Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) Report Number: ICRR0021650 1. Project Data Project ID Project Name P085009 TZ-Private Sector/MSME Competitiveness Country Practice Area(Lead) Tanzania Finance, Competitiveness and Innovation L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-41360,IDA-53260,TF-94620 30-Jun-2012 168,885,104.94 Bank Approval Date Closing Date (Actual) 15-Dec-2005 31-Jul-2018 IBRD/IDA (USD) Grants (USD) Original Commitment 95,000,000.00 15,754,000.00 Revised Commitment 170,954,000.00 15,754,000.00 Actual 168,885,104.94 15,754,000.00 Prepared by Reviewed by ICR Review Coordinator Group Ranga Rajan John R. Eriksson Christopher David Nelson IEGFP (Unit 3) Krishnamani 2. Project Objectives and Components DEVOBJ_TBL a. Objectives The Project Development Objective (PDO) as stated in the March 9, 2006, Development Credit Agreement (DCA) (Schedule 2, page 24): Page 1 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) "To assist the borrower in creating sustainable conditions for enterprise creation and growth by: (i) reducing the cost of doing business; (ii) increasing the capacity of the local private sector to participate in domestic and international markets; and (iii) improving access to financial services". The PDO as stated in the Project Appraisal Document (PAD, page 12) was " to create sustainable conditions for enterprise creation". The PAD states that the project's progress in achieving this objective was to be measured by the increase in the number of formal enterprises, the increase in the value of titled land relative to untitled land, and growth in sales and assets of firms participating in the project. The revised PDO was, as stated in the January 17, 2014, Additional Financing (AF) agreement (Financing Agreement (Schedule 1, page 4), "To strengthen business environment in Tanzania, including land administration reform, and improve access to financial services." This Review is based on a split rating of objectives, with the three sub-objectives as stated in the DCA agreement and the two sub-objectives stated in the AF. b. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval 27-Dec-2013 c. Will a split evaluation be undertaken? Yes d. Components There were three components (PAD, pages 12-16). The appraisal estimate of components with AF is from the ICR (page 17). The actual cost of each component is from Annex 7 (ICR, page 56). 1. Strengthening the Business Environment. Appraisal estimate US$51.80 million. AF estimate US$49.20 million. Cumulative estimate US$101.00 million. Actual cost US$101.00 million. The increase in actual cost as compared to the appraisal estimate was due to the increase in the scope of activities with AF (discussed below). This component supported the Business Environment Strengthening for Tanzania (BEST) program, aimed at lowering the costs of establishing and operating a business, through eliminating the policy, legal, regulatory and institutional constraints. There were three sub-components; (1) Page 2 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) improving regulation; (2) improving commercial disputes resolution; (3) strengthening the Tanzania Investment Center. These activities were added with AF ICR, page 23). (i) infrastructural interventions (such as the new geodetic surveying infrastructure and a Land Management Information System); (ii) strengthening the land management regulatory framework; (iii) land use planning in urban areas; (iv) preparing inventories of government land: (v) simplifying the land administration regulatory process; and (vi) business registration reform through a One Stop Shop system and training staff for using the system. 2. Enterprise Development. Appraisal estimate US$38.90 million. Actual cost US$38.90 million. This component aimed at improving private sector capacity to participate in domestic and international markets and strengthening the Tanzania Private Sector Foundation. There were four sub-components; (1) technical assistance (TA) on cluster competitiveness and business school linkages and strengthening the Tanzania Private Sector foundation's capacity to monitor sector developments, promoting dialogue between the government and the private sector and training local entrepreneurs; (2) matching grants to enterprises through the Tanzanian Business Development Scheme; (3) grants for a business plan competition through the Business Development Gateway; and (4) capacity building of the Technical Innovation Research Scheme. 3. Improving Access to Finance. Appraisal estimate US$5.00 million. AF estimate US$10.00 million. Cumulative estimate US$15.00 million. Actual cost US$15.00 million. This component aimed at improving access to financial services through the Financial Services Deepening Trust (FSDT) and TA. The FSDT was to provide matching grants for activities aimed at low income groups and develop financial products for Medium, Small and Medium Enterprises (MSMEs). The TA activities included funding for (1) two long-term technical experts (one specialized in MSME finance and the other in new product development); and (2) industry assessments and case studies on expanding finance for MSMEs. These activities were added with AF; (i) strengthening financial sector regulation; (ii) supporting deposit insurance; (iii) developing micro finance reporting standards; (iv) addressing collateral system weaknesses; (v) developing standards for mobile financial services infrastructure; and (vi) developing new financial products. Project Implementation. The ICR (page 56) notes that under the original project, project management cost was covered under Business Environment Strengthening (component one). AF estimate US$1.00 million. Following AF, a dedicated Project Implementation Unit was set up. Actual cost US$1.00 million. Page 3 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) e. