverty Reduction Support Grant-PRSC 5 - P Indicator Indicator 1 : (quantitative or Qualitative) Date achieved Comments (incl. % achievement) Baseline none Original Target s (from approval documents) Formally Revised Target s Formally Revised Target s Actual Achieved at Completion or Target Years Actual Achieved at Completion or Target Years G. Ratings of Program Performance in ISRs Fourth Poverty Reduction Strategy Credit - P No. Date ISR Actual Disbursements DO IP Archived (USD millions) 1 12/21/2007 Moderately Unsatisfactory Satisfactory /05/2008 Moderately Satisfactory Satisfactory Fifth Poverty Reduction Support Grant-PRSC 5 - P No. Date ISR Actual Disbursements DO IP Archived (USD millions) 1 06/29/2009 Satisfactory Satisfactory /10/2009 Moderately Satisfactory Moderately Satisfactory BJ- Poverty Reduction Support Grant - PRSC 6 - P No. Date ISR Actual Disbursements DO IP Archived (USD millions) 1 12/05/2010 Satisfactory Satisfactory /13/ /30/ H. Restructuring (if any): N/A xv

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19 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal The PRSC 4 to 6 series was approved in May 2007 and provided support over the period The series was designed to support implementation of the Government s second PRSP (SCRP II), which was adopted in April 2007 and covered the period The reform policies supported by PRSCs 4-6 were embedded in and closely aligned with Benin s SCRP II. In the fall of 2010, Benin suffered its worst flooding experience in 50 years. In response to the floods, a Supplemental Financing to PRSC-6 was provided and this ICR covers that operation as well. The series was set in a context where Benin s macroeconomic performance had been broadly on track over the past years, but economic activity had been recently adversely affected by major external shocks arising in Real GDP growth had averaged 5 percent over (compared to 4 percent for Sub-Saharan Africa more broadly). However, in , poor performance of the cotton sector given declining international prices and more vigorous efforts by Nigeria to reduce unofficial imports from Benin led to a slowdown in economic growth (3 percent growth in 2004 and 2005) and a decline in exports. Economic growth recovered to 4.1 percent in 2006 reflecting a rebound in cotton and services sectors. Inflation was broadly contained, averaging 2.9 percent over the period, and while inflation was low, Benin s competitiveness had weakened due to appreciation of the real effective exchange rate, as a result of the depreciation of the US dollar against the Euro to which the CFA is pegged, and delays in the implementation of key structural reforms. Despite a 10 percent decrease in export volumes and higher oil prices, the external current account deficit (excluding current official grants) had narrowed from 8.6 percent of GDP in 2003 to 7.1 percent of GDP in 2006 as a result of lower formal sector oil imports and weaker capital goods imports. Consequently, the overall balance of payments improved slightly from 0.4 percent of GDP to 4.7 percent of GDP over the same period. Fiscal consolidation had been a major achievement through the early 2000s. Fiscal revenue had been consistently increasing and in 2006 was approximately 16.8 percent of GDP. Over the same period, total government expenditure had also been slowly increasing and reached approximately 20 percent of GDP due to the increase in poverty-reducing outlays in line with the implementation of the initial SCRP. As such, fiscal discipline was broadly maintained, with the overall budget deficit (excluding grants) contained to about 4 percent or less of GDP annually. During , in line with PRSP priorities, the Government had progressively increased the budgetary allocation for basic services. The share of total budget appropriations allocated to basic education, health and rural water increased from 26.0 percent on average in to 28.7 percent over and reached 30 percent in However, 1

