IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H5280) ON A GRANT IN THE AMOUNT OF SDR9.6 MILLION (US$15 MILLION EQUIVALENT) TO THE

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1 Public Disclosure Authorized Document of The World Bank Report No: ICR Public Disclosure Authorized Public Disclosure Authorized IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H5280) ON A GRANT IN THE AMOUNT OF SDR9.6 MILLION (US$15 MILLION EQUIVALENT) TO THE REPUBLIC OF CÔTE D IVOIRE FOR A SMALL AND MEDIUM ENTERPRISE REVITALIZATION AND GOVERNANCE PROJECT Public Disclosure Authorized Trade and Competitiveness Global Practice AFCF2 Africa Region June 30, 2015

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2015) Currency Unit = CFA Franc (CFAF) BCEAO 1CFAF = US$2 US$1 = CFAF500 FISCAL YEAR July 1 June 30 APEX-CI BICICI CAS CCESP CEPICI CGECI CNCGA CPAR CTCFR DB DO ECOWAS EPCA ERR EU FARE/PME FIPME FSAP GUFE IAD IC ICA ICR IDA IFC IMF ISR M&E MFC-PME NPV PAD PARE-PME ABBREVIATIONS AND ACRONYMS Association pour la Promotion des Exportations de Côte d Ivoire Banque Internationale du Commerce et de l Industrie de Côte d Ivoire Country Assistance Strategy Comité de Concertation Etat-Secteur Privé Centre de Promotion des Investissements en Côte d Ivoire Confédération Générale des Entreprises de Côte d Ivoire Collectif National des Centres de Gestion Agréés Country Procurement Assessment Report Comité Technique de Contrôle de la Fluidité Routière Doing Business (World Bank report) Development Objective Economic Community of West African States Emergency Post-Conflict Assistance (International Monetary Fund) Economic Rate of Return European Union Fund for the Revitalization of SMEs (Fonds d Appui à la Revitalisation des PME) Fédération Ivoirienne des Petites et Moyennes Entreprises Financial Sector Assessment Program Guichet Unique de Création des Entreprises Internal Audit Department Investment Climate Investment Climate Assessment Implementation Completion and Results Report International Development Association International Finance Corporation (World Bank Group) International Monetary Fund Implementation Status Report Monitoring and Evaluation Mutuelle de Financement et de Crédit des PME Net Present Value Project Appraisal Document Projet d'appui à la Revitalisation et à la Gouvernance des Entreprises (Small

3 PDO PIU PPD SIL SME TA ULCR and Medium Enterprise Revitalization and Governance Project) Project Development Objective Project Implementation Unit Public-Private dialogue Specific Investment Loan Small and Medium Enterprise Technical Assistance Unité de Lutte contre le Racket Africa Region Vice President: Senior Global Practice Director: Country Manager: Global Practice Director: Practice Manager: Project Team Leader: ICR Team Leader: ICR Primary Author: Makhtar Diop Anabel Gonzalez Ousmane Diagana Cecile Fruman John F. Speakman Lorenzo Bertolini Adesimi Freeman Mahaman Sani

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5 REPUBLIC OF CÔTE D IVOIRE Implementation Completion and Results Report on Small and Medium Enterprise Revitalization and Governance Project (P115398) TABLE OF CONTENTS A. Basic Information... i B. Key Dates... i C. Ratings Summary... i D. Sector and Theme Codes... ii E. Bank Staff... ii F. Results Framework Analysis... iii G. Ratings of Project Performance in ISRs... v H. Restructuring (if any)... v I. Disbursement Profile... v 1. Project 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. Project Costs and Financing Annex 2. Outputs by Component Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 6. Stakeholder Workshop Report and Results Annex 7. Summary of Borrower's ICR Annex 8. List of Supporting Documents Annex 9. Results Framework and Monitoring Map

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7 A. Basic Information DATA SHEET Country: Côte d'ivoire Project Name: Côte d'ivoire SME Revitalization and Governance Project Project ID: P L/C/TF Number(s): IDA-H5280 ICR Date: 01/26/2015 ICR Type: Core ICR Lending Instrument: SIL Borrower: Government of Côte d'ivoire Original Total Commitment: XDR 9.60M Disbursed Amount: XDR 9.27M Revised Amount: XDR 9.60M Environmental Category: C Implementing Agencies: Association pour la Promotion des Exportations de Côte d Ivoire (APEX- CI) Co-financiers and Other External Partners: B. Key Dates Process Date Process Original Date Revised/Actual Date(s) Concept Review: 12/12/2008 Effectiveness: 05/20/2010 Appraisal: 08/14/2009 Restructuring(s): 01/10/ /11/2011 Approval: 10/20/2009 Mid-term Review: 09/10/ /23/2012 Closing: 01/31/ /31/2014 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Satisfactory Moderate Satisfactory Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory i

8 Overall Bank Performance: Satisfactory Overall Borrower Performance: Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation Performance Indicators QAG Assessments (if any) Rating Potential Problem Project at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before Closing/Inactive status: D. Sector and Theme Codes Sector Code (as % of total Bank financing) No Quality at Entry (QEA): None Yes Satisfactory Quality of Supervision (QSA): Original Public administration: Financial Sector SME Finance None Actual Theme Code (as % of total Bank financing) Legal institutions for a market economy Micro, small, and medium enterprise support Other private sector development Other accountability/anti-corruption Regulation and competition policy E. Bank Staff Positions At ICR At Approval Africa Region Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Senior Global Practice Director: Anabel Gonzalez Marilou J. Uy Country Director: Ousmane Diagana Madani Tall Global Practice Director Cecile Fruman Practice Manager: John F. Speakman Iraj A. Alikhani Project Team Leader: Lorenzo Bertolini Djibrilla A. Issa ICR Team Leader: ICR Primary Author: Adesimi Freeman Mahaman Sani ii

9 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the project is to help improve the performance of the SME sector in Côte d'ivoire and the investment climate that affects it. Original Project Development Objective and Intermediate Indicators (as approved by original approving authority) (a) PDO Indicator(s) Indicator Result Indicator 1: Number of new enterprises registered at the one-stop shop Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Date 05/03/ /3/ /31/2014 Number Comments The original target value is cumulative over the project life Achieved. Source of Information: CEPICI Result Indicator 2: Number of new jobs generated by registered SMEs Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Date 05/03/ /3/ /31/2014 Number Comments The original target value is cumulative over the project life Achieved. Source of Information: Investigation report (b) Intermediate Outcome Indicator(s) Indicator Intermediate Outcome Indicator 1: Increase in loans extended by MFC/PME to SME members Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Date 05/03/ /3/ /31/2014 Actual Value Achieved at Completion or Target Years Annual increase 0 10% 63% in 2012 and % in Comments Achieved. Source of Information: MCF-PME-PME Report iii

10 Indicator Date Intermediate Outcome Indicator 2: Investment made by SME beneficiaries of the matching grant Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years 05/03/ /3/ /8/ /31/2014 Amount 0 $6,000,00 $4,193, $3,271, Comments As part of the level II restructuring, funds were re-allocated from the matching grant to the unit in charge of fighting racketeering Achievement: 95.24%. Source of Information: APEX-CI/FARE/PME Report Intermediate Outcome Indicator 3: Number of days to establish a business Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Date 05/03/ /3/ /31/2014 Number 40 days (DB 2009) 8 days 7 days (DB 2015) Comments Achieved. Source of Information: CEPICI Report, and DB 2015 Indicator Intermediate Outcome Indicator 4: Number of days to settle a commercial dispute Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Date 05/03/ /3/ /31/2014 Number 770 days (DB 2009) 450 days 525 days (DB 2015) Comments Almost achieved. Source of Information: Commercial Court report, DB Intermediate Outcome Indicator 5: Percentage of Commercial Court decisions published on the website Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Date 05/03/ /3/ /31/2014 Number 0 95% 100% Comments Achieved. Source of Information: Commercial Court report Intermediate Outcome Indicator 6: Decrease in the additional transportation cost caused by racketeering Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Date 05/03/ /3/ /31/2014 Decrease Comments CFAF 20 /km ton (2008 study) 25% (CFAF 15/km 49% (CFAF 10.2/km ton) ton) Achieved. Source of Information: Investigation Report iv

11 G. Ratings of Project Performance in ISRs No. Date ISR Actual Disbursements DO IP Archived (US$ millions) 1 05/08/2010 Satisfactory Satisfactory 2 03/27/2011 Moderately Unsatisfactory Moderately Unsatisfactory /27/2011 Moderately Unsatisfactory Moderately Unsatisfactory /10/2012 Moderately Satisfactory Moderately Satisfactory /29/2012 Moderately Satisfactory Moderately Satisfactory /26/2013 Satisfactory Satisfactory /23/2013 Satisfactory Satisfactory /22/2014 Satisfactory Satisfactory /04/2014 Satisfactory Satisfactory H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring DO IP Amount Disbursed at Restructuring (US$, millions) Reason for Restructuring and Key Changes Made 08/11/2011 S S 0 Re-engagement following formal resumption of World Bank operations in Côte d Ivoire 01/10/2014 S S Extension of closing date I. Disbursement Profile v

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13 1. Project Context, Development Objectives, and Design 1.1 Context at Appraisal Country and Sector Background 1. Côte d Ivoire experienced two decades of rapid development in the postindependence period, and the country benefited from one of the most dynamic private sectors that served an engine of growth and jobs in West Africa. However, a prolonged political and economic crisis weakened the private sector and related institutions, and impeded the Government s economic recovery and social stability efforts. The global financial crisis and economic difficulties in the 1980s further depressed the economy. Economic reforms initiated in the 1990s including devaluation of the CFAF, reforms of public enterprise, reduced government role in markets, and private investments in infrastructure helped to stimulate the economy. The difficult economic situation was compounded by political and governance issues, which became more important at that time. Growing unemployment in the 1990s contributed to the social and political tensions that eventually led to military coups, armed rebellion, and regional disparities that split the country into two. 2. The political crisis and the security governance situation had significant impact on investments, private sector activity, and jobs because investors and donors lost confidence and withdrew from the country. Under these conditions the informal sector expanded, tax evasion and fraud increased, and government revenues declined. Private industry and the tourism sector were significantly hampered, and by 2006 the contribution to real gross domestic product (GDP) was 35 percent lower than the pre-crisis level. Average real GDP growth was negative and below the rest of Union économique et monétaire ouest-africaine and Sub-Saharan Africa, and real GDP per capita fell by approximately 15 percent cumulatively. 3. The private sector, dominated by SMEs, has traditionally had an important role in the Ivorian economy. The main issues and constraints the SMEs faced included racketeering; 1 dysfunctional institutions, laws, and regulations concerning businesses, lack of financing, government accumulation of arrears to SMEs coupled with erosion of private working capital, weak SME skills and competitiveness, and inadequate provision of public infrastructure and social services. SMEs and other private enterprises also faced a depressed investment climate, and a difficult business environment characterized by cumbersome regulations governing the creation and operation of enterprises. 1 According to the Project Appraisal Document, racketeering in this context consists of harassment, extortion, bribery and, in some cases, physical and sexual assault at roadside checkpoints manned by police and military personnel. These checkpoints were set up to control traffic during the conflict.

