Page 1 INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC3679 Date ISDS Prepared/Updated: 10/16/2008 I. BASIC INFORMATION A. Basic Project Data Country: Togo Project ID: P111064 Project Name: Togo - Financial Sector and Governance Project Task Team Leader: Guillemette Sidonie Jaffrin Estimated Appraisal Date: January 5, 2009 Estimated Board Date: March 31, 2009 Managing Unit: AFTFP Lending Instrument: Specific Investment Loan Sector: General finance sector (100%) Theme: Corporate governance (P);Other financial and private sector development (S) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 10.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 0.00 0.00 B. Project Objectives [from section 2 of PCN] The proposed project development objective is to contribute to economic growth and improved economic governance through financial sector restructuring and strengthening. Financial sector restructuring will lead to more efficient government resources allocation towards poverty reducing and growth inducing sectors and will contribute to private sector led growth. Key expected results include (i) development and implementation of a satisfactory strategy for banking restructuring (BTCI, UTB and BIA), (ii) signature of partnerships with strategic investors for BTCI, UTB and BIA, (iii) strengthened supervision of microfinance institutions, (iv) increased financial transparency of microfinance sector, (v) development and implementation of a strategy to reduce the pension deficits of the social security institutions (CRT and CNSS), (vi) increased capacity of the Government to steer reforms in the financial and private sectors and (vii) improved public private sector dialogue. C. Project Description [from section 3 of PCN] The proposed lending instrument is a Specific Investment Loan (SIL). The proposed US$10 million Financial Sector and Governance project will focus on technical assistance to various stakeholders with a view to improve economic growth and governance. More specifically, the Page 2 technical assistance will support the Government reforms program agreed with the World Bank and the IMF budget, with a focus on the financial sector. The project will have four components: (i) banking sector restructuring, (ii) microfinance sector strengthening, (iii) social security sector restructuring and strengthening and (iv) support to implementation of reforms in the financial and private sectors. Component 1: Banking sector restructuring. The Togolese banking sector is facing a crisis due to serious lack of governance and very high levels of non performing loans (NPLs) which has led to three banks, accounting for 56 percent of the market, to require recapitalization of over CFAF 100 billion. Technical assistance will support the financial and institutional restructuring of key commercial banks. Component 2: Microfinance sector strengthening. Contrary to the banking sector, the microfinance sector is relatively healthy in Togo and plays an important role in providing access to financial services. There is however a need to strengthen the supervision of this sector to prevent crises. The microfinance supervision capacity of the Ministry of Finance therefore needs to be strengthened, as well as internal and external controls within the major microfinance networks (which represent 80% of the microfinance sector). This will also include support to the consolidation of the sector (i.e. independent credit and savings cooperatives joining networks). Increased financial transparency will also be supported (including promotion of rating). Component 3: Social security sector restructuring and strengthening. The pension system for civil servants (CRT) is facing a deep financial deficit, which requires important government subsidies (CFAF 7 to 8 billion annually) to ensure timely payment of pensions. Technical assistance is needed to help reform the pension system with a view to bring the system closer to equilibrium and reduce the burden on the government budget. Technical assistance will also be provided to reduce the actuarial deficit of CNSS. Component 4: Support to implementation of reforms in the financial and private sectors. Technical assistance will be provided to (i) increase capacity of the Government to steer reforms in the financial and private sectors through the Secretariat Permanent pour le suivi des politiques de reformes et des programmes financiers and (ii) improve dialogue between the public and private sectors. The World Bank has worked very closely with the IMF on financial sector issue and joint missions have been organized. Additional support from development partners will be sought. AFRITAC , UNDP and UNCDF are currently supporting the microfinance sector in Togo and the proposed support to microfinance supervision would be undertaken in collaboration with these three agencies. D. Project location (if known) Mostly Lome, the capital city. E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] Page 3 The proposed operation is a Technical Assistance operation and should not trigger any safeguard policies. Funding is mostly for consultants and, to a lesser extent, equipment and refurbishment (i.e. painting, installing air conditioner; no civil works will be undertaken). F. Environmental and Social Safeguards Specialists Mr Warren Waters (AFTQK) II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Environmental Category: C - Not Required III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: 10/07/2008 B. For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS: N/A C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing 1 should be specified in the PAD-stage ISDS. Not applicable. Category C project. 1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons. Page 4 IV. APPROVALS Signed and submitted by: Task Team Leader: Ms Guillemette Sidonie Jaffrin 10/01/2008 Approved by: Regional Safeguards Coordinator: Mr Warren Waters 10/01/2008 Comments: No safeguard specialist is required if project remains as in PCN and ISDS. Later, should the project involve land acquisition, construction, or potential environment or social impact, consult ASPEN Sector Manager: Mr Iradj A. Alikhani 10/01/2008 Comments: