Document of The World Bank FOR OFFICIAL USE ONLY Report No: 5 1059-SN PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 5.2 M I L L I O N (US$8 M I L L I O N EQUIVALENT) TO THE REPUBLIC OF SENEGAL FOR AN ECONOMIC GOVERNANCE PROJECT March 12,20 10 Finance and Private Sector Development Country Department AFCFl Africa Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective January 3 1,20 10) Currency Unit = CFA Franc (CFAF) CFAF469.75 = US$1 US$1 = SDR0.643422 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AAA Analytic and Advisory Activities ADR Alternative Dispute Resolution AFD Agence Franqaise de De'veloppent (French Development Agency) AMLKFT Anti-Money Laundering and Terrorism Financing APIX Agence Nationale Charge'e de la Promotion de 1'Investissement et des Grands Travaux (Investment Promotion Agency) ARMP Autorite' de Re'gulation des Marche's Publics (Procurement Regulatory Agency) ART Autorite' de Re'gulation des Te'le'communications(Telecommunications Regulatory Authority) BIJ Bureaux d 'Information du Justiciable (Information and Orientation Offices) BOJ Bureaux d 'Accueil et d'orientation du Justiciable (Information and Orientation Offices) BRVM Bourse Re'gionale des Valeurs Mobilikres (West African Stock Exchange) CAS Country Assistance Strategy CDSMT Cadre de De'penses Sectorielles tr Moyen Terme (Medium-Term Expenditure Framework) CEDAF Cellule d 'Exe'cutionAdministrative et Financikre (Implementing Unit o f the PSJ) CENTIF Cellule Nationale de Traitement des Informations Financidres (Anti-Money Laundering Unit) CF Counterpart Funding CLCC Convertible Local Currency Credit CNES Confe'de'ration Nationale des Employeurs du Se'ne'gal ( Private Sector Business Association) CNLCC Commission Nationale de Lutte contre la Non Transparence, la Corruption et la Concussion (Anti-Corruption Commission) CNP Conseil National du Patronat du Se'ne'gal (Private Sector Business Association) COA Code des Obligations de 1 'Administration (Code o f Obligations o f the Administration) CPAR Country Procurement Assessment Review FOR OFFICIAL USE ONLY CPI Corruption Perceptions Index CRD Complaints Resolution Committee CREPPMF Conseil Rkgional de 1 'Epargne Publique et des Marchks Financiers (Regional Securities and Exchange Regulatory Commission) DCMP Direction Centrale des Marchks Publics (Public Procurement Control Unit) DDI Direction de la Dette et de 1 'Investissement (Debt and Investment Office) DRC Dispute Resolution Committee EU European Union F&EP Financial and Economic Pole FAA Federal Aviation Administration FDI Foreign Direct Investment GAFI Groupe d 'Action FinanciBre International (International Financial Action Group) GDP Gross Domestic Product GPN General Procurement Notice HIPC Heavily Indebted Poor Countries Initiative ICA Investment Climate Assessment ICs Industries Chimiques du Se'nkgal (Chemical Industries o f Senegal) IDA International Development Association IFC International Finance Corporation IFR Interim Financial Report IS0 International Organization for Standardization IT Information Technology IU Investigation Unit LSO Lesotho MD Managing Director MDG Millennium Development Goal 1 MDRI Multilateral Debt Relief Initiative MDTF Multi-Donor Trust Fund METR Marginal Effective Tax Rate MIGA Multilateral Investment Guarantee Agency MIS Management Information System MTEF Medium Term Expenditures Framework NAO National Audit Office NCB National Competition Bidding NPS National Procurement System OECD Organization for Economic Co-operation and Development OHADA Organisation pour 1'Harmonisation en Afrique du Droit des Affaires (Organisation for the Harmonization of Business L a w in Africa) PCD Project Concept Document PCN Project Concept Note PCU Project Coordination Unit PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PEM Public Expenditure Management PIC Presidential Investment Council This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without W o r l d Bank authorization. PIPP Private Investment Promotion Project PPA Project Preparation Advance PRECAGB Projet de Renforcement des Capacite's de Bonne Gouvernance (Good Governance Capacity Building Project) PREM Poverty Reduction and Economic Management PRSC Poverty Reduction Strategy Credit PRSP Poverty Reduction Strategy Paper PSAC Private Sector Adjustment Program PSD Private Sector Development PSJ Programme Sectoriel Justice (Justice Sector Reform Program) QMS Quality Management System RC Regulatory Council RFP Standard Request for Proposals ROSC Report on the Observance o f Standards and Codes SAR Socie'te' Africaine de Ruffinage (Refining Company) SBD Standard Bidding Document SENELEC Socie'te' Nationale d 'Electricite' du Sinigal (National Power Utility o f Senegal) SIGMAP Procurement Management Information System SME Small and Medium-size Enterprise SMLE Small, Micro, Medium and Large Enterprise SPN Specific Procurement Notices SSA Sub-Saharan Africa SYSCOHADA Systdme de Comptabilie' OHADA (Assigned Accounting System in West African Francophone Countries) UEMOA Union Economique et Mone'taire des Etats de 1Yfrique de 1'Ouest (West Africa Economic and Monetary Union) UNACOIS Union Nationale des Commerqants et Industriels du Sinkgal (Retail Sector Business Association) UNDP United Nations Development Program USAID United States Agency for International Development WAEMU See UEMOA WBI World Bank Institute WTO World Trade Organization Vice President: Obiageli Katryn Ezekwesili Country ManagedDirector: . Habib Fetini Sector Director: Marilou Jane D. U y Acting Sector Manager: Peter Mousley Task Team Leader: Gilbert0 de Barros REPUBLIC OF SENEGAL Economic Governance Project C.ONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A . Country and sector issues .................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 3 C. Higher-level objectives to which the Project contributes ................................................... 4 . I1 PROJECT DESCRIPTION ................................................................................................. 5 A . Lending instrument ............................................................................................................. 5 B. Project development objective and key indicators.............................................................. 5 C. Project components ............................................................................................................. 6 D. Lessons learned and reflected in the Project design ......................................................... 10 E. Alternatives considered and reasons for rejection ............................................................ 12 . I11 IMPLEMENTATION ........................................................................................................ 13 A . Partnership arrangements .................................................................................................. 13 B. Institutional and implementation arrangements ................................................................ 14 C . Monitoring and evaluation o f outcomes/results ................................................................ 14 . . . D. Sustainability..................................................................................................................... 15 E. Critical risks and possible controversial aspects............................................................... 16 F. Loadcredit conditions and covenants ............................................................................... 20 . I V APPRAISAL SUMMARY ................................................................................................. 21 A . Economic and financial analyses ...................................................................................... 21 B. Technical ........................................................................................................................... 22 C. Fiduciary ........................................................................................................................... 22 D. Social ................................................................................................................................. 24 E. Environment...................................................................................................................... 24 F. Safeguard Policy Checklist ............................................................................................... 24 G . Policy Exceptions and Readiness ...................................................................................... 25 Annex 1: Country and Sector or Program Background ......................................................... 26 Annex 2: M a j o r Related Projects Financed by the Bank and/or Other Agencies ................32 Annex 3: Results Framework and Monitoring ........................................................................ 33 Annex 4: Detailed Project Description...................................................................................... 36 Annex 5: Project Costs ............................................................................................................... 86 Annex 6: Implementation Arrangements ................................................................................. 87 Annex 7: Financial Management and Disbursement Arrangements ..................................... 90 Annex 8: Procurement Arrangements ...................................................................................... 97 Annex 9: Economic and Financial Analysis ........................................................................... 106 .......................................................................................... Annex 10: Safeguard Policy Issues 109 Annex 1 : Project Preparation and Supervision ................................................................... 1 110 Annex 12: Summary o f Development Partners' Assistance to the Justice Sector Program ..................................................................................................................................... 112 Annex 13: Documents in the Project File (References) ......................................................... 113 Annex 14: Statement o f Loans and Credits............................................................................ 115 Annex 15: Senegal at a Glance ................................................................................................. 