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project cost. Appraisal estimate US$232.95 million. AF estimate US$170.95 million. Actual cost US$168.88 million. The difference of US$62.00 million between the appraisal estimate and actual cost was due to the lack of borrower contribution during implementation. Project financing. The project was financed by an IDA Credit of US$95.00 million. AF of US$60.20 million was approved on January 17.2014. With this the total credit for the project was US$155.20 million. Amount disbursed US$153.32 million. An unutilized amount of US$1.45 million was cancelled. There was co- financing through a Trust Fund. Appraisal estimate US$15.75. This amount was fully disbursed. Borrower contribution. The borrower contribution at appraisal was estimated at US$62.00 million. There was no borrower contribution when the project closed. The ICR does not provide any reason for the lack of borrower contribution. Dates. The original project approved on December 15, 2005, became effective on July 5, 2006 and was scheduled to close on June 30, 2012. AF was approved on 27th December 2013. Both the original and AF projects were restructured twice through Level 2 restructurings.  The first restructuring May 14, 2013, extended the original project closing date by a year, due to the delays during implementation.  The second restructuring on December 12,2013, extended the original project closing date by six months for preparing the AF documents for scaling up project activities.  These changes were made with the AF approved on January 17, 2014., through a Level 1 restructuring: (i) The development objectives were changed; (ii) Some intermediate indicators were dropped, as the underlying actions had already been completed (discussed in section 4); (ii) Some outcome indicators were dropped; (iii) The project scope was expanded; and (iv) a two year extension was provided for implementing the scaled up activities.  The fourth restructuring on October 15,2015, extended the closing date by 18 months for completing ongoing activities associated with installing the Integrated Land Management System.  The fifth restructuring on November 30, 2016, extended the closing date by 14 months for completing the scaled-up activities under AF. The project closed on July 31,2018. Split rating. Given that the PDOs were changed, this review is based on a split rating of objectives, when US$100.68 million (59%) of the original project was disbursed and after AF when US$69.80 million (41%) was disbursed. 3. Relevance of Objectives Page 4 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) Rationale The PDOs are highly relevant to the government strategy. Despite a growth rate of 6.7% between 2000 and 2005, Tanzania is one the poorest countries in the world, with an estimated per capita income of US$330.00 in 2004. At appraisal, Tanzania was transitioning from being a public sector dominated economy. Private sector contributed just about 10 to 12% of GDP in 2004. The PDOs, which aimed at creating an enabling environment for private sector development through mutually reinforcing components were relevant in the country context. The government's long-term strategy, articulated in the National Vision 2025, highlighted the need for transforming an agricultural-based economy to an export- led semi-industrial economy. The first phase (2005-2010) of the strategy, articulated in the National Strategy for Growth and Reduction of Poverty for the 2005-2010 period, emphasized the need for (i) broad- based and equitable growth and (ii) an export-driven economic transformation. The PDOs are aligned with the Bank strategy. At appraisal, the Country Assistance Strategy (CAS) approved in 2000 (relevant when this project was prepared), was aligned with the country's development goals detailed in the government strategy. The original project and the AF project was consistent with the CAS for 2012-2015 period. The CAS identified the need for promoting inclusive and sustainable private- sector led growth. The PDOs are relevant to the Bank's current (2018-2022) Country Partnership Framework's (CPF) goals of promoting inclusive and sustainable private sector-led growth. The first focus area of the CPF highlighted the need for structural transformation through strengthening the business environment for job creation and improving access to credit of MSMEs. The original objective "creating sustainable conditions for enterprise creation and growth" was broad in relation to the actual focus of the operation. The revised objectives were better aligned with the project activities. Since some activities under the original project were complete, the revised objectives focused on emerging priorities in areas, pertaining to land administration reforms and access to financial services. Therefore, the