ICRR 10019
                                                                                              Report Number : ICRR10019
                    ICR Review
                    Operations Evaluation Department




1. Project Data :
             OEDID:
             OEDID :    C2726
         Project ID :   P001866
      Project Name :    Private Sector Development Credit
            Country :   Islamic Republic of Mauritania
             Sector :   Privatization
       L/C Number :     C2726
  Partners involved :   None
       Prepared by :    Alice Galenson, OEDCR
      Reviewed by : Roger J. Robinson
    Group Manager : Rene Vandendries
       Date Posted : 03/02/1998

2. Project Objectives, Financing, Costs and Components :
This adjustment credit, for US$30.7 million, including an IDA reflow, was approved in FY 95, was fully disbursed, and
closed in FY98. Objectives: to promote private sector development through : (a) improving the investment incentive
structure; (b) improving the foreign exchange and trade regime; (c) consolidating the restructuring of the banking
sector and strengthening financial sector regulations; (d) developing financial markets and institutions; (e)
developing the fisheries sector; and (f) developing the mining sector. The ICR was prepared by the Africa Region
and includes the Borrower's assessment of the credit as an appendix .

3. Achievement of Relevant Objectives :
The project objectives were fully achieved in the areas of liberalization of the foreign exchange system (unified
market-determined exchange rate); banking sector reform (recapitalization of four commercial banks and liquidation
of the national development bank, new banking law, improved credit risk and arrears data base, and recovery of
non-performing loans); development of financial markets and institutions (regular auctions of treasury bills,
market-related interest rate); and reduced state role in the fisheries sector (an equitable licensing system, improved
surveillance. Conditionality requiring submission to Parliament of legislation in the areas of mining and the legal
and judiciary framework for private sector development (PSD) was amended to allow more time to achieve these
objectives, as delays in recruiting consultants and drafting legislation slowed implementation . Strengthening of the
Chamber of Commerce, the Ministry of Fisheries and Maritime Economy and the Oceanographic Research Center
(to carry out research in management of fisheries resources ) did not proceed as planned, due in part to the fact that
anticipated donor support did not materialize .

4. Significant Achievements :
Strong government commitment and strong Bank supervision kept the project on track despite weaknesses in
preparation and appraisal (see 5 below).

5. Significant Shortcomings :
Both the Bank and the Government underestimated the complexity of the project and the time that would be needed
to revise laws and regulations, and failed to establish adequate linkages with the parallel Capacity Building project .
These weaknesses were responsible for many of the delays in implementation . In addition, after project appraisal,
turnover of the entire Bank team disrupted the start -up of implementation.


6. Ratings :             ICR                       OED Review               Reason for Disagreement /Comments
               Outcome : Satisfactory              Satisfactory             Many of the objectives were met, despite
                                                                            the demanding and complex nature of the
                                                                            project and the shortcomings in technical
                                                                            assistance.
     Institutional Dev .: Partial                  Modest                   Differences in menu of ratings.
         Sustainability : Likely                   Likely                   New laws and regulations have been
                                                                               implemented, and gov't commitment is
                                                                               strong.
   Bank Performance : Satisfactory                  Satisfactory               Strong supervision overcame some of
                                                                               problems resulting from weak appraisal .
       Borrower Perf .: Satisfactory                Satisfactory               Government showed high commitment to
                                                                               the project objectives and successfully
                                                                               implemented the major components of an
                                                                               ambitious program.
        Quality of ICR :                            Satisfactory


7. Lessons of Broad Applicability :
(a) It is of critical importance to assess realistically the time needed to revise legal texts and regulations . (b) Active
Government participation in preparation and ownership of the program are key ingredients to success . (c)
Institutional support should be carefully linked to the implementation timetable of the reform program . (d) Project
design should be focused and simple .

8. Audit Recommended?       Yes     No
         Why? Consider auditing in the future as a cluster with two ongoing projects, Capacity Building Project for
Development of the Private Sector and Public Resource Management Credit . Together with previous cluster audit of
PETARP, PESAP and PESIDTA, these would make a good building block for future OED work on PSD .

9. Comments on Quality of ICR :
The ICR is of satisfactory quality . It effectively summarizes an extensive amount of information on a complex
project.