AFRICAN DEVELOPMENT FUND MAURITANIA

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1 AFRICAN DEVELOPMENT FUND Public Disclosure Authorized Public Disclosure Authorized MAURITANIA PROJECT TO SUPPORT THE PROMOTION OF MICRO-, SMALL AND MEDIUM-SIZED ENTERPRISES, AND YOUTH EMPLOYMENT (PAMPEJ) OSHD/GECL September 2016 Translated Document

2 TABLE OF CONTENTS Currency Equivalents, Fiscal Year, Weights and Measures, Acronyms and Abbreviations, Project Information Sheet, Project Summary, Logical Framework, Project Implementation Schedule i to viii I. STRATEGIC THRUST AND RATIONALE Project Linkages with Country Strategy and Objectives Justification for Bank's Involvement Aid Coordination... 2 II PROJECT DESCRIPTION AND OBJECTIVES Project Components Technical Solutions Retained and Other Alternatives Explored Project Type Project Cost and Financing Arrangements Project Target Area and Beneficiaries Participatory Process for Project Identification, Design and Implementation Bank Group Experience and Lessons Reflected in Project Design Key Performance Indicators... 7 III PROJECT FEASIBILITY Economic and Financial Performance Environmental and Social Impact... 9 IV IMPLEMENTATION Implementation Arrangements Monitoring Governance Sustainability... Erreur! Signet non défini. 4.5 Risk Management... Erreur! Signet non défini. 4.6 Knowledge Building... Erreur! Signet non défini. V LEGAL FRAMEWORK Legal Instrument... Erreur! Signet non défini Conditions Associated with Bank's Intervention... Erreur! Signet non défini. 5.3 Compliance with Bank Policies... Erreur! Signet non défini. VI RECOMMENDATIONS... Erreur! Signet non défini. Appendix I: Comparative Socio-Economic Indicators for Mauritania Appendix II: Table of AfDB's Portfolio in the Country... II Appendix III: Table of Related Projects Financed by the Bank and Other Partners... IV Appendix IV: Administrative Map of Mauritania... V Appendix V: FOREMI Financial Projections, VI Appendix VI: Monitoring and Evaluation... XV Appendix VII: Operating Accounts of IGAs and MSMEs XIX

3 Currency Equivalents [August 2015] UA 1 = MRO UA 1 = USD UA 1 = EUR Fiscal Year January December Weights and Measures 1 kilogramme (kg) = pounds (lbs) 1 metre (m) = feet 1 millimetre (mm) = inches 1 hectare (ha) = acres i

4 ADF AFD AfDB AFESD ANAPEJ APROMI AWPB BCM CMAP CNCMP CPMSS CSP DGPPI DMIP EIG EU FAO FAPA FOREMI GRET ICB IEC IFAD IGA INAP-TVT IsDB MAED MASEF MDGs MEFPTIC MFI MIS MJS MRO MSME NCB NEPAD NGO ONEC ONS Acronyms and Abbreviations African Development Fund French Development Agency African Development Bank Arab Fund for Economic and Social Development National Youth Employment Promotion Agency Association of Micro-Finance Professionals Annual Work Programme and Budget Central Bank of Mauritania Mauritanian Policy Analysis Centre National Public Procurement Control Commission Social Sector Procurement Commission Country Strategy Paper Directorate-General of Investment Projects and Programmes Microfinance and Professional Integration Directorate Economic Interest Groups European Union United Nations Food and Agriculture Organization Fund for African Private Sector Assistance Microfinance Refinancing Fund Research and Technological Exchange Group International Competitive Bidding Information, Education and Communication International Fund for Agricultural Development Income-generating activity National Technical and Vocational Training Support Institute Islamic Development Bank Ministry of Economic Affairs and Development Ministry of Social Affairs, Children and Family Millennium Development Goals Ministry of Employment, Vocational Training, Information Technology and Communication Microfinance Institutions Management Information System Ministry of Youth and Sports Mauritanian Ouguiya Micro-, Small- and Medium-Sized Enterprises National Competitive Bidding New Partnership for Africa's Development Non-governmental organization National Order of Chartered Public Accountants National Office of Statistics i

5 PAMPEJ PMU PNIME PP PRECAMF PROCAPEC PRP PRSP SINM NMFS ToR UA UNDP USD WB Project to Support the Promotion of Micro-, Small- and Medium-Sized Enterprises, and Youth Employment Project Management Unit National Integrated Micro- and Small-Sized Enterprise Support Programme Procurement Plan Project to Build the Capacity of Microfinance Operators Credit and Savings Fund Promotion Agency Poverty Reduction Project Poverty Reduction Strategy Paper National Industrial and Mining Company National Microfinance Strategy Terms of Reference Unit of Account United Nations Development Programme US Dollars World Bank ii

6 Project Information Sheet Client Information BORROWER : Islamic Republic of Mauritania EXECUTING AGENCY : Project Management Unit Financing Plan Source Amount Instrument ADF UA UA Government UA Loan Grant TOTAL COST UA AfDB's Key Financing Information Loan Currency Interest Type Basic Interest Rate Service Charge Commitment Fee Other Charges Tenure Grace Period Unit of Account N.A. N.A. Charge 0.75%/year on the disbursed and outstanding loan amount 0.50%/year on the undisbursed portion of the loan starting 120 days after the signing of the loan agreement N.A. 40 years 5 years Timeframe - Main Milestones (expected) Concept Note Approval May 2015 Project Approval September 2016 Effectiveness December 2016 First Disbursement December 2016 Completion December 2020 Last disbursement December This project appraisal follows negotiations conducted in June 2016, in the wake of the request by the Government of Mauritania to use part of the ADF resources allocated to the PAMPEJ Project amounting to UA 2 million. Consequently, the ADF loan amount dropped from UA to UA iii

7 Project Summary Project Overview PAMPEJ is an operation designed to consolidate the achievements of the Project to Build the Capacity of Microfinance Operators (PRECAMF) completed in December It aims to complete the capacity building and professionalization process for MSE developers and to facilitate their access to sources of financing. Its overall objective is to contribute to poverty reduction in Mauritania through MSE promotion, women's and youth entrepreneurship, and job creation. The project's specific objectives are to: (i) promote MSEs that are sustainably profitable as well as women's and youth entrepreneurship; (ii) provide a sustainable supply of inclusive financial services; and (iii) strengthen the capacity of institutional actors. The implementation period will be 4 years, i.e. from September 2016 to December The estimated project cost is UA comprising UA as ADF loan and UA as ADF grant (55.71%), both borne by the ADF, and UA (44.29%) in counterpart funding partly obtained (UA 1.6 million, i.e. MRO 729 million) from the reconstitution of the full redemption value of the PRECAMF credit fund. The remainder, i.e. UA 0.9 million, will be mobilized from the Consolidated Investment Budget (CIB). Although PAMPEJ is not a joint project, it was prepared in close consultation with other partners. Expected Project Outputs: The project will be implemented by the PMU established for the PRECAMF project, which closed in December It will primarily aim to operationalize national MSE and Microfinance Promotion Strategies. More specifically, the main expected outputs are: (i) the Microfinance Refinancing Fund (FOREMI) operationalized; (ii) about 3000 functional MSEs, of which 70% managed by women and youth; (iii) about 3000 jobs created through MSEs; (iv) IGAs and MSEs financed through the Microfinance Refinancing Fund (FOREMI); (v) a higher proportion of young project proposers financed through FOREMI; (vi) the capacity of main actors responsible for implementing national microfinance and MSE strategies (BCM, DMIP, APROMI) built; (vi) 10 supervisory, support, guidance and advisory structures for entrepreneurs operational; (vii) financing for the procurement of equipment (e.g. through leasing) provided to 200 women and 75 youth project proposers by MFIs; and (viii) capacity building for almost 2000 MSE promoters. The project will also provide useful data that could foster MSME promotion and job creation following the conduct of several studies, including: (a) the study on high value-added markets with strong job-creating potential; and (b) the study on matching technical and vocational training with labour market needs. Needs Assessment: PAMPEJ was identified by the Government and shared with the Bank. It represents a phase for consolidating PRECAMF achievements and preparing the necessary tools and mechanisms for the establishment and operationalization of the microfinance refinancing mechanism, the instrument retained to ensure the sustainability of the PRECAMF project. It was initiated in response to the conclusions of the PRECAMF completion mission which stressed the need to consolidate all achievements since the support provided during the project's implementation failed to fully achieve the expected impact in terms of: (i) the productive, technical and operational capacity of MSEs; and (ii) the capacity of microfinance institutions (MFIs) to meet financial service requirements. The project is in keeping with the two national MSE and microfinance promotion strategies ( ), and will contribute to their implementation. Bank's Added-Value: The Bank is one of Mauritania's main development partners and has already financed several social sector operations. Since 1998, it has supported MSE promotion, women's entrepreneurship and youth employment as well as the promotion of inclusive financial services in Mauritania. Through this project, the Bank will: (i) strengthen women's economic empowerment (1 200 women IGA promoters trained in project management and who have learned to read and write through the PRECAMF project); (ii) consolidate PRECAMF job creation achievements (almost jobs created); and (iii) continue to create jobs and ensure the professional integration iv