relevance of the revised objective to the government and Bank strategy is rated as High. Rating Relevance TBL Rating High 4. Achievement of Objectives (Efficacy) EFFICACY_TBL OBJECTIVE 1 Page 5 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) Objective To create sustainable conditions for enterprise creation and growth by (i) reducing the cost of doing business. Rationale Theory of change. Activities aimed at business reforms (such as better regulatory oversight, a mechanism for resolving commercial disputes, strengthening the Tanzania Investment Center, matching grants to entrepreneurs and One stop Shop) and land reforms (conversion of the old mapping system to new geodetic surveying infrastructure, installing a land management system, land use planning in urban areas and simplifying the land administration regulatory process, were relevant for reducing the cost of doing business. This along with activities aimed at financial sector reforms (such as matching grants to low-income groups and developing new financial products for MSME's), were relevant for improving access to finance. The combination of these activities were relevant for strengthening the business environment and to the long-term development challenge of structural transformation from a public-sector dominated economy. Outputs. These activities were completed as targeted.  The Business Registration and Licensing Agency's (BRELA's) registries were digitized. 88,700 files from the Company registry and 191,243 from the Business Names Registry were scanned, indexed and digitized. A record management system was installed and on line names search data base for companies and business names were established on their website (ICR, page 72).  The Parliament approved amendments to these acts of 2002; (i) Business Names Act; (ii) Companies Act; (iii) Tanzania Trade Development Authority Act; and (iv) Merchandise act.  National Individual Identification Database was established.  A Growth Unit in the President's Office Planning and Privatization was established. Outcomes.  The number of days to complete mortgage registration was reduced from 61 days in 2006 to seven, exceeding the target of 20 (ICR, page 20). The days to resolve a dispute on overdue debt in court decreased to 260 as compared to the target of 365 days (ICR, page 20). The official cost (as percentage of debt) to complete a dispute on overdue debt in court decreased by 40% at project closure. This exceeded the target of 39%.  The number of days to complete registration of a certificate of occupancy reduced from 61 at the baseline to 30 days as targeted.The number of formal business enterprises increased from 50,000 at the baseline to 98,202, meeting the target. The gross revenue of firms supported by the project increased by 17% relative to the baseline, exceeding the target of 15%.  The number of days to formally start a business declined from 35 at the baseline to 28 days. This was short of the target of 20 days (ICR, page 21).  The number of steps to formally start a business were reduced from 13 at the baseline to nine days. This was short of the target of seven days. (ICR, page 21). Page 6 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009)  The rigidity of employment index did not change relative to the baseline. (This index measures the regulation of employment, specifically pertaining to the hiring and firing of workers and the rigidity of working hours).  35,000 people benefited from project activities, exceeding the target of 170,000. 45% of the beneficiaries were women as compared to the target of 41%. The main results of a beneficiary survey conducted at project closure were (ICR, page 86); (i) On average, the number of business licenses and title deeds issued by local government authorities increased by 50% annually and by 123% between 2005 and 2017; (ii) The time to issue a license decreased from three days on average in 2005 to 1.7 days in 2017 and revenue from business licenses increased by 53%. This survey however found that participation by rural enterprises was lower as compared to urban enterprises. The ICR provides no details of the methodology followed in administering the survey. Given that overall outcomes of reducing the cost of doing business were realized for the most part, this review concludes that the project contributed significantly to realizing the outcome.. Rating Substantial OBJECTIVE 1 REVISION 1 Revised Objective To strengthen business environment in Tanzania Revised Rationale The outputs and outcomes discussed above were relevant to this objective. Given that the outcomes were realized for the most part, this review concludes that the project significantly contributed to strengthening the business environment in Tanzania. Revised Rating Substantial OBJECTIVE 2 Objective To increase the capacity of the local private sector to participate in domestic and international markets; Rationale Outputs Page 7 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) In addition to the outputs discussed above, the following outputs were relevant to this objective.  910 matching grants (worth US$13.89 million) were provided to MSMEs for either upgrading their business or start their own business. 16,784 men and women were trained in business-related skills, exceeding the target of 1,000. 