Document of The World Bank FOR OFFICIAL USE ONLY Report No. 60727-CG THE INTERNATIONAL DEVELOPMENT ASSOCIATION COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORT FOR THE REPUBLIC OF CONGO May 2, 2011 Country Management Unit (AFCC2) Africa Region This document is being made publicly available prior to Board Consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective 4/8/2011) US$ 1.00 = 455.00 FCFA (Francs) FISCAL YEAR: January 1 – December 31 ABREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities AfDB African Development Bank AFD Agence Française de Développent (French Development Agency) CEMAC Communauté Economique et Monétaire de l'Afrique Centrale (Central African Economic and Monetary Community) CFCO Chemin de Fer Congo Océan (Congolese Railway) COMEG Congolaise de Médicaments Essentiels Génériques (Congolese Agency for Essential Generic Medicines) CPS Country Partnership Strategy EU European Union EITI Extractive Industry Transparency Initiative FCFA Central African Franc FY Fiscal Year GDP Gross Domestic Product GEF Global Environment Facility GNI Gross National Income HIPC Heavily Indebted Poor Countries HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome IBRD International Bank for Reconstruction and Development IDA International Development Agency IFC International Finance Corporation IMF International Monetary Fund MDG Millennium Development Goals MIGA Multilateral Investment Guarantee Agency MTEF Medium Term Expenditure Framework MSME Micro, Small and Medium Enterprises PER Public Expenditure Review PPP Public-Private Partnership PRSP Poverty Reduction Strategy Paper RTA Reimbursable Technical Assistance SNDE Société Nationale de Distribution d’Eau (Congolese National Water Distribution Company) SNPC Société Nationale des Pétroles du Congo (Congolese National Oil Company) Vice President: Obiageli K. Ezekwesili Country Director: Marie-Françoise Marie-Nelly Task Team Leader: Eustacius Betubiza The core team was composed of: Eustacius Betubiza, Hannah Nielsen, and Milaine Rossanaly. Substantive inputs were received from the Congo Country Team i REPUBLIC OF CONGO COUNTRY PARTNERSHIP STRATEGY – PROGRESS REPORT TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................................... 1 II. PROGRESS TOWARDS CPS OUTCOMES AND PORTFOLIO PERFORMANCE ......................... 1 III. UPDATE ON ECONOMIC DEVELOPMENTS ................................................................................. 4 V. IFC AND MIGA .................................................................................................................................. 9 VI. MANAGING RISKS ........................................................................................................................... 9 Boxes Box 1: CEMAC Convergence Criteria ....................................................................................................... 5 Tables Table 1: Alignment of the CPS and New Africa Strategy ........................................................................... 7 Table 2: Activities or Financing not originally defined in the CPS ............................................................. 9 Annexes Annex 1: CPS Results matrix – Assessment of progress to date ............................................................... 11 Annex 2: Republic of Congo Country at-a-glance .................................................................................... 19 Annex 3: Republic of Congo - Millennium Development Goals 1990-2009............................................. 21 Annex 4: Progress towards Millennium Development Goals.................................................................... 22 Annex 5: Status of portfolio existing before CPS ..................................................................................... 23 Annex 6: Status of operations approved during the CPS period................................................................ 24 Annex 7: Status of Analytical and Advisory Activities............................................................................. 25 Annex 8: Congo Republic – Selected Economic and Financial indicators (2008-15) ............................... 26 Annex 9: Revisions to the CPS Outcome Indicators and Milestones ........................................................ 27 Annex 10: Selected Indicators* of Bank Portfolio Performance and Management ................................... 28 Annex 11: Operations Portfolio (IBRD/IDA and Grants) as of 3/23/2011 ................................................ 29 Annex 12: Republic of Congo country map.............................................................................................. 30 ii REPUBLIC OF CONGO COUNTRY PARTNERSHIP STRATEGY – PROGRESS REPORT I. INTRODUCTION 1. This Progress Report assesses implementation of the Bank’s FY10-12 Country Partnership Strategy (CPS) for the Republic of Congo at mid-term. The CPS’ primary objective is to make a critical contribution to promoting diversified and inclusive economic growth in addition to improving social outcomes. To ensure effective implementation in both priority areas, the CPS also supports governance and institutional capacity building as a cross-cutting theme. The CPS’ main themes are fully in line with the new World Bank Strategy for Africa, namely: competitiveness and employment, and vulnerability and resilience, underpinned by good governance and capacity building. 2. There has not been a profound shift in the country context to merit a radical strategic shift on the Bank’s part. However, there are new imperatives that call for a sharper focus on certain areas of our support moving forward. For instance, persistent youth unemployment calls for suitably adapted professional training programs. Similarly, growing oil revenues and the Government’s recent rapid acceleration of its investment program requires an intensified focus on greater investment selection, management, and maintenance requirements. These new dimensions will be at the center of the Bank’s attention and support during the remainder of the CPS period and beyond. 3. The Republic of Congo reached HIPC Completion Point in January 2010. Reaching the Completion Point has emboldened the authorities and the Congolese people to envisage a more ambitious phase of Congo’s development. This has helped strengthen the dialogue with the Bank which has become more mature, and has heightened the prospects for deepening the reforms. 4. In the following sections, this CPS Progress Report: (i) reviews progress to date toward achieving the CPS’ objectives and outcomes; (ii) provides a brief update on the new contextual imperatives within the country with a view to drawing implications for the continued relevance of the Bank’s strategy, including defining a plan of activities over the next two fiscal years; and (iii) updates the assessment of the principal risks facing the CPS’ implementation. II. PROGRESS TOWARDS CPS OUTCOMES AND PORTFOLIO PERFORMANCE A) Progress toward Achieving CPS Outcomes 5. Overall progress toward attaining the CPS outcomes is satisfactory. A series of reforms have been undertaken, especially in the final drive to attain the Completion Point under the HIPC initiative in January 2010. The following is a succinct summary of the progress so far attained for each CPS outcome. A more detailed evaluation at mid-term is provided in the results matrix (Annex1). 1) CPS Theme 1: Economic diversification and growth agenda Outcome 1.1: Rendering the management of oil revenue and public expenditure more effective 6. Progress to date on oil commercialization reforms initiated in 2009 includes restructuring the state oil company to streamline its operations, to put in place a new analytical accounting system to enhance transparency of its accounting practices, and to continue the independent certification of quarterly data on oil revenue. The remaining agenda includes completing the restructuring process of the 1 state oil company, the full application of the new accounting system (adopted in September 2009), and the timely production of independent financial audits by a firm of international reputation (the 2009 and 2010 audits are still outstanding). Regarding EITI, Congo has produced two reports, although these are yet to be validated due to their insufficient scope. Corrective actions as specified by the EITI Board consist of, among other things, taking steps to ensure that all entities that make or receive material payments are included in the reporting process. The EITI stakeholders are currently working on remedial actions that would lead to the preparation of a third EITI report. 