116 Annex 16: Country M a p........................................................................................................... 119 SENEGAL ECONOMIC GOVERNANCE PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTFW Date: March 12, 2010 Team Leader: Gilbert0 de Barros Country Director: Habib M. Fetini Sectors: Public administration - Industry and Acting Sector ManagedSector Director: Peter trade (40 percent); Law and justice (40 Mousley/Marilou U y percent); General public administration sector (20 percent) Themes: Legal institutions for a market economy (1 00 percent) Project ID: P113801 Environmental screening category: C Lending Instrument: Specific Investment Loan Safeguard screening category: C [ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Amount (US$ m): 8 Proposed Terms (IDA): Standard Credit Grace Period (years): 10; Years to Maturity: 40 Commitment Fee: 0.50 percent per year maximum; Service Charge: 0.75 percent Borrower 1.o 0.0 1.o IDA 2.6 5.4 8.0 Total: 3.6 5.4 9.0 ?Y 2010 2011 2012 2013 2014 2015 lnnual 0.4 1.2 1.8 2.0 1.9 0.7 hmulative 0.4 1.6 3.4 5.4 7.3 8.0 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Ref: PAD I.C Does the project require any exceptions from Bank policies? Ref: PAD I K G [ ]Yes [XINO Have these been approved by Bank-management? [ ]Yes [XINO I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? [ ]Yes [XINO Ref: PAD III.E Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ] N o Ref: PAD I K G Project development objective. Ref: PAD II.B, Technical Annex 4 The proposed development objective i s to improve aspects o f the functioning o f the justice sector relevant to the investment climate. The key expected outcomes o f the Project are (a) enhanced effectiveness o f justice, as measured by the number o f cases judged and the speed at which they are judged; (b) improved investment climate, as reflected by the number o f commercial cases being enforced and the reduction in time to enforce these contracts and (c) strengthened CEDAF, as measured by i t s I S 0 9001 quality management certification. Additionally, the Project will improve the effectiveness o f three key economic governance agencies: the Cellule Nationale de Traitement des informations Financi2res (CENTIF); and the Investigation Unit o f the Public Procurement Agency and will increase the number o f f i r m s that adopt a no-bribes integrity pact and obtain an ethical business certification. Project description [one-sentence summary o each component] Ref: PAD II.C, Technical f Annex 4 The Project consists o f four components': Component 1: Improving the investment climate (US$2,200,000). This component will focus o n legal reforms that are necessary to improve the investment climate. These reforms will complement the ones already carried out - and those ongoing - aimed at making Senegal 1 o f the 10 countries with the best business enabling environment in Sub-Saharan Africa. The Project will focus on three subcomponents, as follows: a. Enforcing contracts b. Closing a business c. Protecting investors. Component 2: Improving court performance and user-friendliness (US$3,100,000). The objective o f this component is to enable the judicial system to more effectively play i t s role as warrantor o f the rules regarding economically relevant activities and transactions. Examples would be to provide for fair and efficient commercial dispute resolution, effective protection of property rights, and predictable enforcement o f legally binding rules. This component would be comprised o f two subcomponents: Amounts below exclude contingencies (See Annex 5). a. Improving court performance b. Improving user-friendliness o f courts. Component 3 : Strengthening the demand-side for economic governance (US$1,500,000). The main objective o f the component i s to support complementary demand-side activities by stimulating demand for effective and efficient investigation o f money laundering cases, more transparent procurement o f goods and services, as well as fostering business-led actions against corruption. I t s subcomponents are: a. Strengthening CENTIF; b. Strengthening the Anti-Corruption Commission; c. Strengthening the new Investigation Unit o f the national procurement agency, ARMP; and; d. Fostering business- led actions against corruption. Component 4: Strengthening CEDAF and project implementation support (US$ 1,000,000). The objective of this component i s two-fold. First, it will strengthen the Cellule d 'Exe'cution Administrative et FinanciBre (CEDAF) to enable i t to implement the Justice Sector program successfully and become a center o f excellence in the public administration. Second, Component 4 will provide the implementation support to ensure that the Project meets i t s development objective. US$0.2 million have been assigned to contingencies. W h i c h safeguard policies are triggered, if any? Re$ PAD I K F , TechnicalAnnex 10 N o safeguard policies are triggered; the project environmental category i s C. The project is mainly institutional capacity and technical assistance for sub sector reforms. There is no direct or indirect physical investment and no environmental issue i s present. Significant, non-standard conditions, if any, for: Re$ PAD IILF B o a r d presentation: None L o a d c r e d i t effectiveness: The following events would be conditions o f effectiveness o f the Financing Agreement (most o f the conditions are expected to be fulfilled before Board presentation): 0 Borrower has adopted the Project Implementation Manual (PIM), which includes a Project Implementation Plan (PIP) and Manual o f Administrative, Financial and Accounting Procedures, satisfactory to IDA in form and substance. 0 Borrower has established, or caused to be established, a computerized accounting and financial management system for the Project satisfactory to IDA. 0 Borrower has recruited the following qualified and experienced staff for CEDAF, under terms o f reference and terms and conditions acceptable to the Association: a Financial Specialist, a Procurement Specialist. Covenants applicable to project implementation: Borrower shall conduct, in collaboration with IDA, a mid-tern review o f the Project no later than 20 months after project effectiveness Borrower shall prepare and submit to IDA a progress report on the implementation of the Project that includes progress toward meeting the Project development objectives and performance indicators by November 30 and M a y 3 1 o f each calendar year. This report will be prepared by CEDAF. Borrower shall undertake three operational audits o f the project and submit the corresponding operational audit reports to IDA no later than June 201 1, December 2012, and March 2014, respectively. Borrower shall provide an annual financial audit o f CEDAF no later than six months following the end o f the year for which the financial audit i s being carried out. Borrower shall complete a detailed independent impact assessment o f the Project and submit it to IDA no later than three months prior to the Project closing date. Condition o f disbursement o f the funds for the benefit o f CNLCC: Borrower shall elaborate and adopt an action plan in form and substance satisfactory to the Association to enhance the relevance and capacity o f the CNLCC. I. STRATEGIC CONTEXT AND RATIONALE A. Country and sector issues 1. Senegal i s located on the West Coast o f Africa, and i s part o f the West African Economic and Monetary Union (WAEMU). With an estimated population o f 12 million, its economy i s dominated b y several strategic sectors: groundnuts, fisheries, and services. Senegal has an average per capita income o f approximately US$820 (2007) and ranks 153 o f 177 countries in the 2007 United Nations Human Development Index. The informal sector accounts for approximately 60 percent o f its economy. The importance o f the agricultural sector has declined over time, from almost 15 percent o f GDP in 1960 to 7 percent in 2004. I t s rural economy suffers periodically from drought and lacks access to basic services and infrastructure. The country's challenges are compounded by the fact that almost half o f the population lives in cities, including 30 percent in Dakar and i t s surrounding areas. The urbanization ratio i s projected to increase by as much as 60 percent by 2015. Since the mid-l990s, Senegal's macroeconomic performance has been encouraging, with an average annual real gross domestic product (GDP) growth o f nearly 5 percent annual over a 10-year period. This was the first sustained increase in average per capita growth since independence in 1960, and was supported by a stable overall macroeconomic environment. For much o f this time, growth has been driven by tourism, construction, and telecommunication. Growth was supported by a significant increase in foreign direct investment (FDI) since 2003, as well as significant debt forgiveness within the Heavily Indebted Poor Countries (HIPC) initiative/Multilateral Debt Relief Initiative (MDRI). 2. Senegal's economic performance has been uneven since 2006. Real GDP growth decreased by 1 to 2 points from the previous trend, while inflation increased more than three times (while s t i l l remaining single digit), and the fiscal and external positions deteriorated sharply. The overall fiscal deficit thus rose from 2.5 percent o f GDP during 2003-05 to 4.7 percent in 2006-08, leading to the first accumulation o f arrears vis-a-vis the private sector since 1997. The deterioration o f the fiscal deficit has been associated with a widening o f the current account deficit from 6.7 percent of GDP in 2003-05 to more than 10 percent o f GDP in 2006- 08. This gradual deterioration was driven by a strong domestic demand, mainly from the public sector, and lackluster export performance. The slippage in the macroeconomic framework also was explainable due to the unfavorable international market conditions. These were, in particular, higher commodity prices (oil prices since 2006 and food prices between mid-2007 to mid-2008) as well as internal mismanagement and governance issues o f some key enterprises in the energy and mining sectors (the largest exporting firm, I C s (Industries Chimiques du Sinkgal); SAR (Socie'te' Africaine de Ruffinage); and the state-owned electricity company, SENELEC (Socie'te' Nationale d 'Electricite' du Se'ne'gal)). 3. As stated in i t s Poverty Reduction Strategy Paper (PRSP) and Accelerated Growth Strategy, the Government o f Senegal intends to reduce poverty b y half by 2015.2 To do so, Senegal needs to increase i t s annual growth rate 4 percent to 7 percent or more. Mindful that this rate o f growth will not be generated by the public sector, and that additional j o b creation in the formal sector has been limited, the Government has adopted a strategy that makes the private sector the engine o f i t s economy. The Government also has determined that, to foster private The overall poverty rate i s estimated at 57 percent. 