14 Rationale for Bank Assistance 4. The proposed project supported the joint Government-World Bank strategy aimed at helping the country achieve its potential through private sector regeneration and growth. The Bank supported the Government s emergency economic and social recovery agenda that is part of the Ouagadougou Peace Accords first signed in March Bank support focused on efforts to improve private sector confidence since it enhances transparency and capacity of state institutions through sector investment operations, including an International Development Association (IDA) Economic Governance and Recovery Grant. 5. The Government of Côte d Ivoire requested World Bank assistance to support the revival of the private sector, especially small and medium enterprises, which are essential for job creation and jumpstarting the local economy. In November 2008 a Bank mission responded to the request and discussed short- and long-term priorities for economic recovery with the Government and the main stakeholders. After these consultations, the emergency Small and Medium Enterprise Revitalization and Governance Project (Projet d'appui à la Revitalisation et à la Gouvernance des Entreprises, or PARE-PME) was designed to pave the way for longer-term actions that would be the basis of an IDA operation to support growth in Côte d Ivoire. Higher-Level Objectives to which the Project Contributes 6. The project responds to the PRSP objective of promoting shared growth and alleviating the root cause of the conflict. It aims at improving the investment climate in Côte d Ivoire so that the SME sector can better contribute to growth and employment creation. The project would thus not only help SMEs, but also support all private sector activities. A successful project outcome will also contribute to the country s emergence from conflict, and to improved economic governance. Finally, the project will help prepare policy reforms that would be pursued in the context of the Government s broad poverty alleviation program. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 7. The Project Development Objective (PDO) is to help improve the performance of the SME sector in Côte d Ivoire and the investment climate that affects it. 8. Key Results Indicators linked to the PDO were: Number of new SMEs registered Number of new jobs generated 9. Intermediate results indicators relating to the project components were: Component A: Direct support to SMEs Increase in loans extended by MFC-PME to SME members Investments made by SMEs to improve worker performance 2

15 Component B: Investment Climate and Governance Reform Number of days needed to establish a new business Number of days required to settle a commercial dispute Percentage of court decisions published on the web site Decrease in additional transportation cost caused by racketeering Component C: Institutional Support and Project Implementation Timely production of project reports 10. These indicators were to be measured by regular project monitoring, survey of firm satisfaction, and other sources identified in the results framework and monitoring provided in annex Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 11. The PDO and key indicators were not revised during the life of the project. 1.4 Main Beneficiaries 12. The main beneficiaries of the project were targeted SME firms and associations with access to nonfinancial business development services and access to financial services; the business consulting sector with an improvement of availability and efficiency of business services; and the private sector, which were to benefit from an improved investment climate. 13. Improvements in the business climate and the development of institutions that facilitated private sector development had important spillovers and sector linkages that would create jobs, income, and trade opportunities that would promote social stability, benefit the general public in Côte d Ivoire, and promote regional integration and growth in West Africa. 1.5 Original Components 14. The Project had three components: Component 1: Direct support to SMEs (US$11.3 million, of which IDA US$8.1 million, private sector US$3.2 million) 15. The objective of Component 1 was to strengthen SMEs by: (i) providing technical advice and training through a matching grant program to help SMEs improve productivity and competitiveness, and acquire needed know-how through the Enterprise Revitalization Support Fund (Fonds d Appui à la Revitalisation des Entreprises, FARE); and (ii) contribute to reducing the financial constraints faced by SMEs that are members of FIPME (Fédération Ivoirienne des Petites et Moyennes Entreprises) through the purchase of audited debts that the Government owed SME members of FIPME. The proceeds of this purchase were to be used to capitalize the SME mutual fund MFC-PME (Mutuelle de Financement et de Crédit 3

16 des PME) created by FIPME, whose mandate was to provide working capital to its SME members. The project was to also finance technical assistance (TA) to the Fund. Component 2: Investment Climate and Governance Reforms (US$5.0 million of which IDA US$4.6 million; Borrower 0.4 million) 16. This component supported the introduction of reforms which could be easy to implement and have a quick impact on the business environment and thus assist the government in meeting its objective of promoting competitiveness and encouraging private investments. Activities included: The establishment of a pilot Commercial Court in Abidjan and its business registry and finalizing, in consultation with all stakeholders, a draft legislation and action plan prepared by the Ministry of Justice in Improvements in the regulatory framework for business including the establishment of a one-stop shop for business creation (guichet unique), assistance to the formulation of investment climate reforms and support to the public-private dialogue The implementation of a program to curb racketeering, based on the recommendation of the World Bank funded study on the subject. 2 The CTCFR (Comité Technique de Contrôle de la Fluidité Routière) was to be established to implement the recommendations under a pilot phase in the Abidjan district, while other technical and financial partners agreed to finance subsequent phases of the program. Component 3: Institutional Support and Project Implementation (IDA: US$2.3 million). 17. The objective of this Component was to: (i) finance studies to assist in the formulation of a private sector strategy; to improve competitiveness, and help define modalities to implement the Public Private Partnership; and (ii) provide support for project implementation. 1.6 Revised Components 18. The project restructuring in November 2011 did not result in any significant change to the original PDO and the three components. 1.7 Other significant changes 19. Significant changes were made to fine tune the institutional, governance, and monitoring and evaluation (M&E) arrangements in response to slow execution of the first two 2 Study on Racketeering in Côte d Ivoire, January

17 phases of the project, and the need to improve implementation following formal resumption of World Bank operations after the political crisis. In the second year of operation ( ), the team re-engaged with project stakeholders, confirming the relevance of the project and its structure, ensuring that the conditions for its effective implementation were present in the post-crisis context, and funds that were not used by the matching grant (CFAF 240 million) were reallocated to other activities. The project implementation unit (PIU) recruited a full-time project manager, as recommended by a June 2012 World Bank supervision mission, and the steering committee was revamped to ensure stronger private sector representation with the inclusion of the Investment Promotion Agency CEPICI (Centre de Promotion des Investissements en Côte d Ivoire), the presidency, and the Ministry of SME. A dedicated M&E specialist, recruited by the PIU, updated the M&E framework and oversight arrangements. 20. A level II restructuring was approved on November 8, 2011 to formalize recommended changes to the project steering committee and beneficiaries, modification to the M&E framework, and reallocation of funds across project components. The Government requested, and the Bank approved, a nine-month extension of the project from an end date of January 31, 2014 to October 31, 2014 to consolidate the completion of project activities and achievement of the PDOs. These project restructurings did not result in any changes to the PDO and indicators. 2. Key Factors Affecting Implementation and Outcomes 21. The use of the rapid response process facilitated project processing in direct response to the Government s urgent needs to address unemployment created by the disruption of economic activity, worsening security conditions, and racketeering all of which were underlying the cause and effect of the crisis. The Fund for the Revitalization of SMEs, FARE/PME (Fonds d Appui à la Revitalisation des PME) project was designed as a pilot reengagement instrument to support investment climate reform and improve private sector performance after the prolonged crisis. But project implementation was challenging, particularly in the early phases. 5

18 22. Three important phases can be identified during project implementation (Table 1). Table 1: Project Timing, Preparation, and Implementation Project design Grant Agreement signing Setting up steering committee Project effectiveness World Bank support mission for project launching Project implementation interruptio n Launching all components and subcomponents and effective project implementation Recruitment of three additional staff: Project Manager, M&E specialist, and Coordinator of Matching Grant Subcomponent Resumption of Bank supervision and technical missions Set up professional lawyers for the Commercial Court Launching the mutual funds activities Project design Project launching Political crisis after the Source: Adapted from the Government s 2010 closing report. elections Project activities resumption after political crisis Source: Government ICR 23. The three important phases of the project were the launching phase in 2009, the interruption phase due to the political crisis from mid-2010 to mid-2011, and the re-launching and implementation phase after the crisis, from mid-2011 to the project closing date. 24. At the launching phase, the critical challenge was to meet all effectiveness conditions necessary for project activities to start. The effectiveness conditions included the signing of a Subsidiary Agreement between the Government and the Export Promotion Agency APEX-CI (Association pour la Promotion des Exportations de Côte d Ivoire) that was acceptable to IDA; the effectiveness of the steering committee (Comité de Pilotage); updating the Financial and Accounting Procedures Manual; and recruiting an internal auditor and a procurement specialist. The delays in meeting these conditions meant that project activities started in May The second phase of the project was highly challenging, marked by the interruption of activities due to the political crisis. From December 2010 to September 2011, all project activities and public and private administration stopped, and project activities came to a 6

19 complete standstill. 26. The third phase saw a turnaround in implementation of project activities and was the most dynamic and productive phase. The project team re-engaged with all stakeholders public, private, and World Bank and project activities were put back on track. The project management was particularly proactive, disbursement increased, and project execution intensified. 27. The three phases of implementation show how project performance varied over the life of the project. Achievement of the project outcomes was below expectations in the first two phases, but this turned around in phase 3. There was strong commitment from the Government, private sector and donors in phase 3, and the overall performance of project outcomes is due mainly to progress made in delivering outputs in this phase. Improvements in the political climate and project-induced change in the business environment also had positive effects on investor confidence and private sector engagement during project implementation. 28. The development of recommendations, time bound action plans and road maps, and close supervision to follow up on the implementation of action plans during Bank supervision missions and reviews led to a number of mid-term course corrections that helped improve performance during project implementation. Key changes in the project implementing agency, steering committee, and M&E arrangements enhanced project implementation and achievements. Also, close World Bank and International Finance Corporation (IFC) collaboration ensured strong technical support and enhanced project supervision that contributed to notable progress across the project components. 2.1 Project Preparation, Design and Quality at Entry Soundness of Background Analysis 29. A survey of small, medium, and large enterprises was conducted in Côte d Ivoire in 2008 as part of an Investment Climate Assessment (ICA). The survey identified the main constraints to private sector development and other constraints that affected enterprise development and growth. The ICA highlighted the depressed state of doing business in Côte d Ivoire: the country ranking was 161 out of 181 countries in the overall business environment indicator in the World Bank report Doing Business 2009 (DB), and 167 out of 181 in the business creation indicator. A joint World Bank-IMF Financial Sector Assessment Program (FSAP) provided additional insights on SMEs limited access to credit banks, a problem that was worsened by losses incurred during the crisis. The Bank-supported study on racketeering, completed in January 2009, estimated that the additional cost of transport caused by roadblocks and informal levies was as high as CFAF 34 per metric ton per kilometer across the country. 30. The SME and ICA survey data, the FSAP, and the racketeering study, as along with consultations with stakeholders and strategic diagnostics undertaken in the context of the operation and preparation of the Country Assistance Strategy (CAS), underpinned the objectives and design of the project. 7