20 constraints faced by sector ministries in budget execution, namely long delays in procurement processes and resultant cuts in public investments, limited the full implementation of sector programs. The 2007 budget, the budget adopted immediately prior to PRSC-4 approval, reflected SCRP II objectives and pursued overall reforms in public expenditure management, making a special effort to raise the level and quality of social expenditures, increase absorptive capacity, and enhance resource management in these sectors. Looking forward at that time, the Government s macroeconomic framework over the period was perceived to be consistent with the objectives of accelerating growth and reducing poverty. Under the assumption that the Government was going to be successful in deepening institutional and policy reforms and tackling difficulties in the cotton sector and other structural problems, economic growth was expected to progressively recover from 3.4 percent in to 5.1 percent in while inflation was expected to remain in line with WAEMU convergence criterion at less than 3.0 percent on average. It was thought that economic growth would be driven by a rebound in cotton production initiated by the completion of the reforms in the sector, higher trade volumes with Nigeria following a progressive lifting of trade restrictions, and by an increase in transport activities underpinned by a resumption of traffic at the Port of Cotonou as new investments helped restore the port s regional competitiveness. Growth performance was also seen to be sustained by an ambitious public works program that would bring the investment-to-gdp ratio to 22.0 percent over from 18.9 percent in The external current account deficit was projected to narrow from 7.4 percent of GDP on average over to 6.0 percent on average over The overall fiscal deficit (excluding grants) was expected to widen from 3.6 percent of GDP on average over to about 4.3 percent of GDP over due to implementation of social and development expenditures in the context of SCRP II. Total government expenditures were seen increasing by about 2.0 percentage points of GDP over the period under review, supported by higher revenue and MDRI resources. In March 2003, Benin qualified for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Debt cancellation under the HIPC initiative and a prudent borrowing policy helped the country to maintain its external debt situation on a sustainable path. The external debt-to-gdp ratio decreased from 58 percent in 2000 to 42 percent at end Benin was also one of the first 19 countries to graduate from the HIPC Initiative and received 100 percent cancellation of their eligible debt under MDRI, effective as of July Benin s MDRI eligibility reflected its satisfactory economic performance, progress in implementing its Poverty Reduction Strategy and improvements in public expenditure management. Total debt relief from IDA, the IMF and the African Development Bank amounted to approximately US$1.1 billion or 23.2 percent of 2006 GDP (60 percent of which was provided by IDA). MDRI reduced total public debt to 13 percent of GDP at end

21 External financing requirements at the time were estimated to be US$217 million in 2007, resulting in an estimated total financing gap of US$112 million after projected debt relief. This gap was expected to be more than fully covered by disbursements from the Millennium Challenge Account (MCA) and annual disbursements from multi-year budget support programs from the African Development Bank (US$21.4 million); the European Union (US$20.9 million), and other development partners (USS19.5 million). The US$40 million equivalent for PRSC 4 constituted part of IDA s contribution to filling the remaining gap. As was the case with the first PRSC series, the second series was intended to cover one PRSP cycle and be synchronized with the Government s budget cycle. The PRSCs were seen as providing an anchor for the Bank s overall support to Benin s policy and institutional reform and public expenditure priorities. Each individual PRSC was to be put in place and disbursed on the basis of the up-front completion of a set of prior actions that demonstrated satisfactory progress on the country s social and structural reform agenda in support of its poverty reduction strategy. 1.2 Original Program Development Objectives (PDO) and Key Indicators The overall objective of the PRSC series was to support implementation of Benin s SCRP II. The first series of PRSCs for Benin (PRSCs 1-3) had focused on improving economic growth and governance through reforms in the business environment, justice, agriculture and infrastructure, and through public expenditure management reforms in key sectors, such as health, education and water. The second series was intended to deepen the focus on improving the policy environment for private investment, including supporting completion of the reforms in the cotton sector, and infrastructure. The series also supported the Government s measures to pursue progress toward the MDGs by improving access to basic services and ensuring greater efficiency of public expenditures on human capital formation and to promote better governance through financial management, civil service and justice reforms. This responded to requests from the public in Benin for improved quality of public services and more transparency in the use of public resources, as well as from donors in need of strengthened fiduciary standards to facilitate continued budget support. The PRSC 4-6 series was complemented by other more specific investment credits in the areas of competitiveness and growth, energy, rural development, environment and forestry. The specific development objectives of the PRSC 4-6 series were to support the acceleration of real growth and a reduction in the incidence of poverty in Benin through three pillars: (i) (ii) (iii) improving the policy environment for private investment and infrastructure; pursuing progress toward the MDGs by improving access to basic services and ensuring greater efficiency of public expenditures on human capital formation; and, promoting better governance through financial management, civil service and justice reforms. 3