1 sector growth, it would need to improve the investment climate and economic governance. To this end, the Government adopted one strategy to improve the investment climate and another to fight corruption and improve economic governance. With support provided through the World Bank's ongoing Private Investment Promotion Project (PIPP), the Government already has taken concrete actions to improve the investment climate. As a result, the 2009 Doing Business Report ranked Senegal the best performer in Sub-Saharan Africa in annual improvement o f the investment climate. Despite this progress, Senegal's investment climate needs significant improvement. This was well captured in the 2007 Investment Climate Assessment (ICA), which showed that private firms faced a myriad o f constraints when doing business in Senegal, including poor access and quality o f electricity and a high level o f corruption. Moreover, the country i s still ranked 146 o f 181 countries in the 2009 Doing Business report. As a result, Senegal wants to further improve i t s investment climate to meet the level o f an average Organization for Economic Co-operation and Development (OECD) country. This would contribute to creating the conditions for a greater number o f small and medium enterprises to move from the informal into the formal economy and help generate an economic growth that also creates formal sector employment. Moreover, Senegal intends to consolidate these improvements through setting up better access to justice and improved economic governance. 4. Regarding the improvement o f the investment climate, the Senegalese authorities reaffirmed the critical importance o f addressing the main constraints to fostering private sector investment and increased productivity-in a context o f worldwide financial c r i s i s 4 u r i n g the Presidential Investment Council held in November 2008. Presided over by the head o f state, the participants affirmed that obtaining additional private investment would depend o n the effective implementation o f investment climate reforms, including in these three areas: (a) enforcing contracts, (b) closing down a business, and (c) protecting investors. Addressing these constraints will require that the project takes into account the fact that some important aspects o f the investment climate in Senegal are established by the Organization for the Harmonization o f Business Law in Africa (OHADA) or Organisation pour 1 'Harmonisation en Afrique du Droit des Affaires in French. The Uniform Act which aims at harmonizing business law in 16 countries in Africa establishes the common rules governing the establishment, operation, and closing down o f businesses. These rules can be changed only at the regional level. Another technical assistance is being provided to the O H A D A Secretariat by the International Finance Corporation (IFC), part o f the World Bank Group, to address constraints contained in the O H A D A texts. Other constraints to additional investment highlighted were (a) the high cost o f electricity and i t s inadequate quality, (b) the significant backlog o f government debt to the private sector; (c) the difficult access to land, and (d) concerns over macroeconomic stability. These concerns are being addressed by other World Bank instruments and other donor support. 5. The Justice Sector Program (PSJ) also highlights i t s role in contributing to an improved climate as well as a number o f challenges that need to be overcome to improve the sector's performance and foster a greater adherence to the r u l e o f law and increased credibility and transparency o f the justice sector. This improved performance will depend o n the effective implementation o f the PSJ in three key areas. These include (a) improving institutional capacity to support the effective implementation o f the PSJ, which faces severe resource constraints (material, financial, and human); (b) broadening access to justice; and (c) improving the availability and analysis o f data on the justice sector's performance, to be able to monitor the 2 sector's performance in a periodic and timely manner and adopt corrective .measures, when required. 6. The Economic Governance3 Project will contribute to the establishment o f this improved performance through focused assistance that fosters an improved effectiveness o f justice and a better investment climate. In addition, the project will help improve economic governance through the following actions: (a) strengthening the Cellule d 'Exe`cution Administrative et FinanciBre (CENTIF); (b) strengthening the Public Procurement Investigation Unit, and (c) fostering business-led actions against corruption. B. Rationale for Bank involvement 7. The Economic Governance Project will provide technical and financial assistance in areas o f investment climate, and justice in which the World Bank i s perceived as knowledgeable and as a partner that brings excellent technical expertise and good practices to address the critical constraints to an improved effectiveness o f justice and better investment climate. The Project is part o f an integrated strategy to build institutional capacity and strengthen different aspects o f economic governance using complementary instruments. As such, the project's activities would be complemented by the Poverty Reduction Strategy Credit (PRSC) series which would not only be used to raise the profile o f the reforms included in this investment operation, but also monitor and provide an additional venue for dialogue to ensure that the Project's reforms are completed effectively and in a timely manner. This investment operation further complements the assistance provided thus far in improving public finance management. The assistance in public finance management was provided through the Public Financial Management Reform Support which i s a Trust Fund jointly financed by the European Commission and The Netherlands for an amount o f US$3.4 million. This joint assistance o f three development partners i s the entry point for development partner coordination in public finance management reform. This small assistance was instrumental in helping achieve the following: (a) Building the capacity o f the key Departments in line Ministries and at the Ministry o f Economy and Finances on Medium Term Expenditures Framework (MTEF), (b) building the capacity o f the Inspection Ge`ne`rale des Finances (General Finances Inspectorate) and (c) developing guidelines for the result oriented budget process and MTEF. While this project, which closed on November 30,2009, served as an entry point, i t would need to be pursued further once there i s greater clarity and agreement regarding the key reforms to be adopted as well as the approach to be used. 8. The project also builds on previous operational support in both the investment climate and justice. More specifically, the Economic Governance Project builds on the implementation o f the ongoing Senegal Private Investment Promotion Project. The PIPP financed the successful drafting of, and consultation for, the Programme Sectoriel Justice (Justice Sector Program). The PIPP also provided targeted assistance to the Ministry o f Justice through the adoption o f an anti- Economic governance i s a wide ranging and multi faceted concept " ... that refers to those parts of a country's public and private sector institutional infrastructure that exert a determining or guiding influence in or over how individuals, enterprises, and/or countries carry out economic and commercial transactions: Byrnes 2001. For the public sector, the "institutional infrastructure" or institutional framework i s said to comprise (1) policies (including laws and regulations) that influence economic, financial and commercial transactions; (2) the organizations through which policies are implemented; and (3) the tools (procedures, practices, and technologies) used to formulate, implement and evaluate policies. 3 money-laundering law, provision o f training for ministry staff for the budget planning and execution, and modernization and computerization o f the registry o f firms. The PIPP was also critical b y providing US$1.5 million to provide the capacity building, technical assistance and Information Technology support required to set up the Procurement Regulatory Agency (Autorite' de Re'gulation des Marche's Publics - ARMP). This Public Procurement Agency has quickly proven to be quite effective in improving economic governance by annulling numerous procurements o f goods and services which did not comply with the established procurement code and regulations. Some o f the more notable include the cancelling o f a procurement o f 50,000 computers and additional information technology equipment for CFAF 25 billion, which were awarded to a single supplier and for which the advertisement procedures were not observed and several complaints were received. 9. As this project was designed based on well targeted assistance request from the Ministry of Justice who implements the Justice Sector Program, it complements and reinforces the assistance financed by the authorities and other development partners. The assistance provided by other development partners in the field o f justice and economic governance are presented in Annex 12. 10. The proposed project will expand the support provided for private-sector-led growth consistent with Pillar 1 o f the government's PRSP I1-wealth creation for a pro-poor growth - as well as Pillar 4 on economic governance and decentralized and participatory development. This project also i s aligned with the Accelerated Growth Strategy and i s one o f the International Development Association (IDA) operations under the IDA Country Assistance Strategy (CAS) for FY08-1 14. The CAS focuses on strengthening economic management and public service delivery; enhancing productive capacity, and accelerating growth and competitiveness, which are fully consistent with the proposed project. The Cellule d 'Exe'cutionAdministrative et FinanciBre (CEDAF), the proposed implementing agency that has been implementing activities under PIPP, started project preparation activities and identified tentative project areas and activities. Project identification also has benefited from recent analytical work, including the Senegal Report o n the Observance o f Standards and Codes (R0SC)-Corporate Governance-, the Justice Sector Reform Program, l e Document d 'orientation strate'gique de lutte contre la corruption, the National Program for Economic Governance, the Program for the Fight against Corruption, and the Senegal 2007 Investment Climate Assessment. Project identification also involved consultations with a wide range o f stakeholders, including through the jointly organized (Ministry o f Justice- World Bank) Workshop on Economic Governance o f June 2008. During project preparation, the team helped the Ministry o f Justice strengthen the collaboration with other key development partners in the justice sector, including the European Community, France, United Nations Development Program (UNDP), and United States Agency for International Development ( SAID). U C. Higher-level objectives to w h i c h the Project contributes 11. The Economic Governance Project will extend the support provided for private-sector-led growth consistent with Pillar 1 o f the government's PRSP II-Wealth Creation for a Pro-Poor Growth-as well as Pillar 4-GOOd Governance, and Decentralized and Participatory Approved by the IDA Board on May 2007. 