7. On the other hand, progress has been made on public expenditure management, particularly on budget planning, public investment management, and procurement reforms. Consolidating the above gains will require more capacity building and a broader commitment across Government. Further support to implementing reforms in these areas is envisaged under the new Governance Project (FY12), as well as continued country dialogue. Outcome 1.2: Enhancing agricultural production and productivity in high potential zones 8. The principle vehicle for supporting this outcome is the Agriculture Project. Progress has been slower than anticipated due to the Government’s slow release of counterpart funding and poor project management and coordination, both of which have now been resolved. Achievements so far include production of planting materials and rehabilitation of rural roads. Outcome 1.3: Putting in place tools for improved forestry management 9. The Government has adopted a package of legal and regulatory instruments to improve sector transparency and social and environmental performance. Congo has also made significant progress in the preparation of its Readiness Plan for Reduced Emissions from Deforestation and Degradation (REDD) 1. The Republic of Congo, together with Democratic Republic of Congo, is at the forefront of defending the African position on forest management issues in international fora. Further support will be provided through a forestry project currently under preparation (FY12), as well as trust-funded REDD activities. Outcome 1.4: Laying the foundation for the growth of micro, small, and medium enterprises 10. In a bid to improve the business climate, Government adopted an action plan in late 2009 aimed at, among other things, improving public-private dialogue and promoting business development services for enterprise development. The Bank’s support to this outcome will be provided through the Economic Diversification Project. IFC is also supporting Congo in improving its Doing Business ranking, among other things (see Section V). Outcome 1.5: Improving the services from Government’s ongoing/planned infrastructure program 11. The Government has carried out critical reforms in the telecommunications sector, including liberalization of the international gateway and establishment of an independent telecommunications regulatory authority, which should help maximize benefits from its ongoing investments in a fiber optic cable network. The remaining agenda includes strengthening policy and regulatory capacity, undertaking local and regional network connections, and promoting a local information technology industry. Bank support to this effect will primarily be provided through the Regional Telecommunications Project (FY11). 12. Government is heavily investing in the energy sector, where significant generation capacity has been installed, and work on transmission infrastructure is ongoing. Preparations for complementary 1 A mechanism to reward developing countries engaging in halting deforestation and in promoting afforestation and reforestation that could become a significant source of funds for investment in rural development and of government revenue. 2 sector reforms to make the national utility capable of managing these new investments and deliver quality services to its customers are underway. 13. Regarding the water sector, the Government is already implementing an action plan for strengthening the national water utility’s commercial and financial performance. Both the energy and water reforms are being supported under the Urban, Water, and Energy Project. Outcome 1.6: Laying the foundation for increasing its market share in regional transit services 14. The Bank helped Congo with a prioritization framework for investments along the principal transportation corridors through a seminal study on “Prioritizing Infrastructure Investments: A Spatial Approach” completed in October 2009. A key result of this analysis was the importance of the Pointe Noire − Brazzaville railway (Chemin de Fer Congo Océan (CFCO)). The Bank is assisting the Government through the Economic Diversification Project to implement a reform program for CFCO, including establishing a Private-Public Partnership. The Bank is also facilitating the dialogue between Congo, DRC, and Central African Republic to examine options for developing the Congo Basin-Atlantic Corridor. 2) CPS Theme 2: Basic service delivery agenda Outcome 2.1: Improving the delivery of basic services 15. Although there has been some progress in achieving some of the CPS milestones, the health and education sectors are still struggling, and the country is indeed unlikely to attain the MDGs (Annexes 3 and 4). More generalized improvement in health service delivery continues to be beset by weak capacity and institutional inertia. Similarly, accelerated progress in the education sector will require more efforts in ensuring high retention rates and levels of learning; ensuring a deeper sense of ownership by all stakeholders of the education strategy; and a better match between skills training programs and market needs. It is critical that Government takes a much bolder approach in order to make significant progress toward the MDGs. The Bank is intensifying its support through the ongoing Health, HIV/AIDS and Educations Projects. B) Portfolio Performance 16. The CPS is implemented through a series of operations: six in existence at the time of writing the CPS (Annex 5), and a set of new operations (Annex 6) and AAA (Annex 7) envisaged under the CPS. Previously Existing Projects 17. Implementation performance of the existing portfolio has been mixed. Whereas progress on the HIV/AIDS and Governance projects has been satisfactory, the Agriculture project has experienced major disbursement delays. As indicated above, the Agriculture Project has been beset by poor management and slow release of counterpart funding. A better management team is in place, and Government has released all pending amounts, and has committed to timely releases in the future. The project has just been upgraded from problem status following the mid-term review completed in January, 2011. 18. The Health Project’s complex reforms led to a slow start, which were compounded by the change of the Minister and the key staff, in particular the Project Coordinator, who had been present during project preparation. The team is working closely with the counterparts to improve the project’s performance. An action plan has been agreed upon with the new health minister, and the project is expected to emerge from its unsatisfactory status by mid to late 2011. It is important to note that complex reforms of this nature require time, persuasion and close support from the Bank team, which is now fully based in the field. 3 19. Indeed, all projects are now managed from the field, with the Task Team Leaders either based in Brazzaville or Kinshasa. This, as well as close follow up from the Country Manager and the Country Director, has helped to enhance the quality of our dialogue beyond projects and toward much broader sector issues. New Projects Envisaged under the CPS 20. Project delivery has proceeded as originally planned (Annex 6). The Urban, Water, and Energy Project, which became effective in October 2010, is off to a good start, thanks to the procurement process carried out during project preparation. The Economic Diversification Support Project is expected to become effective in May 2011. The pipeline for FY11 (the Regional Telecommunications Project) and for FY12 (the Forestry and Governance Projects) is expected to be delivered as planned. Analytical and Advisory Activities 21. The Analytical and Advisory Activities planned in the CPS are proceeding well (Annex 7). The Public Expenditure Review (which included an oil sector review) has been completed and disseminated in the country, and its key findings, especially on public finance management will form the basis for deepening further economic reforms, supported mostly through the new Governance Project (FY12). 22. The Growth and Employment Study is being finalized and will, among other things, serve as one of the major inputs in structuring the Bank’s support to promoting non-oil growth, and has particularly highlighted the issue of skills as a major constraint to the private sector. Support to the development of a national statistical strategy, as well as a strategy for information and communication was dully provided. The latter is underpinning the Regional Telecommunications Project (FY11). Support to the forestry sector has led to the development of the Forestry Project (FY12). III. UPDATE ON ECONOMIC DEVELOPMENTS 23. The Republic of Congo has continued to grow its economy significantly since 2008 through improvements in fiscal discipline and debt management. According to the 2010 IMF World Economic Outlook Report, the Republic of Congo was the fastest growing economy in Africa in 2010. Real GDP is estimated to have expanded by 9.1 percent in 2010, compared to 7.5 percent in 2009, based on continued high growth in the oil-sector as well as accelerated growth in the non-oil sector (see Annex 8). Economic prospects remain favorable with a projected growth rate of 7.8 percent in 2011. 