Document of The WorldBank FOR OFFICIAL USEONLY Report No: 42771-NG INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERALINVESTMENT GUARANTEEAGENCY AND DEPARTMENT FOR INTERNATIONAL DEVELOPMENT (UK) COUNTRYPARTNERSHIPSTRATEGY PROGRESSREPORT FOR THE FEDERAL GOVERNMENT OFNIGERIA FORTHE PERIODFY05-09 February 26,2008 Nigeria Country ManagementUnit Africa Region Sub-SaharanAfrica Department InternationalFinanceCorporation MultilateralInvestmentGuaranteeAgency UKDepartmentfor InternationalDevelopment This document has a restricted distribution and may be usedby recipients only inthe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS(February 25,2008) Currency Unit = Naira Naira 118 = US$1 US$ = SDR1 FISCALYEAR January 1 - December 31 ABBREVIATIONSAND ACRONYMS AAA Analytical and Advisory Activities AfDB African Development Bank CDD Community DrivenDevelopment CDMAP Capacity Development Management Plan CPIA Country Performance InstitutionalAssessment CPS Country Partnership Strategy DfID Department for International Development EC European Commission ECA Excess Crude Account ESW Economic Sector Work EFCC Economic and Financial Crimes Commission CET Common External Tariff GDP Gross Domestic Product HIVAIDS Human immunodeficiency virus/Acquired immune deficiency syndrome HSDP Health SystemsDevelopment Project IDA InternationalDevelopment Association JMT Joint Management Team L S Lead States M&E Monitoringand Evaluation MDGs MillenniumDevelopment Goals MIGA Multilateral InvestmentGuarantee Agency MTSS Mid-term Sector Strategies Mw Megawatts NAPE Nigerian Association of PetroleumExplorationists NEEDS The National Economic Empowerment and Development Strategy NEITI Nigeria Extractive Industries Transparency Initiative NEPA Nigeria Electricity Power Authority NGOs Non-Governmental Organisations NIPP National IntegratedPower Program PPP Public-Private Partnership RAMP RuralAccess and Mobility Project SEEDS State Economic Empowerment and Development Strategy SWAP Sector Wide Approach TA Technical Assistance TUGAR Technical Unit on Governance and Anti-Comption Reform UBE Universal Basic Education UN UnitedNations USAID United States Agency for International Development USD United States Dollar WB World Bank .. 11 FEDERALGOVERNMENTOF NIGERIA COUNTRYPARTNERSHIPSTRATEGYPROGRESSREPORT TABLE OF CONTENTS Page EXECUTIVESUMMARY..................................................................................... 1 I. RECENTDEVELOPMENTSANDCHALLENGES........................................... 2 11. PROGRESSTOWARDS CPSOUTCOMES.................................................... 3 111. LOOKINGFORWARD.............................................................................. 7 IV. PLANNEDPROGRAM.............................................................................. 9 V. RISKS.................................................................................................... 11 Tables Table 1: Breakdown of World Bank Projects with StateFederal Focus (FYO3-09) Text Boxes Box 1: Selection of Lead States Annexes Annex 1 Results Matrix Annex 2 World Bank Investment at Federal and StateLevel Annex 3 Nigeria Portfolio Annex 4 Implementationof Lead State Approach Annex 5 Strength of Partnership among CPS PartnersinDifferent Sectors Annex 6 Nigeria Community DrivenDevelopment Program Annex 7 Nigeria-At-A-Glance Annex 8 SelectedIndicators of Bank Portfolio Performance andManagement Annex 9 IBRD/IDAProgram Summary Annex 10 Summary of Non-Lending Services Annex 11 IFC and MIGA Investment Operations Annex 12 Key Economic Indicators Annex 13 Key Exposure Indicators Annex 14 Operations Portfolio (IBRDADA and Grants) Annex 15 IFC Portfolio The World Bank The International Multilateral Investment Department for FinancialCorporation Guarantee Agency - . International Development(UK) Vice President Obiageli K. Ezekwesili Lars Thunell Yukiko Omura CountryDirector Galina Sotirova EamonCassidy (Acting) Core Team Galina Sotirova(Team Leader), EmmaDonnelly (TeamLeader, DFID), SolomonQuaynor, JamesEmery (IFC), Alwaleed Alatabani (MIGA), Luis Alvaro Sanchez(Consultant), Larisa Leshchenko,Jeri Larson, TanangachiNgwira, FolusoOkunmadewa,SimeonEhui, Volker Treichel, Peter Mousley, John Elder, Bonnie Kramer, DeepaliTewari, PrasadTallapragada, George Jxbi, ObadiahTohomdet FOR OFFICIAL USEONLY This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. NIGERIA COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORTFY05-09 Executive Summary 1. The objectives and approaches of the Country Partnership Strategy ( Report, No. 32412-NG, June 2,2005) remain relevant to Nigeria's needs, the Government program of reforms and the effort to improve aid effectiveness. Adjustments inthe program will be made to reflect an increased emphasison the power sector, state governance, and Niger Delta issues as key priorities of the new Administration. This ProgressReport assesses implementation of the CPS during2005-2007, and i sjointly agreedby the World Bank, DFID, and Government of Nigeria. The report identifies achievements, and areas where further progress i s neededwithin the 3 pillars of the CPS (non-oil growth, governance and human development) and makes recommendations for better alignment of the future program of the World Bank with the priorities of PresidentYar'Adua's administration. It takes stock of progress inworking in partnership and through the LeadStates approach, to strengthenimpact and obtain results in a bigfederal country. 2. The two years of CPS implementation showedunevenachievements across the 3 strategic pillars. There has beena notable increaseinnon-oil growth, commendable achievementsinimproving governance at the Federal level, and some successes inhuman development. However, slow progress ingovernance at the state level, inpower and transport sectors, and education sector reforms remain a significant challenge. Achievements have been madepossible inareas where strong government commitment and leadership have enabled the many different institutionalactors to work together effectively. Where this leadership i s absent, poor coordination and competition among different agencies and tiers of government severely hampers progress. Weak capacity i s generally a major challenge across sectors and tiers of government. 3. The LeadState approach and work inpartnership remaincentral to the CPS. Partnerswill continue to implement the LeadState approach and will use engagement inother states to inform their decision at the time of preparation of the next country strategy in 2009 on whether to expand into other Lead States. The partnership i s working and has improvedthe quality of World Bank andDFID assistance. It has beenmost successful at the strategic policy level and incoordination of projects activities on the ground. Inthe remaining 2 years, more emphasis will be placed onjoint design and monitoringof programs. Nigeria's other main development partners (USAID, EC, AfDB and the UNsystem) who have been working closely already, plan to signup to ajoint 2009 Country Partnership Strategy. 4. The World Bank will continue to deliver a robust programof IDA lending and AAA with a strong focus on infrastructure and governance. Project preparation and implementation will be expedited by scaling up existing successfulprojects and focusing new projects on fewer States. DFID and USAIDprograms will continue to contribute to the achievement of CPS outcomes, with a particular focus on State-level work across all sectors. I.RecentDevelopmentsandChallenges 5. The second administration of President Obasanjo (2003-2007) was marked by important achievements in economic and governance reforms. The introduction of an oil price-based fiscal rule led to increased fiscal discipline and was one of the main factors in the achievement of Paris Club debt deal, with the debt-relief gains to be spent on progress towards the MDGs. In 2006, the country obtained its first sovereign rating from Fitch Ratings and from Standard and Poor, both at BB- the same rating as Brazil, Turkey and Vietnam. Progress was made in increasing transparency and tackling corruption by strengthening government institutions (e.g. the Due Process Unit); prosecuting perpetrators of corruption (Economic and Financial Crimes Commission - EFCC); and embedding governance reforms in law (Procurement, Fiscal Responsibility and Nigeria Extractive Industries Transparency Initiative (NEITI)Bills). 6. Nigeria maintained macro-economic stability and achieved strong performance of the non-oil sector. Improvedfiscal managementhas beenthe driver of recent macroeconomic stability improvements. Inflationhas declined to single digits in 2006-2007, the parallel and official exchangerates have converged reflectingthe unification of foreign exchangemarket, and international reservesreachedUSD54 billion by the endof 2007. Continued fiscal discipline at Federal and Statelevels will be critical to maintaining macro-economic stability. The non-oil sector which provides livelihoodfor the majority of Nigerians grew at a rate of 8.2 percent in 2005,9.4 percent in 2006 and 9.6 percent in2007. GDP per capita incurrent U S dollars has more than doubled from USD358 in 2000 to USD752 in2005. Since mid-2005, Nigeria's economic reformprogram has been supported by the IMF's Policy Support Instrument (PSI). The government has expressedinterest inclose collaboration with the IMFinthe future, possibly inthe context of asuccessorPSI,butno formal requestto this effect has been made.The IMF Boardmeeting of February 13, 2008 concluding the 2007 Article IV Consultation with Nigeria strongly highlightedthe good macroeconomic performance under the PSIand progress inthe structural reform agenda. 7. President Yar'Adua has committed his government to reform and has drawn on NEEDS to set out a 7-point agenda of priorities. The elections of April 2007, though judged by observers to fall short of international standards, led to the first handover in Nigeria's history from one democratically elected administration to another. President Yar'Adua's 7-point agenda builds on NEEDSand identifies the development of human capital; economic reforms; transport; power; rule of law; Niger Delta and electoral reform as key priorities for his Administration. Power, the Niger Delta, reforms at state level and in particular the effort to ensure macro- economic stability as States use their shares of the Excess Crude Account (ECA) have emerged as the most critical issuesinthe immediate future. 8. Carrying forward the reforms initiated in the power sector is critical to improving Nigeria's competitiveness, sustaining economic growth and fostering human development. Progress in recent years includes: (i) enactment of a Power Sector Bill which provides the basis for reforms of the sector, (ii)unbundling of the national power company (NEPA) in preparation for privatization, and (iii) investments in an increased generation. Sustaining and continuing the reform program will be a major technical challenge, as simultaneous action i s neededin a wide range of areas: institutional and governance reforms, regulation and ensuring the financial sustainability of the power holding company; and investment in transmission and distribution to 2 keep pace with increasing generation capacity. The President has established an Energy Council to conduct a review of the sector, and make proposals on the way forward. 