8 of young unemployed graduates and school drop-outs. Therefore, the Bank has a comparative advantage in the targeted area. Knowledge Management: Knowledge building is the project's key objective given the sector concerned and the type of activities to be financed. The project will contribute to knowledge building through the identification of technical solutions to problems that businesses face. Knowledge will be transferred through training and different types of technical assistance (coaching). The project will develop good practices in the following areas: (i) entrepreneurial culture; (ii) business management and organizational dynamics, (iii) application of/compliance with microfinance standards; and (iv) monitoring/evaluation. This knowledge will be transferred through consulting services and specific training in the above-mentioned areas. Training modules will be prepared by specialists. Relay structures that are an offshoot of decentralized government services or of NGOs will be identified and their contribution will be required to support women's and youth associations in setting up their MSE projects and to provide support and supervision during implementation of these projects. Training will be followed by the publication of reports and other technical documents, which could be shared with the other project stakeholders or consulted on the project premises. v

9 VIII. Results-Based Logical Framework Country and Project Name: Mauritania: Project to Support the Promotion of Micro-, Small and Medium-Sized Enterprises, and Youth Employment (PMPEJ) Project Goal: Promote sustainably profitable MSEs and ensure the steady supply of inclusive financial services IMPACT RESULTS CHAIN Poverty is reduced in the project area as a result of MSE development and job creation Indicators (including CSIs) 11. Youth unemployment rate 1.2. Women's unemployment rate 1.3. Incidence of poverty in the project area PERFORMANCE INDICATORS Baseline Situation 18% in % in 2014 Target MEANS OF VERIFICATION 12% ONS: National Baseline Survey on Employment and the Informal Sector RISKS/ MITIGATION MEASURES OUTCOMES 1. MSEs are promoted and are sustainably profitable 2. Sustainable supply of inclusive financial services 1.1. Number of advisory-support structures operational 1.2. Number of MSEs established/ operational 1.3. Proportion of youth and women among MSE promoters 1.4. No. of jobs created/ MSE established 1.5 Average profitability of MSE 1.6. Average annual revenue of MSE 2.1. Number of IGAs financed 2.2. Number of MSEs financed 2.3. Number of FOREMI partner MFIs 2.4. Coverage rate of MFI financed projects 2.5. Total financing granted % Between 10 and 15% 1.6 MRO /annum networks financed % 2.5 MRO % Between 15 and 25% 1.6 MRO /annum networks financed % 2.5 MRO 2 billion - Activity Reports - Annual Monitoring/Evaluation Reports - MSE Feasibility Study and SME Financial Statements - Study on outcomes at project completion - ANAPEJ Annual Statistics - Activity Reports - Annual Monitoring/Evaluation Reports - Study on outcomes at project completion Risk 1: Difficulties related to adequate financing and lack of support. Mitigation Measures: Diversity of financing instruments and support services for MSEs Risk 2: Failure to change young people's attitudes to selfemployment Mitigation Measures: Information, sensitization and training activities to promote the entrepreneurial spirit among young people. vi

10 OUTPUTS 1. Support to entrepreneurship and job creation 2. Refinancing Fund (FOREMI) and MFI Support 3. Project Management 1.1 Number of DPMIP, ANAPEJ, PNIME and CAP staff trained 1.2 Number of integration CAPs supported 1.3 Number of youths trained in entrepreneurship 1.4 Number of women and girls supported 1.5 Number of training courses organized for young people 1.6 Number of young promoters supported 2.1 Total amount of FOREMI funds 2.2 Number of MFIs with MIS and other software 2.3 Number of MFIs with specific accounting software 2.4 Number of trainers with government auditing professional (CGAP) certification 3.1 Number of procurement documents finalized 3.2 Number of activity reports prepared 3.3 Number of M&E reports prepared-disseminated 3.4 Audit reports MRO 750 million % % % % % Trainer's report 1.2 Quarterly activity reports 1.3 Quarterly activity reports 1.4 Quarterly report 1.5 Quarterly report 1.6 Quarterly report 2. 1 Quarterly activity report 2.2 TP meeting minutes Quarterly report 2.3 TP meeting minutes Quarterly report 2.4 Training report 3.1 PP report, missions 3.2 Reports 3.3 M&E reports 3.4 Audit report Risk3: Insufficient resources mobilized FOREMI Mitigation Measures: for - Channelling of available microfinance resources to FOREMI - Organization of Donor Round Table on Microfinance Strategy Risk 4: Coordination problems due to the large number of project actors KEY ACTIVITIES COMPONENTS Component 1: Support to Entrepreneurship and Job Creation Component 2: Operationalization of FOREMI and support to MFIs Component 3: Project Management INPUTS Component 1: 1.29 Component 2: 3.15 Component 3: 1.00 Physical Contingencies: 1.01 Price escalation: 0.1 Total Project Cost: 5.65 Mitigation Measures: Implementation mechanism involving all the actors and institutions concerned. vii

11 PROJECT IMPLEMENTATION SCHEDULE ACTIVITIES Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Approval by the Board of Directors Signing of loan agreement Loan effectiveness Project's official launching mission Recruitment of PMU Staff Availability of Credit Fund Procurement of equipment for actors/implementation of microfinance strategy Procurement of equipment for support and guidance structures Assessment of the capacity of MSE support structures Updating of study on high value-added markets with strong job-creating potential Technical assistance for preparation of FOREMI financial/support documents Implementation of training/capacity building activities Design/publication of FOREMI communication aids Project Mid-Term Review Project Audit Preparation of Project Completion Report Project Closure viii