24. The macroeconomic resilience has increased despite the global economic downturn. The economic performance remained robust, backed by increasing oil production and sustained growth in non-oil sectors, such as construction, transport and telecommunication, although the timber industry was negatively affected by lower demand and prices. After deteriorating in 2009, following the decline in global demand and oil prices, Congo’s external current account position also improved markedly in 2010. 25. The overall inflation remained moderate, and the annual inflation, measured by the consumer price index, was estimated at 4.3 percent in 2009 and 5.3 in 2010, which is slightly above the CEMAC target rate of 3 percent. Inflation on food prices remained moderate mainly due to an improvement in transport conditions. Rehabilitation efforts of the road and railway network have facilitated the transport of locally produced goods to commercial centers. As a result, the increase in overall food prices has so far been subdued, averaging 3.0 percent over the last 12 months (March 2010 – March 2011) in Brazzaville. However, some higher prices have been observed on certain items such as meat, cooking oil and fish, which are mostly imported. The Government has been monitoring the situation closely and has taken a number of measures to alleviate the pressure on food prices, including exemptions for certain food import 4 duties at the Port in Pointe-Noire. The Government is also preparing a comprehensive program to curb higher inflation. 26. The Republic of Congo is a member of the Economic Community of Central African States (CEMAC) which promotes regional economic co-operation in central Africa. The CEMAC has adopted four main convergence criteria as laid out in Box 1. The Republic of Congo met all of them in 2010, except the low inflation requirement. Box 1: CEMAC Convergence Criteria As a member of the regional monetary union, Congo is committed to respecting the CEMAC Convergence Criteria. These Criteria have been updated in 2002. They are monitored through a regular multilateral sur veillance process by a Convergence Committee, composed of representatives of the West African Economic and Monetary Union, the CEMAC, the Union of the Comoros, and France. The Committee provides concrete recommendations to member states on strengthening policies with a view to meeting all criteria. The latest assessment of the Committee of April 2008 concluded that Congo had met all targets for the primary indicators, with the exception of the debt target (see table below). In regional comparison, only Benin and Cameroon had met all targets in 2007. Congo’s situation has not radically changed since the April 2008 assessment, as the presentation of latest data related to the indicators reveals, although the inflation targets were also not met in 2010. No assessment by the Committee has been done since 2008. CEMAC Convergence Criteria - Status of Congo Convergence Primary Indicators Targets Assessment 2007 Latest data 20102 1.a) Primary fiscal balance excl. grants/GDP >=0 % 14.1% 22.3% 3 1.b) Structural primary deficit exc. Grants/GDP >0 10.2% Not available 3 Inflation (yearly average) <3 % 2.6% 5.3% Inflation (end of period) <3% -1.4% 5.8% Debt/GDP <70 % 72.9% 15.7% Arrears No accumulation Not declared No accumulation 1 From Report by the Convergence Committee to CEMAC Ministers (April 2008) 2 As per latest data from authorities, Fund and Bank Staff calculations 3 Data will be available once an overall CEMAC assessment is carried out to arrive at comparable structural fiscal balances for all member countries.  Target met  Target not met 27. Congo’s attainment of the HIPC Completion Point led to a drastic reduction in the debt stock and debt servicing payments, providing additional fiscal space. Congo reached the Completion Point under the HIPC Initiative in January 2010, and the Paris Club granted full debt relief in March 2010. The total debt relief included US$1.575 billion from enhanced HIPC in end-2004 net present value terms, and US$201 million of debt service savings from the Multilateral Debt Relief Initiative (MDRI). Total public external debt declined as a result from about US$10 billion (or almost 200 percent of GDP) in 2004 to about US$1.4 billion (or 12.5 percent of GDP) in 2010. 28. However, Congo’s public finances remain highly dependent on oil related fiscal revenues. Higher oil revenues and continued expenditure discipline have led to a strengthened fiscal position. The economy’s oil dependency, however, represents the key fiscal policy challenge to be addressed in the medium term, as revenue from hydrocarbon resources is projected to decline over time, if there are no new major oil discoveries. Since 2008, the government has, thus, followed a fiscal adjustment policy to reduce the non-oil primary deficit to sustainable levels. There were a number of events that placed further 5 strain on government expenditure in 2010, including a mass vaccination campaign against a recent severe polio outbreak, the response to the refugee crisis in the north of the country and some overruns associated with the Fiftieth Anniversary of Congo’s Independence in August 2010. 29. Therefore, the management of public investments is critical. The authorities have scaled up investment spending substantially to improve the dilapidated infrastructure, particularly in the power and transport sectors, which could pose a big challenge to the country’s limited absorptive capacity. The investment budget is estimated to reach CFAF 1,015 billion (approximately USD 2.2 billion) in 20 11, representing an increase of more than 50 percent compared to the investment budget of CFAF 674 billion (approximately USD 1.4 billion) in 2010. Recent efforts to improve public finance management including procurement are steps in the right direction. 30. Despite the sustained strong economic performance, the country continues to face fundamental development challenges. Poverty remains significant, with about half the population of 3.6 million living below the poverty line and inequality remains high. Social indicators are still far below those of countries with comparable levels of GNI per capita and meeting the MDGs, particularly MDG 4 and 5, remain a challenge (Annex 4). According to the 2010 United Nations’ Human Development Index, Congo ranks 126th among 169 countries. 31. As a result, economic diversification is essential to promote non-oil growth and employment creation. Major obstacles to economic diversification are the poor state of infrastructure and the weak business climate (Congo ranks 177th out of 183 countries according to the Doing Business 2011). The Congolese economy is dominated by a capital-intensive oil sector that creates little local employment. Lack of diversification in the economy as well as the limited role of the private sector have led to high levels of youth unemployment (25 percent for the ages 15 to 29 in the urban areas). This has been compounded by a lack of appropriate market skills of job seekers. 32. In order to tackle these challenges, the Government has remained steadfast in implementing its PRSP (adopted in April 2008) despite the global financial crisis. Aware of the transformational effect that proper policy and investment choices could have, the Government has set an objective of becoming an emerging economy by 2025 and is formulating a vision accordingly (“Vision 2025”), which will serve as the basis for the second generation Poverty Reduction Strategy Paper (PRSP), covering the period of 2012-2016. IV. CPS RELEVANCE AND PROPOSED ADJUSTMENTS A) CPS Relevance 33. The overall objectives of the FY10-12 CPS remain valid. This was confirmed by stakeholders during consultations held during March 7-11, 2011 in Brazzaville. The event was very well attended by Government officials, lawmakers, academicians, and private sector and civil society representatives, and was characterized by very lively, frank and rich discussions. While the participants strongly endorsed the thrust and continued relevance of the strategy, they highlighted the need for greater attention to the persistent youth unemployment phenomenon. The different recommendations retained for maximizing employment generation include: (i) rendering the country’s skills training programs more adaptable to private sector needs; (ii) creating synergy among the various policy and investment interventions around a Growth Poles approach; and (iii) maximizing benefits from Government’s proposed four special economic zones. 