9. Conflict in the Niger Delta threatens stability in the region and Nigeria's economy as a whole. Despite the wealth of oil extracted from the Niger Delta region, poverty remains high (43%), and development indicators are very poor (average life expectancy i s 43, and 12% of infants do not live to see their first birthday), which i s one of the factors driving conflict and instability in the region. The States receive large allocations from the Federation Account', but little finds its way to services and benefits for the general population. Poor development, increasing public concern over environmental damage, and high levels of youth unemployment, has led to the growth of both political and criminal groups, who kidnap oil workers and damage oil pipelinesfor publicity, profit or both. The conflict, though contained inthe Delta Region, has a significant economic impact. The cost of reduction in oil production as a result of conflict i s estimated at USD58.3 billion from 1998 to 20072. The new Administration is focusing on achieving security and development inthe Niger Delta as a priority, and are working closely with all stakeholders to this end. 10. Reform at State level is vital for continued economic stability and to accelerate progress towards the MDGs. The 36 State governments, together with the 774 local governments, are responsible for around 50% of government expenditure and the delivery of basic health and education services. Nigeria's Federal system grants a significant degree of autonomy to the State governments and the Federal reform efforts cannot simply be `rolled out' at State level. The challenge for the Federal government i s to provide incentives for better performance at State level, and for the State governments to implement reform agendas which are relevant to the specific challenges in each State and in line with the national objectives of maintaining macro economic stability and achieving sustained growth. State commitment to, and implementation of, fiscal responsibility and procurement reforms are particularlyurgent. 11.Progresstowards CPS Outcomes 11. Progress towards outcomes was uneven across sectors and states. The Result Matrix reflects progress towards outputs and assessment of likelihood of achieving outcomes inthe CPS period (See Annex 1). 12. In Human Development, there are some improvements in the health sector while education reforms are slow. Routine and polio immunization coverage increased dramatically from 38% in 2005 to 77% in 2006 and Polio Type 1cases were halved over 2006. The official HIV/AIDS prevalence rate reduced from 5.2% in 2004 to 4.4% in 2006, though as the data i s weak this figure should be viewed with caution. The partners have been mainstreaming HIV/AIDS control interventions across projects and components of their programs, such as transport, education, support to MSME and others. Education reforms are rather slow, due partly to the poor coordination among the many institutional actors and partly to low capacity at all tiers of government, and access to services remains one of the major challenges. 1 In2007, Rivers Statereceived $1.6 bnfrom theFederalgovernment, which is more than the annualGDP of Niger, Mali or Guinea. 2 Figure from "Locating Peace in the Niger Delta", apaper presentedto the 2007 pre-conferenceworkshop organizedby the Nigerian Association of PetroleumExplorationists (NAPE)by Senator DavidBrigidi (Chairman, Niger Delta Peace and Conflict Resolution Committee), as quotedin `This Day' newspaperon 17 October 2007 3 13. Non Oil Sector Growth is strong, though insufficient progress on power and transport remain a critical bottleneck for increased competitivenessand sustained growth. Growth in agriculture and manufacturing exceeds 8 percent per annum. There are recorded improvements in the business environment, especially in trade facilitation and business registration. The telecommunication sector continues to demonstrate unprecedented growth and the Government has also focused on promoting growth in the mining sector, with moderate progress to date. The unbundling of the main public utility (NEPA), the increase in collections and the decrease in technical losses were significant achievements, but the power sector remains incrisis, and strong Federalleadership is requirediffurtherprogressis to be made. 14. Inthe area of Governance significant achievement was madeat the federal level but states are lagging behind. The Procurement, NEITIand Fiscal Responsibility Bills have been signed into Federal Law. At the federal level, budget prioritization and formulation based on MTSS (Medium-term Sector Strategies) improved the quality of the budget process.However, at the state level the institutional andlegal framework for improved fiscal management is yet to be realized across the board. Some tangible improvements in Cross River, Kaduna, Kano and Lagos have beennoticed and were used as one of the criteria for their selection as Lead States (See Box 1). At the same time, there are still visible institutional and capacity weaknesses of civil service at federal, state and local level, which hampers the government's ability to deliver all services effectively, and delays the implementation of Bank-fundedprojects. 15. All partners are increasing their programs in Lead States, while continuing to implement projects and programs in all 36 States, thus addressing concerns about equity across states and the importance of all states for meeting the MDGs.Projects under design in both the WB and DFID will significantly concentrate project activities and financial resources in the Lead States. USAID is implementing its economic growth and governance programin Cross River, Kano and Kaduna, and is also increasingly focusing resources on Kano and Kaduna in particular. Implementation of the Lead State approach has contributed to greater coordination of partner activities in these states. This coordination i s leading to increased synergies and focus on results. It i s also helping to strengthen the role of the State Planning Commissions in developing monitoring and evaluation frameworks and in demanding development partners to focus on priority issues. In addition, some non-Lead States have begun to invest in improved institutions to enable them to become LeadStates inthe future (See Annex 4). 16. Over the period of the CPS, an increasing proportion of the new lending has been taken up by projects designed at the State level (See Table 1 below and Annex 2 on the World Bank Investment at Federal and State Level). This reflects the effort to increase focus and strengthen implementation effectiveness by tailoring assistance to States' specific needs and capacities. 4 Table 1.Breakdownof World Bank Projects with StateFederalFocus (FY03-09),US$ 000 Projects in Projects in Proposed projects, Portfolio Portfolio FY08-09 (FY03) (FY07) Federal projects 283 (31%) 1028.7 (40%) 330 (30%) Federal Roads State projects - centrally 528.3 (58%) 930.3 (36%) 550 (49%) designed for rollout to all (Fadama 111, States Health and Polio Additional Financing, Community Social Development) State project - tailored to the 100(11%) 633.1 (24%) 240 (21%) (RAMP needs of specific States 1;Commercial Agriculture, Growth Pole) Box 1. Selectionof Lead States The 5 LeadStates (Cross River, Kaduna, Kano, Lagos andEnugu)were selectedusing the following criteria: quality of governance and commitment to reform; number of poor people; potential for becoming regional growth poles; the experience of existing development partner programs; and internal geopolitical balance. The Government's SEEDS benchmarking exercise was the basis for assessment of governance and commitment for reform and a vital input into the selection process. The Lead States were selectedinearly 2006. The Lead States selected, and agreed with the National Planning Commission and the Ministry of Finance, were all grouped in the `better performing' category of the 2005 SEEDS benchmarking exercise, and represent 5 of the 6 geopolitical zones in Nigeria. Kano and Lagos are the two largest cities in Nigeria, accounting for around 1 in 7 of Nigeria's population. Kano, Kaduna and Lagos are potential growth poles for all of Nigeria, and in the case of Lagos, the wider West-African region. There are major development challenges in all 5 States, particularly on health and education in Kano and Kaduna. 17. The partnership between WB and DFID has been most effective at the highest strategic policy level, including injoint World Bank andDFIDEconomic and Sector work, with some success incoordination on the ground, but somethingof a `missing middle' in terms ofjoint designof interventions. The effectiveness of the partnershipbetween DFID and the World Bank (and with USAID and other development partners) has varied across sectors, and at different levels of coordination (See Annex 5). The effectiveness of the partnership at the policy level i s reflectedin the agreement of 24 policy papers as the basis of introductory discussions with the incomingadministration in2007 and the signing of Principles of Partnership agreementswith the Lead States.Excellentjoint diagnostic and analysis includedthejointly 5 authoredCountry Economic Memorandum, the EducationPublic Expenditure Review andthe Investment Climate Program, which will inform design of DFIDand WB interventions to support growth andprivate sector development at the State level. Goodpartnershiphas been demonstratedinthe coordination of governance and HIV/AIDS projects; the move towardsjoint programming inhealth; thejoint design of growth interventions by DFID and the World Bank; andthe coordination of DFIDand USAID support for immunization inNorthernNigeria. Joint design across the board has been hamperedby pressing conflictinginternalprocessing timetables. Teams will needto buildon the good examples and extend them across sectors and programs. Government partners, particularly at State level, have welcomed the greater coordination on policy, but are pushing for morejoint programs inpractice. 18. The partnership is extending to include USAID, and to different degrees, Nigeria's other major development partners. Since the CPS was signed in2005, USAIDhas increasingly participated within the CPS, both at the strategic level (USAID signed on the policy notes, i s apart of the agreementsfor partnership with Lead States and the USAID Mission Directori s attending all Joint Management Team meetings) and implementation (USAID i s framing its interventions within the CPS objectives - focusing new projects in Lead States and reorienting existing projects). UNDP and the EC have engagedwith the CPS, andhave participated inefforts to improve the coordination of activities on the ground, particularlyon governance. The AfDB works jointly with the WB on several projects, but has not been able to participate more fully inthe partnershipdue to a limitedpresenceinNigeriaup untilnow. 