12 REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE BANK GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO THE ISLAMIC REPUBLIC OF MAURITANIA Management hereby submits the following report and recommendations on a proposal to extend a loan of UA and award a grant of UA to the Islamic Republic of Mauritania to finance the Project to Support the Promotion of Micro-, Small- and Medium-Sized Enterprises, and Youth Employment (PAMPEJ). I. STRATEGIC THRUST AND RATIONALE 1.1 Project Linkages with Country Strategy and Objectives In Mauritania, almost all of the working poor are employed in agriculture, fisheries or stockbreeding in rural areas, or in the informal sector in urban areas. Because of the constraints they have to face (low level of education, their confinement to insufficiently productive activities in saturated sectors, etc.), most women remain at the IGA stage and only 20% move on to the MSE stage. According to the micro- and small-sized enterprise (MSE) inventory conducted in 2012 by the Mauritanian Government with ILO and UNDP support, the informal sector accounts for 70% of the urban workforce. It is the main provider of jobs with 4.2 informal sector jobs for 1 formal sector job and is growing at an annual rate of 8.5%. It employs 80% of active women. However, these jobs remain unstable, requiring low qualifications and are usually insecure and sporadic. About 75% of microenterprises cease operations after 3 to 5 years of existence. These weaknesses are mostly due to the mismatch between education, training and employment, and the constraints of the informal sector environment. These constraints are further compounded by a lack of information on tax and administrative obligations The 2012 Employment Survey conducted by the National Statistics Office (ONS) revealed that the estimated national unemployment rate was 10% 2. Furthermore, the study on youth and women's entrepreneurship carried out by the Mauritanian Centre for Policy Analysis (CMAP) in December 2014, identifies the following constraints affecting MSEs as well as women and young entrepreneurs: (i) limited access to information on economic opportunities; (ii) non-existence of specific financing tailored to the needs of young enterprises; (iii) low level of human resource qualifications in young businesses; and (iv) a lack of advisory/support services, thus resulting in a high failure rate among young businesses To address this situation, the Government developed two national strategies (micro-/small enterprise and microfinance promotion ( ), both of which are being implemented through the following thrusts: (i) accelerate economic growth, improve competitiveness and reduce the country's dependency on exogenous factors; (ii) develop the growth and productivity potential of the poor; (iii) develop human resources and facilitate access to essential infrastructure; and (iv) promote real institutional development based on good governance and the full participation of all actors This project is consistent with the Bank's CSP , which focuses on the following two pillars: (i) improvement of economic, financial and sector governance; and (ii) strengthening of basic and growth-supporting infrastructure, the pillars of which have been maintained in CSP This strategy focuses on the following specific objectives: (i) private sector development, with particular emphasis on MSE development; (ii) entrepreneurship development and job creation; and (iii) capacity building for inclusive finance operators and MSE promoters. It also aligns with the National MSE and Microfinance Promotion Strategies adopted by the Government for the 2015 to 2019 period The project is fully in keeping with Pillar II of the CSP - improvement of economic and financial governance - and with the specific PRSP objective implementation of policies and strategies particularly with regard to intensification of the fight against poverty. The PAMPEJ project will help 1. At 14.2%, youth unemployment remains higher than for adults (5.6%). The total technical and vocational training graduate labour market penetration rate has reached 61.5%. The gender breakdown remains disproportionate with a 63.8% labour market penetration rate for men compared to 31.1% for women. 1

13 to achieve these priorities by building the capacity of MSEs, women's economic interest groups, and young unemployed proposers of viable projects as well as improve the population's access to sustainable and inclusive financial services. It will also help to transform the project areas into development hubs as a result of operations undertaken and the expected momentum generated by economic activities supported by the project Therefore, PAMPEJ pursues PRECAMF's overall objective. It will also contribute to the preparation of the microfinance refinancing mechanism - the instrument retained to ensure the sustainability of project outputs. Furthermore, by focusing on poverty reduction, entrepreneurship development, social inclusion and gender equality, the project is also in keeping with the following Bank strategies: Ten-Year Strategy, (Pillars on Private Sector Development, Qualifications and Technologies), Gender Strategy, (Pillar on Women's Economic Empowerment), Human Capital Development Strategy, (Pillars on developing skills and technology to improve competitiveness and job opportunities; and promoting efficiency and inclusion in service delivery); as well as the High 5s aimed at speeding up Africa s development especially through two priorities: Feed Africa and Improve the quality of life for the people of Africa. 1.2 Justification for Bank's Involvement The Bank has extensive experience and undoubted comparative advantage in implementing projects with a strong impact on poverty reduction. It has approved several projects including: (i) the AMINA Programme (Microfinance Initiative for Africa) from 1998 to 2000, the Poverty Reduction Project (PRP) from 1998 to 2004 and the Project to Build the Capacity of Microfinance Operators (PRECAMF) from 2008 to 2014, financed by ADF. These projects have contributed significantly to the emergence of microfinance in Mauritania and, consequently, of MSEs. The main activities of the PRP and PRECAMF projects included widespread sensitization of poor and vulnerable groups (including women) on savings and credit, financing of their economic activities through MFIs and MFI expansion in rural areas Furthermore, the Bank financed the National Microfinance Strategy through PRECAMF as well as the study on promising growth sectors and redeployment of financial services in rural areas. These studies identified capacity building needs to be met and operational, organizational and financial support required to develop and promote MSEs and foster job creation. PAMPEJ will help to: (i) consolidate PRECAMF's achievements and complete the MSE promoter capacity building and professionalization processes; and (ii) establish and operationalize a sustainable refinancing mechanism for financial service actors. This mechanism will provide the Government with a national tool for mobilizing diversified and sustainable financial resources that will effectively promote job creation The Bank's intervention is justified for the following reasons: (i) the country has insufficient resources to finance Government's development programme and requires assistance from its partners; and (ii) the Bank is one of Mauritania's main partners and, since 1998, has supported MSE promotion, women's entrepreneurship, youth employment and inclusive financial services in the country. Through this project, the Bank is supporting Government s poverty reduction and youth employment policies and strategies, particularly through the implementation of the action plans of national microfinance and MSE strategies for the period. 1.3 Aid Coordination Aid coordination is carried out by the Directorate-General of Investment Projects and Programmes (DGPPI) at the Ministry of Economic Affairs and Development (MAED). Mauritania's main technical and financial partners are the World Bank (WB), the European Union (EU), the Islamic Development Bank (IsDB), the Arab Fund for Economic and Social Development (AFESD), the French Development Agency (AFD) and Agencies of the United Nations System (UNDP, FAO and IFAD). The status of development assistance coordination in the social sector is satisfactory and has resulted in 2