22 1.3 Revised PDO and Key Indicators, and Reasons/Justification These development objectives remained consistent throughout the entire series and were not altered in the development of subsequent operations in the series. 1.4 Original Policy Areas Supported by the Program Several reasons underpinned the choice of policies to be supported by the PRSC series. The focus on improving the policy environment for private investment reflected the findings of the Investment Climate Assessment, and the 2007 Doing Business Report. These reports highlighted specific weaknesses related to the business climate and heightened the authorities awareness of the main impediments to private sector growth and the need to address them. In addition, a Diagnostic Trade Study provided additional insights on reforms needed to raise Benin s competitiveness, reduce economic vulnerability and diversify the economy and exports. The continued focus on social services reflected Benin s goals on progress toward the MDGs and the need to increase poverty reduction efforts by strengthening the effectiveness and equity of service delivery through results-based management and institutional capacity building. The continued focus on governance was intended to help improve transparency, accountability and efficiency in budget processes, enable decentralized structures to generate resources commensurate with their mandate and enhance medium-term planning visibility for sectoral program budgets. More specifically, the first in the series, PRSC-4, was designed to support the government s efforts at promoting better governance through financial management, civil service and justice reforms by including the following prior actions: (a) submit the 2007 budget law to the National Assembly in line with revised MTEF ceilings and PRSP priorities; (b) achieve the targets set in the 2006 program-budgets in priority sectors/programs; (c) submit to the Council of Ministers the Procurement Code and the application regulations revised in compliance with UEMOA Directives No.04 and 05/2005/CM/UEMOA regarding public procurement and assignment of public services; (d) submit to the National Assembly the 2002 draft Loi de Réglement and complete verification of the 2003 draft Loi de Réglement ; (e) adoption by the Council of Ministers of the Référentiel de Hauts Emplois Techniques (upper level management position reference repertory) and the monitoring mechanism, designation of the members of the monitoring body and submission of nominations to the Council of Ministers; and, (f) recruit 40 additional judges and 30 additional court clerks and have such 40 judges start their training at the ENAM. At the time of PRSC-4 preparation the focus of PRSC-5 was seen as: continuing to support the above reform areas through the following measures: (a) submission of the draft 2008 Budget Law to the National Assembly in line with revised MTEF and PRSP priorities; (b) implementation of the 2007 budget programs for priority sectors including the monitoring and 4

23 evaluation actions; (c) set up of the integrated public procurement management system SIGMP); and, (d) submission of the 2003 and 2004 central budget audit reports to Parliament. In preparing PRSC-5 the program document noted that PRSC-5 would support the private sector development agenda in improving the business climate and raising the competitiveness and diversification of productive sectors, complemented by components in infrastructure services. As in PRSC-4, the proposed operation would support policy reforms, strategic planning and program budgets in the water, health, and education sectors, and promote progress toward reaching the MDGs. It was also noted that PRSC-5 would continue to cover budget system reforms and public sector governance as a means of reinforcing program budgets, fiduciary standards, and results-oriented expenditure management. This was in response to private sector requests for greater stability in the regulatory framework, from the public for higher quality social services, and from the Government for support in building the capacity to master reforms designed to increase efficiency and transparency in the use of public resources. The PRSC-6 program document noted continued support for the private sector development agenda in improving the business climate and raising the competitiveness and diversification of productive sectors, complemented by components in infrastructure services. As in PRSC-4 and 5, the proposed operation would support policy reforms, strategic planning and program budgets in the water, health, and education sectors, and promote progress toward reaching the MDGs. PRSC-6 would also continue to cover budget system reforms and public sector governance as a means of reinforcing program budgets, fiduciary standards, and results oriented expenditure management. As noted, PRSCs 5 and 6 remained in-line with the originally conceived development objectives as identified at the outset of the series, and largely in-line with originally considered policy areas, though some minor modifications to triggers and prior actions were inevitably introduced into the series in response to the evolving economic, social and political environment. In addition, follow-up actions in the justice sector were dropped from the PRSC-5 and 6 programs although the prior action pertaining to this sector in the PRSC-4 was met. These modifications are noted in the following matrices. 1.5 Revised Policy Areas, Prior Actions and Triggers As the series moved from PRSC-4 through to PRSC-6 the main policy areas remained largely as originally designed. There was some modification to originally indicated prior actions and triggers though these were not significant and did not represent substantive divergence from the originally envisioned actions and triggers. Table 1 presents the policy areas, prior actions, triggers and indicators and illustrates how they evolved as the series progressed from one operation to the next. Divergence from original action and triggers are noted in Table 1 in bold type, are numbered in footnote style for ease of reference, and the rationale for changes in prior actions from originally noted triggers are explained in the paragraphs that follow the table. 5