2.010 micro enterprises and their employees were trained in entrepreneurship, exceeding the of 1.000 (ICR, page 81).  50 new degrees and diploma courses were established in technical institutions as part of the Technical Innovation and Applied Research Scheme. 9,240 students were enrolled in these institutions. 16,784 men and women were trained on various technical skills and over 10,304 people were employed in the beneficiary companies and institutions. There were no targets for these indicators (ICR, page 82).  One stop center for issuing building permits under one roof were established in Local Governments (ICR, page 74). Outcomes. The outcomes (such as matching grants for business enterprises and establishment of one-stop business) were output oriented. With no appropriate outcome indicators, it is not clear the extent to which these activities contributed to the overall outcome of "creating sustainable conditions for enterprise creation and growth". Rating Modest OBJECTIVE 2 REVISION 1 Revised Objective To strengthen the business environment, including land administration reform Revised Rationale Outputs.  These land reform legislation were enacted: The land use planning act of 2007 for efficient land use; The Urban Planning Act of 2007 for sustainable use of urban land; The Unit Titles (Condominium) Act of 2008 for efficient housing; The Land Law Miscellaneous Amendments Act Number Three in 2009 for protecting the legal rights of untitled properties in urban informal settlements;  22 district housing and land tribunals were established. (There were no targets for this indicator). Of this, 12 were provided with office and operational facilities to support a special program for reducing backlogs of land cases in key municipalities. (ICR, page 24).  The geodetic infrastructure system for modern land surveys was installed. The village titling process was improved. Page 8 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009)  The Integrated Land Management Information System (ILMIS) was installed at the Ministry headquarters and the Coastal Zone Office in Dar es Salaam for registering land. Multi purpose maps for Dar es Salaam and surrounding areas were developed as targeted. Alternative resolution mechanism for land disputes were established and the National Land Information Center was established (ICR, page 75).  A Customer Service Center was established at the Ministry of Lands as targeted (ICR, page 46).  Six Legal bills relating to land administration were drafted as compared to the target of two. Outcomes.  The value of titled land relative to untitled land increased from US$1.2/ square meter at the baseline US$31/square meter, exceeding the target of US$7.76/ square meter. The value of untitled land increased from US$0.08/ square meter in 2007 to US$21/square meter, exceeding the target of US$7.70/square meter (ICR, page 19).  The number of title deeds increased by 190% (from an average of 180 per year to 517) and the time to issue a title declined by 40% (from an average of 340 days in 2005 to 37 days in 2017). The results of the beneficiary survey discussed above with respect to the land reform agenda were; (i) 70% of the respondents of the sample survey in both households and firms reported that it was easier to acquire land in 2018 as compare to the past ten years due to a combination of factors, including decrease in price for getting a title, increased awareness and knowledge, less time taken for securing a title and low level of corruption. (ii) 84% of households reported no gender bias in owning land. (iii) 87% of the respondents reported no bias in obtaining land titles. Given that the outcomes were realized, this review concludes that the project significantly contributed to realizing the project development outcome. Revised Rating Substantial OBJECTIVE 3 Objective To assist the borrower in improving access to financial services. Rationale Outputs.  Tanzania Mercantile Exchange (TMX) was established as a company under Public Private Partnership between the Government, public institutions and the private sector. TMX was incorporated on August 25,2014 under the Companies Act, 2002. The staff for TMX was recruited. Commodity contract specifications were prepared for these crops sesame seeds, sunflower, cashew nut, maize, pigeon peas and cow peas (ICR, page 26).  The Dar es Salaam Automated Trading System and the Central Depository Security System were upgraded (ICR, page 27).. Page 9 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009)  The legal and regulatory frameworks for 25 new financial products were completed, exceeding the target of two.  New financial products for money transfer services were introduced by mobile network operators in 2008 by the Bank of Tanzania. These were operated by a network of agents across the country (as compared to the traditional bank-dominated financial system which was urban-based and not affordable for majority of Tanzanians (ICR, page 84).  The framework for Deposit Insurance was created and the financial reporting standard for micro finance institutions were developed as targeted (ICR, page 23).  There were no public private partnership projects when the project closed (target three). Outcomes.  26,698 Small and Medium Size Enterprises had active loan accounts at closure, short of the target of 34,440. 