4 Development. The Project also i s consistent with the CAS and i s one o f the IDA operations under the Country Assistance Strategy for FY07-1OY5 which is aligned with both the PRSP and Accelerated Growth Strategy strategic objectives. It will help realize the objectives o f the wealth creation and accelerated growth pillar o f the CAS, as well as embodying activities envisaged under the CAS'S governance filter. 11. PROJECT DESCRIPTION A. Lending instrument 12. The lending instrument selected for this Project i s a Specific Investment Loan (SIL), which the team considers to be the best suited to the significant need for Technical Assistance (TA) to successfully meet the Project development objective stated below. Given that the assistance requested by the Borrower will be essentially the delivery o f technical assistance and the acquisitions o f some goods, it would not have been appropriate to use a budget support operation for this project, since this instrument does not bring the World Bank support that the Borrower wants to enhance the quality o f the technical assistance through different Bank reviews. Likewise, the use o f an Adaptable Program Lending (APL) instrument did not seem necessary, since the assistance requested and the activities to be carried out are well defined and achievable within the time-span o f a specific investment loan. Consequently, the specific investment loan seemed most suitable. B. Project development objective and key indicators 13. The proposed Project Development Objective (PDO) i s to improve aspects o f the functioning o f the justice sector relevant to the investment climate. The key expected outcomes o f the Project are (a) enhanced effectiveness o f justice, as measured by the number o f cases judged and the speed at which they are judged; (b) improved investment climate, as reflected by the number o f commercial cases being enforced and the reduction in time to enforce these contracts; and (c) strengthened CEDAF, as measured by its I S 0 9001 quality management certification. Additionally, the Project `will improve the effectiveness o f three key economic governance agencies Cellule Nationale de Traitement des Informations Financibres (CENTIF); and Investigation Unit o f the Public Procurement Agency and an increase in the number o f f i r m s that adopt a no-bribes integrity pact and obtain an ethical business certification. 14. The following outcome indicators would be used to track project implementation progress towards meeting i t s objective: a. The delay and backlog o f case processing at the Tribunal Rbgional de Premibre Instance de Dakar i s reduced by 30 percent between 2009 and 20 14. b. The average time to enforce a contract i s reduced from 780 to 365 days by 2014. c. The average time to close a business i s reduced from 3 to 1.5 year by 2014. Approved by the IDA Board on May 2007 5 C. Project components 15. To achieve the above-mentioned objective, the Project consists o f four components: (a) improving the investment climate (estimated cost: US$2.2 million), (b) improving court performance and user-friendliness (estimated cost: US$3.1 million); (c) strengthening the demand side for economic governance (estimated cost: US$1.5 million); and (d) strengthening CEDAF and project implementation support (estimated cost: US$1 million) and US$0.2 million in contingencies. The total cost o f the Project would be US$8 million, financed b y IDA. The Borrower will contribute approximately U S $ l million towards operation costs o f CEDAF, not financed b y IDA. 16. Component 1: Improving the investment climate (US$2,200,000).6 As demonstrated in the World Development Report 2005: A Better Investment Climate for Everyone, a good investment climate drives both investment and productivity, the main sources o f long-term growth; As a result, many governments are embarked on reforms to improve the investment climate. Senegal i s one o f them. The country has partially succeeded in implementing these reforms, as reflected in i t s garnering the ranking o f best reformer in Sub-Saharan Africa in the Doing Business Report 2009. The authorities are keen to further improve the investment climate, so as to be more competitive in attracting private investment. In particular, investment climate reforms, which are related to the legal and judicial aspects, are a priority on the agenda, as confirmed in the Cabinet meeting o f October 30,2009. 17. As such, this component will focus on legal reforms that are necessary to improve the investment climate. These reforms will complement the ones already carried out - and those ongoing - aimed at making Senegal 1 o f the 10 countries with the best business enabling environment in Sub-Saharan Africa. The Project will focus on three subcomponents, as follows: a. Enforcing contracts b. Closing a business c. Protecting investors. 18. Under this component, the Project will provide technical assistance and capacity building to support legal and institutional reform and implementation to significantly improve the performance o f the above-mentioned three aspects o f the investment climate. 19. More specifically, this component will provide the technical assistance to undertake the following tasks: (i) support the economic and financial section o f the Recipient's State Attorney's @rocureur) office; (ii) enhance court specialization; (iii) increase the number o f commercial hearings; (iv) improve the hearing process; (v) establish strict timeframes for 6 Broadly defined, "investment climate" includes a country's unique attributes, or "geography" (climate, endowments o f natural resources, distance from important markets and so on), as well as the state o f its infrastructure, economic and social policies, institutions, and governance stability. For operational purposes, a narrower definition i s used that focuses on the endogenous determinants o f investment. For example, Stem (2000a) notes that i t i s "the policy, institutional, and behavioral environment, present and expected, that influences the returns, and risks, associated with investment." This definition, in its reduced form, includes economic incentives, which are shaped by macroeconomic and regulatory policies and public administrative procedures, and incentives embodied in institutional arrangements, such as security o f property rights and rule o f law and governance stability. 6 commercial judges; (vi) foster better case management for faster disposal and enforcement o f judicial decisions; (vii) improve enforcement procedures; (viii) speed up the issuance o f court decisions; (ix) foster the monitoring and evaluation o f judges; (x) build bridges with alternative dispute resolution mechanisms; and (xi) reduce reliance on and use experts more effectively. 20. Component 2: Improving court performance and user-friendliness (US$3,100,000). The objective o f this component is to enable the judicial system to more effectively play its role as warrantor o f the rules regarding economically relevant activities and transactions. Examples would be to provide for fair and efficient commercial dispute resolution, effective protection o f property rights, and predictable enforcement o f legally binding rules. This component would be comprised o f two subcomponents: a. Improving court performance b. Improving user-friendliness o f courts. 2 1. Under this component, the Project will provide technical assistance and capacity building to support the implementation o f activities to significantly improve the performance o f the Tribunal regional hors clusse de Dakar, in which 80 percent o f all commercial cases in Senegal are received. Additionally, subcomponent b aims to improve the access to, and user-friendliness of, the courts in Dakar for court users through activities including analytical work, improvement o f user guidance, and increased community outreach. 22. Subcomponent 1 aims to improve the performance o f the courts in Dakar in both efficiency and quality o f services. This would be done through the improvement o f the court administration and the improvement o f the case management. Regarding the improvement o f the court, this requires the establishment o f a three-part approach based on an effective court performance management structure, increased court performance management capacity, and meaningful court performance management tools. To that end, the project will provide both technical assistance and capacity building. As for the improvement o f case load management, it requires reforming the judicial map, improving enforcement structures, developing case management tools, adapting infrastructure, and building capacity for case management at various levels. The project will support the realization o f these objectives by providing technical assistance and capacity building as well as the targeted purchase o f some goods. 23. Subcomponent 2 will help improve the access to and user-friendliness o f the courts in Dakar for court users. The Project will do this through a variety o f activities, including technical assistance to assess, and will address obstacles to access justice. The project will also finance the preparation o f materials to be distributed in the recently established reception and help desk o f Justice so as to improve user guidance. Additionally, this sub component will finance the holding o f "open house" during which the courts explain their inner working as a mean to foster community outreach. 24. Component 3: Strengthening the demand side for economic governance (US$1,500,000). Promoting the efficiency o f justice and economic governance requires action on both demand and supply sides. To accompany the supply-side work described in components 1 and 2, the Project intends to support complementary demand-side activities. Under this component, the Project targets four areas that are critical in meeting the Project Development Objective (PDO) from the demand side by stimulating demand for effective and efficient 7 investigation o f money laundering cases, more transparent procurement o f goods and services, as well as fostering business-led actions against corruption I t s subcomponents are: (a) Strengthening CENTIF; (b) Strengthening the Anti-Corruption Commission; (c) Strengthening the new Investigation Unit o f the national procurement agency, ARMP; and (d) Fostering business- led actions against corruption. 