24 Table 1: Policy Matrix for PRSC 4-6 PRSC-4 Prior Actions Prior Action Status PRSC-5 Triggers PRSC-5 Prior Actions Prior Action Status PRSC-6 Triggers PRSC-6 Prior Actions Prior Action Status Pillar I: Improve the regulatory environment and policy framework for private investment and infrastructure. Implement the PSD strategy with a focus on the core actions retained for 2006, in the area of land markets, taxation, customs administration, the zone franche, and in the area of the newly selected agricultural product lines. Completed Simplify procedures in: a) tax identification number; b) time to create a company; d) import and export procedures; e) conversion of living permits into property deeds; (f) micro finance regulation. (i) Simplification of administrative procedures and implementation of tax measures so as to facilitate the establishment of a company; (ii) simplification of the customs procedures on import and export of goods; (iii) Completed Adopt the fiscal reform strategy simplifying business taxes. Adopt the fiscal reform strategy simplifying business taxes. Completed facilitation of the conversions of living permits ( permits d habitations ) into ownership property deeds; (iv) institution of single tax identification for individuals and legal entities; and (v) adoption of a decree with regards to the development policy in the microfinance sector. 1 6

25 PRSC-4 Prior Actions Prior Action Status PRSC-5 Triggers PRSC-5 Prior Actions Prior Action Status PRSC-6 Triggers PRSC-6 Prior Actions Prior Action Status Update the institutional framework for management of supply roads, prepare and adopt the new regulations. Completed Government s decision authorizing private sector investment in new generating capacity in the electricity sector. Adopt implementing regulations for the rural electrification fund. 2 Completed Adopt a decree establishing the regulatory code for the energy sector. Adopt a decree establishing the regulatory code for the energy sector. Completed Implement remaining reforms in the cotton sector, which include: (a) ex-post analysis of the first campaign under the regulatory framework; (b) consolidation of all the cotton producers associations; (c) start a gradual removal of restrictions on cottonseed exports; (d) define the roadmap for the sale of the industrial assets of SONAPRA to a new company made up of the private sector, the producers, the workers Completed Complete privatization of the SONAPRA industrial base. Establish a new publicprivate mixed corporation with the ginning assets of SONAPRA and in partnership with a private operator that owns at least thirty three percent (33%) of the shares of this new corporation. 3 Completed Completion of the phased transfer of shares of SONAPRA to private control. Completion of the phased transfer of shares of SONAPRA to private control. Completed 7

26 PRSC-4 Prior Actions Prior Action Status PRSC-5 Triggers PRSC-5 Prior Actions Prior Action Status PRSC-6 Triggers PRSC-6 Prior Actions Prior Action Status and the State, indicating the participation of the bidders to the process, begin roadmap implementation, and confirm the termination of the previous privatization process. Pillar II: Pursue progress towards the MDGs by improving access to basic services and ensuring greater efficiency of public expenditures on human capital formation. The initiative Water in urban centers financed through a donors-pooled fund is operational and 10 water supply systems have been built and are managed under PPP arrangements. Completed At least 15 % of the Village Water Supply Systems are managed under a local PPP arrangement. At least 15 % of the Village Water Supply Systems are managed under a local PPP arrangement. Completed At least 90% of the municipalities contract directly with NGOs for the preparation of dossier communautaires requesting new water points. At least 90% of the Recipients municipalities (communes) have contracted directly with NGOs in an effort to obtain, by application, decentralized funds from the Recipients authorities earmarked for water-related investments. 10 Completed Complete the inventory of the private health facilities and disseminate the regulations governing the provision of health services by the private sector. Completed Implement the strategic plan through: (i) the development of at least three community based health insurance schemes; (ii) the extension of the benefit of the Fund for the Implement the health strategic plan through: (i) the development of at least three community based health insurance schemes; (ii) the extension of the benefit of the Fund for the Poor in 10 additional Completed Extend the hygiene and basic sanitation marketing approach to the twelve departments of the Extend the hygiene and basic sanitation marketing approach to the twelve departments of the country. Completed 8

27 PRSC-4 Prior Actions Prior Action Status PRSC-5 Triggers PRSC-5 Prior Actions Prior Action Status PRSC-6 Triggers PRSC-6 Prior Actions Prior Action Status Poor in 10 additional districts; and (iii) the gratuity of health care for the targeted vulnerable groups. sanitary zones; and (iii) the provision of gratuity for some aspects of health care for women. 4 country. Implement the redeployment plan (redeployment and decentralized recruiting to fill 1,000 new contractual positions in primary schools) for public school teachers and improve teacher distribution throughout the districts. Completed Evaluate the impact of the Teacher Redeployment Plan and continue redeployment and decentralized recruiting to fill 1,300 new contractual positions in primary schools, to reduce disparities and evaluate the teacher training in ENI. Recruitment to fill 1,300 new contractual positions in primary schools for the school year , in a decentralized manner. 5 Completed Pillar III: Promote better governance through public financial management, civil service and justice reforms. Submit the 2007 budget law to the National Assembly in line with revised MTEF ceilings and PRSP priorities. Completed Submit the draft 2008 Budget Law to the National Assembly in line with revised MTEF and PRSP priorities. Submit the draft Budget Law to the National Assembly in line with revised MTEF and PRSP priorities. Completed Achieve the targets set in the 2006 program-budgets in priority Completed Implement the 2007 budget programs for priority sectors including the monitoring and Implement the budget programs for priority sectors. Completed Implement the 2009 budget programs for priority sectors including the monitoring and Implement the 2009 budget programs for priority sectors for the first three quarters of FY Completed 9