14 the establishment of formal exchange and dialogue frameworks in which the Bank participates as a member. During its appraisal of the PAMPEJ project, the Bank met with the World Bank and AFD and discussed opportunities for synergy with their interventions in the field. In the context of the implementation of the World Bank's cash transfer operations, the MFIs may be used to distribute cash and to contribute to the sustainability of cash transfer outcomes. Furthermore, the youth integration support centres ( CAP-insertion ), which have already received AFD support in the form of GRET technical assistance, represent a common centre of interest. The Government will ensure the effectiveness of this synergy. A table of development partners' contributions in the sector is presented as Appendix IV. II PROJECT DESCRIPTION AND OBJECTIVES 2.1 Project Components PAMPEJ's overall objective is to contribute to poverty reduction in Mauritania by promoting MSEs, women's and youth entrepreneurship, and job creation. The project's specific objectives are to: (i) promote MSEs that are sustainably profitable; and (ii) ensure a sustainable supply of inclusive financial services. The project will be implemented over a 4-year period and will focus on the following three components: (i) support to entrepreneurship and job creation; (ii) operationalization of the refinancing fund (FOREMI) and support to MFIs; and (iii) project management. Component Title Support to Entrepreneurship and Job Creation Table 2.1Project Components Estimated Cost (in Component Descriptions UA million) 1.29 Sub-Component 1: Support implementation of the National MSE Promotion Strategy (i) Training of managers of SME support structures; (ii) technical assistance to identify value chains in sectors and services with strong job creating and income generation potential; (iii) procurement of equipment (furniture and IT equipment) for the support structures. Sub-component 2: Build entrepreneurs' capacity (i) Capacity building for 600 MSE/IGA selected from the supervised under PRECAMF; (ii) support to young project proposers for the conduct of feasibility studies; and (iii) organization of technical training sessions for young people Operationalization of the Refinancing Fund (FOREMI) and support to MFIs 3.15 Sub-component 1: Operationalization of FOREMI (i) Procurement of IT/office automation equipment and furniture; (ii) technical assistance for the preparation of financial instruments and support to FOREMI; (iii) capacity building; (iv) study trips for FOREMI staff; and (v) operational support. Sub-component 2: Support Microfinance Institutions (i) Installation of effective and reliable management information software (MIS); (ii) MFI coaching in MIS; (iii) MFI capacity building on Islamic financial instruments; (iv) provision of solar kits; and (v) establishment of the credit fund. Sub-component 3: Support to actors involved in implementing the National Microfinance Strategy For BCM: (i) procurement of MIS software; and (ii) publication and dissemination of the Chart of Accounts. 3

15 For APROMI: (i) procurement of equipment. For DPMIP: (i) publication and dissemination of the two strategies; and (ii) organization of regional workshops Project Management 1.00 The aim of this component is to coordinate project implementation. It will entail preparation of procurement documents and payment requests, monitoring/evaluation, preparation of quarterly activity reports and annual audit of project accounts. 2.2 Technical Solutions Retained and Other Alternatives Explored The option retained is focused on solutions that are likely to ensure sustainable job and wealth creation. Their advantage is to be able to rapidly generate income and build the capacity of beneficiary communities around a culture of savings, development and entrepreneurship. This option will enable associations and EIGs to assume ownership of the development process through the gradual empowerment of grassroots actors in the quest for viable solutions to the country's situation of poverty. Therefore, it will constitute one of the best practices recommended for job creation. Capacity building for MSE/IGA promoters will foster harmonious, structured and organized local development. The other technical solutions are: the creation of social safety nets for the most disadvantaged on a 'food for work' basis and the direct allocation of financial resources to poor families. These solutions were not retained because of their non-sustainability and long-term budgetary impact. Table 2.2Alternative Solutions Explored and Reasons for Rejection Alternative Solutions Brief Description Reasons for Rejections Food for Work Distribution of food products to the population in return for an amount of work carried out Not consistent with good sustainable development practices Cash allowances Transfers to poor families to meet their needs. Impact on the national budget. Limited impact in terms of number of jobs created 2.3 Project Type PAMPEJ is an investment project. The investment project model was retained because of the project's duration and the type of activities to be financed, which require regular monitoring of the schedule and the use of resources Project Cost and Financing Arrangements The total project cost is UA , excluding tax and customs duties. The ADF contribution is UA as loan and UA as grant, i.e % of the total project cost. The Government will contribute UA 2.5 million (44.29%), a part of which (UA 1.60 million) obtained from the reconstitution of the full redemption value of the PRECAMF credit fund. The remainder (UA 0.9 million), will be mobilized from the Consolidated Investment Budget (CIB). Government's Miscellaneous contribution will cover the initial FOREMI amount, i.e. UA 2.5 million, to be disbursed as follows: UA 2.33 million at start-up and UA 0.17 million in the second year. Costs relating to other activities are supported by ADF resources and distributed as follows: (i) the 'goods' category totalling UA 0.90 million will be partly covered by the grant resources to the tune of UA million, and loan resources in the amount of UA 0.38 million (see Table 2.6); (ii) the operation and services categories, estimated at UA million, will be covered by the loan. Tables 2.3 to 2.7 below present the project cost by sources of financing, component, expenditure category, by expenditure category and sources of financing, and the annual expenditure schedule by category. 4

16 Table 2.3 Sources of Financing (amounts in UA million) ADF Loan ADF Grant Govt. Total Amount % Amount % Amount % Amount % I. Foreign Exchange II. Local Currency Total Cost Table 2.4 ADF Loan by Expenditure Category Amount (in UA million) Expenditure Categories Foreign Exchange Local Currency Total Goods Services Miscellaneous Operation TOTAL Expenditure Categories Table 2.5A DF Grant by Expenditure Category Amount (in UA million) Foreign Exchange Local Currency Total Goods Table 2.6 Estimated Cost by Component Components (MRO Million) (UA Million) L.C. F.E. Total L.C. F.E. Total % F.E. 1. Support to Entrepreneurship and Job Creation Operationalization of the Refinancing Fund and Support to MFIs Project Management Total Base Cost Physical Contingencies Price Escalation Total Project Cost

17 Table 2.7 Project Cost by Expenditure Category (MRO Million) (UA Million) Expenditure Categories L.C. F.E. Total L.C. F.E. Total 6 % F.E. A. Goods B. Services C. Miscellaneous D. Operation Total Base Cost Physical Contingencies Price Escalation Total Project Cost Expenditure Categories Table 2.8 Project Cost by Expenditure Category and Sources of Financing ADF Loan ADF Grant Govt. Total Amount % Amount % Amount % Amount % 1. Goods Services Miscellaneous Operation Total Project Cost Table 2.9 Expenditure Schedule by Category and by Year (UA million), including Contingencies Expenditure Categories 2016/ Total A. Support to Entrepreneurship and Job Creation B. Operationalization of the Refinancing Fund and Support to MFIs C. Project Management Total Project Cost able 2.9Expenditure Schedule by Category and by Year (UA million), including Contingencies Expenditure Categories Total A. Goods B. Services C. Miscellaneous D. Operation Total Project Cost Project Target Area and Beneficiaries The project will be implemented nationwide, particularly in zones within Nouakchott, Assaba, Gorgol, Guidimakha, Hodh Charghi, Hodh El Gharbi, Trarza, Tagant and Brakna. These zones were chosen because they are the same as those covered by the PRECAMF project (an area with a high concentration of poverty estimated at 75% compared to overall population), the achievements of which the PAMPEJ will consolidate. This targeting is also due to the scarcity of MFIs in the area that meet the needs of IGA and MSE promoters While particular emphasis will be placed on the PRECAMF area of intervention, PAMPEJ will have an impact on the entire national territory through cross-cutting activities such as IEC and operations in support of the decentralized structures of the Ministry of Youth and Sports and the Ministry of Social Affairs. The project will directly benefit about 200,000 people i.e. 6% of the country s population. F.E. L.C.