80% of project supported institutions reported on this indicator when the project closed, short of the target of 100% (ICR, page 21).  There were 951,404 active micro savings accounts when the project closed, short of the target of 1,396,000. 75% of project supported institutions reported on this indicator, short of the target of 100%.  42% of these accounts were held by women as compared to the target of 58%. 80% of project supported institutions were reporting on this indicator, short of the target of 100% (ICR, page 21). .  The sales of firms supported under the project increased from US$0.19 million to US$627.30 million, exceeding the target of US$562.50 million. The assets of firms supported under the project increased from US$57.08 million to US$627.30 million when the project closed, exceeding the target of US$562.50 million.  Proportion of adult population that used financial services provided by formal financial service providers increased from 9% in 2006 to 57% in 2013, exceeding the target of 18%. Proportion of adult population classified as unserved/excluded reduced from 54% in 2006 to 16% in 2009. This was short of the target of 48.5% (ICR, page 84).  Credit extended to the private sector as a percentage of Gross Domestic Product increased from 9% in 2006 to 16% in 2009, exceeding the 13% (ICR, page 84). The results of the beneficiary survey discussed above indicated that only 27% of the respondent firms and 21% of the households surveyed received bank loans in the last year mostly from Commercial banks, Village community banks and Savings and Credit Cooperative Societies, due to a combination of factors, including high interest rates, lack of collateral and the high cost of procurement of Electronic Fiscal Devices machine for SMEs. Given that outcomes were realized although less than targeted, this review concludes that the project activities significantly contributed to realizing the outcome. Rating Substantial OBJECTIVE 3 REVISION 1 Page 10 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) Revised Objective To improve access to financial services. Revised Rationale The outputs and outcomes discussed above were relevant to this objective. Given that outcomes were realized, this review concludes that the project activities significantly contributed to realizing this development outcome. Revised Rating Substantial OVERALL EFF TBL OLD Rationale Given that outcomes of two out of the three sub-objectives of the original project and the two sub-objectives after AF were largely realized, this review concludes that the project activities significantly contributed to realizing the project development objectives. Overall Efficacy Rating Substantial 5. Efficiency Economic analysis. A Cost-Benefit analysis was conducted at appraisal and at completion, for activities associated with: (i) strengthening the business environment and (ii) enterprise development competitiveness. These activities accounted for 95% of the appraisal estimate and 90% of the actual cost. The economic benefits were expected to come through increase in jobs created by the Tanzania Business Development Scheme. The Net Present Value at US$8.50 million at a 15% discount rate at closure compared to the NPV of US$56.00 million for a 12% discount rate at appraisal. The ex post Economic Rate of Return (ERR) was estimated at 19% as compared to the ex ante ERR of 27%. The results of the ex post and ex ante analysis were not comparable, given that the project was extended several times. However, both results were above Page 11 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) their respective discount rates and the corresponding Benefit-to-Cost ratio for the project was estimated at 118% at project closure. Administrative and Operational Issues. Delays associated with implementing some activities (such as the geodetic network, renovation of office building and preparing the Dar es Salaam Master Plan), contributed to the extension of the original project closing date. Some planned activities were not implemented when the project closed (such as the activity associated with strengthening the legal and regulatory framework, capacity building for consumer protection and addressing weakness of the collateral system). Although there were moderate administrative and operation shortcomings, given the economic analysis, this review assesses the efficiency to be substantial. Efficiency Rating Substantial a. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 95.00 Appraisal  27.00  Not Applicable 90.00 ICR Estimate  19.00  Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated. 6. Outcome Original objective. The original PDO, broad in relation to the activities supported by the project, is rated as Substantial. Efficacy of two of the three sub-objectives – reducing the cost of doing business and improving access to financial services is rated as Substantial, given that the outcomes were largely realized. Efficacy of the second sub-objective - increasing the capacity of the local private sector to participate in domestic and international markets - is rated as Modest, in view of the limited evidence. Efficiency is rated Substantial, given the relatively strong economic analysis. Outcome before restructuring was moderately satisfactory. Page 12 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) Revised objective. The revised PDO was more focused and realistic, is rated