19. The World Bank delivered a strong programof IDA lending and analytical work over FY05-07 (a total of 10pro'ects and 4 additional financing projects totaling to $1.5 bn and severalmajor AAA piece$ see Annex 2 and Annex 10for details). The Nigerian - portfolio i s the largest inthe Africa Region and it has doubled since 2004 both interms of the numberof projects (22) andcommitments (now about US$2.6 billion). Analytical and advisory activities have had a strong impact on policy achievementsof the government. A strong program of economic and sector work andtechnical assistancehave contributed to progress inimproving governance and fighting corruption. The World Bank public expenditure management reviews and anti-corruption TA informedthe development of fiscal andprocurement legislation, and the establishment of the Bureau for Public Procurement and the TUGAR (Technical Unit on Governanceand Anti-Corruption Reforms). World Bank technical assistancewas instrumental inthe institutionalization of the NEITI, andthe establishment of the EITISecretariat. The Bank's finance team has beenintensively involvedin supporting the development of the Financial Sector Strategy 2020. The IFC's outstanding portfolio i s USD$553 million inprivate sector investments. MIGA has six projects inNigeria in support of the manufacturing and services sectors, with a gross exposure of USDllOmillion. 20. The portfolio performance improved significantly over the last few years. The relatively low disbursementratio at the end of FY04 of 12.8% improvedto 24.5% in 2007. The percentageof the portfolio at risk has dropped from 66.4% inFY04 to 22.5% inFeb FY08. The community driven development projects (Community Based Poverty Reduction, Local Empowerment andEnvironmental Management andFadama11)have already demonstrated an impact on poverty and improved livelihoods. The Lagos Urban Transport Project has contributed The Competitiveness and Growth Study; Agriculture Financing Study; Agriculture Strategy; Public Expenditure ManagementandFinancial Accountability Review; Education Public Expenditure Review; Study on Scienceand TechnicalEducation; the Country Health Statement; and the Country Environmental Assessment 6 to improvedquality of roads, improved access and a 30% decrease intransportation costs. The HIV/AIDS project has contributed to the multisectoral response to HIV/AIDS epidemic in Nigeria (See Annex 3 and 6). This improvement has been achieved through: increased procurement thresholds for prior reviews; restructuring of problemprojects; removalof the requirement for counterpart funding; andbuildingstronger project ownership through greater engagementwith all stakeholders. 21. Despite success inportfolio performance, concerns remain: the challengesof managing an increasedportfolio; slow implementation start-up; weak capacity at the state level and inadequate M&Esystems. Inmid-February 2008 the disbursement ratio of 11.3% i s below the disbursement ratio for the same period of FY07, reflecting the slow implementation start up of the new projects inthe portfolio. Project preparation at the state level will take into account weak capacity and will aim at ensuring strong ownership, definingclear implementation arrangementsand strengtheningcapacity at project levelbefore proceeding to Board. Retrofitting M&Eframework andtrainingM&Eproject staff continues to beapriority for the oldprojects, while baseline assessment and adequateM&Eframeworks will be a pre-requisite for processing of new projects. 111.Lookingforward 22. The objectivesand approachesof the Country Partnership Strategy are still relevant to, and well aligned with, government priorities. Adjustments are neededto more fully respond to the new Administration's emphasis on power, the Niger Delta andreforms at the State level. A renewed effort on capacity buildingi s also a part of mid-term adjustments. The partnerswill continue to focus efforts andresources on the Lead States and seek to expand the partnershipto include other development partners. 23. Support to the energy sector will be scaled up infour areas, and DFIDwill become more closely involved. Firstly, joint Bank andDFID analytical and advisory work will center on helpingthe Government indefining strategic options for institutionalreforms, improving governance inthe sector and ensuringits sustainability and capacity to deliver reliable energy. Secondly, inthe short to mediumterm, the partnerswill help identify quick wins andby engaging with the IFC and MIGA help attract private sector investment in existing or new infrastructure. Thirdly, the Bank will continue to assist the government to improve energy transmission and the broader managementperformance of enterprises inthe power sector, building on the gains of recent years. Lastly, DFIDwill increaseits assistanceto the power sector, focusing on technical assistanceto improve governance. 24. To help address the issue of the Niger Delta, the partners will step up dialogue with Federaland State Governments, seek opportunities to help statesincreasetransparency and improve resource managementfor better development impact. The partners will also continue to work with civil society and communities to strengthen demand for accountability and better service provision. CPS partners will participate inthe Niger Delta Consultative Group to be convened by the Government, to share progress, anddiscuss the possibilities for successful interventions. The World Bank, DFIDand USAID will continue to work with civil society and community foundations inthe Delta to builddemand for improved governance and deliver basic services, and through the Community Driven Development approach (see Annex 6) providing support to community-based organizations inpartnershipwith 7 Local Governments (Local Environmental and Economic Empowerment and Community-Based Poverty Reduction). Partners stand ready to assist State Governments improve resource managementand the wider policy environment through technical assistance and capacity building,possibly including: State levelEITIs; Public Expenditure Management andFinancial Accountability Reviews; assistancefor preparation and implementation of Fiscal Responsibility and Procurement laws and Investment Climate improvement work. 25. The CPS will strengthen assistanceto states to improve governance and service delivery through: (i)support to Federal initiatives to provide incentives to States for better performance; (ii)capacity buildingand support to reformprograms inLead States; and (iii)buildingthecapacityofcivilsocietytoholdgovernmenttoaccountinbothLeadand non-Lead states. The SEEDS benchmarking exercise, the proposedMDGUnit performance fund, andthe Executive CouncilAgreement that States would enactFiscalResponsibility and Procurement Legislationas part of the agreement for access to the ECA, are examples of how Federal incentives might be provided for reform at State level. The World Bank, DFID and USAIDwill seek to support these initiatives, includingthrough aWorld BankFiscalFederalism review to provide an empirical and analytical basis for government initiatives, and possible contribution to a performance- related conditional grant mechanism. Partners will buildthe capacity of State governments to manageinvestments efficiently, includingproject screening and cost-benefit analyses. Partnerswill also support Federal government efforts to buildthe capacity of States to managedebt. DFID will support Lead State Governments to develop a plan to build the capacity of local governments, and World Bank CDD projects currently under way are increasingly engaging in strengthening capacity of Local Government to better allocate resources and deliver quality services. A new USAID local governanceprogram will focus inPlateau, Bauchi and Cross River States. 26. The validity of the CPS approach to focus resources on a limited number of better performing states inorder to increaseimpact hasbeen confirmed and this will be maintained for the remaining years of implementation. The LeadState approach increases the likely impact of operations by: securing a `critical mass' of support for selectedStates; ensuring more intensive monitoring and implementation support with the objective of helping states becomemodels of development and growth to be followed by other states. Selecting Lead States with greater commitment to reform i s beginning to work as an incentive for other States to reform and improve governance. To further strengthen this process the partners will assist states andFederal government to draw lessons and disseminate experience of Lead States The CPS Lead state approach will continue to align closely with Federal initiatives to improve performance at the State level (such as the SEEDS benchmarking, conditional grants, and support to budgetmanagement). 27. InLeadStates partners' engagement will beona larger scale. Resources will be investedto achieve a critical mass of support for non-oil growth and institutional reform across sectors for stronger development results. WB will invest innon-oil growth (transport, urban development, power) and governance, while support for education and health sector reform programs will likely be within SWAP-type operations. DFIDwill work through an interlockingset of governanceand sectoral programs, focused on sustainableinstitutional reform. USAID will continue to allocate budgetedresources to LeadStates to the degree possible within its strategic framework. 8 28. At the same time, partnerswill continue to work innon-Lead States. Inthese states partners will focus investment insupport of public goods provision, basic servicedelivery and building the demand for good governance,including through support to civil society organizations. The World Bank will invest incommunity and social infrastructure, including through the community-driven development approach, work on basic education and health services and tackle HIV/AIDS and malaria. DFIDwill work on girls' education, immunization, malaria reduction andHIV/AIDS. USAID will continue to work within its strategic framework, on governanceand democracy, growth and human development. 29. Partners will explore ways of expanding the set of Lead States in2009. Experience in implementing the LeadState approach (see Annex 4) demonstrated the importance of analyzing and understanding the governance ina State before scaling up engagement. Partnerswill therefore use their projects and activities innon-Lead States to learn more about the political and institutionalcontext, and the depth of commitment and capacity to reforminthose States, and on this basis proposeany potential additions to the numberof LeadStates in2009. To become (and remain) a LeadState, States will needto demonstratecommitment to a set of key principles (includingdue process, effective financial management and accountability, and responsivenessto citizen demand). 30. To improve the relevance and sustainability of capacity development work, the partners will focus on institutional strengthening at Federal and State Level. The Bank will help to develop a coherent approachto capacity building,focusing on puttingin place aprocess for capacity development that relies on the country's relatively strong traininginstitutes, think tanks, and civil society organizations. Capacity buildingwill increasingly be delivered as part of wider institutionalreformprograms, most notably inthe governance and public finance management areas (See paragraphs 25-26). At the same time, partners will continue to mainstream capacity buildingactivities at micro/project level with clearly defined outcomes. This work will be carried out inclose collaboration with the Africa RegionCDMAP, andwill be coordinated with the work of other donors. Opportunities will also be explored for involving the NigerianDiaspora incapacity building. 