20 Inclusion of lessons learned 31. Lessons learned from operations in fragile and post-conflict situations and from private sector operations including the Côte d Ivoire Private Sector Capacity Building Project (Cr. 3104) were used in the project preparation. The Government-Private Sector Consultation Committee, revived in 2008, was another mechanism for PPD that was used as an important pillar for the project s design. Overall project design 32. The project was prepared by an experienced, multisectoral team drawn from the World Bank and IFC. The operation benefited from the diverse team s expertise in key areas such as private sector and SME development, and financial sector and investment climate reforms. The project team considered the Government s priorities for SMEs and consulted with public and private stakeholders, including a number of multilateral and bilateral donors. The preferred Bank lending instrument was a Specific Investment Loan (SIL) because of its flexibility in supporting private sector activities, such as providing direct support to SMEs, and financing TA, equipment, and minor civil works. The SIL was also expected to support TA for Government to facilitate implementation of its private sector reform agenda, including job creation through promotion of SMEs. Assessment of risks 33. Overall project risk was assessed as Substantial, with three elements assessed as high. The three elements are as follows: The political situation would not normalize, or conflict resumes because of lack of progress on elections and security. The mitigation measure was to sustain international community support for implementation of the Ouagadougou Accords to ensure elections were held. This risk did not materialize because elections were held and the political situation continued to improve. There were two risks to the macroeconomic framework at appraisal: the unstable world economy that could adversely affect foreign direct investment and other capital flow, and the Government s significant arrears and debt servicing pressures while it sought to finance the country s recovery and stability. The mitigation measure to the risk included government implementation of a number of programs approved by the International Monetary Fund (IMF), and commitment to rapid attainment of the heavily indebted poor country decision and completion points, and the commitment of the Government to adjust its macroeconomic program to address possible exogenous shocks. Donor budget support also helped offset debt servicing and reconstruction programs crucial for social stability and economic recovery. The risks in the macroeconomic framework were largely mitigated. Data from the IMF and the Economic Intelligence Unit showed that Côte d Ivoire made significant improvements in the transition from post-crisis recovery to a more sustainable growth path, although with periodic setbacks), and performance on IMF programs was strong. Continued support from multilateral and bilateral donors 8

21 also increased fiscal performance, which facilitated establishment of the mutual fund and the purchase of SME s debts. The post-conflict environment and persistent volatile sociopolitical situation would not guarantee effective procurement system functioning. This risk was expected to be mitigated by project supervision missions, and post-procurement and Statement of Expenses reviews and audits. This risk was also largely mitigated. 34. As previously noted, the country continued to make progress on political stability, and all scheduled Bank supervisions were conducted. Procurement arrangements were well managed by the project, although some equipment valued at about US$169,000 was not delivered on time at project closing. 2.2 Implementation Implementation arrangement 35. The project was designed and implemented to be a cornerstone of the Government s post-crisis, private sector led strategy, with a strong focus on promoting SMEs and improving the investment climate. To accelerate project implementation and fiduciary risk supervision, the project preparation team set up a disbursement mechanism through an existing private institution, APEX-CI, which had successfully implemented the IDA-financed Private Sector Development Project. APEX-CI was responsible for all procurement, disbursement, accounting, financial reporting, and M&E, and for ensuring the auditing of project accounts. APEX-CI was also responsible for management of the matching grant component and coordination of all project activities. 36. A Subsidiary Agreement was signed between the Government and APEX-CI to formalize the role of APEX-CI as an executing agency. A steering committee made up of representatives of all stakeholders involved in the project implementation was established to provide guidance to APEX-CI. Also, specific private agencies or public administration were identified to implement other project subcomponents. 37. The first two years of the project were particularly challenging, including a virtual halt in project implementation because of the political conflict in the country. The project was restructured in November 2011 to accelerate its implementation, and all activities were implemented from late 2011 to October After project activities resumed in June 2011, overall implementation remained limited. Given the slow mobilization and little progress across components, the Bank rated the Small and Medium Enterprise Revitalization and Governance Project PARE-PME (Projet d'appui a la Revitalisation et a la Gouvernance des Entreprises) as moderately unsatisfactory and noted it as a problem project in the Region s portfolio, thus requiring close supervision and proactive measures. Project Restructuring During Implementation 38. The November 2011 restructuring focused on two adjustments. First, a budget 9

22 reallocation provided more resources to the unit in charge of fighting racketeering. The budget for this activity was initially US$1,100,000, but the Ivoirian government asked the Bank to increase the allocation for this subcomponent by US$1,200,000 because of the magnitude of the effort and the need to thoroughly address this phenomenon. 39. The second adjustment was made to address the June 2012 supervision mission s recommendation to recruit a full time project manager. After the political crisis, when project activities were put back on track project management needed more intensive follow-up and focus on activities with high potential impact. The restructuring also aimed to improve the steering committee s strategic activities by including more members with stronger private sector orientation. A budget reallocation was also made to enhance the operationalization of the Commercial Court. 40. The Government requested an extension of the project in September 2013, extending the closing date from January 31, 2014 to October 31, This adjustment was justified by the need to continue achieving objectives that could greatly impact the private sector environment and create more conditions to facilitate job creation. The achievement of all the project objectives was also expected to pave the way for a large, ambitious, integrated economic support operation. 41. A mid-year review was conducted in October 2012, and key findings included the following: Project activities picked up significantly during the first half of 2012, and implementation of all components was on track. Successful implementation of project activities translated to an increase in disbursement up from 22 percent in June to 46 percent in November 2012, taking into account all ongoing payments in the pipeline at the time of the review. Given this progress, the project rating was upgraded from moderately unsatisfactory to moderately satisfactory, and an action plan was drafted to serve as a road map to accelerate project implementation and disbursement. The overall institutional governance of the project was not satisfactory, and communication among project stakeholders was not adequate. In spite of progress made by the APEX-CI staff during the first half of 2012, project coordination was not proactive and visible. Much of this was attributed to the fact that the project management was weak. The steering committee was not effective in its governance role, due to inadequate private sector representation. 42. Aside from the observed improvements toward achievement of project objectives, the mid-year review recommended changes in the project s institutional arrangements, governance, beneficiary and stakeholder engagement, and M&E. 43. Subsequent Bank supervision missions developed recommendations and timebound action plans that were agreed to with the authorities (and updated in subsequent 10

23 supervision and review missions) were to serve as a road map for the PIU and stakeholders to help realize targeted activities and make progress toward the project s development objectives. The recruitment for a full-time project manager to address day-to-day project management enhanced implementation of project activities which led to increased disbursement. It also improved the project s visibility to all stakeholders and facilitated communications both within the project and between the project and beneficiaries. The steering committee was also revamped with new, committed members and met regularly after the adjustments from the 2012 project restructuring. However, as noted in some supervision reports, the project s management did not systematically implement all of the recommendations made, and in other cases recommendations were implemented late, thus delaying project activities. 44. Overall, intensive project supervision, close Country Management Unit monitoring and sustained commitment from Government and stakeholders including the private sector resulted in noticeable improvements in project implementation and enhanced prospects for achieving outcomes/results and the project s development objectives. These achievements translated into continued improvements in project performance from moderately unsatisfactory in June 2012 to satisfactory, and an increase in disbursement rates from 22 percent in June 2012 to about 98 percent at project closing in Partnership Arrangement and Coordination with IFC in Project Implementation 45. IFC worked with the Bank to enhance the project s impact on private sector and SME development. Its role was to support the project objectives through its Foreign Investment Advisory Services and through funding to the local banking sector through lines of credit and/or guarantee facilities for SMEs. 46. World Bank-IFC collaboration was a noticeable feature of project implementation. Component 2 of the PARE-PME was implemented in close synergy with the IFC Business Regulation Program, as reflected in joint supervision and activities and overall client dialogue on the investment climate. After the 2011 post-electoral crisis and the acceleration of project activities, the PARE-PME, in collaboration with IFC, helped create and strengthen a dedicated Doing Business Reform Unit within CEPICI under the sponsorship of the prime minister. The unit coordinated the annual DB reform agenda, in collaboration with multiple public and private stakeholders, enabling Côte d'ivoire to achieve a strong track record of reforms in 2013 and Specific reforms such as creating the one-stop shop, the Commercial Court, and the credit registry RCCM (Registre de Commerce et de Crédit Mobilier), and the simplification of procedures and costs for business registration and other formalities also benefited from IFC-World Bank synergy in providing support to the Government with crucial legal, institutional, and regulatory TA, and capacity building (including equipment, training, and so on). Component 1 (direct support to SMEs) also benefited from joint supervision and support from IFC, which was complementary to ongoing IFC support to financial intermediaries; for example, the MCF-PME (Mutuelle de Financement et de Crédit des PME) established partnership agreements with BICICI (Banque Internationale du Commerce et de l Industrie de Côte d Ivoire), a local bank involved in an IFC SME support program. 11

24 2.3 Monitoring and Evaluation Design, Implementation, and Utilization M&E Design 47. At project preparation, results framework and monitoring were set up, but staff positions were not included at preparation and there was no clear plan for implementing M&E. Consequently the PIU did not recruit M&E staff, and the project did not have a functioning M&E system during the first two years of the project life. This was due, in part, to the difficult political situation at project preparation which made it particularly difficult to gather baseline data from credible data sources. M&E Implementation 48. The absence of a functioning M&E system at project design meant that baseline data were not available for Component 1, direct support to SMEs that required information from potential beneficiaries. This gap was addressed during the 2012 mid-term review, and actions were taken to recruit full time M&E staff and design a strong M&E plan. The absence of baseline and other monitoring data for a key project component was a major shortcoming that made it especially difficult to assess project performance and undertake rigorous economic analysis to evaluate impact on beneficiaries. Baseline data from secondary sources including international benchmarking from Doing Business reports and other studies, such as the racketeering study provided useful baselines for the investment climate and governance reform. As previously discussed, the adjustments to the M&E system established a robust data collection system, which was used to monitor project performance. M&E Utilization 49. After the mid-year review, data from the M&E system was used to assess performance as inputs into the strategic studies that the project supported. But the utilization of M&E for decision making on project performance, satisfaction of project beneficiaries, and assessment of project impacts at project closing stands out as a major shortcoming. 2.4 Safeguard and Fiduciary Compliance 50. The project s safeguard was classified as Category C and had no social or environmental issues during implementation. The project s fiduciary management was rated satisfactory and in compliance during project implementation, and no major issues were raised about financial management. A recommendations agenda was set up and monitored in subsequent missions to deal with the management issues noted during the Bank supervision and technical missions. The project s fiduciary management was, in general, acceptable throughout project implementation. 12