18 2.6 Participatory Process for Project Identification, Design and Implementation The project was prepared and designed by involving both national and international actors. The Bank s field missions met with the national authorities, civil society and representatives of the beneficiaries. Discussions with the national authorities focused on lessons learned from previous operations, identification of good practices developed, determination of the content of the new project, its cost and area of intervention. Discussions with civil society and representatives of the beneficiaries helped to gather information on the population s immediate needs and on how best to design the project to meet these needs. The discussions also allowed the Bank s missions to sensitize the beneficiaries on the need for them to become organized and well-structured in order to more closely monitor and become more deeply involved in the project s implementation. Discussions with the other partners focused on ongoing operations, future projects and programmes, and on the creation of synergies to optimize the impact of operations The selection of project activities, area of intervention and beneficiary targeting represents a continuation of PRECAMF and was the subject of working sessions to meet the different parties following prior individual consultations. These meetings helped to focus opinion on project issues and forge ties between the different actors. These relationships will help to ensure the project s smooth implementation. Within the framework of the PAFEJ project (Youth Training and Employment Support Project) approved in 2014, the Government will aim to ensure complementarity between PAMPEJ and PAFEJ. Similarly, in the context of the implementation of the World Bank s cash transfer operations, the MFIs may be used to distribute cash and to contribute to the sustainability of cash transfer outcomes. Furthermore, the CAP-Insertion operations, which have already received AFD support in the form of GRET technical assistance, represent a common centre of interest. The Government will ensure the effectiveness of this synergy The momentum created by the consultation process during the project preparation and appraisal phases will be maintained during the implementation phase. Terms of reference, specifications and other documents prior to the implementation of activities will be validated by the beneficiary partners before being submitted to the Bank for its no-objection opinion and issuance of requests for expressions of interest. Implementation of each activity will be regularly reviewed by the stakeholders with a view to making possible adjustments and corrections. The Bank s supervision missions will meet at local level with all project stakeholders. It will also encourage the project team to adopt a participatory process when implementing its work programme. 2.7 Bank Group Experience and Lessons Reflected in Project Design.7.1 As at 30 April 2016, the Bank s portfolio in Mauritania comprised 9 operations (details in Annex 1), 7 of which in the public sector and 2 in the private sector, for a total amount of approximately UA million, including UA million for the private sector. In terms of the financing volume, the mining sector represents 80.79% of the portfolio s total commitments. This sector is the Mauritanian economy s main engine of growth. The public sector operations financed are distributed as follows: the agricultural sector leads with 8.72%, followed by the water and sanitation sector with 7.06% of the portfolio, governance 2.74% and the social sector at 1.43%. According to the previous evaluation methodology based on performance indicator ratings, the last portfolio review rating was 2 on 3, signifying a satisfactory portfolio performance overall PAMPEJ draws on lessons from previous operations implemented by the Bank and other partners in Mauritania. They mainly concern: (i) project implementation delays (actions precedent and management mechanisms, etc.); and (ii) the inadequacy of measures to ensure the sustainability of outputs. Therefore, during PAMPEJ s preparation, efforts were made to ensure that all actions precedent were taken to guarantee effective implementation, in particular: (a) Decree No. 004 dated 26 April 2016 establishing the Microfinance Refinancing Fund (FOREMI); (b) the validation of the specific microfinance chart of accounts by the National Accounting Council (at its sitting of 29 July 2015; (c) timely actions and measures to ensure output sustainability based, among others, on ownership by the 7

19 beneficiaries of the MSE and IGA organizational, planning and management process through entrepreneurship training given in the first phase of the PRECAMF project; and (d) resources are mobilized (reconstitution of the full redemption value of the PRECAMF credit fund) in time to consolidate the achievements with a view to heightening the impact and enhancing the visibility of interventions To enhance effectiveness, the following measures are proposed under this project: (i) Loan Conditions: the loan conditions associated with the PAMPEJ project have been reduced; (ii) Familiarization with the Bank s procurement, financial management and disbursement rules. PAMPEJ will be implemented by the PRECAMF PMU, which has gained experience in the application of the Bank s procurement, disbursement and financial management rules. However, this experience will be bolstered by the organization of new training sessions during the project implementation period; (iii) Institutional anchoring: in view of the experience gained from PRECAMF, the PMU will be accommodated at the Office of the Minister of Employment, Vocational Training, Information and Communication Technology (MEFPTIC), which will provide the appropriate decision-making level to ensure effective management as well as achievement of project objectives; (iv) Aid Coordination: while PAMPEJ is not a co-financed project, it was prepared in close coordination with other partners and meetings were organized to ensure complementarity among the activities; (v) Monitoring/Evaluation: the PRECAMF PMU has a unit responsible for monitoring/evaluation and resources have been earmarked to ensure effective monitoring of the project and evaluation of its outcomes. 2.8 Key Performance Indicators Progress made towards achievement of the main outcomes will be measured with the assistance of the Project Logical Framework. The performance indicators are defined in it at the different outcome levels: In the long term: (i) youth unemployment rate; (ii) women s unemployment rate; and (iii) incidence of poverty in the project areas; In the medium term: (i) number of operational MSE advisorysupport structures; (ii) number of MSEs established/consolidated that are operational; (iii) proportion of young people and women among MSE promoters; (iv) number of jobs created by the MSEs; (v) average annual revenue of MSE; (vi) number of IGA financed; (vii) number of MSEs financed; (viii) proportion of project proposers who have received financing; and (ix) total financing granted. The project output indicators are also defined in the logical framework The Project Management Unit (PMU) will be responsible for collecting and analysing the necessary data for the verification of these indicators. The indicators will be regularly updated in the quarterly and annual activity reports, in the specific monitoring/evaluation reports and also in the information bulletins published by the project. III PROJECT FEASIBILITY 3.1 Economic and Financial Performance Economic Performance The project will have a significant impact on the development of MSEs. As a result of activities to finance MSE/IGA promoters and young proposers of viable projects, this project will contribute both to lower unemployment and higher productivity in the economic sectors concerned. In the longer term, it will boost the competitiveness of MSEs, IGA and national enterprises. Also, on the economic front, the project will support women s empowerment and job creation. Indeed, real opportunities abound in agriculture, fishery and livestock product marketing, and handicraft. The operating account of some activities in the sectors mentioned are presented in Appendix VII. 8

20 Financial Performance PAMPEJ is financially viable with a 49% rate of return. The financial analysis was conducted on the basis of the following elements: (i) PRECAMF reconstituted credit fund of MRO 729,000,000; (ii) 138 funds (comprising 40 large funds, 52 medium-sized funds and 56 small-sized funds); (iii) an initial 42% coverage of the estimated financing requirements of MRO billion; (iv) a seven-year period with a one-year grace period; (v) a 7% annual interest rate; and (vi) annual instalments paid at the start of each year (details in Appendix IV). Amount of reconstituted PRECAMF Credit Fund MRO Total financing granted ( ) MRO Revolving rate 223% Number of financing operations 140 Total financial income ( ) MRO Rate of return on resources 49% 3.2 Environmental and Social Impact 3.2 Environmental and Social Impact Environment. The project is classified in Environmental Category III since its negative impacts on the environment are minor. Production activities will respect and help to protect the environment. The targeted communities will be provided with equipment adapted to environmental standards and specific measures will be taken in terms of IEC activities to mitigate any possible negative impact of the infrastructure constructed under PRECAMF. The IEC component will cover the sensitization of young people and women on the need to protect the environment. Sensitization actions will be organized for farmers and users of agricultural and fish farming products on topics relating to energy savings, waste treatment, control of bush fires and excessive deforestation Climate Change. The project will have no negative incidence or impact on climate change Gender. Women represent almost 52% of the project's target population. They will be the project's main beneficiaries. From the design to implementation phases, the project will focus on women's economic empowerment, the correction of gender inequalities and the economic and social integration of unemployed women and youths both male and female. Gender issues will be institutionalized in all project components. In this connection, an expert responsible for PRECAMF MSEs and IGAs, who has received gender coaching, will be recruited by the project to monitor and evaluate these aspects. The equipment to be financed will facilitate women's access to basic economic and social services while taking into account security and women's specific needs. With regard to financial services, about 60% of loans granted and 40% of amounts thereof will benefit women. Sensitization will focus on themes that particularly affect women: (i) women's empowerment, especially concerning girls enrolment; (ii) reproductive health, HIV/AIDS; and (iii) prevention of violence against women, including female genital mutilation. The monitoring/evaluation mechanism will focus in particular on gender aspects through the production of gender disaggregated documents. Sensitization activities will also target men, with specific themes aimed at bringing about a positive change in their behaviour towards women Social Sector. By prioritizing the most vulnerable communities, the project will help to facilitate the population's access to sustainable financial services and to reduce disparities between social groups. In the case of women and young people, the project will create jobs and significant sources of income. The production equipment to be provided to women and young people will help to increase their productivity and the profitability of their economic activities. The project will affect almost 200,000 people throughout the Mauritanian territory, i.e. about 6% of the country's population. 9