3 1. Strengthening partnerships for development effectivenesswill continue to be a core approach of the CPS. The partnershipwill be expandedand its effectiveness improved. USAID i s committed to formally associatingitself with the partnership, through a memorandum of understanding (MoU). The AfDB, UNDP and the EC have all committedto engage more fully with the CPS. Henceforward, they will participate inthose Joint Management Team meetings of wider strategic importance, with the aim associating with the 2009 CPS. CPS partners will address the `missing middle' ofjoint design and monitoringby clarifying and strengthening the roles of the LeadState Coordinators, and emphasizing the importance ofjoint designto country Program staff. IV. PlannedProgram 32. The World Bank will continue to deliver a robust programof IDA funded projects and analytical and advisory serviceswith a strong focus on infrastructure inFY08-09 (see Annexes 9 and 10for details). As Nigeria's CPIA and IDA performance rating are improving, the indicative annual IDA allocation is expected to increase. Inthe next two years the IDA 9 credits will have a strong focus on infrastructure with almost half of the resources assignedto Federal Roads Project and a Stateproject on Rural Access and Mobility. Improvedinfrastructure will be the central plank of a growth project inLeadStates. The IFC will work towards establishing a PPP framework to attract private sector participationin infrastructure, such as roads, while IFC financing could be channeled directly to private sector projects, or through Federal or State government projects. IFC i s also exploring opportunities for helpingprivate sector investments in health and education. MIGA also expects to underwrite two additional investments inthe power and services sectors. Projects tailored to the needs of Lead States will be delivered inhealth, education, governance and growth (Commercial Agriculture and Growth Pole). The successfulCDD projects will be scaledup, with an increased focus on linkages to local governments to ensure sustainability (See Annex 6). Support to Federal initiatives to increaseimmunization, and make visible progress towards the MDGs will continue. 33. The programof AAA will focus on specific analytical and policy piecesand State levelanalysis. With the core diagnostic ESW already carried out, the programof AAA will focus on specific analytical and policy areas, which will provide the government with concrete recommendations and policy choices on employment generation and growth, fiscal federalism, child and maternal health, energy tariffs, governanceand corruption monitoringandjudicial reform. More focus will be placed on state level analytical and policy work with an increasing number of state level public expenditure reviews and economic analysis. MIGA will continue to explore the development of a sub-national investment promotionprogram. The IFC will work on the key constraints to attracting private sector investment. DFIDand the World Bank will continue to roll out theirjoint Investment Climate Program nationwide, which will identify specific constraints to private sector investment ineach of Nigeria's 36 States. Capacity building to improve governanceat the Federal level will continue, and support for an institutionalized approachtowards civil society monitoring of government programand policy implementation will be strengthened. 34. The World Bank will assist Nigeria to play a leading role inregional integration. The Bank has already significant agenda inregional integration, including working on Niger River Basin, Aviation Safety andWest Africa Gas Pipeline. Going forward the partners will helpthe Government define the benefits of opening markets andtrade for Nigeria; support Nigeria's cooperation infinancial andbankingsectors and its efforts to become a Regional financial center. The Bank will also be working with Nigeria and the other countries inthe Region to support regional educational and research centers of excellence. 35. The World Bank will expedite project preparationand implementation by scaling upexisting successfulprojectsand focusingnew projects on fewer States. Existing successful projects such as HSDP, Polio andFadamawill be scaled up quickly with additional financing. Designingnew projects for a smaller number of States (especially inLeadStates) will allow more attention and resources to be focused on buildingcapacity and ownership, to ensure a fast start-up and high-quality implementation and supervision. The strong effort on monitoring and evaluation of portfolio performance will continue with the ongoing practice of the bi-annual CPPR, organizedjointly with the government and development partners at federal and state levels, and quarterly reviews of projects at risk. To further enhance synergies among projects and strengthenimpact, project teams will work inclusters, especially inLead States, meaning that Task Team Leaders for projects that could be mutually reinforcing (e.g. Commercial Agriculture, 10 Rural Roads and the Growth PolesProject) jointly design andplan their interventions for maximumimpact. 36. DFIDand USAID programs will continue to contribute to the achievement of CPS outcomes. The centerpiece of DFID's work will be an interlocking set of education, health, governanceand growth programs, implemented inthe Lead States. DFID will continue to support federally managedinitiatives to improve health and education, and tackle HIV/AIDS. Work will also continue to support progress towards the MDGs inthose States where the needi s greatest. DFID will also seek to buildcoalitions to lobby for change throughout Nigeria, deepen its work on security andjustice, as well as develop further its work on political governance including support (jointly with USAID) to the NationalAssembly and reforms of the electoral process. The bulk of USAID investments overall will continue to be inHIV/AIDS and the health, population andnutrition sectors. USAID will continue to support democratic governance at boththe national and sub-national levels. At the national level, support will be providedto strengthenthe NationalAssembly, and at sub-national level, implementation of the new local governanceprogram and continues support for civil society partnerships with government. V. Risks 37. Goingforward the main risk will be the fragility of the reforms: to sustain achievements, reforms at federal level need to be institutionalized and states will need to follow Federalefforts. The new Administration i s showing strong commitment to sustaining the reformprogram, as evidenced by enacting critical reformlegislation. The President has also launched a productive consultation process with states, and all 36 states have confirmedtheir commitment to the reforms, as indicated intheir willingness to pass Fiscal Responsibility and Public Procurement Acts. Partnerswill continue to engage with Government, the Legislature and Civil Society to help keep the reformmomentum. Partners will also support Federal efforts to put incentive systems inplace, and are concentrating efforts on building capacity for reforms at State level. Progress will be monitoredclosely and implicationsconsidered for the next CPS. 38. Inthe short term, accessof statesto increased allocationsfrom the ECA could pose a risk to macro-economic stability. Government i s cognizant of the possible negative effects of injecting a sizable amount of funds into the economy and has been working intensively with the States to identify and agree on ways of minimizing the risk, such as phasedreleaseof the funds and spending additional funds on priority import-intensive projects. The partners are working with the Ministry of Finance and states to support fiscal responsibility and procurement reforms, as well as helpingbuildFederal and State capacity to scope projects fully, including rigorous costhenefit analysis, so that funds are wisely invested. 39. The risk that weak institutions and poor governanceundermine development progressremains high. The government's anti-corruption stance i s solid, it i s basedon ensuring due process and the rule of law andplaces a strong emphasis on institutionalreforms. CPS partners will continue their support to the Government's effort to strengthenmajor anti- corruption agencies, such as the EFCC andTUGAR, and will focus on support for the implementation of key legislation inprocurement, NEITIandFiscalResponsibility at Federal and State level. 11 40. The risk that ethnic and religious diversity willjeopardize development effort is moderate. Although conflict inthe Delta Region has escalated inthe runup and the immediate aftermath of the elections inApril 2007, it has not yet spread beyond the Region andis likely to remaincontained.The CPS partnerswill continue to monitor the possible revenueloss andits impact on the economy. Also, the partnerswill continue to support development at the grassroots level with its emphasis on community development. Inaddition, the CPS will engage indialogue ledby the government to identify opportunities to make progressinthe Niger Delta, and continue providing support to NGOs and community foundations inthe States of the Niger Delta region. 12 3 x a a a 3 *as c8+ 3 e e e e e e e e e e e *e* e e e . ...... . . . . . . . . . 5 c X3 e e e e e e a. am a a a a a a a 0% a a a a a Annex 2 WORLD BANK INVESTMENTAT FEDERALAND STATE LEVEL %a- = -Credit EMCAP 330 I 2ol HIV/AIDS 20 01 HiViAiDS PrivatizationSupport 114. PnvatizationSupport 114.4 PrivatizationSupport Transmission Dev. 1000 Transmission Dev 100.0 TransmissionDev Polio Eradication 28 7 Polio Eradication 80.4 PolioEradication EconomicReform& 140.0 EconomicReform& Governance Governance MSME 32.0 MSME SustainabieM@ of Min Res 120.0 SustainableMgt of Min Res National Energy Avian Flu Science &Tech in Post Basic Education 283. 626.7 330.1 31. 41.5 - 29.! 25 2c Development 50 50 Smaii TownsWater LocaiEmpowerment SecondPnmaiy Local Empowerment(GEF) Education UBE Fadama/I FadamaI/ 930.3 - 51 49. Agncultre SecondUrbanWatei Lagos Metropoiitan Total Portfolio 911.3 1511.1 2592.1 1120 22 Annex 3 NIGERIA PORTFOLIO I. NigeriaPortfolioGrowthandPerformance 1. The Nigeria portfolio has continued to grow and improve during the CPS period. The portfolio volume has more than doubled from US$1.2 billion inFY04to US$2.6 billion inFY07. During FY05-FY07, over US$1.5 billion in IDA financing was approved (10 projects, 1 GEF project and additional financing for 4 projects). 