as High. Efficacy of the two sub- objectives - is rated as Substantial, as the outcomes were largely realized. The outcome of the revised project is rated as Satisfactory. Considering the ratings discussed above and weighing them by the shares of Bank disbursement before and after AF (0.59*4 + 0.41*5 = 4.41), the overall rating is Moderately Satisfactory. a. Outcome Rating Moderately Satisfactory 7. Risk to Development Outcome Political risk. There is risk to ongoing benefits due to the possibility of policy reversals and backtracking of reforms. The ICR (paragraph 109) states that recent legislative changes in mining and Public Private Partnerships have sent negative signals to foreign investors. This along with abrupt policy changes, certain policy measures aimed at strengthening state controls over private sector activities and stalling of the National public-private dialogue process, had contributed to erosion of business confidence. Technical risk. It is also not clear if the government will provide the necessary resources required for updating technology and conducting training programs. 8. Assessment of Bank Performance a. Quality-at-Entry The preparation of this project benefited from analytical studies by the Bank and the Government (Country Economic Memorandum on Growth, Diagnostic and Trade Integration Study, the Investment Climate Assessment, the Cost of Doing Business Survey and the value chain analysis of four sub sectors) (PAD, page 16). Lessons incorporated included: (i) Unlike traditional approaches for providing matching grants, grants provided to enterprises in this project were temporary and partial and enterprises were expected to contribute upfront; (ii) Capacity building of the Tanzania Private Sector Foundation for facilitating public-private sector dialogue: (iii) addressing constraints through mutually reinforcing components; and (iv) community approaches for building land registration systems (PAD, pages 16 and 17). The project was prepared in collaboration with donors financing complementary activities of the BEST program. Several risks were identified at preparation, including High risk associated with Page 13 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) procurement, given the unfamiliarity of the implementation agencies with Bank procedures. Mitigation measures incorporated included hiring additional procurement staff and training the project entities. With mitigation measures, the project risk was rated as Moderate (PAD, page 25). The implementation arrangements were appropriate, with the Project Implementation Unit in the Prime Minister's Office (the main implementing agency). The arrangements made at appraisal for fiduciary compliance were appropriate (discussed in section 10b). There were moderate shortcomings in design. As indicated in section 3, the original PDO was broad in relation to the project activities. The revised PDO was more focused and realistic. The design underestimated the risk associated with many implementing agencies, given the weak institutional capacity of the government (discussed in section 100. This contributed to procurement delays during implementation. There were M&E shortcomings (discussed in section 9a). Quality-at-Entry Rating Moderately Satisfactory b. Quality of supervision Supervision missions were held on average twice a year (ICR, page 3). The continuity of leadership WAS maintained, with three Task Team Leaders (TTLs) over the 12-year lifetime of the project. The ICR (page 40) notes that the supervision team included technical experts, financial management and procurement specialists and consultants. The AF project built upon the original project to address identified weaknesses in key areas of Tanzania's business environment (land reforms and access to finance). The supervision team ensured smooth transition from the original to the AF project. The team provided active support to address the procurement challenges during implementation. According to the Borrower's ICR (ICR, page 71), the team demonstrated flexibility and disbursed funds in a timely fashion. The Borrower's ICR also states that the Bank team addressed the challenges associated with procurement delays, through streamlining and coordinating procurement functions between the participating ministries, department and agencies and this aided in fiduciary compliance (discussed in section 10b). There were moderate shortcomings. The implementation of key activities remained behind schedule halfway during implementation. There were procurement delays during implementation. Quality of Supervision Rating Moderately Satisfactory Overall Bank Performance Rating Moderately Satisfactory Page 14 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) 9. M&E Design, Implementation, & Utilization a. M&E Design There were three original key outcome indicators - Increase in the number of formal enterprises. Increase in the value of titled land to untitled land through time and growth of sales and assets of beneficiary firms. There were however no appropriate indicators for monitoring the overall original PDO pertaining to creating sustainable conditions for enterprise creation and growth. There were no baselines for the indicators associated with the value of titled land and increase in the growth of sales and assets of beneficiary firms, Following the