6 B) Proposed Adjustments 34. In this regard, the Bank program will be adjusted slightly in order to more adequately align it with the new context and Government’s emerging priorities, especially regarding creation of employment centered growth, and to increase efficiency in public investment programs. These adjustments mostly relate to activities already programmed under the CPS. The only exception is a new operation for FY13, which is outside this CPS period, but whose preparation will begin during this CPS period. The current strategy is fully aligned with the New Africa Strategy as demonstrated in the table below. Table 1: Alignment of the CPS and New Africa Strategy Country Partnership Strategy New Africa Strategy Pillars Diversifying the economy to spur broad-based growth Competitiveness and employment Improving public service delivery, particularly to the most Vulnerability and resilience vulnerable groups Cross-cutting themes Improving governance and strengthening institutional capacity Governance & Public Sector Capacity 35. The following adjustments have been or are to be undertaken regarding diversifying the economy with a view to increasing competiveness and employment:  Supporting improvement in the energy sector’s performance. An Enterprise Survey conducted in 2009 reveals that electricity is a major and by far the most important obstacle for the operation of companies; 71 percent of the companies surveyed identified electricity as a major obstacle. An energy component was added to the Urban and Water Development Project (hence the new appellation: Urban, Water, and Energy Development Project) to help the Government develop a comprehensive strategy for the reform of the electricity sector and improve its capacity to implement the reforms. This is in recognition of the vital importance of the energy sector in Congo’s diversification and employment generation agenda. Reliable energy is critical for implementing the special economic zones concept and the Growth Poles approach.  Supporting professional skills training. In view of the strong demand for skills training from all stakeholders during the consultations on the CPS Progress Report, the Bank proposes a Professional Skills Development Project for FY13. This is critical for enhancing the employability of the youth, especially in the emerging non-oil sectors such as mining, information technology, and construction. This project will, among other things, tackle the issue of Gender regarding access to training and employment.  Laying the foundation for the growth of the mining sector. A Mining Sector Review (FY11) was added to the program upon the request of the Government. Mining is a potential area of diversification and job creation for the oil-dominated Congolese economy. Issues under review include: (i) knowledge about mineral potential; (ii) the legal and regulatory framework; (iii) Government capacity to manage a growing mining sector; (iv) mining infrastructure needs; (v) environmental and social impacts of mining; and (viii) cross-border issues.  Facilitating the development of the Congo Basin - Atlantic Growth Corridor. The Republic of Congo, DRC, and the Central African Republic, are contemplating ways and means of developing the Congo Basin - Atlantic Growth Corridor. An advisory activity to accompany this process has been added to the CPS. In addition, a PPA, under the regional IDA financing window, is being contemplated, to support the preparatory phase. 7  Supporting transition from low to middle income country. As the Republic of Congo is moving from a low to middle income country status, new opportunities arise, making it possible for the Bank to offer a new set of services to the Congolese authorities, including the Reimbursable Technical Assistance (RTA) and the enclave projects. The RTA concept was already envisaged in the CPS, and the idea is still under discussion with the Government. Such opportunities will be actively pursued during the remainder of the CPS period. Possible candidate projects include Bank support to the Government in the context of Special Economic Zones.  Deepening the Bank’s facilitation of South-South Cooperation. The Bank is already facilitating South-South cooperation in different sectors such as energy and water. This will be extended to other areas, especially those related to employment generation. For instance, the Government is entering into partnerships with various countries, such as Singapore, for the development of special economic zones, and has requested the Bank’s assistance in structuring such partnerships. 36. The following adjustment will be undertaken regarding addressing vulnerability and resilience:  Improving efficiency in human development sector spending. One of the principal challenges to improving performance in the health and education sectors is inefficiency in sector spending. In this regard, the team is envisaging carrying out a public expenditure review of the human development sectors in the coming year to deepen the knowledge of the public expenditure management and efficiency in those sectors. The results of the review will help identify weaknesses in the delivery of basic services and develop recommendations to accelerate progress towards the MDGs.  Enhancing Congo’s preparedness for REDD. Although a national REDD activity had been envisaged in the CPS, it is only now that funding has been confirmed (by the Forest Carbon Partnership Facility). In addition, a regional REDD activity, of which Congo is one of the beneficiaries, has also obtained funding (by the Global Environment Facility). The two activities will enhance Congo’s institutional capacity for sustainable management of its forest resources (table 1). This is also complementary to the Forestry Project already envisaged under the CPS (FY12). 37. Regarding the cross-cutting theme of governance and capacity building, the following adjustments will be made:  Deepening the support to public investment and financial management. As outlined in the PER, all investment projects should be subjected to very high levels of scrutiny to minimize leakage and waste, and need to be complemented with regulatory and institutional reforms to ensure good management and governance and to allow private sector participation. These efforts will be supported by the new Governance Project (FY12). The CPS had originally envisaged this operation an additional financing to the ongoing Governance Project. However, it will be transformed into a free standing operation in order to give it a more robust focus on new dimensions of governance that do not necessarily coincide with those supported in the ongoing governance operation. It will be more innovative, bringing the various stakeholders more into the dialogue (parliament, civil society and research centers) as well as giving more space to the line ministries. In essence, it will be the beginning of the reform of the public administration using the budget as an instrument and entry point.  Widening the support for demand-side governance. Up to now, the Bank’s support for demand- side governance has primarily been through the anti-corruption “Observatoire”, which has a 8 strong civil society representation. This approach will be broadened to provide direct support for selected Civil Society platforms in advocacy and demand for better service delivery in key sectors. The inclusion of such support in the new governance project will be considered. Also under consideration is the use of civil society in the monitoring of Bank-supported projects as an entry point to create a culture of civil society oversight in public investment programs. In this regard, a number of ongoing operations will integrate this dimension into their work. Table 2: Activities or Financing not originally defined in the CPS Planned delivery IDA Amount (USD m) National projects Professional Skills Training FY13 20 REDD national ( FCPF ) 2 FY12 3.4 Regional projects REDD regional (GEF) 3 FY11 3.4 Analytical and Advisory Activities Mining Sector Review FY11 - Atlantic-Central Africa Corridor FY12 - V. IFC AND MIGA 38. The Bank is working closely with the IFC in the field. On the investment side, IFC does not currently have an active project in the country. IFC continues to pursue prospects for involvement in projects/programs in the Congo in the following strategic areas: (i) agribusiness and manufacturing; (ii) information communication technology; (iii) access to finance for MSMEs; and (iv) infrastructure (through PPP). On the advisory side, IFC is currently engaged in: (i) providing support to Government to improve key areas of the business climate as measured by the Doing Business report; (ii) the OHADA Business Law Reform Program aimed at supporting OHADA's efforts to modernize its business law framework and improve the effectiveness of its implementation; (iii) implementing a capacity building program in partnership with MINOCO (a flour mill) to provide Business Edge trainings to 150 bakeries in Pointe Noire and Brazzaville; and (iv) the Health in Africa Initiative (HiA) in Congo aimed at improving the health sector in the country. 