21 The actions planned under this project will contribute to a reduction of the youth and female unemployment rates through the creation of almost jobs. Furthermore, microfinance services will help to: (i) improve the beneficiaries' income and increase self-employment among young people; (ii) provide sustainable support to small income-generating activities; and (iii) improve financial intermediation and the use of MFIs for financial transactions. Fifteen (15) microfinance institutions which are FOREMI partners will award total financing of about MRO 2 billion. IGA and MSE promoters will have their income increased by about 35 % as a result of access to credit and training received. The focus on professionalization and sustainability of MFIs will ensure a 30% to 60% improvement in meeting MSE/IGA needs through the diversification of financial instruments and the matching of funding with their financing needs Involuntary Resettlement: The project will not entail any population displacement IV. IMPLEMENTATION 4.1 Implementation Arrangements Institutional and Implementation Arrangements: The project will be implemented by the Project Management Unit (PMU) of the Project to Build the Capacity of Microfinance Operators (PRECAMF), closed in December The PMU has an administrative, accounting and financial section, a monitoring/evaluation section and a procurement section whose staff are familiarized with the Bank's procurement and financial management rules and procedures as well as with the provisions of the Bank's Disbursement Handbook. Despite weaknesses related to non-compliance with the audit report submission timeframe and non-eligible expenditure, the PMU successfully executed PRECAMF in terms of physical implementation and the project s tangible results for the target communities Because of the poor performance noted in the PRECAMF completion report regarding DMIP (which was responsible for project oversight), PAMPEJ's institutional anchoring will be at the level of the Office of the Minister of Employment, Vocational Training, Information and Communication Technology (MEFPTIC). The advantage of this option is that it takes into account the cross-cutting nature of project actions. This will ensure more effective coordination of project activities and will also facilitate risk mitigation and contingency measures A Steering Committee will also be established to guide and supervise the project executing agency's activities. It will be chaired by the Secretary-General of MEFPTIC and will include a representative from each of the following institutions: MAED, MEFPTIC, MASEF, BCM and APROMI Lastly, given the project's multi-sector character and the need for each of the ministries to assume responsibility for the implementation of activities falling within its remit, focal points will be designated in the ministries concerned Arrangements for the Procurement of Goods, Works and Services: Procurements made under this project will be used to implement the project's three components. They will mainly concern materials and equipment as well as consulting services to be provided by firms or individuals and training to be given by specialized centres. Because of the size and nature of the procurements, some will benefit from the facilities provided for under Letter of Agreement No. ORVP.0/LTR/2014/10/001 signed between the Bank and Mauritania in force since 4 February 2015 on conditions for the use of Mauritanian public procurement procedures for Bank-financed projects. Thus, all procurement of goods by national competitive bidding (NCB) or by shopping (simplified bidding) will be carried out in compliance with national public procurement legislation [Act No of 22/07/2010], using national standard bidding documents adopted on 18 June 2015 by the Regulatory Council, subject to necessary adjustments acceptable to the Bank and implementation in accordance with the procedure set out in annex to the Letter of Agreement. In contrast, the recruitment of consulting services (firm or individual consultant) required to implement this project will be made in compliance with the Bank's Rules and Procedures for the Use of Consultants, May 2008 Edition, revised in July 2012, using the 10

22 Bank's appropriate requests for proposals (RFP). Details of the implementation (estimation, procurement method, type of review) of these different procurements as well as their scheduling are provided in Technical Annex B Under the oversight of the Office of the Minister of Employment, Vocational Training, Information and Communication Technology (MEFPTIC), the PMU will be responsible for the project s fiduciary management and for procurement activities. It will be assisted by the Procurement Commission for the Economic and Financial Sectors (CPSMEF). Depending on the value, procurements will be submitted to the National Public Procurement Control Commission (CNCMP) for prior review. During the appraisal mission, the capacity of these structures (which will be involved in the managing project procurements) to handle project procurements was assessed and the risk level deemed moderate. This assessment is justified by the fact that: (i) the PMU had acquired procurement experience during implementation of the first phase of the PRECAMF project; (ii) the CPSMEF and CNCMP have the necessary competencies to supervise and control the PMU since, for over three years now, they have been responsible for awarding and controlling public contracts financed by both the general government budget and the technical and financial partners, including the Bank. To lessen the risks identified by the assessment, mitigation measures are proposed in Technical Annex B Financial Management Arrangements: The project's financial management will be carried out under the responsibility of the Office of the Minister of Employment, Vocational Training, Information and Communication Technology (MEFPTIC) through the existing Project Management Unit (PMU), which was responsible for PRECAMF s implementation (completed in December 2014), and which was reinstated pursuant to Ministerial Order No of 16/10/2014 to " collaborate with the African Development Bank in the appraisal of PAMPEJ, to participate in the negotiations and see to the project's launching." This decision is in line with the conclusions of the PEFA 2014 assessment which reports an overall average public finance management performance in Mauritania. Consequently, the national financial management system will not be used to implement this project. The assessment of the PMU showed that the staff employed (the PMU currently has 13 staff members) have long experience in the financial management of Bank-financed projects (since 1994) and that the existing financial management system functions with the assistance of the following tools: (i) an administrative, financial and accounting procedures manual; (ii) a budget process comprising an indicative budget approved by the Steering Committee and computerized budget execution monitoring; (iii) general and cost accounting maintained on TOMPRO software (old 2008 version); (iv) monitoring of the financial situation in terms of commitments; (v) a quarterly activity report, part of which provides details on the financial situation; and (vi) an external audit of accounts to be performed by an independent firm. However, the existing financial management system has some weaknesses related to: (a) noncompliance with the segregation of duties principle particularly in connection with the processing of procurement documents by the financial officer as well as the handling of salaries and missions by the accountant; and (b) failure to apply certain formalities as stipulated in the procedures manual (management of orders ). Therefore, the existing financial management system must be strengthened by putting more effective mechanisms in place in line with the mitigation measures set out in detail in the fiduciary risk analysis Table presented in annex to the PAR. These mechanisms include the recruitment of an accounting assistant and a financial expert, the installation of a new, more efficient TOMPRO accounting software package as well as a clear distribution of tasks in light of the recruitments proposed. It is also necessary to update the administrative, financial and accounting procedures manual. Hence, the appraisal mission considered the current overall financial management risk as substantial. This rating derived mainly from the weaknesses observed and the delay in the PRECAMF project closing process, including: (i) the failure to repay to the Bank the final balance on the ADF special account, including non-eligible expenditure items, as required; (ii) delays in initiating the process for the recruitment of the auditor and submission of the final closing audit report (2014 fiscal year); and (iii) failure to provide the final list of PRECAMF property to be transferred to the new project. Following the final closure of PRECAMF I (condition precedent to first disbursement and startup of PAMPEJ) and implementation of the recommended financial management arrangements, the system will be sufficiently strengthened in the areas of accounting (installation of the new version of 11