25 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation Relevance of Objectives: High 51. Improving performance of the SME sector in Côte d Ivoire and the investment climate were highly relevant for promoting private sector development and economic growth at the design of the Project and in the current circumstances. The CPS, FY10-FY 13, strategic objectives for Côte d Ivoire has four pillars strengthening governance and institutions, improving the performance of the agriculture sector, strengthening the private sector, and infrastructure renewal and basic services. The project directly supported two of these pillars strengthening the private sector and strengthening governance and institutions - by providing support to small and medium enterprises, promoting reforms that improve the business environment, strengthening competitiveness, and helping to build key institutions such as the commercial court, investment promotion agency, and credit union for SMEs. Relevance of Design: Substantial 52. Two of the three project components direct support to SMEs and investment climate and governance reforms were critical for achieving the Project s objective. The inclusion of strong private sector representation in the institutional support and implementation arrangements also ensured that project design was responsive to the priority needs of SMEs and the private sector. The design of the project involved a participatory process, with consultations engaging all key public and private stakeholders at preparation and during implementation. Project design also took into account strategies and policy priorities articulated in key government and Bank documents, such as the ICA, the racketeering study, the FSAP, the Poverty Reduction Strategy Paper, and the Country Sector Strategy. The project also addressed key issues in the World Bank Strategy for Côte d Ivoire, as specified in the Interim Strategy Note for Côte d Ivoire 2008, and financial sector reforms were and still are important priorities in the Bank-Government policy dialogue. Relevance of Implementation: Substantial 53. Notwithstanding the challenges in the post-conflict situation in which the project was implemented, the project team s interventions were critical for ensuring the continued relevance of the project and achievement of project objectives. The team developed detailed action plans that served as a road map for the PIU and other stakeholders work on achieving targeted activities and tracking progress against project objectives. The mid-year review and level II restructuring led to adjustments in the PIU, Steering Committee, and M&E that resulted in substantial improvements in implementation of project activities and reflected in sustained increases in disbursement rates and performance ratings over the life of the project. The outcomes from the project remained important in the country s priority development objectives even after its closure. Government continued to build on the Project outcomes and priorities identified in the CPS. Current development priorities reflected in the National Development Plan, , emphasizes strong SME and private sector participation and an improved 13

26 business environment as key pillars for economic recovery and industrialization. World Bank and Government strategies, policies, and programs are also building on relevant findings and lessons from the operation. 3.2 Achievement of Project Development Objectives Rating of Achievement of PDO: Substantial 54. The project was successful in helping to improve the performance of the SME sector in Côte d Ivoire and the investment climate that affects it. To do this the Project helped improve productivity and competitiveness of SMEs, promoted reforms that improved the business environment, and generated evidence to inform a more competitive economy. The project s achievements in improving the performance of the SME sector and investment climate, reflected in the key performance indicators, indicated a more than seven-fold increase in the number of new SMEs registered at the one-stop shop and 154 percent increase in number of new jobs generated by registered SMEs 55. Improved performance of the SME sector in Côte d Ivoire: This was achieved through the financial and non-financial support provided by the project. The matching grant scheme that subsidized 50 percent of the costs of training and other business development services helped SMEs acquire needed know-how for reducing cost and improving firm productivity. In addition, a mutual fund helped reduce SMEs financial burden through the purchase of audited debt obligations of the Government to SME members of FIPME. The matching grant scheme FARE/PME provided SMEs with access to finance, and capacity building in management and organization, production processes and technologies, and marketing and commercial activities. The establishment of the mutual fund MCF-PME helped reduce the cash flow problems of participating SMEs arising from the accumulation of arrears from the state and supported capacity building of the Ivorian Federation of SMEs that represented the interests of SMEs in their engagement with Government and other organizations, including development agencies. These interventions were fully implemented during the course of the project, and performance targets set during project preparation were surpassed in most areas. The Project s direct support to SMEs resulted in more than nine-fold increase in investment made by SMEs beneficiaries of the matching grant and an increase in average MFC- PME lending to SME members from a target of 10 percent to 63 percent. SMEs respondents in the beneficiary assessment conducted at project closing reported that the financing and nonfinancing project support enabled them to improve managerial capacity, financial management, and to access to technology and finance. According to the SMEs, these factors were critical in improving productivity, reducing costs, and improving the quality of products sold or services delivered. 56. Improved investment climate that affects the SME sector in Côte d Ivoire : Project achievements that contributed to improving the business environment included : Creating a one-stop shop for business formalities anchored within the Investment Promotion Agency (CEPICI) simplifying processes and reducing costs related to business creation 14

27 Supporting a Doing Business Reform Team, under the sponsorship of the prime minister s office and the technical coordination of CEPICI Strengthening CCESP (Comité de Concertation Etat-Secteur Privé), the Public Private Dialogue (PPD) platform Establishing a specialized Commercial Court and modernizing RCCM Supporting the Government s program to curb roadside racketeering, including communication campaigns, training, and technical support to the anti-racket unit ULCR (Unité de lutte contre le racket) and call center 57. The project demonstrated successful outcomes in all of these areas. A one-stop shop for business formalities housed within CEPICI was formally launched in December A Doing Business Reform Unit was effectively set up within CEPICI. CCESP, largely inactive during the crisis, was reinvigorated with the project s support, including coordinating consultations on competitiveness and establishment of industrial zones. The Commercial Court of Abidjan was formally launched in October 2012, reducing the number of days required to settle a dispute. Project interventions also enhanced the Commercial Court s transparency, with nearly all of its decisions published on its publicly accessible website at project closure. The Court also developed an information system that was compatible to the Organization for the Harmonization of Business Law in Africa (Organisation pour l'harmonisation en Afrique du Droit des Affaires), which modernized the RCCM. The sub-component supporting the antiracketeering program was fully implemented, including communication campaigns, capacity building, and technical support to the anti-racketeering unit and call center. End of project results for investment climate and governance reforms indicated the following achievements: (i) a reduction in the number of days to establish a business (from 40 days to seven days); (ii) decrease in the average number of days to settle a commercial dispute (from 770 days to 525 days); (iii) 100 percent publication of commercial court decisions on its website; and; (iv) 49 percent reduction in the average additional transportation cost induced by racketeering. These reforms were critical in reducing transaction costs as well as providing incentives and comfort for private investors. 58. The successful delivery of investment climate reform outcomes that improved the business climate in Côte d Ivoire laid a sound foundation for sustaining investment climate reforms. The Doing Business ranking for Côte d Ivoire increased from 177 to 147 during the project cycle, and the country is recognized among the Top 10 Global Reformers in two consecutive DB Reports (2014 and 2015), with at least four reforms recorded each year. Such achievements are reflected in increasing private sector participation in current economic recovery efforts in Côte d Ivoire. 59. Overall, these results for achievement of the PDO, direct support for SMEs, and investment climate and governance reforms largely met or surpassed the targets set during project preparation. However, the absence of credible baseline data on outcome indicators for the matching grant and MCF-PME at the beginning of the project due mainly to the challenging country context during project preparation and launch which preceded the post- 15

28 electoral conflict made it especially difficult to accurately assess some of the achievements regarding improved performance of SMEs. 3.3 Efficiency Rating of Efficiency: Substantial 60. Assessment of efficiency is based on quantitative and qualitative assessment of project impacts obtained from information contained in project documents, beneficiary assessments, and other secondary sources. The project was developed to improve performance of the SME sector and the investment climate that affects it. The main beneficiaries of the project and their intended benefits were targeted firms and associations, with access to finance and nonfinancial business development services; the business consulting sector, with improved availability and efficiency of business services; and the private sector, which benefits from an improved investment climate. 61. At appraisal, a cost-benefit analysis was performed for the matching grant component, accounting for 32 percent of the total project cost, for which expected benefits could be reasonably quantified. For the four-year project lifetime, the Project Appraisal Document (PAD) estimated a net present value (NPV) of US$7.3 million, and an economic rate of return (ERR) of 38 percent. The ex-post NPV and ERR, based on project data, are estimated at US$27 million and 61 percent, respectively estimates that are significantly higher than those estimated at project preparation. The estimated actual benefits are higher because the actual number of jobs created from the matching grant was 1,598, which is higher than the projected 1,000 jobs used in the PAD. Given the number of beneficiary SMEs, which remained close to the PAD target, the actual number of jobs created per SME was 15.8, compared with 10 in the PAD. However, it is important to note that the baseline data used for assessment of impact are targets based on strong assumptions because the project M&E system did not systematically collect all the data required for a rigorous ex-post assessment of costs and benefits. 62. Estimated cost compliance savings in four reform areas starting a business, construction permits, registering property, and enforcing contracts are about US$8.8 million as of February 2014, representing a 78 percent savings from In two areas, starting business and enforcing contracts, where cost compliance savings from reforms were implemented jointly with the PARE-PME project, estimated savings improved by 41 percent and 99 percent (respectively) from the 2012 baseline values. The direct costs of the achieving these cost savings was $3.55 million, representing by the cost of enterprise licensing ($2.35 million) and commercial courts ($1.20 million) sub-components of the investment climate and governance reforms. Using the estimated benefits, measured by the estimated cost compliance savings, and the direct costs of the related sub-components, the benefit cost ratio is 2.4. This indicates that the benefits from cost compliance savings outweigh the costs and that the objective in the investment climate and governance reform was achieved efficiently. 16