39. Congo has been a MIGA member since 1991, and contributed to the General Capital Increase in March 2003. MIGA has no exposure in Congo, and there is no active application. VI. MANAGING RISKS 40. The risks as identified in the CPS did not materialize, and the overall risk threat has been revised from “high” to “medium”. As explained below, Congo weathered the global financial crisis virtually unscathed, the July 2009 elections and their aftermath were peaceful, the Government’s support for reforms even after reaching the HIPC completion point has generally been sustained, and the dialogue between the Bank and the Government remains good. 41. The impact of the global financial crisis was mild and short-lived (risk revised from “high” to “low”). Moreover, oil prices and forestry activities have rebounded. In the long term, the Congolese 2 Forest Carbon Partnership Facility, a multi-donor trust fund managed by the World Bank This operation had been envisaged in the CPS, but it’s only recently that Congo’s allocation was confirmed. 3 E nhancing Institutional Capacities on REDD issues for Sustainable Forest Management in the Congo Basin 9 economy’s overdependence on extractive industries keeps it exposed to fluctuations in international commodity prices. The Bank will, therefore, continue to support Congo’s diversification agenda. 42. Congo’s peace consolidation process has advanced even further following the 2009 elections, when President Denis Sassou Nguesso won another seven-year term with a large majority of the vote (78.6 percent), but still remains a concern (overall peace and stability risk remains medium). The concern of possible fallout from the general elections held in July 2009 did not materialize. In fact, the remaining belligerents have since been integrated into the Government. However, more needs to be done to develop a shared vision in order to more fully consolidate the peace process. Legislative elections are slated for 2012. 43. High unemployment and inequality could generate social tensions (“high” risk). The large number of unemployed youth could lead to social discontent. Similarly, the high levels of income inequality could pose a major threat to social and possibly political stability. The Government’s plans for stimulating non-oil growth and improving access to employment through suitably adapted skills training are steps in the right direction, and the World Bank will continue to support the Government in these efforts. 44. The pace of reforms has been mixed, but generally positive (risk reduced from “high” to “medium”). There have been no signs of resistance willfully orchestrated by vested interests. The pace of reforms has largely been dictated by the complexity of the reforms and/or insufficient capacity for the implementation. The World Bank will continue to work with the various stakeholders to support these reforms, including through normal dialogue and the Governance support project. 45. Government’s ambitious infrastructure investment program could pose social and environmental challenges, although no major risks have manifested themselves yet (risk remains rated “medium”). In the planned Forestry operation (FY12), the World Bank will continue to support the Government in strengthening its environmental safeguards. 46. The World Bank portfolio has not suffered from any undue fiduciary risks. However, overall governance in the country remains a challenge. (Hence, overall fiducially risk will be revised to “high”). There are two problems projects, largely due to either the complexity of the reforms involved or intermittent contributions of Government funding. Overall fiduciary performance at the project level remains good. However, because of the overall governance challenges in the country, the overall fiduciary risk, including that of Government’s own resources, will be revised to “high”. 10 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects PRSP Pillar 1: Improve governance and consolidate peace PRSP Pillar 2: Promote growth and macroeconomic stability CPS Theme 1: Diversifying the economy to spur broad-based growth Improve the country’s CPS Outcome 1.1: more macroeconomic effective management of framework on a oil revenue and public sustainable basis: expenditure. Projects Transparency and  Enhance the capacity Governance to formulate  High dependency 1. Non-oil primary 1. Moderate. The non-oil primary deficit as percent of Capacity Building development policies of economy on oil deficit reduced from non-oil GDP declined to 36 percent in 2009 and 35 Project and strategies and 45 percent in 2008 to percent in 2010 and is projected to decline further in manage reforms 30 percent of non-oil the next years.  Implement Public  Fiscal policy GDP 2. Substantial. Pre-payments on oil revenue are no AAA and TA Financial Management challenges related 2. No ex-post longer operated and are monitored under the IMF Oil Revenue reforms to volatility and regularization of Program. The incidence of ex-post regularization of Management projected long-  Improve procurement term decline of oil payments apart from payments, apart from exceptions as defined by the Review practices exceptions as defined budget law, have significantly declined since 2009 due Policy dialogue on revenues by the budget law to the establishment of quarterly budget execution oil revenue 3. At least 80% of public plan. management Enhance management  Inefficient use of contracts in excess of (HIPC completion) 3. Moderate. The procurement regulatory body is fully of the oil sector with a oil resources for FCFA 250 million functional although it still has capacity limitations. For view to optimizing the public spending subject to competitive Public instance, the procurement report for the 2010 budget is use of oil revenues for programs bidding (most Expenditure still outstanding, information on the share of public developing other sectors contracts are currently Review contracts in excess of FCFA 250 million that are  Improve transparency sole-sourced) subject to competitive bidding is therefore not and effectiveness of oil  Lack of strategic available. Support to the revenue management basis and capacity preparation of the for prioritization of a. Fiscal strategy adopted by a. Moderate. A reform plan prepared by the National Statistical public investments end 2010 addressing Government with the assistance of AFRITAC is under Development volatility and long term implementation. The key element of the strategy Strategy decline of oil revenue. concerns the reforms of customs administrations that  Inadequate are supported by the European Commission. b. New system for systems and b. Moderate. A Public Investment Management Action preparation, appraisal and limited capacity Plan (PAGGIP) was adopted in 2009 and is currently selection of projects in Partners and transparency being implemented; although capacity constraints operation by 2011 budget IMF (Poverty in executing public have had a severe impact on the public investment cycle. Reduction Growth investments management reform process. (Public Financial c. Streamlined and Facility, technical Management, computerized expenditure c. Moderate. Following the adoption of the public assistance) 11 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects procurement, etc.) chain is operational by financial management action plan (PAGGFP), EU (Economic end 2010 progress was made on the partial rationalization of the Governance public expenditure management system as well as on Support Project) the establishment of the “fichier unique”. However, reform of the payment system is a critical outstanding Coop. Française element in the rationalization of the public expenditure (Technical management system. Assistance Project on public d. Moderate. The main elements of the full MTEF investment d. Global MTEF fully (macroeconomic framework, central MTEF, key operational by end 2011 management) sector MTEFs) are in place and were used to prepare the 2010 budget. The MTEF has not been used for the preparation of the 2011 budget, but the government is planning to use it for the preparation of the 2012 budget. e. New procurement code is e. Moderate. The new procurement code has been effective at end 2009 and adopted in May 2009 and is being implemented. The capacity has been new institutions supporting the code have been put in developed in line place and are operational, but their capacity for ministries implementation of the new procurement code remains weak. Information on the new systems has been disseminated, and most ministries are now aware of the new procurement code and of their own ministerial level institutions, as does the civil society. Most procurement tenders are published on the “Congo DG Market” website as well as on the Procurement Regulatory Authority’s own website. Develop agricultural  Low productivity