25. The Project assistance to CENTIF will comprise the following three activities. The first one i s the provision o f specialized technical advisory support through the recruitment o f an internationally recognized expert to advise CENTIF management and provide in-house training to analysts and CENTIF partners to fully adopt international standards and practices in all operations. The second one consists o f the financing o f critical information technology equipment to support investigation and operations. Specifically, the Project will purchase specialized analytical software (Anacrime and Analysis notebook) and high-level security software to protect and encrypt information. This software will limit access to confidential information, even to sophisticated hackers, as well as improve CENTIF's analysis and performance. This assistance would be complemented by the purchase o f two vehicles to supply CENTIF with the transportation to carry out i t s investigation. The absence o f a vehicle has hindered CENTIF's carrying out its investigatory work effectively and efficiently. The third one will be to assist CENTIF in designing and carrying out an awareness campaign to improve the public administration, private f i r m s , as well as the general public understanding o f what money laundering i s and how CENTIF's work contributes to preventing, combating, and prosecuting it. 26. To hrther contribute to strengthening the demand side for economic governance, the project will provide assistance to another pillar o f the improvement o f economic governance: Anti-Corruption Commission (CNLCC). Specifically, the project will provide capacity building assistance through training for CNLCC members on anti-corruption. This would be done by providing access to an internationally recognized expert in the field o f Governance and Anti- Corruption to help build the capacity o f the members o f the Anti-Corruption Commission and provide them with key principles in preventing, investigating and prosecuting corrupt practices. Additionally, if a relevant and cost effective twining arrangement i s identified, the finance it to provide the members o f the Commission with the technical assistance required to carry out their functions effectively. 27. To complement this assistance and improve the Commission's effectiveness, the project also will provide technical assistance to revise the anti-corruption unit legal authority and institutional arrangements, to adopt good practices in institutional arrangements and mandate. 28. Additionally, the project also will help finance the formulation and implementation o f a communication strategy to allow to help the Commission with the prevention and prosecuting aspects and to also show to the general public that the Commission i s accountable to the tax payer and wants to report on i t s activities. 29. The project also will assist in the dissemination o f annual report o f CNLCC. The annual report o f CNLCC is a public report according to the L a w 2003-35. The publication o f the report i s a mean to validating the Commission's work and a way to show to all stakeholders and the general public the relevance o f i t s work. This dissemination includes publishing the report on the CNLCC website (www.cnlcc.net). 8 30. Since the establishment o f i t s Investigation Unit (IU), A R M P has recruited a procurement specialist and a lawyer for the unit. With i t s core team is in place, the IU can start to create the conditions to effectively review potential violations o f national procurement principles and procedures. At this early stage, the IU has qualified staff that could significantly benefit from technical assistance to operate based on good practices developed by other IUS around the world. Moreover, A R M P would like to ensure that the violations o f procurement and related laws by corrupt practices that are duly uncovered by the IU are prosecuted in a timely and effective manner once reported to the justice system. To address these dual challenges, the Economic Governance Project will provide technical assistance to both (a) strengthen the IU's internal capacity, and (b) support the establishment o f an adequate follow-up o f the results o f investigations by the justice system. 31. This assistance will take the form o f strengthening . o f investigation capacity o f the Investigation Unit by providing on-the-job technical assistance related to investigation techniques, public procurement, and regulatory matters. Additionally, to expose staff to good practice investigation techniques, the Project will finance the study tour o f one institution (national or international) that deals with procurement investigations and that is recognized as performing well. 32. The project will also finance the acquisition o f investigation materials such as information technology equipment (laptops, digital recorder, digital scannerhender, and digital camera) and a vehicle. 33. The sub component on fostering business-led action against corruption will work with committed local business associations and chambers o f commerce to forge a collective anticorruption initiative. Specifically, it will facilitate the development and adoption o f a No- Bribery Pact for private firms. Companies would become signatories o f the Pact by which they would publicly commit to uphold a common code o f conduct.' As bribery i s one o f the key corruption challenges in Senegal, the pact will include rules on gifts and entertainment, facilitation payments and sponsorship, as well as on conflicts o f interest, collusion, and bid rigging. These activities will be implemented in close collaboration with ARMP, the national procurement agency, so that project activities are mutually reinforcing in addressing corrupt practices. 34. Component 4: Strengthening CEDAF and project implementation support (US$l,OOO,OOO). The objective o f this component i s two-fold. First, it will strengthen the Cellule d 'Exe`cution Administrative et Financidre (CEDAF) to enable it to implement the Justice Sector Program successfully and become a center o f excellence in the public administration. Second, Component 4 will provide the implementation support to ensure that the Project meets i t s development objective. 35. Component 4 will provide the technical assistance and resources necessary to strengthen CEDAF's fiduciary and monitoring/evaluation capacity in the first phase, which i s expected to be concluded by June 201 1. In the second phase - which will build upon the first phase - the 'Transparency International's Business Principles for Countering Bribery might be one model for such a common code. 9 project will provide the assistance so that CEDAF becomes a center o f excellence. Today, CEDAF i s a small organization with 10 staff and a drive for excellence. I t s organizational chart shown on Annex 4: detailed project description presents the institution's current number o f departments and staffing. Building on the institutional capacity that will be provided to support Project implementation, resources will be allocated to help CEDAF become an institution recognized for i t s quality management and excellence within the Senegalese public administration. In other words, the project will enable this unit to have all the capacities and `skills set necessary to successfully implement the PSJ. This support will be based on the development and adherence to a quality approach in management and applied to the implementation o f the Justice Sector Project, which is assessed by independent evaluators. To that end, the project will finance the I S 0 9001-2009 quality management certification process. The main steps to achieve quality certification are as follows: (i) Educating CEDAF on what I S 0 9001-2008 standards mean and provide the staff with the basic aspects o f quality management systems and the implementation process; (ii) Zdentzfiing the I S 0 certijkation processes.; (iii) carry out a gap analysis to compare the organization's current quality management system (QMS) to the requirement o f the I S 0 9001 standard; (iv) formulating a new QMS adhering to International Organization for Standardization (ISO) 900 1 standards; (v) completing the pre certification audit; and (vi) undertaking the certification audit. 36. The financing o f this I S 0 9001 certification will enable consolidating and maintaining high service standards and performance within CEDAF. The QMS also will reinforce CEDAF's credibility and open possibilities to leverage additional funding from other development partners to finance the implementation o f the Justice Sector Program, which faces a funding gap. 37. This component will also provide technical advisory services for Project Coordination and management, including (i) preparation o f annual work plans, including updating procurement the plans and related budgets, (ii) financing o f expenditures related to monitoring and evaluation, financial audits, training, communication and organization and participation in local and external workshops, and (iii) follow up with Project's beneficiaries to ensure that the approved Project the activities are being.implemented in a timely manner. 38. Additionally, this component o f the project will finance the development o f a digital law library physically located at the Ministry o f Justice to give electronic access to legal documents to all o f the country's administrative departments. This law library will be made available through the Ministry o f Justice website and will have its search engine adequately calibrated to facilitate the search o f documents. The support under component 4 will also finance the purchase o f office equipment and furniture, the establishment o f an intranet, and the setting up a video conferencing facility for capacity building. D. Lessons learned and reflected in the Project design 39. In light o f the cross-cutting nature o f the Project, particular attention has been paid to ensure that i t s design builds on the World Bank Group's past experience in Senegal and in the sector in other developing countries. Project preparation benefited significantly from the input o f several departments and networks, particularly, Africa Financial Management Unit (AFTFM), Africa Procurement Unit (AFTPC), IFC, Investment Climate Unit, Poverty Reduction and 10 Economic Management Unit (PREM), Quality and Knowledge (QK), and the World Bank Institute (WBI). The main lessons and approaches that informed the project's design were: 0 Improving the investment climate. The participation o f the Investment Climate Unit in the early phase o f investment climate reform consultations was coupled with a prior consultation with the World Bank's Doing Business Unit and the lessons drawn from World Development Report 2005, A Better Investment Climate for Everyone. Thus, the design o f this Project reflects Pan-African and global experience on how to improve the investment climate. Additionally, the Project design benefited significantly from the lessons learned from the implementation o f two World Bank investments in Senegal that contained investment climate reform. These two operations are Credit 3762 S for the E Private Investment Promotion Project and Credit S 3 875 Private Sector Adjustment E Credit. Experiences from these two projects show that investment climate reform i s interactive and requires strong champions and consensus building. These aspects are reflected in the current Project design. For example, the lack o f a clear consensus on labor market reforms led to the decision to drop this subcomponent previously identified in the Project Concept Note (PCN). 