29 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 63. The relevance of project objective was rated high while design and implementation were substantial due mainly to the challenging situation faced by the project in the first two phases. Notwithstanding these challenges the rating on achievement of development objectives was substantial given that most output targets were achieved or surpassed at closing. Efficiency was rated substantial given that cost-benefit analysis of the matching grant and investment climate reforms indicated that the objectives in both components were achieved efficiently. 3.5 Overarching Themes, and Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 64. The beneficiary assessment pointed to a number of issues that are relevant to the Project s contribution to creating jobs and income opportunities. About 34 percent of SMEs reported increases in sales revenue and number of new partnerships and 20 percent an increase in trading partners as a result of the project support. In addition, 64 percent of SMEs reported that the matching grant enhanced their capabilities to run their businesses. (b) Institutional Change/Strengthening 65. The framework and structure for implementing investment climate reforms that were established by the joint PARE-PME and IFC business regulation programs also enhanced the sustainability of the reform agenda. These arrangements are being used to implement other reforms beyond doing business, such as reforms on inspection and business licensing and taxation. 66. The contribution of the project to building institutions (the Commercial Court, the Investment Promotion Agency CEPICI, the Export Promotion Agency APEX-CI, a credit union for SMEs) is essential to helping Côte d Ivoire implement crucial reforms under the project, but most important, after the project, paving the way for a second generation of reforms on competitiveness, innovation, cluster and growth poles strategies for sustainable investment and job creation. Even though the project focused more on a short-term intervention which seemed appropriate given the uncertain situation and the immediate challenges and opportunities it also aimed to build the right institutional capacity, and a broad strategic roadmap for longer-term World Bank support. (c) Other Unintended Outcomes and Impacts (positive or negative) 67. The completion of the PARE-PME project and its achievements at project end were commendable, given the very difficult political context in which it was designed and implemented. Project interventions contributed immensely to public and private sector commitments to the private sector reform agenda in Côte d Ivoire. For example, project supported missions involving World Bank management and senior advisors in West Africa 17

30 played a key role in ensuring political engagement and setting a clear direction for the private sector agenda. These interventions helped revitalize the CEPICI, where the one-stop shop was eventually established, public private dialogues, and establishment of the commercial court. These outcomes continue to be key pillars of the private sector and SME development agenda. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 68. In general, the project beneficiaries recognize that the project was relevant and helped them address some crucial issues such as access to finance and the improvement of their capacity through TA. However, they found some conditions highly constraining, such as the 50 percent contribution in the matching grant component, the loan ceiling, and the refundable period. 69. Importantly, the TA enabled SMEs to improve their managerial capacity, specifically to present credible documents such as loan applications and business plans; it also gave them the opportunity to access more financing through the banking system. For example, because of project TA, some MFC-PME members are now in partnership with BICICI. 70. All public and private beneficiaries noted that the project greatly improved the country s investment climate. 4. Assessment of Risk to Development Outcome Rating: Moderate 71. A more stable political situation, an improvement in the investment environment, and strong economic growth helped to mitigate a number of risks that were rated high in the PAD. However, slow progress on national reconciliation poses risks to political stability, particularly in the run-up to the presidential and legislative elections. 72. The project helped improve SMEs access to finance, including actions that reduced Government arrears owed to SMEs. But the SME financing gap remains, with large numbers of SMEs not getting access to financial services from commercial service providers, such as banks. Limited access to credit and other financial services remains challenging and is a major threat to SME and private sector development outcomes, including sector competitiveness and job creation. 73. The project also contributed to improve PPD, which provided a platform for consultation, engagement, and making inputs into decision making that helped improve the private sector s confidence and trust in its relationship with the Government. These developments are crucial for building a productive relationship between the Government and the private sector now and in the future. With regard to racketeering, a permanent Center of the Anti-Racket Unit was formally inaugurated in April 2014, but the Government still needs to provide the necessary logistical support for its effective functioning. Failure to institutionalize and support this unit risks eroding the gains from project activities that reduced transaction costs from racketeering. 18

31 74. Urgent actions are also needed to consolidate and institutionalize key project achievements in areas such as the Commercial Court, the one-stop shop, and the mutual fund. Failure to do so will erode the project s gains, and its impact on SME and private sector development and on society in general. Even though Government authorities signaled strong intentions to build on the project outcomes, active follow-up will be necessary to ensure that these intentions are translated into time-bound actions. The absence of a time-bound and sequenced action plan backed by resources remains a threat to development outcome. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 75. The World Bank team worked closely with the Government and the private sector during project preparation to diagnose SME and private constraints, and use the understanding of those constraints to prepare the project that aimed to support investment climate reform and improve private sector performance. The Bank brought together a diverse, knowledgeable team drawn from across the Bank Group that had solid experience in fragile and post-conflict areas to prepare an operation that facilitated transition from post-crisis recovery to a more sustainable growth path. The team provided strong leadership and drew from relevant country and bank strategies, knowledge products, and lessons to provide investment, sound advice, and TA. 76. The project was small, but extremely innovative and ambitious in its objectives and implementing process. A private sector organizations was used for project implementation, and emphasis was given to collaboration and dialogue between the Government and the private sector. 77. Three shortcomings affected the quality of the Bank s performance at entry. These are: Limited diagnosis of key project management capabilities, including weaknesses in dayto-day management, and communication problems between the project and its key stakeholders. Inadequate attention to stronger private sector representation on the steering committee. Weaknesses in M&E arrangements (including staffing) to collect good quality data that would facilitate robust assessment of outcomes across all project components. The lack of good quality M&E data also made it difficult to undertake robust economic analysis to assess the potential impacts at entry. 78. As previously stated, these shortcomings were addressed during the project life, justifying the satisfactory Bank performance rating. 19

32 (b) Quality of Supervision Rating: Satisfactory 79. During project implementation, nine World Bank supervision missions made up of relevant staff were conducted. These supervisions developed recommendations and timebound action plans, and monitored project activities to put the project on track and keep the focus on achievement of project objectives. Recommendations for improvement and action plans were systematically reviewed during the subsequent missions. This proactive approach allowed the Bank team to detect problems at an early stage and initiate corrective actions to address problems during implementation. 80. Adjustments made in institutional arrangements, governance, and staffing after the supervision and review missions were crucial in putting the project on track and to progress on achievement of the PDO at closing. These changes, including recruitment of a full-time project manager, reinforcement of private sector perspectives in the steering committee, and strengthening M&E, improved project implementation and the day-to-day project management, which resulted in increased disbursements and enhanced performance on project outcomes. 81. Due to the project characteristics and the implementing environment, the fiduciary aspect was one of the most important issues that the team addressed during supervision missions. Despite delays in dealing with some fiduciary aspects, the Bank s fiduciary team assessed the fiduciary risk as low. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 82. Overall Bank performance is rated satisfactory. This rating is justified because of excellent supervision by the project team, and the good preparation and quality of consultation that were fundamental for a solid project design. Aside from the shortcomings in implementation, governance, and M&E at the early phases of the project, significant progress was made on achievement of the PDO, and all targets set during preparation were met or surpassed. 20

33 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 83. The Government, particularly the new Government that took office in late 2012, was a major champion for the project and demonstrated strong commitment to improving the investment climate and to the overall business reform agenda. Initially there were challenges in meeting some effectiveness conditions, such as the process for certification of SME debts. These challenges delayed project effectiveness and launching of activities as scheduled in the project design. After activities resumed, the project became a centerpiece of the Government s post-crisis strategy for private sector led growth. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 84. The implementing agency, APEX-CI, had the relevant experience required to manage a private sector operation, but initially the agency was not adequately equipped with sufficient staff to successfully manage the project. However, due to weak management and lack of M&E staff the project implementation was delayed during the first year. In addition there was weak financial support for the activities of the center in charge of managing the racketeering subcomponent. This problem was however addressed during the level II restructuring with allocation of increased funds for racketeering activities. 85. The mid-term review resulted in improvements in the implementing agency, including staff reinforcements, and project management improved considerably. From that point on, the implementing agency managed the project effectively, resulting in increased disbursement, enhanced fiduciary management (moderately satisfactory rating), and low assessment for fiduciary risk. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 86. An enhanced project implementing agency improved project management and communication among project stakeholders. The assessment noted strong Government commitment to the reform agenda, but this was marred by delays in fulfilling the effectiveness conditions. The improved performance of the implementing agency and its effect on efficiently achieving project objectives justifies the satisfactory rating for overall borrower performance. 21

34 6. Lessons Learned 87. Knowledge of the post-crisis environment, sustained donor support, strong government commitment, and clear strategies for private sector and stakeholder engagement are the prerequisites for designing effective private sector operations that support transition from post-crisis recovery to a more sustainable growth path. Aside from the challenging post-conflict situation, the PARE-PME project achieved all of its PDOs, with all targets met or surpassed at project closing. Designing the project as a pilot re-engagement with crucial components to support SME and private sector needs helped pave the way for a large, more ambitious and integrated operation to improve private sector development. 88. It is crucial to diagnose implementing agency capabilities up front staffing, performance-tracking system, and so on even for agencies with prior successful experience with Bank operations, to avoid potential implementation problems that can hamper a project s impact. Strong participation of the private sector in governance arrangements is essential for enhancing private sector perspectives in project decision making processes. Even though the project used an existing private sector firm for implementation, failures to adequately equip the firm with the necessary tools, including staffing in key areas, and capacity to design and implement a well-thought out engagement strategy and results measurement system can lead to implementation problems. 89. Public-private dialogue takes a lot of time and effort to set up, but the investments in time and money can have significant payoffs because building trust among the parties is an important part of achieving successful private sector outcomes, particularly in a post-conflict environment. The platform for PPD provided a good foundation for setting the private sector agenda, and for building trust and open engagement for future engagements between the government and the private sector. Such mechanisms take time to build, but they can be important in post-conflict situations, where trusting relationships are rare. The CCESP is a good example of a project finding that can be replicated in other countries. 90. Even limited resources, when strategically engaged, can lead to large, positive results with high impact when the knowledge base is strong, partnerships are made to work, and stakeholders stay committed to achieving the project s objectives. PARE-PME was a small project, but it achieved big and ambitious outcomes. These successes derive mainly from strong commitment to a participatory and stakeholder driven approach that addressed the priority needs of the private sector and SMEs and Government s desire to unleash the private sector as a major source of growth. 22

35 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 91. The summary of the Borrower s ICR is in Annex 7. According to the borrower, the project was successfully implemented with all project objectives satisfactorily achieved at closing. The most important issue raised by the Government, the implementing agency, and other stakeholders was that future World Bank and other donor support build on the project s findings, ensuring that results and lessons learned are mainstreamed into private sector, SME development operations and business climate reforms. 92. On the Government s side, the main recommendations included a call for proactive actions to sustain the activities of the Commercial Court, address doing business and racketeering issues, and continue supporting SME and private sector promotion through strong partnership with the private sector and other stakeholders. 93. On the Bank s side, the main recommendation was a Government request for large, ambitious, and integrated support building on the project s achievements. According to the borrower and private sector, the project had strong commitment from all stakeholders making it easier to enhance private sector participation in the country s growth process and impact on the economy. 23