2. While the portfolio expanded, the percentage of projects at risk by amount decreased from 66.4% in FY04 to 16.2% in FY07 (less than the Africa region's commitment at risk of 17.7%) see table blow. However, inFY08, the percentageof projects at risk by amount has gone up somewhatto 22.5%. The relatively low disbursement ratio for the portfolio size at the end of FY04 of 12.8% also improved to 24.5% in 2007 (above both Bank wide and Africa levels), but in mid-February 2008 the disbursement ratio of 11.3% is below the disbursement ratio for this same periodinFY07. I Nigeria Portfolio Riskiness in FY 80 0 $ 80 0 7 0 0 g 60 0 50 0 'E3 -AFR Region 4 0 0 30 0 2 0 0 10 0 I 1 2 3 4 5 FYOJ FYO7 - 11. Portfolio ImprovementActivities and ChallengesAhead over the CPS Period 3. At the end of FY 2004, the Nigeria portfolio had 8 projects at risk - 5 were problem projects, and the average project age was about 2 years. The World Bank's macroeconomic, policy and institutionalratings and previous performance track recordmeant that new projects in the portfolio were labeled as risky from the start. The Country Portfolio Performance Reviews in 2004/2005 hadidentified five main systemic factors that hamperedproject implementation: (i) projectdesign,projectmanagementandimplementationprocedures;(ii)premature complex launch of projects and underestimation of implementation capacity and effectiveness delays; (iii) inadequateAate counterpart funding; (iv) weak results management, often due to inadequate monitoring and evaluation systems and capacity; and (v) political interference, frequent changes of key project staff and task team leaders, and incentives issues and rigidities in applying performance-based principles. There were projects with areas of overlap and similar activities at the state level, and the CDD operations under implementation provided opportunities for harmonization. 23 Annex 3 Indicator FY2004 FY2005 FY2006 FY2007 FY2008 (as of 2/20/08) Number of IDA 15 17 20 23 22 Projects Average project age 2.2 2.6 3.1 3.5 4.2 % of Problem 33.3 35.3 10.0 4.2 4.5 Projects by Number % of Problem 40.3 33.8 5.2 0.7 0.7 Projects by Amount % of Projects at 53.3 41.2 40.0 29.2 36.4 Riskby Number % of Projects at 66.4 43.1 26.5 16.2 22.5 Riskby Amount Disbursement Ratio 12.8 15.7 24.0 24.5 11.3 4. The intensivefocus on the portfolio by the Government of Nigeria and the World Bank, as well as the alignment of the portfolio with the CPS and NEEDSpriorities over the last few years, have begun to address the above systemic issues and improve portfolio performance, and focus on outcomes and tangible results. Greater engagement with States, stronger coordination of programs, integration of partners, and more efficient resource use. In 2006 an in country Bi-annual CPPR was undertaken at the Federal and state level which reviewedfor the first time together World Bank, DFID and USAID projects. The Ministry of Finance inSeptember 2007 organized a CPPR to review World Bank, African Development Bank and Islamic Development Bank projects which provided the opportunity for state project teams in some instances for the first time to share experiences and best practices. State project teams at recent CPPRs have encouraged state governments to develop strategic plans around their key priorities, agenda and budgetary allocations to provide a framework for better coordinatiodsynergies of donor financing and to achieve a greater development impact. The Federal Ministry of Finance has also indicated their intent to improve coordination between the Ministry and the state agenciesresponsible for portfolio monitoring. Restructuring of projects. 10 projects have been re-structured since the CPS was preparedimplemented (Privatization Support, Universal Basic Education, Second Health Systems, Community Based Urban Development, Community Based Poverty Reduction, HIV/AIDS, Lagos Urban Transport, Transmission Development, Local Empowerment and Environmental Management, and State Governance and Capacity Building). The restructurings have led to allocating mqre resources to states that perform well, more flexibility in use of state level resources, greater community participation in decision making on resource allocation and simplifying project design. The Universal Basic 24 Annex 3 Education Project was closed inFY06 as a poor performing project with resources spread too thinly among the states, and a new State Education Project was approved in FY07 which focuses on three states. More flexible and simplified World Bank procedures have been introduced. The procurement thresholds for prior reviews have been increased, and clinics and workshops are heldperiodicallyfor Project Coordinating Units. Ensuring project readinessfor implementation. Stakeholders are actively involved in the project design and participate in project review meetings to ensure ownership and commitment. A project readiness checklist i s now followed. A project i s considered ready for Board approval and implementation when bid packages are issued, baselines are inplace, effectiveness conditions are minimized and the core project team i s inplace. Improved counterpartfunding. With the country financing parameters, social sector and CDD projects may be now financed up to 100%. The Ministry of Finance has requested that all states properly budget for counterpart funds in their FY08 budgets. None of the projects inthe portfolio have arisk flag for counterpart funding. More TTLs based in the Country office. To reduce the turnover of the Bank's TTLs, and allow a closer interaction with clients and other development partners, senior staff has been decentralized to the country office and many of the TTLs are based in Abuja which has improvedproject performance. 5. Challengesthat are continuing to be addressedinthe Nigeriaportfolio include: Significant increase in the number and volume of new projects. The disbursementratio as of mid-February 2008 i s 11-3%and in comparison to the same period of FY07 overall disbursement has gone down. And there are other signs of weakening of strong performance with projects at risk increasing to 22.5%. This i s due to the number and volume of new projects in the portfolio particularly during the end FY07-08, the new administration and related delays in implementation of new projects. However, efforts are being made to speed up implementation of new projects and improve overall disbursements. Project monitoring and evaluation resultsframeworks further strengthened. Some of the older projects have weak M&E systems (projects at that time were not required to have results frameworks) and lack baseline data. Retrofitting M&E frameworks and training M&E project staff continues to be a priority. In addition, strong attention continues to be placed on ensuringM&Ebaseline assessment and strengthening the M&E frameworks inprojects entering the portfolio. Increasing share of CDDprojects has called for development of an overall CDD policy framework and consolidation of operations. The share of CDD projects inthe portfolio i s increasing and CDD project teams are making a concerted effort to move towards further integration and consolidation, projects' sustainability and more efficient use of resources. 25 Annex 3 The Bank will continue to encourage more direct involvement of the local government in community projects to ensure sustainability. Development of the CDD policy framework at both federal and state levels i s underway and i s important to provide common underpinning for the projects and their sustainability. Project implementation start up at the State Level is likely to be slow due to weak capacity. Therefore, state project preparation should take into account weaker capacity and ensure strong ownership, clear implementation arrangements and trained project staff are inplace before proceedingto Board. 111. Resultson the Ground 6. The community driven development projects (Community Based Poverty Reduction, Local Empowerment and Environmental Management and Fadama 11) have already demonstratedan impact on poverty and improvedlivelihoods. For example, Fadama I1increased on average net incomes of fadama users by about 60%. A similar assessment will be undertaken for the Community Based Poverty Reduction Project in 2008. The Lagos Urban Transport Project has contributed to improved quality of roads, improved access and a 30% decrease in transportation costs. The HIV/AIDS project has contributed to the multisectoral response to HIV/AIDS epidemic in Nigeria, and in 2006 the estimated prevalence among the adult general population i s 4.4% after peaking at 5.2% in2004. IV. Portfolio Alignment with CPS Pillars and the Lead State Approach 7. The CPS focuses on three pillars (human development, non-oil growth and governance) and concentrated resources in the 5 lead states i s clearly reflected in the current portfolio dynamics over the last 2-3 years and pipeline structure. There are two noticeable trends in the re-allocation of IDA resources, namely: (i) significant shift towards projects supporting non- a oil growth with IDA credits in this area expected to double by the end of FY09 relative to end FY07, and (ii) a substantial increase in resources allocated to lead states with the highest total commitment to Lagos state (almost US$460 million), followed by Cross River and Kaduna with US$60 million and US$54 million respectively. The non-oil growth part of the pipeline consists of projects aimed at improved infrastructure both at the federal and state levels. Work in lead states i s complemented with considerable IDA allocations to non-lead states in the form of CDD- type operations that have proved to be successful and effective in delivering results in basic services and community empowerment. V. Going Forward 8. More work needs to be done to improve the Nigeriaportfolio and there are still 8 projects at risk (1problemproject). Buildingon the initiatives outlined above and lessons learned, the Government and Country Team will continue to closely monitor the portfolio. In2008, there will be two CPPRs inNigeriawith the Federal Ministry of Finance organizing one inJune with an emphasis on state portfolio performance. The Bank will review the entire portfolio in November 2008. Quarterly reviews inJanuary and March 2008 will review the problem and potential problem projects. 26 Annex 4 IMPLEMENTATION OFLEADSTATEAPPROACH 1. The process of selecting the Lead States, buildingrelationships and aligning WB, DFID and USAID support to State priorities, took longer than initially envisaged. Furthermore, even inthe better performing States selected, initial work was required to strengthen systems before engagement increased. As a consequence, major DFID and World Bank projects and programs of support to the Lead States are still being developed. Engagement with the Lead States, and greater understanding of the institutionalcontext there, ledto the preparation by the World Bank of many sectoral operations rather than the expected multi-sectoral interventions. 