0 Supporting the Justice Sector Reform and improving access to justice. Lessons learned from the implementation o f the Private Sector Capacity Building Project (Credit 2759 SE), as well as the Private Investment Promotion Project (PIPP) (Credit 3762 SE), have shown the critical importance o f implementing legal reforms with the full involvement o f the Justice Ministry. The first project mentioned above had difficulties in meeting i t s targets and objectives since it had only the partial involvement o f the Justice Ministry. With the full assistance o f the Justice Ministry, the PIPP (Credit 3762 SE) effectively assisted the authorities in reforming the commercial registry as well as improving the registration o f firms. Moreover, the proposed assistance to the justice sector i s pragmatic and based on well-targeted assistance for reform, which benefits from significant consultation and consensus-building. 0 Strengthening economic governance. The preparation o f this component benefited from WBI's knowledge o f emerging good practices and international experience in Economic Governance and in line with the World Bank's governance and anticorruption (GAC) strategy. The Project also builds on the 2006 Report on the Observance o f Standards and Codes (ROSC) Corporate Governance Country Assessment, Senegal, which was drafted following wide-ranging consultation. Moreover, tackling corruption i s more difficult for individual businesses. Therefore, the approach used under the business-led actions against the corruption subcomponent emphasizes a sustained joint process o f collective actions that enables private f i r m s to implement anticorruption mechanisms together with industry peers and key stakeholders. 0 Strengthening CEDAF and supporting the Project implementation (US$l.0 million). B y using an International Organization for Standardization (ISO) 900 1 quality management certification to build CEDAF's institutional capacity and make it a center o f excellence, the Project ensures adherence to emerging good practices in institutional capacity building. Moreover, the Project w i l l strengthen CEDAF's ability to implement 11 the wide-ranging PSJ. Since CEDAF will support the Project's implementation, no new Project Implementation Unit (PIU) will be set up-in line with the increased emphasis on national systems to implement projects. 40. The design o f the proposed Project also draws on the experience acquired in other E projects, including Credit 3762 S for the Private Investment Promotion Project, Credit SE 3875 for the Private Sector Adjustment Credit, Credit MZ 3317 for the Mozambique Enterprise Development Project, and the IDA Credit 3483 LSO for the Lesotho Utilities Reform Project. 4 1. Moreover, project preparation benefited from the fact that substantial consensus-building at the technical level involving relevant stakeholders was carried out with the financing o f another World Bank operation, the PIPP. In addition, the Project was prepared based on a participatory approach and an exemplary collaboration with the Borrower's representatives. This approach was significantly facilitated by the fact that several o f the World Bank staff working on the project are based in Senegal, have acquired a good knowledge o f the country and can consult daily with the Borrower cost effectively. E. Alternatives considered and reasons for rejection 42. This Project was designed with a deliberately focused scope so it did not have to reject substantially strategic aspects that could have been supported under it. Furthermore, certain possible subcomponents or approaches were dropped to ensure that the Project remained focused on high priorities that benefit from strong political commitment, good consensus, and technical ability to implement the reform, as well as to fit the Project within a reduced IDA envelope. 43. Improving labor market flexibility. The original P C N included assistance to improve labor market flexibility through amendments to the relevant laws and consensus building. This assistance was dropped in light o f the lead time necessary to initiate and successfully implement labor market reforms and the increasingly difficult political economy that results from the fact that general elections are scheduled for early 2012. Commitment and a consensus on whether the proposed reforms could actually be implemented could not be obtained. 44. Supporting the implementation o the Public Expenditure and Financial Accountability f (PEFA) action plan. Recent budget slippages and subsequent fiscal problems in Senegal have highlighted the need to accelerate public financial management (PFM) reforms. This assistance i s well related to the reforms being carried out under this Project, particularly under component 3. However, the nature and scope for an effective assistance to be provided to support the PEFA action plan has not yet been clearly defined and agreed upon. As such, the World Bank potential assistance may later on be added to this project through additional financing, when the nature and scope i s well defined. 45. Drafting a code o corporate governance. The task team considered financing a code o f f corporate governance, as recommended in the June 2006 Report on the Observance o f Standards and Codes (ROSC) Corporate Governance Country Assessment, Senegal. This proposal was dropped since the drafting o f the code i s being financed by the IFC. 12 46. T w o alternative implementation arrangements were considered. The first was to outsource the fiduciary functions to Agence Nationale Charge` de 17nvestissement et des Grands Travaux (APIX), which has successful experience in implementing a World Bank-financed Project Preparation Advance (PPA) and i s the implementing agency for two World-Bank- financed projects. The second was to have the Project implemented by the Cellule d'Exe`cution Administrative et Financi2re (CEDAF). This unit i s responsible for the implementation o f the Justice Sector Program, which i s being supported under this Economic Governance Project. The task team considered an alternative in which the fiduciary functions (procurement and financial management) would be carried out by APIX. However, the World Bank reviews and discussions with Borrower representatives strongly indicated the suitability o f an approach in which CEDAF implements the project, including its fiduciary responsibilities, 111.IMPLEMENTATION A. Partnership arrangements 47. This Project i s fully financed by IDA and by counterpart funds and, as such, entails no donor partner financing o f project activities. However, i t is noteworthy that the Project was designed as a complement to various initiatives undertaken by other development partners already active in the justice sector. The ongoing assistance o f these development partners, which include the European Union, France, UNDP, and USAID, i s found in Annex 12, Summary o f Development Partners Assistance to the PSJ. 48. Moreover, this Project intends to use an innovative approach by building CEDAF's institutional capacity and putting it in a position to be a fully recognized entry point for the coordination o f the PSJ. The Project thus would help reduce the need for development partner coordination and enables CEDAF to progressively take on more o f this responsibility as it builds i t s capacity (described under component 4). As a result, CEDAF will be able not only to improve i t s performance coordination functions but also to leverage additional financing from other development partners to finance the implementation o f the Justice Sector Reform Program, which faces a funding gap. 49. During preparation o f the Project, extensive consultation took place with the relevant development partners. In an innovative manner, CEDAF presented the Economic Governance Project to the different development partners to show full ownership, but also to start to demonstrate to all involved that the institution is able to carry out the coordinator role without a development partner leading this process. 50. The Project also intends to contribute significantly to improved partnership. In fact, during the preparation, the task team and the Ministry o f Justice agreed that the Project will help develop CEDAF as a recognized center o f excellence in the implementation o f the PSJ, as confirmed by the I S 0 9001 certification. In this way, as CEDAF's capacity i s established, all o f the development partners will use a single fiduciary and reporting system for the entire PSJ. While this improved capacity to manage and coordinate the PSJ i s not expected to materialize in year 1 or 2 of the Project, it will happen by year 4 and will entail the use o f one single 8 accounting, financial management (FM), and monitoring and evaluation (M&E) system for all 13 donors. In the interim, the Economic Governance Project will encourage the partnership b y recommending that CEDAF hold quarterly coordination meetings to (a) report implementation status; (b) discuss constraints met, and (c) discuss and adopt corrective measures to ensure that the PSJ objectives are met. B. Institutional and implementation arrangements 51. In line with the Paris Declaration and the increased emphasis on national systems to implement projects, no Project Implementation Unit (PIU) will be set up. In fact, the day-to-day implementation o f the Project will be the responsibility o f CEDAF, the technical unit in charge o f the implementation o f Senegal Justice Sector Reform. It i s noteworthy that the task team considered an alternative in which the fiduciary functions (procurement and financial management) would be carried out by an existing government agency (APIX), which is experienced in managing World Bank-financed projects. However, based on World Bank reviews and discussions with representatives o f the Borrower, the task team adopted the approach that the Project, including i t s fiduciary responsibilities, would be implemented by CEDAF. As such, CEDAF will oversee the Project's financial management (FM), procurement, M&E, audit, and public information campaign. 