CPS Outcome 1.2: a. Existing extension service a. Moderate. Several trainings and equipments were growth and food of smallholder enhanced agricultural equipped and trained provided: security agriculture, for on- productivity and - All 10 regional offices of agriculture and livestock farm and off-farm marketing of the MoA were equipped with vehicles Projects activities - All existing district inspectorates of MoA within the  Inefficient 1. Average yields for 10 regions equipped with motorcycles Agricultural marketing of cassava, maize, - 36 extension workers trained Development & agricultural - 10 NGOs involved in agriculture extension service Rural Roads banana and ground- products recruited and their personal trained to support Rehabilitation nuts among farmers activities on the ground Project (P095251) benefiting from 12 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects project interventions b. Improved plant materials b. Moderate. Foundation seeds for Maize and increased by 10% over for the target crops Groundnuts, and Cassava seedlings are under 2009 levels produced and production at the "Centre National de Semences disseminated Améliorées (CNSA)". Starting next production season, the foundation plant materials will be Partners distributed to pilot farmers for multiplication. The dissemination of plant materials was delayed because of counterpart funding shortfall which delayed all Two agriculture project activities. projects funded by the International 2. Transportation time in c. At least 500 km of Fund for c. Moderate. As of to date, 264 km of priority rural Agricultural areas with priority rural roads roads rehabilitated. Transportation time has reduced rehabilitated rural rehabilitated Development but no survey has been done yet roads is reduced by 30% Develop the forestry  Uneven CPS Outcome 1.3: Tools a. New gazetting and a. Substantive. A decree on gazetting forest lands, Projects sector by improving the implementation of for improved forestry degazetting regulations which enhances this process, including through local management of forest management management put in place that take into account consultations was adopted in Sept 2009. Pipeline - Forest resources and regulations forest and indigenous Sector Operation expanding on-site people rights are adopted (FY12) processing  Inadequate 1. New transparent and b. Substantive. A decree on forest concessions, which regulations on b. New forest concession competitive award of allows for greater competition and transparency in gazetting of forest award regulation is forest concessions their award, was adopted in Sept 2009. Transparency lands and overlap adopted established has improved in concession award but bidding system Partners of mining permits with forest still needs improvement AFD Project to concessions and 2. Revised forest enable small forest national parks. c. Substantive. Submission to Parliament of a legal taxation system is c. New forest taxation package on forest taxation (passed as an amendment title holders to  Taxation system operational system and collaborative to the Forest Law), with the following changes to the comply with not providing recovery system between relevant legislation: sustainable forest sufficient Ministry of Forests and management incentives to Environment is adopted - A change of the basis o f the export tax assessment, regulations sustainable from free-on-board to an ex works or free-on-truck exploitation and basis to take into account the transport costs and to AFD/AfDB (forest efficient facilitate the diversification of harvests in the certification, processing concessions facing high transport costs due to their product traceability geographic location. and protected  Lack of - An indexing of the forest concession area tax on the areas) environmental productive surface as set by an agreed forest impact assessment management plan. Forest concessions without an EU regulations agreed management plan will have to pay the tax for Gvt signed a the full granted area.  Weak national Voluntary → Most tax reforms have been implemented. Change from Partnership 13 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects institutions FOB to FOT basis still needs work. Change in forest Agreement with area tax assessment system still pending. the EU under the Forest Law d. New Environmental d. Substantive. A decree on social and environmental Enforcement, Impact Assessment impact assessment, which provides full environmental Governance and regulation is adopted and social assessment of projects to be implemented Trade initiative. 3. New Environmental in forest areas, was adopted in Sept 09. Social and Impact Assessment environment assessment capacity, and capacity to regulations are carry out participatory gazettment will be built in operational FY12 Forest Sector Operation e. Key monitoring, law e. Substantive. A decree on contradictory use of forest enforcement, and lands, which will help address cases where 4. Indiscriminate participatory management concessions or other permits have been issued for expansion of mining functions Ministries in conflicting use of forest lands (i.e., cases where into national parks and charge of Forests and the mining permits were awarded in national parks) was other protected forest Environment reorganized adopted in Sept 09. Commission on forest land use areas ended conflict not yet operational – also included in FY12 Forest Sector Operation Significantly improve  Low access to CPS Outcome 1.4: a. Regulations to ensure a. Poor. Regulation framework does not yet comply with business climate financial services foundation for MSME consistency with Basle Basle I and the authorities are still working on it. The growth laid Core Principals (BCP) CEMAC Regional Institutions Support project  :Credit to private  Weak regulatory strengthened sector capacity 1. Banks accounting for supports implementation of BCP core principle 80% of sector assets assessment of COBAC (2011) and design and comply with implementation of action plan to improve compliance regionally agreed with BCP core principles by COBAC. This is Projects financial norms. followed-up by the Bank in collaboration with IMF. b. Poor. Banks in CEMAC have not moved to IFRS. The CEMAC Regional b. New accounting standards for banks CEMAC RISP Project will consider supporting move Institutions introduced of banks in CEMAC to IFRS following mid-term Support project review of the project in July 2011. (RISP) c. Moderate. There has been good progress on on- c. Monitoring and site/off site supervision by COBAC given the enforcement of rules circumstances, but more needs to be done through better off-site surveillance and on-site inspections improved.  Distorted, complex 2. The total tax rate as a d. Streamlined tax d. Moderate. Adoption of an Action Plan to improve the and unevenly percentage of total framework adopted business climate, the near-term priorities contained in Projects applied tax system profits is reduced from the comprehensive plan include: current 65% to 30%. Support to - Improving public-private dialogue Economic - Simplifying and making the tax system more Diversification 14 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects business friendly Project (SEDP). - Ensuring investment security - Addressing issues related to land use & tenure, such as the use of long-term leasing. → Government has also formed a committee which Upcoming IFC TA produced a first draft report on streamlining the fiscal program to system improve the Doing Business indicators  Registration of new  Weak support 3. The average time 3. Poor. The average time required to start a business is companies structure for required to start a 160 days in the 2011 Doing Business report compared MSMEs business is reduced to 37 days in 2008. The increase in the time to start a from 37 days to 7 business is due to inefficiencies in the process to start a AAA and TA days. business since the 2008 reform. The time to deliver the 'carte de commercant' from the Centre des Growth and Formalités des Entreprises increased to 3 months and Employment study the time to register with social security and for taxes increased to 1 month each. The team verified this during its visit last year to the country through its Partners discussions with local partners. IMF (taxes) e. The one-stop window’s e. Poor. Support to improve the effectiveness of the one- effectiveness is enhanced stop window will start after the effectiveness of the IFC (access to (as evidenced by SEDP project expected in May 2011. Support will be credit) beneficiary survey) focusing on improving the legal, regulatory & institutional framework for enterprise creation, and EU (eco. strengthening the capacity of the one-stop window. No Governance) major improvement is expected until at least one year after support start. The AfDB is complementing this effort through a separate project.  