36 Annex 1. Project Costs and Financing Project Cost by Component (in US$ Million equivalent) Component I: Direct Support to SMEs (Matching Grant and Mutual Fund) By Subcomponents Total Borrower Beneficiaries IDA Local Foreign Total Component Matching Grant Firm Level Consultancies Firm Level Training and TA Subtotal Component Mutual Fund Arrears Buy-back TA/Mutual Fund Management and FIPME Subtotal TOTAL Baseline Cost Contingencies TOTAL Baseline+Contingencies By Category Total Borrower Beneficiaries/ IDA Local Foreign Total 1- Consultant/Training 2- Equipment 3- Recurrent Costs 4. Other (Arrears Buy-back) 5- Contingencies Total

37 Component II: Investment Climate and Governance Reform (Enterprise Licensing, Commercial Court, and Fight against Racketeering) By Subcomponents Total Borrower Component 2.1. Commercial Court Consultancy to Elaborate Legal Framework Consultancy to Elaborate Operational Framework Consultant and TA to set up the registrar T Beneficiaries/ Other Donors IDA Local Foreign Total Subtotal Component 2.2. Enterprise Licensing and Private Public Dialog Equipment for the One-stop shop Civil Work for the One-stop shop (Common to the Registrar) Subtotal Component 2.3. Doing Business Fighting Racketeering Equipment for the Task Force Consultancy, Capacity Building, TA for the Task Force Subtotal TOTAL Baseline Cost Contingencies TOTAL Baseline+Contingencies By Category Total Borrower Beneficiaries IDA Local Foreign Total 1- Consultant/Training 2- Equipment 3-Civil Work 4- Contingencies Total

38 Component III. Institutional Support and Project Implementation (Project Implementation and Selected Support to Key Ministries) By Subcomponents Total Borrower Component Project Coordination APEX CI Fee for Implementing the Matching Grant Component Fee for Implementing the Other Project Components and TA to APEX-CI Audit Steering Committee Meetings and M&E Beneficiaries/ Other Donors IDA Local Foreign Total Subtotal Component TA to Ministries Consultancy for the Ministry of Industry: PSD Strategy Consultancy for the Study on Competitiveness MEF Subtotal TOTAL Baseline Cost Contingencies TOTAL Baseline and Contingencies By Category Total Borrower Beneficiaries/ IDA Local Foreign Total 1- Consultant/Training 2- Equipment 3- Contingencies Total

39 Annex 2. Outputs by Component PDO 1. Global Objectives Help improve performance of the SME sector and investment climate 2. Intermediate Objective Component 1: Direct Support to SMEs A1. Improved institutional capacity of SMEs A2. Mutual fund Target 1,000 SMEs registered at the onestop shop 10,000 formal jobs generated by the SME 1,000 jobs created by the SME supported by the FARE/PME A1.1 CFAF 1,876,931,610 invested by SMEs supported by matching grant A SMEs supported A1.3 1,000 jobs created by SMEs supported by FARE/PME A2.1 Annual increase in amount of loan to SMEs Component 2: Investment Climate and Governance Reform B1: Doing Business B2: Abidjan Commercial Court B3: Reduction of magnitude of racketeering B1.1 Reduction of time to set up a firm from 32 days to 8 days by end of project B.1.2 1,000 SMEs registered at one-stop shop B ,000 formal jobs generated by SMEs created B.2.1 Reduction of time to clear a commercial dispute from 770 days to 450 days by end of project B.2.2 Publication of at least 95% of Court decision by end of project B % decrease in illegal additional cost due to racketeering Component 3: Institutional Support and Project Implementation PDO 7,447 registered Achievement 25,468 jobs generated 1,371 jobs created A1.1 CFAF 1,822,695,910 disbursed A SMEs effectively supported A1.3 1,371 jobs created A % in 2012 and % in , A2.1.2 A2.1.3 B1.1 Time to set up a firm: 7 days (DB 2015) B1.2 7,447 registered B1.3 25,468 registered B days (DB 2015) B % of Court decisions published B % decrease from CFAF 20/km ton to CFAF 10.2/km ton C1: Institutional support Two strategic studies completed. Four are effectively achieved Four are effectively achieved C2: Project implementation Good and acceptable management Project management and governance rating satisfactory 27

40 Annex 3. Economic and Financial Analysis The Project Development Objective (PDO) of The Côte d Ivoire SME Revitalization and Governance Project was to help improve the performance of the SME sector in Côte d Ivoire and the investment climate that affects it. This would help stimulate economic activity and contribute to broader private sector led investment, growth, and employment generation. The overall objective of the project would be achieved through three mutually reinforcing components, namely, (a) strengthening SMEs through the provision of financial and non-financial services; (b) improvement of the business environment through targeted reforms of key government regulations affecting business and of key institutions; (c) strengthening policymaking for growth and providing support for project implementation. The quantitative economic analysis refers only to the matching grant component and not the entire project. The assessment of impact from the other project components are described in the qualitative assessment in the relevant sections of the ICR. Noteworthy qualitative impacts include the reduction is racketeering, the creation of new jobs from SMEs registered in the one stop shop, the reduction of costs related to business formalities and settlement of disputes. Methodology Undertaking a cost-benefit analysis for this project was very challenging. The PAD noted challenges in conducting economic analysis of private sector development projects due to (i) the lagged effects of the project and, the difficulty to isolate the direct impact of the different project activities related to institutional development and business climate reforms on output growth and job creation, and (ii) the lack of time series which can be used to estimate the relevant coefficients of correlation required for simulation. In addition to the challenges, the project did not systematically collects M&E data that is required for a rigorous ex-post cost benefit analysis. Without the data (at least on number of firms and level of income before and after the matching grant) disaggregated per year, it was difficult to get a realistic estimate of the ERR. Since these data are not available, the economic analysis conducted in the ICR, kept the same level of income assumed in the PAD. The economic analysis in the PAD which also focused on the matching grant also assumed that a minimum of 100 firms/associations would use the matching grant scheme either for consulting services or training, the average grant was expected to be US$30,000 for individual firms, and the SMEs supported were expected to create 10 jobs on average per SME. Notwithstanding the above limitations, the analysis at project end, provides useful insights into the magnitude of actual economic benefits and costs of the matching grant component. Key data collected from the M&E system at project closing indicated that: (i) (ii) (iii) 101 firms benefited from the matching grant; the average grant amount was about US$35,000; and 1598 jobs were created which is equivalent to an average of 15.8 jobs created per SME. These actual data are higher than those assumed in the PAD, indicating that the matching grant component was, in terms of rate of return (ERR), more successful than what was planned. 28

41 Based on the simple projection model used in the PAD, available data from M&E, and keeping all other assumptions unchanged, the actual NPV and ERR are estimated at US$27 million and 61 percent respectively. These estimated compared to the ex-ante NPV and ERR of US$15 million and 46.4 percent respectively. Estimated cost compliance savings in four reform areas starting a business, construction permits, registering property, and enforcing contracts are about US$8.8 million as of February 2014, representing a 78 percent savings from In two areas, starting business and enforcing contracts, where cost compliance savings from reforms were implemented jointly with the PARE-PME project, estimated savings improved by 41 percent and 99 percent (respectively) from the 2012 baseline values. The direct costs of the achieving these cost savings was $3.55 million, representing by the cost of enterprise licensing ($2.35 million) and commercial courts ($1.20 million) sub-components of the investment climate and governance reforms. Using the estimated benefits, measured by the estimated cost compliance savings, and the direct costs of the related sub-components, the benefit cost ratio is 2.4. This indicates that the benefits from cost compliance savings outweigh the costs and that the objective in the investment climate and governance reform was achieved efficiently 29

42 Annex 4. Bank Lending and Implementation Support/Supervision Processes Table 4A.1. Task Team Members Name Title Unit At Lending Akoua Gertrude Tah Program Assistant AFCF2 Andrea Vasquez-Sanchez Sr. Program Assistant GFMDR Djibrilla Adamou Issa CSC (Former Task Team Leader) GTCDR Emmanuel Diarra Finance Specialist AFCF2 Emmanuel N. Ngankam Resident Representative MNCDZ Fatma Hervieu-Wane Operations Officer CASSB Gilberto de Barros Sr. Private Sector Specialist GTCDR Haroune Ould Sidatt Financial Specialist GFMDR Josephine Tonle Ngou Mawamba Sr. Executive Assistant GSPDR Lionel Black Yondo Private Sector Specialist CAFIC Lorenzo Bertolini Sr. Private Sector Specialist GTCDR Magueye Dia Sr. Private Sector Specialist GTCDR Mariama Bamba Program Assistant AFCF2 Maurice Adoni Sr. Procurement Specialist GGODR Saidou Diop Sr. Financial Specialist GGODR Sameena Dost Sr. Counsel LEGES At Supervision/ICR Adamon Karamath D. Sybille Private Sector Specialist GTCDR Adesimi Freeman Head, ICR Team Leader GTCDR Axel Gastambide Financial Specialist GFMDR Cecile Fruman Director GTCDR Djibrilla Adamou Issa CSC (Former Task Team Leader) GTCDR Emmanuel N. Ngankam Resident Representative MNCDZ Fanja Rovoavy Sr. Operation Officer GTCDR Jaoujata Toure Junior Professional Associate GTCDR Jean Charles Amon Kra Sr. Financial Specialist GGODR Jeannette Kah Le Guil Sr. Program Assistant GTCDR John Speakman Practice Manager GTCDR Kamal M. Siblini Sr. Monitoring & Evaluation Specialist GTCDR Keta L. Ruiz Sr. Operation Officer GPSOS Lionel Black Yondo Private Sector Specialist CAFIC Lorenzo Bertolini Sr. Private Sector Specialist GTCDR Magueye Dia Sr. Private Sector Specialist GTCDR Mahaman Sani Extended-Term Consultant GTCDR Maurice Adoni Sr. Procurement Specialist GGODR Saidou Diop Sr. Financial Specialist GGODR Sebastian A. Molineus Director GFMDR Vincent Palmade Lead Economist GTCDR Yannick Saleman Private Sector Specialist GTCDR 30

43 Table 4A.2. Staff Time and Cost Staff Time and Cost (Bank Budget Only) US$ (including travel Stage of Project Cycle No. of Staff Weeks and consultant costs) Lending FY , FY , Total , Supervision/ICR FY , FY , FY , FY , FY , FY ,07 Total ,