52. To complement these institutional arrangements, the Project will be overseen by a Project Steering Committee (which will comprise all the Project stakeholders, including CEDAF) supported by a professional secretariat (CEDAF). The Steering Committee will provide the strategic orientation to the project, review and approve annual work plan and budget, and propose any needed corrective measures to be adopted during project implementation. The Steering Committee i s made up o f the members o f the Justice Sector Project Evaluation and Coordination Committee (Comite' de Coordination et d 'Evaluation du Programme Sectoriel Justice) as established by the Borrower in accordance with Decree No. 2006-1279 dated November 23, 2006. The Steering Committee i s responsible for the follow up o f the entire Justice Sector Program, including the contribution o f this Economic Governance Project. I t i s expanded to include the fact that several o f the project beneficiaries such as the A M P , CENTIF, CNLCC and private sector firms are not members o f the Comite' de Coordination et d 'Evaluation du Programme Sectoriel. The establishment o f the Steering Committee uses existing institutional arrangements which will contribute to strengthening the coordination o f the Justice Sector Program among the several stakeholders, including development partners and will strengthen the use o f the Comite' de Coordination et d'Evaluation du Programme Sectoriel Justice as the coordination mechanism o f the Justice Sector Reform Program. Moreover, expanding the Comite' de Coordination to likeminded institutions such as ARMP, CENTIF, and CNLCC which all aim to improve economic governance will foster better coordination and follow up on investigations carried out b y ARMP, CENTIF, CNLCC by the judiciary branch and foster a strengthening o f collaboration while enhancing the project's effectiveness. C. Monitoring and evaluation o f outcomeshesults 53. The M&E system will be based on the agreed Results Framework and monitoring arrangements (Annex 3, Results Framework and Monitoring). The M&E function will be carried out by CEDAF. A quarterly monitoring table and progress reports will be prepared and submitted to IDA by CEDAF. A Project Implementation Plan (PIP), a Financial Management 14 Plan, and an overall Procurement Plan will be prepared to help produce a Project Implementation Manual (PIM). The P I M will include all periodic reporting and M&E arrangements throughout the Project cycle. The P I M w i l l state that independent operational audits will provide impact assessments and identify ways to improve project management and results. The reports for such operational audits will be furnished to IDA by June 201 1, December 2012; and March 2014, respectively. 54. The CEDAF M&E team will be responsible for collecting the data and managing and monitoring the agreed project development outcome indicators. 55. The primary monitoring mechanism will be quarterly reports and annual reports prepared by the CEDAF Coordinator and presented to the steering committee. These reports will assess achievements against the PIP and overall project progress using the indicators defined in the results framework. All reports will be submitted to the World Bank and shared with other development partners involved in the sector when needed. A mid-term review will be carried out to assess results and draw lessons from the Project. An Implementation Completion and Results (ICR) report also will be prepared. D. Sustainability 56. The Project provides financial and technical assistance for institutional reforms for well- defined, time-bound activities that include permanent improvements in the Borrower's institutional framework and investment climate. These changes are, by and large, irreversible and highly unlikely to be reversed in light o f the benefit accrued to the population through a more efficient justice sector and an improved investment climate. 57. Project preparation has several features that strengthen the sustainability o f the proposed activities. These features include (a) clear political commitment, (b) substantial consensus building, and (c) significantly participatory preparation between the Borrower and the Association. 58. The political commitment to carry out these reforms i s well exemplified by the fact that the President o f Senegal has asked the country's administration to work diligently to improve Senegal's investment climate. This high-level commitment i s well complemented by the fact that substantial consensus building at the technical level involving relevant stakeholders had been carried out with PIPP financing. In addition, the current Project was prepared based on a participatory approach and an exemplary collaboration with the Borrower's representatives. This approach was facilitated by the fact that the majority o f the World Bank staff working on the project are based in Senegal, have acquired a good knowledge o f the country, and can consult with the Borrower daily and cost effectively. 59. To strengthen the sustainability o f the activities, the assistance being provided under the Project was selected strategically. Several aspects could be supported to improve the investment climate or the justice sector. However, the key areas chosen were based o n the level o f readiness and buy-in that enables these reforms to be carried out and sustained. 15 60. This approach i s usefully complemented by the fact that the proposed activities build on areas in which past reforms have been successfully completed. For example, the investment climate reform built on the fact that Senegal was ranked best reformer in Africa in the 2009 Ease o f Doing Business Index thanks to the reforms that had been carried out, including the modernization o f the commercial registry. 61. Additionally, the sustainability i s reinforced by the presence o f the technical will and ability to implement the reform. The latter were indicated by the successful implementation o f the modernization o f the commercial registry and the preparatory work to implement the reform related to the indicators: (a) contracts enforcement, (b) protecting investors, and (c) closing a business. 62. Some features o f the Project design also enhance sustainability. For example, to avoid creating a salary structure that could not be sustained at the Project's closing, the Project does not finance staff salaries. Moreover, the training and the development o f procedures and systems are key features o f the project assistance. The Project aims at making CEDAF an institution o f excellence through the acquisition and maintenance o f an I S 0 900 1-2009 quality management certification, which foster a culture o f excellence. E. Critical risks and possible controversial aspects 63. The potential risks identified at this preparatory stage and the corresponding mitigating measures follow: 16 I. Country and/or Sub-National Level Risks Macro-economic The robustness o f the regional Slippages in macroeconomic Framework monetary arrangements, the relative policies would be mitigated by comfortable fiscal situation, the risk close monitoring and o f significant macroeconomic coordination by IDA, IMF and slippage in the form o f sustained other donors. The need for inflation or negative growth i s external borrowing would be moderate. reduced by increased grant resources. However, the economy remains vulnerable to some structural Sustaining sound macro policy constrains such as: stance: The authorities are pursuing corrective fiscal - maintaining fiscal discipline; actions undertaken at end- - diversifying the sources of growth; Substantial 2008, including the settlement Moderate - improving competitiveness. o f domestic arrears, which should partly offset external shocks. The Government i s also adopting reforms which contribute to improving the investment climate - including the infrastructure- and diversify exports, which will help foster growth. These actions would contribute to Senegal maintaining i t s positive growth in 2009- 10. International One external risk that has to be The government has so far financial and monitored i s the fiscal and carried out relatively prudent xonomic crisis, economic impact of the measures in response to recent and food and fuel international financial crisis and international developments price stability. food and fuel price stability. So far, and continues to maintain a this impact has been relatively dialogue with the development limited, but there i s a risk of partners on appropriate policy deterioration depending on responses and the possible developments of the global need for augmented economy. This could lead to fiscal Substantial concessional external aid in Substantial pressures on the government budget. the form of grants. A prolonged global economic crisis could constrict investment flows, exports and reduced the level o f remittances. The downturn in tourism arrivals due to the suspension of Air Senegal's operations could exacerbate the negative impact on tourism. Zountry The collaboration between the Eliminate arrears and place ngagement with government and the World Bank i s country's fiscal stance on Moderate Moderate he World Bank in relatively good standing. sustainable track. ind IDA Portfolio 17 Description of risk Mitigation measures The accumulation of government Ensure payment of counterpart arrears led to delays in the payment funds: The Bank team i s o f counterpart funding (CF) in FY08 working closely with and FY 09. Government so that all 2008 CF arrears are paid in early 2009, and adequate finding i s secured Country Vested interests and rent-seekers Although the preparation of Governance have been significant obstacles to the budget and its approval by reform in the past. Recent elections the Parliament come under have reinforced this tendency, as scrutiny in Senegal and the policy makers have been more budget i s published on a web prone to handle matter related to site, ex-post controls by the their term rather than in Substantial judiciary and the legislative Moderate implementing the longer term branches are deficient. The reforms agenda. Influentialgroups CFANCPAR action plan and have thus undermined policies PEFA performance report, reforms, including in edible oil and among other, would be used as energy. instrument to address governance issues. Political risks Senegal i s vulnerable to regional The authorities have appointed political instability. Additionally, a Cabinet member to address the instability in Casamance with an the lingering issue of absence of peace could pose a Casamance and regional substantial risk to stability. Substantial institutions such as CEDEAO Moderate and the international community are helping adopting mitigating measures to reduce political instability. 11. Sector Governance, Policies and Institutions Sector-specific Resistance could come from The Ministry of Justice has Risks stakeholders in the Justice Sector build consensus during a two who are used to administering days retreat in May 2009 with justice in a certain manner and all the key stakeholders. The could thus resist the change. consensus i s broad and i s Substantial likely to overcome resistance. Moderate Moreover there are champions who are driving the reform and are both keen to implementing the reform and consensus ~ builder. There have been a high turnover o f The political commitment to Ministerialposition in Senegal over. carry out the justice sector the last few year which could reform has been clearly stated undermine the political commitment in the PRSP as well as at the to the justice sector reform Presidential Investment Substantial Moderate Council. This risk has been mitigated by supporting reforms which benefit from consensus and for which there i s a champion and 18 the technical capacity to bring about the change. 