Enhance quality and  Low access to and CPS Outcome 1.5 a. A regulatory framework a. Moderate. Adoption by Parliament of a new legal reach of infrastructure high cost of Improved infrastructure for the telecommunication framework for the postal and telecom sectors in services: telecommunication services delivery. sector establishing August 2009. With the help of an international services 1. Existence of a competition at the level of consultant, the government prepared: (i) a law international gateways instituting a regulatory agency for the sector, (ii) a law Projects  Limited functional and the wireless local loop autonomous on the regulation of the electronic communications International is adopted Pipeline - Regional telecommunications sector and, (iii) a law on the regulation of the Postal Bandwidth Telecom Project regulator Sector. The international gateway (previous (Around 100 Mbps in 2008) monopolized by the Government-owned operator) has been liberalized, and an independent telecommunications regulatory authority has been established. 15 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects b. The installation process of b. Moderate. Preparatory works for the WACS landing the fiber optic cable site near Pointe Noire was initiated end of January linking Brazzaville to the 2011 by the Government. Within coming months, the regional network is off-shore undersea cable will be linked to the shore initiated (likely to be line, linking Congo to the international high speed completed beyond CPS network. Plans are underway for inland period) interconnections, a phase to be partly supported by the Bank with the CAB project (only financing regional and international links to neighboring countries), slated for Board in May 2011.  Inefficient 2. Revenue collected per c. Action Plan for the reform c. Moderate. The installed generation capacity in the management of kWh delivered to the of the power utility country increased from 172 MW to 590 MW in 2010 public utilities Brazzaville (Société Nationale after commissioning of 300 MW gas fired station, distribution network d’Electricité) is completed jointly owned by a private company and the increases by 10% and approved by the Projects Government, and a 120 MW hydroelectric power from 2009 levels Government, based on a station whose construction was financed by the (further increases to thorough review of Water, Electricity People’s Republic of China. However, this increase occur beyond CPS Private Sector and Urban brought marginal benefits to the population because of period) Participation Options delays in the ongoing rehabilitation of the transmission development and distribution networks. Progress has been slow on Project the study on reform of the sector, the contract for the consultant who will undertake the study is expected to be signed at the beginning of April 2011 with a delay of three months on the procurement schedule.  Insufficient 3. Km of roads d. Current Road d. Poor. This target is not met. A new project financed collection and maintained annually Maintenance Fund by EU which aims to support the Current Road management of increase by 10% over transformed into Second Maintenance Fund (RMF) is under preparation. One of Road Fund 2009 levels Generation Road the objectives of the project is to transform the RMF resources Maintenance Fund by into Second Generation Road Maintenance. June 2012 e. MTEF for Transport in e. Moderate. MTEF for transport is in place in 2010 but place by end 2010 and not updated in 2011. updated annually Strengthen physical  Lack of integration CAS Outcome 1.6 Congo a. Economic analysis of the a. Substantial. Corridor study completed in 2009 called Projects (infrastructure) and in regional markets lays the foundation for various transportation “Prioritizing Infrastructure Investments: A Spatial Support to economic integration in increasing its market corridors completed by Approach” which shed light on the prioritization and Economic sub-region  Congo’s potential share in regional transit end 2009 sequencing issues of infrastructure investments. Diversification role as transport services Project (SEDP). hub for the region b. Support provided for b. Poor. The CFCO concessioning process is not hampered by weak 1. Action plans for the implementation and launched yet. The right form of PPP actually still AAA and TA transport corridor principal corridors supervision of initial years needs to be defined. CFCO is currently using its own Corridor study 16 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects infrastructure identified in the of the CFCO concession resources to improve its management and “Prioritizing analysis are adopted (start of activity performance. The Government is still interested in a Infrastructure (their implementation depending upon when the PPP arrangement. The form of PPP is not Investments: A falls beyond this CPS concessioning is actually defined/adopted yet. It will depend on the strategy Spatial Approach” period) completed). which needs to be prepared with support of a (2009) transaction advisor. PRSP Pillar 3: Enhance access to basic social services PRSP Pillar 4: Improve the social environment and integration of vulnerable groups PRSP Pillar 5: Combat HIV/AIDS CPS Theme 2: Improving public service delivery, particularly to the most vulnerable groups Guarantee school-age  Low level of social CPS Outcome 2.1:Basic children’s access to indicators in services delivery high quality basic relation to improved education countries with similar income  Primary school 1. Increase in primary- a. MTEF for Education in a. Moderate. The Bank contributed to the strategy for level place by end 2010 and the Education sector including the three areas (Higher completion rate from education completion 73 (2007) to 100 updated annually education, Professional & vocational education and from 73 in the percent in 2015 Primary education). MTEF was prepared in the  Inefficient and 2006/07 school year to context of 2010 budget but has not been used for the Projects inadequate public 85 percent in the 2011 budget. spending 2011/12 school year. Education b. Poor. Performance-based system for HR management 2. The girl-boy ratio of b. Performance-based not yet in place.  Poor human primary school system for human resources enrollment has resource management in management increased from 0.90 in place by end 2011 the 2006/07 school year to 0.95 in the 2010-11 school year. Improve the health  Insufficient 3. Under 5 mortality rate c. Satisfactory performance c. Poor. COMEG has recently been affected by status of the population, from 126 per 1,000 of COMEG corruption scandals and the leadership and Projects deployment of especially women and resources for (2007) to 105 per management have performed poorly. EU still children service delivery in 1,000. providing support and TA. Health rural areas  Under 5 mortality rate 4. The percentage of: (a) from 126 per 1000  Poor quality of Urban, Water and women and men aged d. Moderate. The Action Plan is adopted, which consists Electricity (2007) to 12 by 2015 services d. Action Plan for the reform of carrying out an investment program, strengthening 15-49 years who have had more than one of the water utility the commercial and financial performance of the sexual partner in the (Société Nationale de SNDE and completing the urban water sector reform. HIV/AIDS past 12 months Distribution d’Eau) is The PEEDU supports the implementation of this Improve access to reporting the use of a completed and approved Action Plan through investments to rehabilitate and 17 Annex 1: CPS Results matrix – Assessment of progress to date Country Issues and Assessment of Progress to date Relevant CPS Outcomes Milestones Development Goals Obstacles (Substantial – Moderate – Poor) projects drinking water condom during their by the Government, based expand the water supply systems in Brazzaville and last sexual intercourse on a thorough review of Pointe-Noire, a service contract with a private  Reduce population increased by 20 Private Sector Operator to improve the technical, financial and without access to Participation Options percent (against a commercial performance of the SNDE, and technical improved water source 2009 baseline); (b) assistance to improve the management and planning in from 58 (2005) to 38 female and male sex the water sector. All components are being percent by 2015 workers who report implemented satisfactorily. Expected bidding using a condom with documents for the works are expected to be delivered their most recent by mid-2011, while the recruitment of the private client (of those Operator is underway and is expected to be mobilized surveyed having sex during the second half of 2011. with any clients during the last 12 months) increased by e. MTEFs for Health in e. Poor. MTEF for health not completed 20 percent (against a place by 2010 and 