23 the TOMPRO software package), internal control through closer monitoring of expenditure eligibility, application of the principle of segregation of duties, updating of the administrative, financial and accounting procedures manual, and adherence to the agreed deadline for submission of the external audit report. It will also be possible to guarantee transparency, traceability and exhaustive and adequate financial information on the funds invested in PAMPEJ s implementation. Lastly, the project will be the subject of two financial management supervision missions yearly Loan Disbursement Methods: The ADF loan and grant resources will be disbursed in accordance with related Bank rules and procedures. For the loan, the project will use the direct payment method to honour the contracts of consultants, suppliers of goods and service providers. The special account method will also be used and an account opened in a bank acceptable to the Bank, into which loan resources to finance the project s operating costs will be paid. In the case of the grant, the direct payment method will be used for the procurement of goods. An account will be opened for the payment of counterpart funds. The project will use the Bank's disbursement procedures External Audit: the financial statements prepared in compliance with applicable accounting standards in Mauritania will be audited annually by an independent external auditor recruited for a threeyear period. Auditing of the project's financial statements will be performed in accordance with IFAC international auditing standards and the Bank's terms of reference (ToR), a copy of which will be communicated to the project. The project audit report, accompanied by the Management Letter (internal control report), must be submitted to the Bank no later than six (6) months after the closure of the fiscal year concerned. The PMU may also be subject to several financial controls by the Government (inspection of the Ministry), with the possibility of a control by the Office of the Auditor-General. The related reports will be submitted to the Bank for information. 4.2 Monitoring The project monitoring/evaluation expert will ensure coordination of monitoring/evaluation activities in collaboration with ministry focal points and other structures involved in project implementation. His/her responsibilities will include: (i) periodic assessment of the implementation status of activities planned as well as the outcomes (physical and financial) linked to their actual execution; and (ii) the conduct of annual light surveys and/or specific studies to assess the impact on the target communities. Upon project completion, the competent national structures will assess the changes induced by the project in terms of impact, particularly unemployment rate trends for youths and women, and the poverty rate in the area of intervention At project start-up in September 2016, the expert will, if necessary, try to more clearly specify the different performance indicators of the logical framework (with baseline values and targets), in collaboration with the main actors involved in the project implementation. He/she will also prepare data monitoring and collection sheets for beneficiaries and partners, as well as spreadsheets to monitor the status of the activities planned Project implementation will be monitored using an Annual Work Plan and Budget and by means of quarterly and annual reports to be prepared by the Project. The project outcomes will be monitored using the following tools: (i) basic data on outcome indicators (Appendix V); (ii) annual surveys and/or specific studies; (iii) the mid-term review; and (iv) the project completion report. The monitoring/evaluation expert will prepare annual monitoring/evaluation reports, which will review the level of achievement of the main outcome indicators. 12

24 The following Table presents the key dates and main milestones of the project schedule Schedule Milestones Monitoring Activities/Feedback Loop 8 September 2016 Board Approval Letter to the Government December 2016 Loan and grant effectiveness Signing of loan and grant agreements and fulfilment of conditions precedent to first disbursement December Implementation of activities Quarterly and annual activity reports December 2020 January 2019 Mid-Term Review Mid-Term Review Report Supervision and Completion Mission reports and recommendations to the Missions Government Technical and financial audits of activities Audit reports and recommendations to the Government 4.3 Governance.3.1 Procurement management was considered satisfactory by the Bank. However, during the PAMPEJ evaluation conducted in July 2014, the project s financial management was deemed less satisfactory for the following reasons: (i) failure to submit the 2013 audit report and the PRECAMF closing audit; and (ii) failure to close the PRECAMF special account and repay non-eligible expenditure. It is worth noting that the 2013 audit and the closing audit were subsequently forwarded to and accepted by the Bank; the ADF loan accounts and the rolling fund were closed and their respective balances reimbursed to AfDB. The Government also reimbursed MRO as expenditures deemed non-eligible. Furthermore, within the context of PAMPEJ s implementation, the PMU will update its administrative, financial and accounting procedures manual. This will help to improve the PMU's governance and facilitate project implementation. 4.4 Sustainability The project adopts a sustainable development approach and its sustainability will be ensured by the fact that most of the activities to be financed were identified with the collaboration of the different stakeholders during the preparation and appraisal missions. Furthermore, the transfer of authority to MFI management organs and to MSE promoters will encourage beneficiary self-promotion. As regards microfinance, the project mainly supports already existing MFIs. The project's contribution will help these MFIs to modernize their administration and management methods. This support will consequently strengthen the sustainability of the targeted MFIs Project activities will consolidate the sustainability of PAMPEJ's achievements through the establishment and operationalization of the microfinance refinancing mechanism. FOREMI will help to ensure the continuity of project activities and channel funds towards economic and social development financing. Similarly, various actions targeted by the project for instance capacity building for beneficiary groups in the areas of entrepreneurial culture, business management and organizational dynamics - will foster inclusive growth. These actions will provide an additional guarantee of sustainability of project achievements while maintaining the momentum triggered beyond the project period. 13

25 4.5 Risk Management Potential Risks and Mitigation Measures Risks Difficulties related to access to financing and lack of support Failure to change young people's attitudes to selfemployment and weak entrepreneurial culture Insufficient resources mobilized for FOREMI Coordination problem due to the large number of activities Measures Diversity of MSE financing measures and support services. Information, sensitization and training actions to promote the entrepreneurial spirit among young people. Channelling of resources available for microfinance towards FOREMI. Organization of donor roundtables on the microfinance strategy. Implementation mechanism involving all actors and institutions concerned. 4.6 Knowledge Building Many of the capacity building activities retained under the project will contribute to knowledge building in the following areas: (i) entrepreneurial culture; (ii) business management and organizational dynamics; (iii) consolidation and capacity building of MFIs; and (iv) monitoring/evaluation. This knowledge will be transferred through consulting services and specific training in the above-mentioned areas. Training modules will be prepared by specialists. To encourage ownership of project actions at the national and local level, the building of local skills will be prioritized. Thus, relay structures which are offshoots of the decentralized government services or of NGOs will be identified and their contribution will be required to support associations/eigs in setting up their projects/mse, and to provide supervision and assistance during the implementation of such projects. V LEGAL FRAMEWORK 5.1 Legal Instrument PAMPEJ is financed by an African Development Fund (ADF) loan and grant Conditions Associated with Bank's Intervention A. Condition Precedent to Grant Effectiveness Grant effectiveness shall be subject to the signing of the Protocol of Agreement. B. Conditions Precedent to Loan Effectiveness: Effectiveness of the Loan agreement will be subject to the fulfilment by the Borrower, to the Fund's satisfaction, of the conditions stipulated in Article of the General Conditions Applicable to Loan Agreements and Grant Agreements of the Bank. C. Conditions Precedent to First Disbursement of the ADF Loan and Grant Resources In addition to loan/grant effectiveness, the first disbursement of loan/grant resources will be subject to the fulfilment by the Borrower, to the Fund's complete satisfaction, of the following conditions: a) Provide the Bank with evidence of the opening of the PAMPEJ special account in a bank deemed acceptable by the ADF, into which the ADF loan and grant resources will be paid; 14

26 b) Forward the procurement plan covering an 18-month period to the Bank; and c) Forward the final list of PRECAMF property that will be transferred to PAMPEJ. D. Other Conditions (Loan and Grant): In addition, the Borrower shall: a) Update the project operations manual and submit the updated manual to the Bank latest 6 months after project effectiveness; b) Provide evidence of the recruitment of the financier; and c) Provide the Bank with evidence of the installation of the new version of the TOMPRO accounting software package. 5.3 Compliance with Bank Policies This project complies with all applicable Bank policies. VI RECOMMENDATIONS Management recommends that the Board of Directors approve the proposal to extend an ADF loan not exceeding UA and award a grant not exceeding UA to the Islamic Republic of Mauritania for the purpose and subject to the conditions stipulated in this report. 15