28 PRSC-4 Prior Actions Prior Action Status PRSC-5 Triggers PRSC-5 Prior Actions Prior Action Status PRSC-6 Triggers sectors/programs. evaluation actions. evaluation actions. PRSC-6 Prior Actions Prior Action Status Submit to the National Assembly the 2002 draft Loi de Règlement and complete verification of the 2003 draft Loi de Réglement. Completed Submit the 2003 and 2004 central budget audit reports to Parliament. Submit the 2003 and 2004 draft central budget audit reports (Lois de Réglement) to the Supreme Court. 8 Completed Submit the 2005 draft central budget audit report ( Lois de Submit the 2005 draft central budget audit report ( Lois de Réglement ) to the Completed Réglement ) to the National Assembly. National Assembly. Submit to the Council of Ministers the Procurement Code and the application regulations revised in compliance with UEMOA Directives No. 04 and 05/2005/CMIUEMOA regarding public procurement and assignment of public services. Completed Set up the integrated public procurement management system (SIGMP). Conduct training in procurement for staff of the priority sector ministries. 9 Completed Set up the integrated public procurement management system (SIGMP). Set up the integrated public procurement management system (SIGMP) and adoption by the Government of the development strategy to integrate it with other budget execution information systems. 12 Completed Recruit 40 additional judges and 30 additional clerks of the courts and Completed 10

29 PRSC-4 Prior Actions Prior Action Status PRSC-5 Triggers PRSC-5 Prior Actions Prior Action Status PRSC-6 Triggers PRSC-6 Prior Actions Prior Action Status have such 40 judges start their initial training at the Ecole Nationale de I Administration et de la Magistrature. Adoption by the Council of Ministers of the Référentiel de Hauts Emplois Techniques (upper level management position reference repertory) and the monitoring mechanism, designation of the members of the monitoring body, and submission of nominations to the Council of Ministers. Completed 11

30 In PRSC-5 some modifications to prior actions were made from the triggers noted in PRSC-4. These are explained as follows (and refer to the superscripts in Table 1): 1. The change to this prior action was introduced to improve clarity and to provide more specificity to the action. The change did not imply a significant change in policy direction, an accommodation to government under-performance or other significant modification to original policy intent. 2. In this case the original trigger was met in late 2007 earlier than expected. The new trigger was formulated to support the next steps in the reform agenda in the electricity sector. 3. The revised measure better reflected the phased transfer of shares in SONAPRA s industrial assets to private control. At the time of PRSC-4 preparation the privatization process was not fully detailed and the revised prior action in PRSC-5 thus better reflected the decided course of action 4. This minor change was required to increase clarity and did not represent a meaningful change. 5. The original trigger consisted of two separate actions, the evaluation of the teacher redeployment plan and continued teacher recruitment. The evaluation of the redeployment plan in ENI was delayed due to capacity constraints and was removed as a prior action in PRSC-5, while the action concerning ongoing recruitment was retained as originally formulated. 6. The original trigger considered during PRSC-4 preparation (submission of the 2008 budget law), was completed prior to PRSC-5 preparation and as such, the revised formulation of the prior action in PRSC-5 (submission of the 2009 budget law) reflected the timing of PRSC Similar to the previous modification, the original trigger (implementation of 2007 priority sectors budget), was completed and the revised formulation (implementation of the 2008 priority sectors budget) reflected the timing of PRSC The revised measure (submission of audit reports to the Supreme Court instead of to Parliament as in the original trigger) more accurately reflected the required stages of the external audit process. 9. Final adoption and implementation of the procurement code took longer than originally anticipated and hence the revised measure was modified to address one of the main bottlenecks in the procurement process while awaiting final passage of the procurement code. 12