44 Annex 6. Stakeholder Workshop Report and Results Main Points: Project Description 1. The report stated that the project was a post-crisis operation and aimed to contribute to the small and medium enterprise s (SME s) sector performance improvement, and to the investment climate in Côte d Ivoire. The project planned direct and indirect support (financial and nonfinancial) to SMEs and institutional support to public and private sector organizations. 2. The project was implemented through APEX-CI (Association pour la Promotion des Exportations de Côte d Ivoire), a private organization with high experience in managing such operations. This approach facilitated project implementation and contributed to securing the commitment of all stakeholders during the project implementation period. Project Context and Aim of the Evaluation 3. The report also noted that the project was designed and implemented in a particular and difficult context. The project preparation began in 2008 and ended in The activities had to be launched early in 2010, but because of the delay in fulfilling the effectiveness conditions and other arrangements that needed to be put in place, the project activities did not begin until May Months later, the project implementation was suspended because of the crisis, and resumed in In 2012 the project activities picked up, and all project activities and objectives were achieved from this time to the project closing. Table 6A.1. Summary of Project Ratings Areas assessed Rating Project relevance 5.0/5.0 Project internal and external coherence 4.5/5.0 Project achievement 4.5/5.0 Project efficiency 4.5/5.0 Project impact 4.5/5.0 World Bank global performance HS Government global performance S Project implementation performance S Note: HS = Highly Satisfactory; S = satisfactory. 32

45 Figure 6A.1. Project Global Performance Beneficiaries Evaluator Sustainability Relevance Consistency Impact Efficiency Effectiveness Source: Project Government Report. Lessons Learned The project was designed and implemented in a particularly difficult and uncertain context, but with good deliverables. The project was original and innovative in its design and how it was implemented. It demonstrated what can be achieved through successful partnership between the public and private sectors. The project was small with regard to the resources it engaged, yet it successfully achieved all project objectives. Recommendations Take action to perpetuate the results achieved by the project by planning a huge and integrated operation to promote economic recovery and private sector promotion. 33

46 Annex 7. Summary of Borrower's ICR Context, Rationale, and Evolution of SME Revitalization and Governance Project 1. After two decades of rapid growth that began in the 1980s and lasted until the beginning of 2011, Côte d'ivoire entered a turbulent period characterized by a succession of economic and sociopolitical crises. These crises disrupted all key sectors of the economy and increased the country s poverty level. The private sector suffered from this situation of instability particularly small and medium enterprises (SMEs), which already faced many difficulties. Given the key role of SMEs in the economy and for sustainable development of this sector, it became urgent to address some important challenges faced by SMEs. These challenges included lack of funding, management problems, racketeering, corruption, and liquidity problems aggravated by the accumulation of debts of SMEs in the state. 2. As part of the post-crisis recovery strategy of the Ivorian economy, consensus was reached among the Government, the private sector, and the World Bank to find solutions to these issues through the Small and Medium Enterprises Revitalization and Governance Project (PARE-PME). 3. The two main components of the project were to improve the performance of the SME sector in Côte d Ivoire, and the investment climate that affects the SME sector. Implementation of the project would help stimulate economic activity and contribute to broader private sector led investment, growth, and employment generation. 4. PARE-PME is an original project with regard to the objectives and the methods used to achieve them. It was implemented by a private agency, APEX-CI (Association pour la Promotion des Exportations de Côte d Ivoire), which developed an innovative approach to reduce the Government s domestic debt owed to SMEs. 5. Furthermore, the project implementation required the establishment of an institutional anchor, by which a steering committee was established to take on a supervisory role, exercise interdepartmental coordination, and provide the overall strategic direction in project management. The steering committee is composed of members of the public (interministerial) and private sector. 6. The project has three mutually reinforcing components: Strengthening SMEs through the provision of financial and nonfinancial services Improving the business environment through targeted reforms of key Government regulations affecting business and of key institutions Strengthening policymaking for growth and providing support for project implementation. 7. The project experienced difficulties at its start because of the crisis and coordination. The recruitment of a dedicated staff and a project manager revived the project and helped to achieve all planned activities, with some flexibility. 34

47 Assessment of the project 8. The outcome of the project is largely positive. As of October 23, 2014, the analysis of the performance of different subcomponents through the results shows that all objectives were achieved or exceeded, except for objective regarding the disbursement rate of the FARE/PME (which is about percent). 9. These highly satisfactory results were achieved through the project management system reforms introduced in 2012, and through the flexibility of the project team, the support of the World Bank, and the attention paid by the Government to implementing the recommendations. 10. Component 1, Direct Support to SMEs, helped to relieve the cash burden of beneficiaries caused by debts owed to them by the Government and the difficulty of access to the banking system. Above all, it helped to strengthen SMEs governance capacity. 11. FARE/PME achieved two of three goals, specifically, the number of companies financed (101 against a target of 100) and the number of jobs created (1,578 against a target of 1,000). The third target for the disbursement rate is at a highly satisfactory level of achievement (97.11 percent on October 23, 2014). 12. Concerning the mutual fund MCF-PME (Mutuelle de Financement et de Crédit des PME), the loans of 90 SMEs were repurchased for a total amount of CFAF 1,821,843,258. Also, 61 loans were granted with an annual growth rate of 14.3 percent on October 30, 2014 (compared with 2013) against a target of 10 percent. The strategy implemented by the staff of the MCF-PME helped achieve a satisfactory level of repayment (100 percent). To further support the development of SMEs, the MCF- PME signed agreements with some institutions, including CNCGA (Collectif National des Centres de Gestion Agréés) for capacity building, and BICICI (Banque Internationale du Commerce et de l Industrie de Côte d Ivoire) to finance SMES investment projects. The strategy implemented by the management team is expected to make its actions sustainable for its members. 13. With regard to Component 2, the activities carried out under the project significantly improved the business environment in Côte d'ivoire. Reforms supported by the project through the establishment of the Commercial Court, assistance to CEPICI (Centre de Promotion des Investissements en Côte d Ivoire) through the Doing Business Department, and the creation of GUFE (Guichet Unique de Création des Entreprises), helped the country to be ranked among the top 10 performers in the world, as noted by the Doing Business (DB) Reports 2014 and Also, racketeering was reduced with support given to the Government through the Component 2 subcomponent that established the antiracketeering unit ULCR (Unité de lutte contre le racket). All the objectives of the three subcomponents were met or exceeded. 14. According to the Abidjan Commercial Court, establishing the Commercial Court reduced the average number of days to judge a trade dispute from 770 to 38; the evaluation of DB 2015 reports the average number of days reduced to 525 days. The project s target was 450 days. Almost all of the 35

48 decisions rendered by the Court (95.41 percent) are published on its website, against the target of 95 percent. According to the CEPICI, facilitating business creation procedures through the operationalization of GUFE and simplifying procedures reduced the average number of days to start a business to two, against the target of eight days. However, the DB 2015 notes an average of seven days to start a business in Côte d'ivoire. In total, 7,447 new companies were registered at GUFE against the target of 1,000, and 25,468 jobs were created against a target of 10, The support for ULCR had a positive effect: the additional transport costs caused by racketeering declined to CFAF 10.2, against a target of CFAF 15 per metric ton per kilometer. However, the activities of ULCR were stopped for lack of funding. This may undermine the important gains made by the project in the fight against racketeering. 16. Regarding Component 3, Institutional support and project implementation, the results are satisfactory. The two planned strategic studies were conducted (on competitiveness and on the private sector development strategy), and these reports are available. The project conducted two additional studies on industrial statistics and industrial zones on behalf of the Ministry of Industry and Mining. 17. After project coordination encountered difficulties at project start, reforms were introduced that created the conditions for success. The coordination and management of the project were key success factors. The results relied on the availability of the members of the steering committee, the flexibility of the project manager and the manager of subcomponents, and the involvement of other stakeholders. Summary of evaluation questions 18. Relevance. Development priorities reflected in the National Development Plan (NDP ), provides a reference for Côte d Ivoire s strategic objectives. The Small and Medium Enterprise Revitalization and Governance Project PARE-PME (Projet d'appui a la Revitalisation et a la Gouvernance des Entreprises) addresses concerns related to the business environment and the development of the SME sector. The project s relevance both overall and in its components and subcomponents is shown in the project s choices to take into account the private sector s concerns about the business environment and, in particular, SMEs priorities regarding access to finance and accumulation of credits on the Government. 19. Consistency. The objectives of the components and subcomponents are consistent with one another (internal consistency) and are appropriate to the context in which the project was initiated and executed (external consistency). Furthermore, the implementation strategy and the methods used are consistent with the project objectives. 20. Efficiency. The results are highly satisfactory regarding the objectives. This success could be attributed to the strong, positive involvement of all stakeholders in both actions and management of resources. The project mobilized high-quality, heavily involved human resources. 36

49 21. However, the lack of incentive for members of the steering committee likely affected the efficiency of actions. Also, the lack of travel equipment dedicated to the Fund for the Revitalization of SMEs, FARE/PME, made follow-up and evaluation activities difficult. Notably, the travel equipment requirements for the FARE/PME resulted from the project restructuring and so were not taken into account during the design phase. 22. Effectiveness. The project implemented all the planned activities and everything that contributed to the achievement of the objectives of the various subcomponents. All objectives of the seven subcomponents were exceeded, except for the objective relating to the disbursement rate of FARE. Furthermore, the FARE/PME disbursement rate was highly satisfactory. The business environment continues to improve due to the actions of the Commercial Court, the Doing Business dedicated team, and the ULCR. 23. The biggest problem in the area of effectiveness is the lack of financial resources for fuel and per diems for ULCR agents, which compromises their field monitoring missions. 24. The beneficiary SMEs either strengthened their governance capacity or relieved their cash stress or both through the purchase of their claims by the project and through loans from the mutual fund MCF-PME. 25. Through the project s support, the Government now has background documents to define its new private sector development policy. These documents include the study on competitiveness, the study on industrial statistics, a survey of industrial areas, and the Phoenix Plan of the Ministry of SME and Commerce. 26. Note that all of these satisfactory results are linked to the performance of the coordination unit and the project steering committee, which ran all the planned activities on time. The progress and all of the results were made possible by the reforms implemented after the project encountered difficulties at the project start. 27. Impact. The evaluators note that the project contributed significantly to improving the business environment in Côte d'ivoire. According to Doing Business, the country s ranking improved such that it was among the top 10 reformers in the world in 2013 and The project enabled the SME beneficiaries to adopt good practices in governance and to have a financing instrument. All of these actions positively influenced the activities of SMEs. Support of the SMEs by FARE/PME increased their incomes by an average of 43.5 percent. FARE/PME also improved the productivity and competitiveness of SMEs through their creation of new business partnerships (53.47 percent). 28. The case studies confirm the positive impact of the project on SMEs activities. FARE/PME beneficiaries adopted good practices in quality control, planning, and management that increased their sales. Some MCF-PME beneficiaries increased their productive capacity through optimal 37