27 APPENDIX I: COMPARATIVE SOCIO-ECONOMIC INDICATORS FOR MAURITANIA Mauritanie INDICATEURS SOCIO-ECONOMIQUES COMPARATIFS Année Mauritanie Afrique du Nord Pays en Afrique Dévelop- pement Pays Déve- loppés Indicateurs de Base Superficie ('000 Km²) ,031 6,784 30,067 80,386 53,939 Population totale (millions) , Population urbaine (% of Total) Densité de la population (au Km²) Rev enu national brut (RNB) par Habitant ($ EU) Participation de la Population Active - Total (%) Participation de la Population Active - Femmes (%) Valeur de l'indice sexospécifique de dévelop. humain Indice de dév eloppement humain (rang sur 187 pay s) Population v iv ant en dessous de 1,25 $ par Jour (%) Indicateurs Démographiques Taux d'accroissement de la population totale (%) Taux d'accroissement de la population urbaine (%) Population âgée de moins de 15 ans (%) Population âée de 65 ans et plus (%) Taux de dépendance (%) Rapport de Masculinité (hommes pour 100 femmes) Population féminine de 15 à 49 ans (%) Espérance de vie à la naissance - ensemble (ans) Espérance de vie à la naissance - femmes (ans) Taux brut de natalité (pour 1000) Taux brut de mortalité (pour 1000) Taux de mortalité infantile (pour 1000) Taux de mortalité des moins de 5 ans (pour 1000) Indice synthétique de fécondité (par femme) Taux de mortalité maternelle (pour ) Femmes utilisant des méthodes contraceptiv es (%) RNB par Habitant $EU Taux de croissance démographique (%) 2008 Mauritanie 2008 Mauritan ie Afrique 2011 Afrique Indicateurs de Santé et de Nutrition Nombre de médecins (pour habitants) Nombre d'infirmières (pour habitants) Naissances assistées par un personnel de santé qua Accès à l'eau salubre (% de la population) Espérance de vie en bonne santé à la naissance (ann Accès aux services sanitaires (% de la population) Pourcent. d'adultes de ans v iv ant av ec le VIH/S Incidence de la tuberculose (pour ) Enfants vaccinés contre la tuberculose (%) Enfants vaccinés contre la rougeole (%) Insuffisance pondérale des moins de 5 ans (%) Apport journalier en calorie par habitant Dépenses publiques de santé (en % du PIB) Indicateurs d'education Taux brut de scolarisation au (%) Primaire - Total Primaire - Filles Secondaire - Total Secondaire - Filles Personnel enseignant féminin au primaire (% du total) Alphabétisme des adultes - Total (%) Alphabétisme des adultes - Hommes (%) Alphabétisme des adultes - Femmes (%) Dépenses d'éducation en % du PIB Indicateurs d'environnement Terres arables (en % de la superficie totale) Terres agricoles (% superficie des terres) Forêts (en % pourcentage de la superficie totale) Emissions du CO2 par habitant (tonnes métriques) Source : Base des données du Département des Statistiques de la BAD; dernière mise à jour: May 2015 Banque Mondiale WDI; ONUSIDA; UNSD; OMS, UNICEF, PNUD, Rapports nationaux. Notes: n.a. Non Applicable ; : Données non disponibles Espérancee de vie à la naissance (ans) 2000 Taux de mortalité infantile (Pour 1000 ) Mauritan ie 2010 Mauritan ia Africa Afrique I

28 APPENDIX II: TABLE OF ADB'S PORTFOLIO IN THE COUNTRY Project Name Source of Approval Signature Completion Amount Amount Disbursed Financing Date Date Approved Disbursed Rates MINING SECTOR SNIM Expansion ADB 16-Sept Dec Dec % Project -GUELB II TA to SNIM FAPA 22-Oct Dec Dec % Line of Credit to Mauritania Leasing Line of Credit to BCI West Brakna Irrigation Scheme Project Programme to Build Resilience to Food and Nutrition Insecurity in the Sahel (P2RS) Rosso Bridge Pre-Feasibility Study Project to Build the Capacities of Microfinance Operators FINANCIAL SECTOR ADB 17-July Apr Dec % ADB 17-July Apr Dec % AGRICULTURE SECTOR ADF 17-Nov June June % NTF 03-June % ADF/Grant 15-Oct Dec % ADF Multinational /Grant 11-Dec % INFRASTRUCTURE NEPAD-IPPF 30-Mar Apr Dec % MICROFINANCE ADF 02-Mar Mar Sept % Youth Training ADF/Grant 28-Nov Dec % II

29 and Employment Support Project Governance Support Project for Inclusive Growth Public Investment Management Support Project RDWSS in the Southern Zone GOVERNANCE ADF/Grant 17-Nov Dec Dec % ADF/Grant 07-Oct Dec June % WATER AND SANITATION ADF 15-Nov Jan Dec % National Integrated Rural Water Supply Project (PNISER) Integrated Water Resource Management Project Emergency Humanitarian Aid to Flood Victims in Nouakchott ADF Loan 07-Dec Feb % ADF Grant 07-Dec Feb % RWSSI 07-Dec Feb Dec % ADF Supplementary Loan 18-Dec Apr % AWF 07-Nov May Dec % SRF 04-Apr May May % TOTAL % III

30 Appendix III: Table of Main Related Projects Financed by the Bank and Other Partners Thrust Target France+ SCAC UNDP USAID ADB+ADF WB EC+EB+EU Spain Italy FAO Japan SDF IDB WHO WFP UNFPA UNICEF CHINA 1- Accelerate 1.1-Macroeconomic Framework 1.2- Structural Reforms 2- Ensure 1.3- Growth Potential 1.4-Growth Support Infrastructure 2.1- Rural Development 2.2- Urban Development 2.3- Microfinance 714, , Micro & Small Enterprises 2.5- Food Security 398, , ,000 17,087,667 24,618,429 12,017,869 5,605,352 1,974,880 53,544,867 19,841,270 17,450,000 76,400,000 6,159,450 4,800, Targeted Poverty Reduction Programmes 3- Develop 2.7- Fight Against Exclusion 3.1- Education 14,574,183 12,400,000 11,033, ,102 39,682,540 36,355,914 12,372, Literacy 3.3- Technical and Vocational Training 3.4- Health 13,901,916 9,137,706 1,670,092 9,750,390 10,770,648 10,715, Water Supply 3.6- Culture 3.7- Employment 3.8- Population Policy 3.9- Women's Advancement and Gender Equity 4- Improve Childhood Social Protection Universal Access to Basic Services 4.1- Rule of Low 4.2- Modernization of Civil Service 5- Strengthen Grand Total 4.3- Effective Management of Public Goods 4.4- Decentralization 4.5- Environmental Governance 4.6- Promotion of Participatory Process 4.7- Communication 5.1- Monitoring-Evaluation System 5.2- Coordination 5.3- Other 29,589, , ,000 18,007,667 12,400,000 24,618,429 32,189,190 5,605,352 1,974,880 55,801, ,159,450 4,800,000 12,372,410 IV

31 APPENDIX IV: ADMINISTRATIVE MAP OF MAURITANIA This map has been drawn by the African Development Bank Group exclusively for the use of readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory or any approval or acceptance of these borders. V