2. The development of the partnership ineach of the LeadStates i s summarizedbelow: Cross River: A results matrix was agreedin2006 between the Cross River State (CRS) government, and all the development partners. It includedpriorities and targets set out in Cross River's SEEDS and development partner inputs. This process enabled the CRS government to identify rural access as a priority area for African Development Bank engagement. A Statement of PartnershipPrinciples was signed by the Governor of Cross River State and the three CPS Agency Heads (World Bank, DFID and USAID) in late 2006. Progress has been made in harmonizing governance and HIV/AIDS interventions by development partners. Kaduna: A results matrix was agreedin 2006 between the Kaduna government, and all the development partners in Kaduna. It included priorities and targets set out in Kaduna's SEEDS and development partner inputs. A Statement of Partnership Principles was signed by the Governor of Kaduna State and the three CPS Agency Heads in 2006. Progress has been made in harmonizing governance and HIV/AIDS interventions by development partners. A Public Expenditure Management and Financial Accountability Review was also conducted in the state. All partners are working together to design harmonized support for the health sector in Kaduna. The World Bank and DFID are implementing joint support for basic education, and designing ajoint program to remove the constraints to growth. DFID will implement interlocking programs in governance, education, health and growth, from 2008-2014. The World Bank i s preparing a Commercial Agriculture Project (FY09). -Kano: A results matrix was agreed in 2006 between the Kano government, and all the development partners inKano. It included priorities and targets set out in Kano's SEEDS and development partner inputs. A Statement of Partnership Principles was signedby the Governor of Kano State and the three CPS Agency Heads in 2006. Kano Government officially requested support from the World Bank in 2006, and the joint World Bank and providing support to growth through the Fadama Project, the Commercial Agriculture Project under design, and the Growth Pole Project to remove constraints to growth (designed jointly with DFID). DFID has undertaken a PEFA review alongside the government, will implement interlocking programs in governance, education, health and growth from 2008-14. DFID i s also assisting the government to set up a system for coordinating donor assistanceinthe State. 27 Annex 4 Lagos: A results matrix was agreed in 2006 between Lagos government, and all the development partners. It included priorities and targets set out in Lagos' SEEDS and development partner inputs. A Statement of Partnership Principles has been prepared and i s ready for signature. The main focus of development partner support in Lagos i s on governance and growth. The World Bank has large-scale investments in transport, urban infrastructure, governance and water, while DFID i s providing technical assistance to improve revenue collection and the budget process. All donors are working together to improve coordination on HIV/AIDS Enum: A joint DFID and World Bank Public Expenditure Management and Financial Accountability Review raised concerns about resource allocation, which were discussed at a high level. The decision was made to postpone additional investment inEnuguuntil there was evidence that resources were being allocated in line with budget priorities. The administration elected in 2007 i s showing signs of improving governance, but more evidence will be needed before a decision i s made to scale up support. ProgressinConcentrating ResourcesinLead States 3. B y December 2007, the WB will have significantly concentrated project activities in Lead States: while the average number of projects in non-Lead States i s fewer than two, Cross River, Kaduna and Lagos have six, and there will be four or five inKano. There will also be significant concentration of the WB financial resources in Lead States. DFID i s currently designinga set of interlocking governance, health, education and growth programs, to be implemented in Lead States from 2008-13. USAID i s implementingits economic growth and governance program in Cross River, Kano and Kaduna, and i s also increasingly focusing resources on Kano and Kaduna inparticular. 4. The partners' commitment to concentrating efforts in Lead States did not prevent them from also implementing projects designed for Lead States in non-Lead States (e.g. DFID in Jigawa, and the WB with the State Education Project in Kwara and Rural Access Mobility Project in Osun). These decisions were taken in response to strong demand and commitment to sectoral reforms in those States, and this engagement i s also considered valuable both as a `control' for the assessment of the Lead State approach impact at the end of the CPS period, and as close engagement with non-Lead States is neededto ensure that the decision on expanding the number of LeadStates i s an informedone. 5. Though the World Bank does not have staff based in Lead States, the Bank works in cooperation with DFID's significant presence on the ground in Kano (from where the relationship with Kaduna i s also managed) and more limited presence in Enugu (also covering Cross River) and Lagos. 28 Annex 5 STRENGTHOFPARTNERSHIPAMONG CPSPARTNERSINDIFFERENTSECTORS CPS Partners Strategic JointKoordinated Coordination on Total 4ctive Alignment (out of Design (out o f 5) the Ground (out (%) 5) of 5) Economic WB, DFID, 5 Strong shared 3 Mutually supportive 4 Concerted 80 Governance1 USAID analysis of DFIDNB PERlERGP efforts to reduce Public Financial challenges and projects at Federal level, overlap and Management/ priorities little WB input into duplication at State Public Service DFIDdesign of new level, involving Reform State governance wide range of programme donors. LegaVJustice DFID, USAID, 5 Strong shared 2 Littlejoint design of 4 Donor 73 Sector WB analysis o f programs coordination group challenges and meets regularly priorities Political DFID, USAID 5 Strong shared 4 Next phase of support 5 Excellent ~ 93 Governance analysis of to the electoral process (managed by the challenges and beingjointly developed. same contractor) priorities Financial Sector WB. DFID 5 Strong shared 4 Close coordination in Not applicable 90 support for the design of WB FSS2020 agenda intervention Power WB 4 Agreement at 3 N ojoint design o f Not applicable 70 (DFIDNSAID highest level on existing power projects, tbd) importance of though collaboration governance and planned (WBDFID) on political economy, power ESW butonly WB has expertise in-house Transport WB 3 Agreement this Not applicable Not applicable 60 i s a key constraint to growth in Nigeria, but only WB has expertise Private Sector WB, DFID, 4 WB and DFID 5 GPP and RAISE Not applicable 90 Development USAID share focus on designed as one project Growth Poles Agriculture WB, DFID, 3 Difference of 2 Some consultation 3 Some 55 USAID views on how best around WB Commercial coordination to support Agriculture project WBNSAID on the agricultural ground development Water WB, DFID 3 Historic 1Some discussion Not applicable 40 (very limited) difference of views around possible DFID on role of private interventions sector (may change with new Ministers inDFID) Health WB, DFID, 5 Strong shared 4 Intent to design new 2 Limited 73 USAID analysis o f WB andDFIDState coordination challenges and programmes together, betweenDFID priorities, buttiming hasput PATHS and WB particularly need pressure on this HSDP for SWAP in States 29 Annex 5 CPS Strategic JointKoordinated Coordination on Total Partners Alignment (out of Design (out of 5) the ground (out of (%) Active 5) 5) Education WB, DFID, 4 Strong agreement 3 Commitment to joint 3 Huge amount of 67 USAID onprimary, only designof SESP and effort going into WB prioritizing ESSPIN more inrhetoric coordination, but post-basic thanreality. DFIDTA frequent conflict project supporting WB SESP (views differ on how well). HIV/AIDS WB, DFID, 4 Agreement on 4 Mutual input into design 3 Support to SACA USAID priorities andneed of WB MAP2 andDFID to coordinate in to coordinate project. USAID informed, States, though some different activities but focused on ART duplication may (e.g. USAID) Total (%) 80 64 30 Annex 6 NIGERIA COMMUNITY DRIVENDEVELOPMENTPROGRAM I. Background 1. The Community DrivenDevelopment (CDD) approach inthe Africa Region is definedas improving empowerment, service delivery and local governance through: (i)empowerment of communities; (ii) empowerment of local governments, hence decentralization; (iii)re-alignment of the sectors to improve service delivery given the increased roles of communities and local governments; (iv) accountability, transparency and communication at all levels; and (v) a learning by doing attitude, capacity building while implementing. The country context rather than ablue-printed approachprevails inthe sequencingor implementation of these activities. 2. The current World Bank portfolio in Nigeria has 3 major projects which use the CDD approach in design and implementation: Community-based Poverty Reduction Project (CPRP); Local Empowerment and Environmental Management Project (LEEMP) and Fadama 11. There are also some elements of community-led activities in the Community-based Urban Development Project, HIVAIDS and the Sustainable Management of Mineral ResourcesProject. The 3 projects (CPRP, LEEMP and FADAMA) have a common origin, operate largely in rural communities, and are similar intheir approaches. Table 1 CDD Type Projects inNigeria Project Total Credit Closing Coverage Date Community-based $60million + Dec., Abia, Cross River, Ekiti, Kebbi, Kogi Poverty Reduction $20million 2008 Yobe, Kwara and Ebonyi + Zamfara, Project (additional Gombe, Edo, and Osun - supported by financing) AfDB Local Empowerment $70million June, 2009 Adamawa, Bayelsa, Bauchi, Benue, andEnvironmental Katsina, Imo, Oyo, Niger, andEnugu Management Project FADAMAI1 $100million Dec., Adamawa, Bauchi, Gombe, Imo, 2009 Kaduna, Kebbi, Lagos, Niger, Ogun Oyo, Taraba and FCT Borno, Plateau, Katsina, Kogi, Kwara andJigawa supported by AfDB. 11. Implementation Performance 3. More than USD250m is currently committed by the World Bank (and about USDlOOmby AfDB) to the three projects in29 States which are spread across the country. Over 70% of these resources are disbursed to and controlled by the beneficiaries themselves at the community level, for welfare enhancing social and economic activities that they have identified and are implementing by themselves. The microprojects in Kebbi, Katsina, Bauchi, Niger, Yobe, Bayelsa, Cross River, Lagos, Ogun and Ekiti are examples of States with exemplary success on the CDD approachin CPRP, LEEMPandFADAMAII. 31 Annex 6 4. These projects are contributing to: (i) reduced maternal and child mortality through the construction and equipment of primary health centers in about 400 communities; (ii) improved educational outcomes with the construction and equipment of primary and secondary school classrooms in over 800 communities; and (iii) improved access to safe drinking water through the construction and operation of boreholes and motorized water pumps in over 1000 communities across the country. There are other outputs and resultant outcomes in terms of rurayfeeder roads, rural electrification, rural markets, natural resource management and community livelihoodeconomic micro-projects (e.g. crop processing, fishing and agro forestry). 