2009 baseline) updated annually f. Moderate. Work on human resources ongoing f. Performance-based through a partnership with French AFD. system for human resource management in place in health by end 2011 Reduce the prevalence 5. The percentage of: (a) g. Access and utilization of g. Substantive. Increase of 55% of patients under of HIV/AIDS in the adults and children prevention services for treatment ARV from 2008-2010 population** diagnosed with vulnerable groups are advanced HIV strengthened  Reduce prevalence of infection receiving h. Access and utilization of h. Substantive. Progress was made: HIV/AIDS from 4.2 antiretroviral (2007) to 3.2 percent combination therapy treatment, care, and - 118 Health Centers have integrated the activities of by 2015 for 15 to 49 mitigation services are the Voluntary testing Centers (Centres de Dépistage increased by 20 strengthened year old Volontaire) against 98 in 2008 Projects percent (against a 2009 baseline); (b) - UMODEV (mobile vehicle for anonymous and pregnant women voluntary testing) made 101 outings and 10, 047 living with HIV who people have used its services HIV/AIDS receive antiretrovirals to reduce the risk of - Number of pregnant women admitted to the PMTC mother-to-child program increased from 2009 (986 women are transmission is tested HIV positive and 536 are on ART), to 2010 increased by 20 (900 women are on PMTC program and among percent (against a them 616 women are on ART) 2009 baseline). - Blood bags tested increased from 36,178 in 2009 to 40 409 in 2010 (4 markers tested: syphilis, hepatitis B & C and HIV/AIDS) 18 Annex 2: Republic of Congo Country at-a-glance 19 20 Annex 3: Republic of Congo - Millennium Development Goals 1990-2009 21 Annex 4: Progress towards Millennium Development Goals Current Likelihood of 1990 MDG Millennium Development Goals status achieving target by Benchmark (year) 2015 1. Poverty and Hunger - 54.1% (2005) insufficient data - Poverty headcount ratio at $1.25 a day (PPP) (% of population) 2. Achieve universal primary education 59% 73% (2009) seriously off track - Increase primary completion rate to 100%. 3. Promote gender equality 0.94 0.94 (2009) seriously off track - Raise ratio of girls/boys in primary school to 100%. 4. Reduce child mortality - Reduce child mortality per 1,000 live births in children under 5 by 104 127 (2009) seriously off track two-thirds. 5. Improve maternal health - Reduce the rate of maternal mortality per 100,000 live births by three- 460 580 (2009) seriously off track fourths. 6. Combat HIV/AIDS, malaria & other diseases 5.1% 3.5% (2009) - - Prevalence of HIV, total (% of population ages 15-49) 7. Ensure environmental sustainability 29% (2009) insufficient data - Halve the proportion of individuals without access to safe water. 22 Annex 5: Status of portfolio existing before CPS Gvt IDA Revised Effect. Closing Disb. Undisb Approved Amt Amt Net DO IP Date ($mil.) ($mil.) Date ($mil.) ($mil.) Comm. National Projects HIV-AIDS Apr-04 Oct-04 Jun-09 10 20.36 24 20.18 3.82 S S Education Sep-04 Mar-05 Jun-09 15 21.03 34.31 24.62 9.69 MS S Governance Feb-02 Feb-03 Jun-11 - 22 21.62 19.84 1.78 S MS Agriculture Jun-07 Apr-08 Dec-12 20 21.21 20 7.43 12.57 MU MU Health May-08 Feb-09 May-12 - 38.43 40 5.13 34.87 U U Regional Projects Regional Financial Dec-08 Apr-09 Jun-14 - 48.32+ 50 9.28 40.72 MS MS Institutions Total 45 123.03 189.93 86.48 103.45 23 Annex 6: Status of operations approved during the CPS period Gvt IDA Revised Closing Disb. Undisb. Planned Delivered Amt Amt Net DO IP Date ($mil.) ($mil.) ($mil.) ($mil.) Comm. Projects approved during CPS National Projects Urban, Water, FY10 Mar 2010 Dec-15 100 22.5 25.5 4.05 21.45 S S and Energy Economic Diversification FY10 Dec-10 Feb-16 10 10 10 0 10 -- -- Support Total 110 32.5 35.5 4.05 31.45 Projects in pipeline National Projects pipeline on track Governance FY12 - 14 7 21 - - - - for FY12 On track Forestry FY12 - 20 20 40 - - - - for FY12 Regional Projects pipeline Regional On track FY11 - 15 15 30 - - - - Telecom for FY11 Total 49 42 91 - - - - 24 Annex 7: Status of Analytical and Advisory Activities IDA funded FY 10 HIPC Completion Report Completed (Jan 10) Corridor study “Prioritizing Infrastructure Investments: A FY 10 Completed (Oct 09) Spatial Approach” FY 10 Public Expenditure review Completed (May 10) FY 10 Oil Revenue Management Support Ongoing (Jul 11) FY 11 Growth and Employment Study Ongoing (Jul 11) Trust Fund financed FY10 Support to the Forestry Sector Completed (Jan 10) Support for Preparation of a National Statistical FY11 To be completed Development Strategy (NSDS) Support for the development of the strategy on the FY10 Completed (2010) Technologies of Information and Communication (ICT) 25 Annex 8: Congo Republic – Selected Economic and Financial indicators (2008-15) 26 Annex 9: Revisions to the CPS Outcome Indicators and Milestones Original CPS Indicators/Milestones Updated and Revised Indicators CPS Outcome 1.4: foundation for MSME growth laid Outcome Indicator 2: The total tax rate as a  Number of tax payments reduced from 61 percentage of total profits is reduced from to 50 in 2012 current 65% to 30%. Outcome Indicator 3: The average time required  Number of procedure to start a business to start a business is reduced from 37 days to 7 reduced from 10 in 2010 to 8 in 2012 days. CPS Outcome 1.5 Improved infrastructure services delivery Milestone: Current Road Maintenance Fund transformed into Second Generation Road  No longer relevant Maintenance Fund by June 2012 27 Annex 10: Selected Indicators* of Bank Portfolio Performance and Management (As of 3/23/2011) Indicator 2008 2009 2010 2011 Portfolio Assessment Number of Projects Under Implementation a 6 5 6 7 b Average Implementation Period (years) 3.4 4.1 4.3 4.3 a, c Percent of Problem Projects by Number 33.3 20.0 33.3 28.6 a, c Percent of Problem Projects by Amount 25.9 14.2 36.1 34.2 a, d Percent of Projects at Risk by Number 50.0 20.0 50.0 42.9 a, d Percent of Projects at Risk by Amount 51.2 14.2 49.4 46.5 e Disbursement Ratio (%) 21.0 20.7 14.9 14.5 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 20 3 Proj Eval by OED by Amt (US$ millions) 473.6 101.9 % of OED Projects Rated U or HU by Number 73.7 66.7 % of OED Projects Rated U or HU by Amt 86.6 62.8 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the Beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 28 Annex 11: Operations Portfolio (IBRD/IDA and Grants) as of 3/23/2011 Closed Projects 26 IBRD/IDA * Total Disbursed (Active) 81.70 of w hich has been repaid 0.00 Total Disbursed (Closed) 106.93 of w hich has been repaid 50.36 Total Disbursed (Active + Closed) 188.63 of w hich has been repaid 50.36 Total Undisbursed (Active) 97.27 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 97.27 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementation Project ID Project Name Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd Objectives Progress P118561 # CG Support to Economic Diversification # 2011 10 9.994368 P095251 CG-Agr Rehab SIL (FY07) MU MU 2007 20 13.50639 5.4076487 P084317 MS CG-Basic Education Support (FY05) MS 2005 35 0.68589955 11.34264 -4.846809 5.653191 P077513 S CG-HIV/AIDS & Health SIL (FY04) S 2004 24 4.417082 -1.331273 2.490121 P106851 U CG-Health Sector Service Dev Proj (FY08) U 2008 40 32.30094 21.763549 P073507 CG-Transp & Gov CB (FY02) S MS 2002 22 0.38144582 3.840538 -12.08514 3.364859 P106975 S CG-Water, Electricity & Urban Dev. SIL S 2010 25.5 21.86821 -1.08344 Overall Result 176.5 1.06734537 97.27017 7.8245351 11.50817 29 IBRD 33390 14°E 16°E 18°E CENTRAL AFRICAN 4°N REPUBLIC 4°N CONGO CAMEROON Ib To en Batouri ga Bétou To Mo tab Ebolowa a 2°N Souanké Ngoko LIKOUALA 2°N Sembé Ouésso Impfondo Epéna o ng Co SANGHA C o n g o Sangh Li ko Le a ua To Mambili ng la Lambaréné oué WESTERN GABON gi CUVETTE Uban 0° Etoumbi 0° Lik ou To CUVETTE ala Booué Owando Kouyou Liranga Ewo B a s i n Lake Tumba a im To Mossaka Al Lambaréné Okoyo P L AT E A U X o ng Gamboma i Co én 2°S DEMO CRAT IC 2°S k N Mbinda s REPUBLIC é Lake s Ngo Loué Djambala O F CO NGO Mai-Ndombe NIARI Zanaga Batéké Fim i Mossendjo Kwa Plateau Ngabé ué 0 20 40 60 80 100 Kilometers LÉKOUMOU D jo Makabana POOL Ni Sibiti 0 20 40 60 80 100 Miles ari lou KOUILOU Koui 4°S Nkola 4°S Dolisie Madingou BRAZZAVILLE 18°E BOUENZA Kayes Kinkala CO N GO To Kikwit Pointe-Noire AT L AN T IC SELECTED CITIES AND TOWNS CABINDA OCEAN (ANGOLA) REGION CAPITALS To Matadi To This map was produced by Lusanga NATIONAL CAPITAL the Map Design Unit of The World Bank. The boundaries, RIVERS colors, denominations and To any other information shown 6°S on this map do not imply, on M'banza Congo MAIN ROADS the part of The World Bank RAILROADS Group, any judgment on the legal status of any territory, ANGOLA or any endorsement or REGION BOUNDARIES acceptance of such boundaries. 12°E 14°E 16°E INTERNATIONAL BOUNDARIES SEPTEMBER 2004