50 management of margins on loans. By reducing the Government s domestic debt owed to SMEs, MCF- PME contributed to creating more than 231 new jobs. 29. The results confirm the positive impacts of the project, even in an environment characterized by numerous initiatives that make it difficult to isolate and quantify its real contributions. Also, the original project design did not include baseline studies to enable a rigorous assessment of its impact, which added to the difficulty of quantifying results. 30. Sustainability. One determining factor of sustainability in the project was the importance placed on training the actors throughout implementation. Through its activities to train the various leaders of the beneficiary institutions, the coordination of PARE-PME intended to give these leaders the skills necessary to carry out activities without external support. The evaluation found that the sustainability conditions are met at ULCR, the Commercial Court, Doing Business department, and beneficiary SMEs (FARE/PME and MCF-PME). 31. The evaluators noted, however, that training of the beneficiaries alone could not guarantee the sustainability of benefits without the strong commitment of the Government regarding some activities funded under its responsibility. These include the ULCR, the Doing Business department at CEPICI, and the Commercial Court of Abidjan. 32. Value Added. The Government s efforts to improve the business environment and to develop the private sector (and SMEs in particular) are clearly appreciated. In a crisis environment characterized by a lack of external funding and the inability of Government to pay back its domestic debts, PARE-PME responded to the concerns of the private sector, particularly those of SMEs. PARE- PME contributed to finding solutions to the traders concerns about the business climate and helped relieve SMEs of their cash burden caused by the Government s liquidity problem. Lessons learned 33. The private sector s strong self-advocacy during the dialogue between the World Bank and the Government of Côte d'ivoire led to the PARE-PME and to the Bank s renewal of its financial support after years of interruption due to the crisis. The Bank s support renewal was both complex and ambitious for the context in which it was initiated and the objectives pursued. Many gains were observed and should be used to advantage in the future. 34. The project was original in its design and anchor. The project was initiated for the private sector and funded through a grant from the World Bank to the Government of Côte d'ivoire. APEX- CI, a private organization, was charged with coordinating all project activities and was responsible for all procurement in collaboration with the other ministries. This arrangement enabled freedom of action for the Government to conduct the project. 35. Collaboration between the Government and the private sector was one of the key success factors of the project. This experience should be replicated in other projects with the private sector, 38

51 and it can be fully replicated by following the procedures of the money provider while taking measures to correct some of the shortcomings noted by the beneficiaries. 36. The project management was dynamic. Recruitment of high quality staff dedicated to the project gave it new life after the difficulties at start-up and helped achieved all the objectives. The availability, experience, and flexibility of the project manager were crucial to the project s success. 37. Beneficiaries were and still remain strongly adhered to the project. Despite their difficult financial situations, SMEs accepted the highly restrictive conditions of the project such as halfshared cost financing and capitalization of MCF-PME with part of the repurchased debt and they fully adhered to these conditions to benefit from the project. 38. The repurchase of Government s debts to SMEs as proposed by the project was innovative in clearing domestic debt. This unique experience could be used in the future by extending it to all companies. Recommendations 39. The evaluation identified a series of recommendations at the end of the project s implementation period and after discussions with the various stakeholders. These recommendations are aimed at maintaining and strengthening the support of the World Bank to Côte d Ivoire s private sector through a more ambitious project based on the achievements of PARE-PME. To the Government 40. Implement all commitments necessary to maintain and extend the learning from PARE-PME. a. For the Commercial Court: Ensure that the operational, maintenance, and security costs of the infrastructure are maintained through the purchase of the building, the full computerization of the Court, capacity building, and extending the experience to the entire territory. b. For Doing Business: Ensure the financing of the technical secretariat and the dedicated Doing Business team, decentralize the activities of the GUFE to all major towns in the country, and support the communication campaign related to the reforms and actions undertaken. c. For combating racketeering: Provide adequate resources to ULCR, equip the call center, and continue sensitization through communication, awareness, and appropriate sanctions in proven cases of racketeering. d. For institutional support: Ensure wide dissemination and appropriation of the results of studies by the Government and the private sector so that they can be used in strategies and development policies. 39

52 41. To avoid duplicating efforts, capitalize on all the achievements and the expertise of the coordination unit to achieve the same kinds of results in future projects. 42. Negotiate another project with the World Bank that is more ambitious in volume of financial support and scope of intervention. To the World Bank 43. Establish interim funding to enable completion of activities that were not completed at the end of PARE-PME, and to maintain support for the business environment component (Commercial Court and Doing Business) and the MCF-PME subcomponent to finance SMEs. 44. Initiate a large-scale, integrated operation to develop the private sector, and SMEs in particular, by increasing the amount of support and expanding the cost-shared financing experience to large companies. Also, extend to large companies the experience of the redemption of Government debts owed to SMEs. 45. Integrate into new operations the constraints identified by SMEs, including modulation according to the priority sectors of the requirement to SMEs for their participation in cost-shared funding, and modulation of upper funding limits across sectors. 46. Define support for MCF-PME to make it a real link between banks and SMEs that will increase SMEs access to funding, and for establishing confidence between SMEs and large enterprises to facilitate sub-outsourcing to the SMEs. 47. At the project design stage, define and implement a monitoring and evaluation (M&E) framework to facilitate rigorous impact evaluation. This framework should be based on baseline studies and the project s operational rules defined at the project design stage. Project designers should also ensure that the impact indicators or development objectives differ from the indicators for output and outcome of the project. 48. From its beginning, the project should integrate M&E in the coordination unit to facilitate the monitoring and reporting of activities, and to have information by which to measure the impact at the end of the project. To APEX-CI 49. Capitalize on the achievements of project management, specifically, management and procurement. 50. Capitalize on the expertise of the coordination unit. 40

53 To FIPME and the private sector in general 51. Sustain the mutual fund MCF-PME s gains from the project by ensuring the observance of good practice in microfinance management. 52. Negotiate maintaining and resizing the project to avoid losing the gains, which were to increase the amount of support and to take into account the investment needs. 53. Involve commercial banks in the negotiations of the new project so that the banks will support companies in financing their share of the cost-shared activities. 41

54 Annex 8. List of Supporting Documents 1. Benin: Malaria Control Support Project, ICR, December Burkina Faso: Competitiveness and Enterprise Development Project: ICR, Côte d Ivoire: CAS, Côte d Ivoire: Small and Medium Enterprise Revitalization and Governance Project: PAD, October Côte d Ivoire: Study on Racketeering in Côte d Ivoire, January Côte d Ivoire: Financial Sector Assessment Program, Côte d Ivoire: Interim Strategy Note for Côte d Ivoire, April Côte d Ivoire: Public Expenditure Management and Financial Accountability Review, Côte d Ivoire: Evaluation finale du PARE-PME, APEX-CI, October Côte d Ivoire: Economic Brief, January Doing Business Reports: 2009; 2011; 2014; Etude sur l évaluation des emplois crées les Entreprises enregistrées au Guichet Unique du CEPICI: December 2012 August 2013, APEX-CI 13. Etude sur le racket routier en Côte d Ivoire, Ghana: Micro, Small, and Medium Enterprise Project, ICR, March Implementation Completion and Results Report Guidelines, Operations Policy and Country Services, August L évaluation d impact en pratique: Gertler and others PARE-PME main documents: PAD, ISR, Aide-Mémoires 18. Serbia: Real Estate Cadastre and Registration Project, ICR, September

55 Annex 9. Results Framework and Monitoring Table 10A.1. Results Framework Project Development Objective Outcome Indicators Project Reports Critical Risks To improve the performance of the SME sector in Côte d'ivoire and the investment climate that affects it P1. Number of new SMEs registered P2. Number of new jobs generated SME association (FIPME) Report APEX-CI reports Macroeconomic and political instability Component A: Direct support to SMEs A1. Mutual fund recapitalized and technical assistance provided A1.1. Increase in loans extended by MFC-PME to SME members Project report mutual fund reports Government accumulates new arrears A2. Improved institutional capacity of SMEs A2.1. Investment made by SMEs to improve worker performance APEX-CI report Political instability resumes Output from Each Component Output Indicators Project Reports (from Outputs to Objective) Component B: Investment Climate and Governance Reform B1. One-Stop Shop Functioning B1. 1. Number of days to establish a business Donor community benchmarking PPD not effective to trigger required policy reforms B2. Commercial Court set up in Abidjan and functioning B2.1. Number of days to settle a commercial dispute B2. 2. Percentage of Court decisions published on the website Annual enterprise survey benchmarking exercise (Doing Business) Web site data Some magistrates of Abidjan court reluctant to have an autonomous commercial court B3. Coordinated response to reduce incidence of racketeering B 3.1. Decrease in the additional transportation cost caused by racketeering Survey to be conducted at Mid-Term Review and project end Conflict resumes Component C: Institutional Support and Project Implementation C1. APEX-CI efficient in implementing project activities C1. 1. Timely production of project reports 43

56 Table 10A.2. Arrangements for Results Monitoring Outcome Indicators PDO Indicators Baseline Frequency Data Collection Instrumen ts P1. Number of New SMEs Registered at Semi- FIPME report One-Stop Shop annually APEX-CI P2. Number of New Jobs Generated By Registered SMEs A1. 1. Average percentage change in MFC-PME lending to SME members 0 From MFC-PME business plan Semiannually FIPME report APEX-CI Component A: Direct support to SME 10% 10% 10% 10% Annually Project report MFC-PME financial statement Responsibility APEX-CI FIPME APEX-CI FIPME APEX-CI A2.1. Investment made by SMEs beneficiaries of the Matching Grant B1. 1. Number of days to establish a business 0 0 US$.2.0 million US$2.5 million US$1.5 million Annually Beneficiary SMEs financial statements FIPME report Independent evaluation of matching grant Component B: Investment Climate and Governance Reform Annually APEX-CI reports World Bank benchmarking reports (Doing Business, ICA) APEX-CI FIPME APEX-CI IDA missions 44

57 Outcome Indicators Baseline Frequency Data Collection Instrumen ts B2. 1. Decrease in average number of days to settle a commercial dispute 770 days from 2009 Doing Business Report (Sub- Saharan Africa average) (SSA good practices) Annually Court Report Annual Enterprise Survey World Bank benchmarking exercise (Doing Business) Responsibility APEX-CI MJ B2. 2. Commercial Court decisions published on website (%) B 3.1. Decrease in average additional transportation cost induced by racketeering (%) Annually Website data APEX-CI MJ 20 per metric ton per kilometer, established by 2008 Bank study Survey/Study to be updated at Mid-Term Review and project end Technical Committee to Fight Racketeering C1. 1. Number of reports acceptable to IDA produced by APEX-CI Component C: Institutional Support and Project Implementation Quarterly APEX-CI Report Supervision Report Procurement Post-Reviews Mid- Term Review APEX-CI IDA missions 45

58 46