31 Similarly, eventual prior actions for PRSC-6 varied from those originally envisaged, but again the changes did not represent significant policy changes or under performance on the part of the Government. They are summarized below: 10. The revised prior action more appropriately emphasized the fiscal decentralization aspect of the reform, which was the original intention, rather than the more narrow local level NGO contracting aspect of the original trigger. 11. This revised measure reflected the onset of the 2009 global economic crisis and the need to adjust budget expenditures in response to this exogenous shock. 12. The revision to this prior action reflected the adoption of the Procurement Law by the National Assembly and the need for further actions in order to ensure effective implementation and functioning of the SIGMP system. 1.6 Other significant changes: There were two significant changes in addition to the relatively minor policy modifications noted above; the addition of a Supplemental Financing to the PRSC-6; and modifications to the results indicators Supplemental Financing: The first significant change was the Supplemental Financing to PRSC-6 in the amount of US$22 million in response to the late 2010 floods. In late 2010 Benin suffered its worst floods in over 50 years. This led to significant losses in terms of economic and social infrastructure, such as roads, schools and health clinics, serious losses in housing, and large agricultural losses, both to crops and livestock. Total estimated damages and losses were over CFAF 127 billion (US$ 250 million), with about CFAF 29 billion of the losses and damages being in agriculture, nearly CFAF 8.5billion in housing, and over CFAF 33 billion to other infrastructure. The Supplemental Financing provided direct budget support to the Government of Benin in order to augment their resources as a result of the increased budgetary demands arising from the flood disaster. Without external financing to cover a significant portion of the flood related financial demands, the fiscal position could have deteriorated further putting in jeopardy not only the IDA-supported program under the PRSC-6, but the IMF program as well. Achievement of several performance indicators under the PRSC-6 would clearly have been at risk in the absence of a rapid and comprehensive response, including indicators related to: education outcomes, health outcomes, agricultural production, and access to safe drinking water. While these indicators were, in all probability, negatively affected by the disaster regardless of the adequacy of the response, a financial response from the Bank was intended to limit under-performance and more importantly, reduce the medium and longer term negative impacts that might be exacerbated by a prolonged crisis. 13

32 1.6.2 Changes to Results Indicators: A second change was that some expected results selected at the inception of PRSC-4 were rather quickly observed to be ahead of established targets and some targets were exceeded in the first year of the series. This arose not primarily as a result of the actions supported by the PRSC series, but because of favorable global economic conditions and other factors well beyond the scope of the PRSC series. In proceeding with the subsequent PRSCs 5 and 6, while the task team desired to maintain the original targets, this was deemed inappropriate as maintaining the original targets would have resulted in an operation having targets that were below the baseline and thus already achieved. Furthermore, studies undertaken over the timeframe of the PRSC-4 resulted in different baselines, making it difficult to forecast target numbers in progress and the need to change originally stated baselines in some instances. This led to a restating of expected results for PRSCs 5 and 6. Given that the original results appeared to be well in-hand, the new results were now significantly more ambitious. Unfortunately, as rapidly as results were surpassed in the case of PRSC-4, they then quickly began to lag. Again, this was clearly due to factors exogenous to the series, including the food and fuel price crises, the global financial crisis and in 2010 the devastating floods. The evolution of results is explored more fully in the next section. 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance: The PRSC series had clearly identifiable and measureable outcome indicators associated with the policy areas, individual triggers and prior actions. As can be noted in Table 2, results were mixed with six expected results being achieved, one substantially achieved and four not achieved. In assessing program performance and the attainment of these outcomes it should be recognized that the period covered by this series, was a period of considerable global economic instability. This included important fuel and food price crises leading up to this period; crises which peaked in 2008, the first year covered by the series. Perhaps more consequential was the global financial and economic crisis, which had a significant impact on Benin in 2009 and As such, it is difficult to disentangle the impact of these important negative exogenous shocks on the achievement of outcomes from the impact of the reforms supported under the PRSC series. Even set within a benign global and economic environment it can be arbitrary to attribute results to specific measures, a specific PRSC, or to the program as a whole. In a period of considerable external shocks attribution becomes near impossible. This is thus further complicated in this case given the fact that several of the indicators were considerably removed from the actions undertaken. The linkages between prior actions and expected results, while certainly evident and logical, were nonetheless rather weak or subject to considerably more important external influences. For example, prior actions relating to the implementation of the PSD strategy, tax/customs reforms and land markets reform have a logical 14