5. The FADAMAIIproject has hadthe additional achievement of registering 1187 Fadama Community Associations (FCAs), which have 8,423 FadamaUser Groups (FUGs). Membership of the FCAs stands at 217,210 individuals with 37.6% female. There are 1,236 Local Development Plans that are being implemented with 10,601 sub-projects as of May 2007. An impact assessment study of the project carried out by the International Food Policy Research Institute (IFPRI) showed that in its first year of operation, the Fadama I1project has realized significant positive impacts on household access to markets, transport services, assets, and on household income and acquisition of assets. Household incomes improved substantially more for Fadama I1 beneficiaries than non-participants. On average there was an increase in real income due to participation inthe Fadama I1project of about 60%, well above the 20% goal that the project set to achieve in six years of implementation for 50% of the beneficiaries. 6. These CDD projects also ensure beneficiary participation, empowered poor communities and provide a reorientation of governance by sensitizing the lowest tier of government to the needs and priorities of the governed. They have also ensured transparency and accountability while guaranteeing capacity building at all levels. More specifically, the projects have been able to harness the abundant social capital (social structures networks and resources) in their respective areas of operation. The fostered participation of communities has ensured maintenance, utilization and sustainability of the projects. This i s expected to lead to improved output, outcome and impact. The executed micro-projects have been shown to be cost effective when compared with publicly executedcounterparts 111. Harmonization Process and Achievements 7. At the 2004 Country Portfolio Performance Review, one of the agreements madewas that the harmonization of CDD projects should be pursued - through tools and approaches in the short run and through the merging of operations, where possible in the long run. It was anticipated that harmonization of the projects would: (i) make the operations of the individual projects more efficient and effective by avoiding duplication of efforts and adoption of good and proven practices; and (ii) ensure common processesat the community level. The development of a CDD policy framework i s underway. IV. Key Challenges and Policy and ProgramOptions for the Future 8. The key challenges and policy and progfam options for future CDD projects in Nigeria include: 32 Annex 6 Greater involvement of the Local Government in CDD: Most CDD projects do not provide enough attention to Local Governments (LG). Where LGs are not involved there are difficulties in ensuring maintenance as well as appropriate staffing of micro-projects. When LGs are active there i s solid evidence of complementarity. To ensure sustainability of the micro-projects establishedby community and user groups, it i s important to ensure that Local Government Authorities (LGAs) are involved in the planning and approval of Community Development Plans and Local Development Plans so they can adequately budget for overhead, and recurrent or maintenance costs of the infrastructure. It will be important for the preparation of FADAMA I11 and Community Social Development Projects to include institutional arrangements that involve LGAs. Communities and User groups should also be supported only in LGAs where the appropriate support mechanism has beenestablished. Harmonize CDD activities and ensure an integrated approach: There i s a need to harmonize tools and approaches utilized in all CDD related projects in Nigeria. This will ensure operational efficiency and effectiveness of individual projects. It will also ensure common processes at the local government and community levels. Accordingly, the following actions are important inproject implementation: Synchronization of the various CDD projects in the Nigeria portfolio while avoiding duplication of efforts. Adoption of best practices and quick responses to the priorities of the communities since all of the CDD projects are expected to be operating inthe sameway. Active networking will be imperative to maximize the benefits of comparative advantageand synergy. 33 Annex 7 Nigeria at a glance 10/1/07 1 Sub- Key Development Indicators Saharan LOW Nigeria Africa income Age distribution, 2006 (2006) Male Female Population,mid-year(millions) 144.7 770 2,403 Surface area (thousandsq. km) 924 24,265 29,215 Populationgrowth (%) 2.4 2.3 1.8 Urbanpopulation(%of totalpopulation) 49 38 30 GNI (Atlasmethod,US5 billions) 92.3 848 1,562 GNI per capita (Atlas method, US5) 640 642 650 GNI per capita (PPP, international5) 1,050 2,032 2,698 GDP growth ("A) 5.2 5.6 8.0 20 10 0 10 20 GDP per capita growth (%) 2.7 3.2 6.1 percent (most recent estimate,2000-2006) Povertyheadcountratioat 51 a day (PPP, %) 71 41 Povertyheadcountratioat $2 a day (PPP,%) 92 72 Under-5 mortalityrate (per 1,000) Lifeexpectancyat birth(years) 44 47 59 Infant mortality (per 1,000live births) 100 96 75 2501 Childmalnutrition (% of children under 5) 29 29 Adult literacy, male (%of ages 15 and older) 78 69 72 Adult literacy,female (% of ages 15and older) 60 50 50 Gross primaryenrollment, male (% of age group) 111 98 108 Gross primaryenrollment,female (% of agegroup) 95 88 96 Access to an improvedwater source(`%of population) 48 56 75 Access to improvedsanitation facilities (%of population) 44 37 38 1990 1995 2000 2005 T i Nigeria 0Sub-SaharanAfrica NetAid Flows 1980 1990 2000 2006 a I (US$ millions) Net ODA and official aid 34 255 174 6,437 Growth of GDP and GDP per capita (%) Top3 donors (in 2005): UnitedKingdom 5 25 23 2,201 France 5 8 4 1,436 Germany 2 18 11 1,181 Aid (%of GNI) 0.1 1.o 0.4 7.7 Aid per capita (US5) 0 3 1 46 1 Long-Term EconomicTrends Consumer prices(annual% change) 10.0 7.4 8.9 8.2 l-511GDp GDP implicit deflator (annual% change) 12.4 7.2 29.0 7.9 05 - GDP per capita 00 05 Exchangerate (annualaverage, localper US5) 0.8 9.2 101.7 127.4 Terms of trade index (2000= 100) 165 87 100 177 1980-90 1990-2000 2 0 0 0 6 (averageannualgrowth %) Population,mid-year(millions) 71.1 94 5 1248 144.7 2.8 2.8 2.5 GDP (US5 millions) 64,202 28,472 45,984 115,338 1.6 2.5 6.0 (% of GDP) Agriculture 20.6 32 7 26 3 23.3 3.3 3.4 5.8 Industry 45.6 41 4 52 7 56.8 -1.1 1.o 5.5 Manufacturing 8.4 5 5 3 7 4.0 0.7 1.1 8.8 Services 33.8 25 9 21 0 19.9 3.7 3.3 6.5 Householdfinal consumptionexpenditure 56.5 55 5 36 7 39.6 -2.6 1.0 4.3 General gov'tfinal consumptionexpenditure 12.1 15 1 20 9 21.2 -3.5 -1.8 3.3 Gross capital formation 21.3 147 20 3 22.0 -8.5 5.4 15.0 Exportsof goods and services 29.4 43 4 54 3 56.3 -0.3 5.0 4.4 Importsof goodsand services 19.2 28 8 32 2 34.7 -13.6 4.0 11.9 Gross savings 194 31 9 33.9 Note: Figuresin italicsare for years other than those specified. 2006 dataare preliminary. ..indicatesdata are not available. a. Aid data are for 2005. AFTP3 34 Annex 7 Nigeria Balanceof Paymentsand Trade 2000 2006 IGovernance indicators,2000 and2006 (US$millions) Total merchandiseexports(fob) 23,761 61,600 I Total merchandiseimports(fob) 9,894 30,800 Voice and accountability T i Net trade in goodsand services 10,093 24,906 Political stability Workers'remittancesand compensationof employees(receipts) Regulatoryquality Current accountbalance 5,353 13,600 Rule of law as a % of GDP 11.6 11.8 Control of corruption Reserves,includinggold 10,099 42,735 I 0 25 50 7s 100 Consolidated GovernmentFinance Country's percenhlerank (0.100) higher values mp!y bettermbngs (%ofGDP) Current revenue(includinggrants) 42.5 43.4 Solirce Kaufmann-Kraav-Maslrurzl World Bank Tax revenue Currentexpenditure 34.2 26.1 Technology and Infrastructure 2000 2005 Overall surplusldeficit 6.0 8.5 Pavedroads(%of total) 30.9 15.0 Highest marginaltax rate (%) Fixedline and mobile phone Individual 25 subscribers(per 1,000people) 5 140 Corporate 30 Hightechnologyexports (% of manufacturedexports) 0.4 1.7 External Debtand Resource Flows Environment (US$millions) Total debt outstandingand disbursed 31,355 22,178 Agricultural land (% of landarea) 77 80 Total debt service 1,845 8.881 Forestarea (?Aof landarea) 14.4 12.2 Debt relief (HiPC,MDRI) - - Nationallyprotectedareas (%of landarea) .. 6.0 Total debt (% of GDP) 68.2 22.5 Freshwaterresourcespercapita (cu. meters) .. 1,563 Total debt service (% of exports) 7.3 15.9 Freshwaterwithdrawal (% of internal resources) 3.6 Foreigndirect investment(net inflows) 1,236 9,100 CO2emissions per capita (mt) 0.37 0.39 Portfolio equity(net inflows) - - GDP per unitof energy use (2000 PPP$ per kg of oil equivalent) 1.2 1.3 Compositionof total externaldebt, 2005 Energy use per capita (kgof oil equivalent) 715 717 l6RD 72 Short tern Othermull lateral 822 Private 2 183 (US$millions) IBRD Totaldebt outstanding and disbursed 1,625 534 Disbursements 31 0 Principalrepayments 273 211 I interestpayments 103 33 B~lateml,15,473 I IDA Totaldebt outstanding anddisbursed MA 1,541 Disbursements 55 382 Private Sector Development 2000 2006 Totaldebt service 9 33 Time requiredto start a business (days) - 43 Cost to start a business(% of GNI percapita) 54.4 Time requiredto registerproperty(days) -- 80 I Rankedas a major constraintto business ("of managerssurveyedwho agreed) 1 12 ma. n.a. 0 Stock marketcapitalization(% of GDP) 9.2 28.5 Bank capital to asset ratio(O h ) 7.4 9.9 Note: Figuresin italicsare for years otherthan those specified. 2006 data are preliminary 10/1/07 ..indicatesdata are notavailable.-indicatesobservation is not applicable. AFTP3 35 Annex 7 Millennium Development Goals Nigeria With selected targets to achieve between 1990and 2015 (estimate closestto dateshown, +/-2years) Goal 1:halvethe ratesfor $1 a day poverty and malnutrition 1990 I995 2000 2005 Povertvheadcountratio at 51 a dav (PPP. % of DoDulation) 77.9 708 Povertyheadcountratio at nationaipoverty line bh'of popuiation) 34 1 Shareof income or consumptionto the poorest qunitile (%) 3 7 5ff Prevalenceof malnutrition(%of childrenunder5) 35 3 3 9 7 273 28 7 Goal 2: ensure that childrenare ableto complete primary schooling --.-....-__I Primaryschool enrollment (net, O h ) 58 63 68 Primarycompletionrate (`37 of relevant age group) 80 Secondaryschool enrollment (gross,"A) 25 24 34 Youth literacyrate (?Aof people ages 15-24) 71 84 Goal 3: eliminate gender disparity in education andempowerwomen _L_ Ratioof girls to boys inprimaryand secondaryeducation (%) 85 Womenemployed inthe nonagriculturalsector (% of nonagricultural employment) 34 Proportionof seats heldbywomen in nationalparliament (%) 3 6 Goal 4: reduce under-5mortalityby two-thirds Under-5mortality rate (per 1,000) Infant mortalityrate (per 1,000 live births) Measlesimmunization (proportionof one-yearolds immunized,%) Goal 5: reduce maternal mortalitybythree-fourths Maternalmortalityratio (modeledestimate,per 100,000 live births) Birthsattended by skilled healthstaff (%of total) 31 Goal 6: halt and begin to reverse the spread of HIV/AIDS andother major diseases Prevalenceof HIV ("hof populationages 15-49) Contraceptive prevalence ("hof womenages 15-49) Incidenceof tuberculosis(per 100,000 people) Tuberculosis cases detected under DOTS (%) Goal 7: halvethe proportion of people without sustainable accessto basic needs --------- - --_I Access to an improvedwater source ( O hof population) 49 50 49 4s Access to improvedsanitationfacilities (% of population) 39 41 42 44 Forestarea (% of total land area) 189 144 122 Nationally protected areas ("4of total landarea) 60 C02 emissions (metrictons per capita) 05 0 3 0 4 0 4 GDP per unitof energyuse (constant2000 PPP$per kg of oil equivalent) 1 1 1 1 1 2 1 3 Goal 8: developa global partnership for development ~1111111111 Fixedlineand mobile phonesubscribers (per 1,000people) 3 4 5 140 Internetusers(per 1,000people) 0 0 1 35 - Personalcomputers (per 1,000people) 5 6 6 Youth unemployment(x of total laborforceages 15-24) I Educationindicators (%) Ueasles immunization (%of 1-yearolds) CT indicators (per 1,000 people) 1 100 150 - f3-a - I 751 100 50 I 50 L 50 2: 25 2w5 2wo 2002 0 0 1990 1995 ZWO 2005 20w 2002 2005 -0- Primarynetenrollmentratio +Ratio of giris to boys in primary& 2 Fixed+ mobileSubscribers c7 Nigeria I Sub-SaharanAfrica I secondaryeducation Internetusers Note: Figures in italics arefor years otherthan those specified. ..indicates data are not available. 