restructuring of the project after AF, the PDO indicators were replaced with new indicators such as the number of beneficiaries and the percentage of women who benefited from project activities. The project coordination unit in the President's Office of Planning and Privatization, the agency responsible for overall project coordination, was responsible for data collection for monitoring performance. Targets were provided for all outcome indicators at M&E design. b. M&E Implementation The ICR (paragraph 38) provides little detail but notes that standard formulas and guidelines for data collection were established during implementation. The ICR also notes that the task team collected data for monitoring performance in a timely fashion. c. M&E Utilization Data collected during implementation was used to inform decision-makers on project performance. The ICR does not provide any information on whether the M&E data was used for purposes other than monitoring performance of this project. M&E Quality Rating Modest 10. Other Issues a. Safeguards Page 15 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) The project was classified as a Category C project. No safeguard policies were triggered at appraisal (PAD, page 29). The ICR (paragraph 100) notes that the project did not have any activities that impacted on environmental and social safeguards during implementation. b. Fiduciary Compliance Financial management. An assessment of the financial management arrangements of the President's Office of Planning and Privatization, conducted by the Bank, concluded that the arrangements were satisfactory (PAD, page 90). The ICR (paragraph 101) reports that the project complied with all financial requirements during implementation and the financial audits were unqualified (Borrower's ICR, page 67). Procurement. The PAD (page 94) reports that procurement activities were to be carried out by three entities; (I) The Better Regulation Unit located in the President's Office for Planning and Privatization; (ii) Tanzania Private Sector Foundation; and (iii) Financial Sector Deepening Trust. The Bank carried out an assessment of the implementing agencies capacity to address procurement issues at appraisal. The assessment concluded that procurement risk was High, due to the lack of experience of the implementing agencies with Bank's procedures. Risk mitigation measures included hiring a short-term consultant to provide hands on training to the staff and at least twice a year supervision missions by the Bank team (PAD, page 95-96). The ICR (paragraph 103) notes that there were procurement delays primarily due to the limited procurement capacity on the government side. These were however rectified and the ICR does not report any case of mis-procurement. c. Unintended impacts (Positive or Negative) d. Other --- 11. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Outcome Moderately Satisfactory Satisfactory Page 16 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) Moderately Bank Performance Moderately Satisfactory Satisfactory There were shortcomings in Quality of M&E Substantial Modest M&E design. Quality of ICR --- Substantial 12. Lessons The ICR (pages 42-43) draws the following three lessons from implementing this project (with some adaptation of language). 1. Sequencing sector reforms and using a piloting approach can be useful for later implementation of sector activities. In this project, the first phase of the project focused on infrastructure for the Integrated Land Management Information System and piloting of systematic registration of land in rural and urban areas. The activities pertaining to land registration were later scaled up in the next phase. (2) The capacity of the implementing agencies needs to be carefully considered, especially when multiple implementing agencies are involved. Closely related to this lesson is that for projects involving multiple implementing agencies, procurement issues could be more effectively addressed by centralizing procurement in one implementing agency and by strengthening the capacity of that agency at an early stage of the project. (3) South-South Cooperation and peer to peer learning can be effective for knowledge exchange and transfer. The government in this project developed its own integrated land management system based on Uganda's land information system under the Competitiveness and Enterprise Development in Uganda. 13. Assessment Recommended? No 14. Comments on Quality of ICR Page 17 of 18 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review TZ-Private Sector/MSME Competitiveness (P085009) The ICR is clear and provides a helpful narrative of events during implementation. For instance, it clearly discusses the problems associated with procurement in a project involving many implementing agencies. The ICR is consistent with the guidelines and draws reasonably good lessons from the experience of implementing this project. The Borrower's ICR provided in Appendix 1 provided useful additional information. The ICR could have provided more details on the methodology followed in administering the beneficiary survey, as a separate annex. The ICR is unduly long and could have benefitted by better editing (The main text of the ICR at 43 pages, is almost three times the recommended length of 15 pages). a. Quality of ICR Rating Substantial Page 18 of 18