1011107 AFTP3 36 Annex 8 CAS Annex 82 Nigeria - Selected Indicators*of Bank PortfolioPerformanceand Management AS of Dateou2112ooa Indicator 2005 2006 2007 2008 PortfolioAssessment Number of Projects Under Implementation a 17 20 24 22 Average Implementation Period (years) 2.6 3.1 3.5 4.2 Percent of Problem Projects by Number 35.3 10.0 4.2 4.5 Percent of Problem Projects by Amount 33.8 5.2 0.7 0.7 Percent of Projects at Risk by Number 41.2 40.0 29.2 36.4 Percent of Projects at Risk by Amount a, 43.1 26.5 16.2 22.5 Disbursement Ratio (%) e 15.7 24.0 24.5 11.3 PottfolioManagement CPPR during the year (yedno) Yes Yes Yes Yes Supervision Resources (total US$OOO) 3,000 3,758 3,478 2,541 Average Supervision (US$/project) - 167 188 151 110 MemorandumItem Since FY 80 Last Five FYs Proj Eva1by OED by Number 85 3 Proj Eva1by OED by Amt (US$ millions) 5,756.6 118.8 % of OED Projects Rated U or HU by Number 54.1 33.3 % of OED Projects Rated U or HU by Amt 53.0 48.7 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 inthe Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 37 Annex 9 CAS Annex B3 - IBRDADA Program Summary Nigeria - As Of Date 2/20/08 Proposed IBRDADA Base-CaseLending Program a Fiscal proj strategic Implementationb year us$(M) (H/WL) Risks (H/WL) 2008 NG - Federal Roads 330.0 M NG - RAMP 1 60.0 M NG - Niger BasinWater Resources(Approved) 45.0 M NG -West and CentralAfrica Air Transport (Approved) 15.6 M Result 450.6 2009 NG - Fadama 3 (FY08 Reserve) 250.0 NG - CommunitySocial Development (FY08 Reserve) 200.0 NG - HealthSystems DevelopmentAdditional Financing 50.0 NG - Polio Additional Financing 50.0 NG - CommercialAgriculture 100.0 NG -Growth Pole 80.0 NG - Lagos Eko (SESP II) (FYO9Reserve) 50.0 Result 780.0 Overall Result 1,230.6 a. This table presents the proposedprogram for the next two fiscal years. b. Foreachproject, indicate whether the strategicrewardsandimplementation risks are expectedto behigh (H),moderate(M),or low (L). 38 Annex 10 CAS Annex B4 Summary of NonlendingServices - - Nigeria AS of Date 21121120oa cost Product CompletionFY (US$OOO) Audiencea Objectiveb Recentcompletions Country Partnership Strategy FY05 586 G,D,B, PD KG,PS Country Gender Assessment FY05 76 G,D,B KG,PS Forestry Review FY05 140 G,D,B KG,PS Oil Revenues Management FY05 309 G,D,B PS Lagos Strategy for Economic Development FY05 475 G,D,B KG,PS LSMS FY05 116 G,D,B KG,PS HealthCSR FY05 332 G,D,B KG,PS Country EnvironmentAssessment FY06 67 G,D,B KG,PS Agriculture Sector Review FY06 184 G,D,B KG,PS PovertyAssessmenVPSIA FY06 201 G,D,B KG,PS CDD EvaluationPolicy Note FY06 228 G,D,B KG,PS Diversificationand Growth (CEM) FY07 682 G,D,B,PD PS PEMFAR FY07 591 G,D,B KG,PS EducationSector Review FY07 46 G,D,B KG,PS Lagos State Analysis FY07 171 G,D,B KG,PS Petroleum Pricing FY08 125 G,D,B KG,PS Underway CPS Progress Report FY08 340 G,D,B, PD KG,PS Investment Climate FY08 0 G,D,B KG,PS Fiscal FederalismStudy FY08 221 G,D,B KG PER Agriculture FY08 105 G,D,B KG,PS Niger Delta Soc.and Conflict Analysis FY08 94 G,D,B KG,PS FinancingAgriculture FY08 99 G,D,B KG,PS Energy Policy Notes FY08 38 G,D.B KG, PS HealthCSR2 FY08 78 G,D,B KG,PS Rural Finance FY08 0 G,D,B KG,PS Planned Access to Justice FYO9 72 G,D,B KG,PS HD Strategy Note FYO9 97 G,D,B KG,PS Governanceof Service Delivery FYO9 176 G,D,B KG,PS Employment and Growth FYO9 438 G,D,B KG,PS Transport and Economic Growth FYO9 0 G,D,B KG,PS Community Based Health and Nutrition FYO9 137 G,D,B KG,PS NElTl Report FYO9 418 G,D,B KG,PS PovertyAssessment FYO9 278 G,D,B KG.PS a. Government,donor, Bank, public dissemination. b. Knowledgegeneration, public debate, problem-solving. 39 Annex 11 Annex B3 Nigeria: IFC Investment Operations Program 2005 2006 2007 2008* Commitments(US$m) Gross 161-89 265.49 592.34 334.11 Net** 161.89 265.49 512.34 334.11 Net Commitments bv Sector (%) EQUITY 1.17 2.94 GUARANTEE 63.27 615 3 94.01 LOAN 80.3 11.3 22.84 5.99 QUASI LOAN 18.53 25.43 12.69 Total 100 100 100 100 Net Commitments bv Investment Instrument r%) Equity 1.17 2.94 Guarantee 63.27 615 3 94.01 Loan 80.3 11.3 22.84 5.99 Quasi loan 18.53 25.43 12.69 Total 100 100 100 100 As of March 31,2008 ** IFC'sOwn Account only MlGA Outstanding Exposure(Gross Exposure,$ million) 2005 2006 2007 2008 through 01131I2008 As of end of fiscal year 101.8 149.2 102.9 103.1 ? 40 Annex 12 Nigeria Key Economic Indicators - Actual Estimate Projected Indicator 2003 2004 2005 2006 2007 2008 2009 2010 2011 National accounts (as % of GDP) Gross domestic product" 100 100 100 100 100 100 100 100 100 Agriculture 43 34 33 32 33 31 33 33 33 Industry 37 42 44 42 39 40 37 35 33 Services 21 24 24 26 28 28 31 32 34 Exports (GNFS)b 43 44 47 43 39 39 35 34 33 Imports (GNFS) 40 31 31 28 30 27 26 25 25 Memorandum items Gross domestic product 67656 87845 112249 146867 166601 211001 236498 259899 278701 (US$ million at current prices) GNIper capita(US$,Atlas method) 360 400 520 640 Real annual growth rates (%, calculated from 90 prices) Gross domestic product at factor costs 10.2 10.5 6.5 6.0 6.3 9.0 8.3 7.0 7.0 Real annual per capita growth rates (W, calculatedfrom 90 prices) Gross domestic product at market prices 7.6 7.9 2.9 3.7 3.9 6.5 5.8 4.5 4.5 Balance of Payments (US$ millions) Exports (GNFS)b 28891 38609 52238 62600 64500 82000 83300 87400 91500 MerchandiseFOB 27497 36853 50169 59100 61300 78900 80300 84100 87900 Imports (GNFS)~ 27360 27282 34849 41000 49500 56000 62400 65900 70061 MerchandiseFOB 20616 19389 25632 31100 38800 44300 49900 52700 55800 Resource balance 1531 11327 17388 21600 15000 26000 20900 21500 21439 Net current transfers 2086 2751 3399 3400 3400 3400 3500 3500 3600 Current account balance -4042 4343 7959 13800 1300 10000 5700 7900 8139 Net private foreign direct investment 2891 4776 6544 9144 10320 11000 11380 11872 12507 Long-term loans (net) -1291 -1286 -8554 -16577 -388 116 768 901 986 Other capital (net,incl. errors &omissions) 2229 1654 5375 7530 -946 -32 -8 14 -33 Change inreserves' 213 -9487 -11324 -13897 -10286 -21084 -17839 -20687 -21600 Memorandum items Resourcebalance (% o f GDP) 2.3 12.9 15.5 14.7 9.0 12.3 8.8 8.3 7.7 Real annual growthrates ( YR90 prices) Merchandise exports (FOB) 32.4 1.6 -5.0 -0.4 -7.3 6.9 8.6 4.4 4.9 Merchandise imports (CIF) 10.8 -14.1 27.4 21.2 24.1 13.6 11.5 4.9 3.7 (Continued) 41 Annex 12 Nigeria Key Economic Indicators - (Continued) Actual Estimate Projected Indicator 2003 2004 2005 2006 2007 2008 2009 2010 2011 Public fmance (as % of GDPat market prices)d Currentrevenues 37.1 35.4 38.1 34.1 28.2 31.1 30.7 30.9 30.3 Current expenditures 32.9 24.1 23.2 20.6 20.0 17.5 17.4 17.8 18.5 Current account surplus(+) or deficit (-) 4.2 11.3 15.0 13.5 8.3 13.6 13.3 13.1 11.8 Capitalexpenditure 5.4 5.0 6.8 5.8 7.3 7.4 8.5 8.6 7.9 Foreignfinancing -4.3 0.0 -5.9 -4.1 -0.2 0.1 0.3 0.3 0.4 Monetary indicators M2/GDP 22.1 19.4 17.8 19.6 22.6 23.3 Growthof M2(%) 24.1 14.0 16.0 39.9 28.3 23.1 Price indices( YROO =loo) Merchandiseexport price index 102.4 135.1 193.5 229.0 256.1 308.4 289.1 290.2 289.0 Merchandiseimport price index 112.1 122.8 127.5 127.6 128.1 129.0 130.2 131.2 133.8 Merchandiseterms of trade index 91.3 110.0 151.8 179.4 199.8 239.1 222.1 221.2 216.0 Consumer price index (% change) 14.0 15.0 17.8 8.3 5.4 7.3 8.5 8.5 8.5 GDPdeflator (% change) 11.2 20.7 19.8 19.5 4.8 9.6 2.6 6.4 7.4 a. GDP at factor cost b. "GNFS"denotes "goods andnonfactor services." c. Includesuse of IMFresources. d. Consolidated government. 42 Annex 13 Nigeria Key Exposure Indicators - Actual Estimate Indicator 2003 2004 2005 2006 2007 Total debt outstanding and 34700 37883 22178 7693 3300 disbursed (TDO) (US$m)a Net disbursements (US$m)a -1063 -242 -2998 -3721 -1600 Total debt service (TDS) 1642 1731 8881 6805 1226 (US$m)" Debt and debt service indicators (%I TDO/XGS~ 119.8 97.7 41.9 12.1 5.0 TDO/GDP 51.3 43.1 19.8 5.2 2.0 TDS/XGS 5.7 4.5 16.8 10.7 1.9 ConcessionaVTDO 44.6 46.3 48.6 25.9 IBRDexposure indicators (%) IBRDDS/public DS 16.3 15.5 3.0 3.6 Preferred creditor DS/public 29.9 28.3 5.5 6.9 DS (%)' IBRDDS/XGS 0.9 0.7 0.5 0.4 0.3 IBRD TDO (US$m)d 1201 1027 722 534 381 Of which present value of guarantees (US$m) Share of IBRDportfolio (%) 1 1 1 1 IDA TDO (Us$m)d 787 967 1136 1541 1929 IFC (US$m) Loans Equity and quasi-equity /e MIGA MIGA guarantees (US$m) a. Includes public andpublicly guaranteeddebt, private nonguaranteed,use of IMFcredits and net short- term capital. b. "XGS" denotes exports of goods and services, including incomereceipts. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF,and the Bank for International Settlements. d. Includespresent value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 43 ma m" ,o .-Q L4 m 5 rnT qoN oao 000 000 OOUJ mC: IqON 000 000 ooa 0 k N :" Ei cq R r 2 00000 oooo(u 00000 00000 00000 OOOON 00000 00000 0N 8 8 0 2 LE 0 N 0 0 0 ONN moo .oo 823 588 B 8 8 8 s ocqo (0 a 000 8%:" 000 ocqo 000 000 r b, r 0 0 0 0 000000000000 000000000000 000000000000 000000000000 n x s MAP SECTION To Tahoua To Agadez 10°E To Nguigmi 15°E N I G E R Illela 1963 Level N I G E R S O K O T O 1973 Level To To Yobe Kandi Sokoto Katsina 2001 Level Nguru Yobe Yo Oamasak Rima Sokoto Kaura Namoda S a h e l Lake Chad Birnin K A T S I N A Hadejia Gana Kebbi J I G A W A BORNO Gusau YOBE C H A D ZAMFARA Kano Dutse Jam maaarari Komadugu Maiduguri KEBBI Pokiskum Damaturu To To Kandi Niger KANO Zaria Gongola t s. GOMBE B A U C H I M B E N I N Kontagora Kaduna Biu Kainji Bauchi Reservoir K A D U N A Gombe 10°N Wawa N I G E R Kaduna B a u c h i ra 10°N Jos To To a Bori P l a t e a u Minna Jos d n Nig er A ABUJA P L A T E A U Benue W Yola a K W A R A FEDERAL Shendam M CAPITAL Jalingo Baro TERRITORY Plateau Ilorin NASARAWA Lafia ADAMA OYO NIGERIA Benue Be Taraba Bali Oshogbo EKITI Lokoja Wukari Ado-Ekiti K O G I Makurdi T A R A B A Ibadan OSUN Akure B E N U E ts. M Abeokuta O N D O U d i H i l l s Chappal Waddi (2,419 m ) O G U N E D O G o t h ENUGU To To ANAMBRA Enugu Lomé Lomé LAGOS Benin Abakaliki Lagos City Asaba Awka EBONYI NIGERIA Sapete C A M E R O O N SELECTED CITIES AND TOWNS D E L T A CROSS Owerri Umuahia Warri Niger RIVER IMO ABIA STATE CAPITALS NATIONAL CAPITAL 5°N RIVERS Aba Uyo Yenogoa AKWA- Calabar 5°N To To Gulf of Guinea N Port RIVERS Harcourt IBOM Doula i BAYELSA g MAIN ROADS e SEPTEMBER r 0 50 100 150 200 Kilometers D e l RAILROADS t a IBRD This map was produced by the Map Design Unit of The World Bank. STATE BOUNDARIES The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 0 50 100 150 Miles Bioko I. INTERNATIONAL BOUNDARIES 33458 2004 Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 5°E (EQ. GUINEA) 10°E