111. Operation-specific Risks Technical Design While improving access to justice The Project i s designed to result from the Borrower's request, complement the financing it directs project's resources towards from both the Government and an area which requires substantial other donors. As such, this investment to generate results. would partially mitigate the Substantial Moderate risk that the project cannot provide substantial financing for the sub component improving access to justice. Implementation Implementing agency I n line with the Paris Capacity and implementationcapacity needs to be Declaration and the increased Sustainability strengthened. emphasis on national systems, the Project will be implemented by Cellule d'Exe`cution Administrative et Financidre (CEDAF) - the technical unit in charge o f implementing the Justice Moderate Sector Reform. CEDAF's Moderate implementationcapacity, its fiduciary functions will be reinforced by the Project. I n fact, the Project will help CEDAF obtain I S 0 9001 certification for its services, thus becoming a center o f excellence in the administration. Financial Inherent risks, such as: The Project will be Management - Poor governance/cormption in implemented by a CEDAF, the areas where activities will be and the Bank will pay special implemented attention during the supervision mission to the Control risks such as: adequacy o f the F M system - Limited knowledge o f Bank's iniplemented (see details in F M and procurement procedures Substantial Annex 7). Moderate - N o internal audit functions in The project will also finance place - Lack o f strong systems of the capacity building o f CEDAF in accounting and external audit - Risk of mingling funds with financial management. other projects (see details in Annex 7) The implementationentities in The Project will use the Substantial Moderate :harge of the implementationof,the financial management 19 E Risk factors Description of risk Project may not have acceptable financial management capacity. Mitigation measures arrangements o f PSAOPl and 2, which have already benefited from capacity building in financial management and was rated satisfactory by the last assessment o f the F. Management review. The implementation entity does not The Project will reinforce the have a complete knowledge and procurement training and practice o f Bank procurement qualifications o f the staffs who guidelines. have been exposed to Bank procurement procedures under PIPP and which i s satisfactory according to the procurement assessment review carried out Substantial Moderate in May 2009. Additionally, the project will recruit a procurement specialist to help carry out the procurement functions during the initial period of the project and train the CEDAF staff in procurement, Social and The project i s mainly institutional Environmental capacity and technical assistance for Safeguards sub sector reforms. There i s no direct or indirect physical Low Low investment and no environmental issue i s present. IV. Overall Risk (including Reputational Risks) Overall Risk I Moderate to substantial I Moderate Memo items: Rating o f risks on a four-point scale - High, Substantial, Moderate, Low - according to the likelihood of occurrence and magnitude o f potential adverse impact F. Loadcredit conditions and covenants 64. Effectiveness conditions. The following events would be conditions o f effectiveness o f the Financing Agreement (most o f the conditions are expected to be fulfilled before Board presentation): 0 Borrower has adopted the Project Implementation Manual (PIM), which includes a Project Implementation Plan (PIP) and Manual o f Administrative, Financial and Accounting Procedures, satisfactory to IDA in form and substance. 20 0 Borrower has established, or caused to be established, a computerized accounting and financial management system for the Project satisfactory to IDA. 0 Borrower has recruited the following qualified and experienced staff for CEDAF, under terms o f reference and terms and conditions acceptable to the Association: an accounting specialist, a financial management specialist. 65. Disbursement conditions: Prior to disbursement o f Part C (Strengthening the demand side o f economic governance), subcomponent 2: Strengthening the Anti-Corruption Commission (Commission de lutte contre la non transparence, la corruption et la concussion), the Recipient shall have implemented an action plan in form and substance satisfactory to the Association to enhance the relevance and capacity o f the CNLCC in a manner satisfactory to the Association. 66. Other conditions: 0 Borrower shall conduct, in collaboration with IDA, a mid-term review o f the Project no later than 20 months after project effectiveness 0 Borrower shall prepare and submit to IDA a progress report on the implementation o f the Project that includes progress toward meeting the Project development objectives and performance indicators b y November 30 and M a y 3 1 o f each calendar year. This report will be prepared by CEDAF. 0 Borrower shall undertake three operational audits o f the Project and submit the corresponding operational audit reports to IDA no later than June 20 11,December 2012, and March 2014, respectively. 0 Borrower shall provide an annual financial audit o f CEDAF no later than six months following the end o f the year for which the financial audit i s being carried out. 0 Borrower shall complete a detailed independent impact assessment o f the Project and submit it to IDA no later than three months prior to the Project closing date. IV. APPRAISAL SUMMARY A. Economic and financial analyses 67. Given that this operation consists o f technical assistance to build capacity for an improved investment climate and economic governance, i t s direct benefits cannot be completely captured in a cost and benefit analysis. Therefore, a full economic and financial analysis, including cost and benefit quantification, would not be the appropriate tool to assess the significance o f this Project. 68. The pace and depth o f the reforms envisioned, as well as the quality o f the technical assistance delivered in this operation, will determine the ultimate economic and financial benefits o f this Project. The Project's resources will be used to foster better governance. 69. Project economic benefits: 21 For example, under component 1, improvement o f the investment climate is expected to foster competitiveness o f the economy and private investment. Competitiveness, in turn, will lead to higher economic growth and j o b creation.' Similarly, supporting justice sector performance i s intended to remove another key bottleneck to finance and private sector development; hence, the support or Justice Sector improved performance will facilitate investment and economic growth. Indeed, as documented in the l i t e r a t ~ r e there i s a positive correlation between judicial efficiency ,~ and the influx o f external finance. Finally, under component 3, addressing corruption on both the demand and supply sides ultimately will help attract more private investment because investment i s the main channel through which corruption affects economic performance. lo 70. The above items are examples o f economic benefits expected from the Project's implementation. The Project will contribute to long-term development impact. 7 1. f Measurements o economic costs: IDA credit amount to US$8 million equivalent. Government contribution o f U S $ l million for salaries and operating costs. B. Technical 72. The Project i s technically sound. I t i s consistent with the Government's PRSP and Accelerated Growth Strategy 73. I t s design takes into account lessons learned from previous operations in Senegal and elsewhere. I t s estimated economic benefits are high, and its development impact i s significant. The Project's four components are well focused and mutually reinforcing and are based on a PSJ, which benefits from strong government commitment. Each component i s well defined and draws on World Bank group experience and good practices. 74. The detailed component by component analysis can be found in Annex 9: Economic and Financial Analysis. C. Fiduciary Financial management arrangements 75. The inherent risk o f the public financial management system in Senegal i s rated "Substantial" at the country level. In line with this rating, the project's rating for financial management i s substantial. The adoption o f mitigating measure brings the residual risk rating to modest. The Project's detailed financial management and disbursement arrangements are found in Annex 7. Strengthening the Project's FM and disbursement arrangements, which will be 8 World Development Report (2005). La Porta and others (1997), Demirguc-Kunt and Maksimovic (1998), and Galindo (2001). loMauro (1998). 22 financed under the Project, will enable CEDAF to have the staffing, process, and internal control systems for a sound implementation o f the Project. Strengthening FM also will contribute to the establishment o f CEDAF as an institution able to effectively discharge its functions. This process has started and will continue throughout the Project's implementation. For example, the Project will help ensure that an FM specialist who has the relevant educational qualifications and experience, as well as familiarity with financial management o f World-Bank-funded projects i s appointed. Moreover, CEDAF' S accountant will be given additional training. The Project also will strengthen the accounting and FM by establishing a computerized accounting and FM system at CEDAF, as well as adopting an administrative and financial accounting manual. These steps will be complemented by strengthening an internal audit function and completing an annual financial audit o f the Project's account. In the spirit o f building country systems, and subject to reaching an agreement with other development partners, one joint financial audit will be carried out for all the funds managed by CEDAF. Procurement 76. Procurement would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA credits" dated May 2004, revised October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated M a y 2004, revised October 2006. Guidelines on Preventing and Combating Fraud and Corruption in Projects financed by IBRD Loans and IDA credits and Grants" dated October 15, 2006 shall apply to the project. 77. The overall project risk for procurement is substantial and is expected to be moderate once the mitigation measures agreed upon are implemented. The assessment carried out during Project preparation showed that the main issueshisks concerning the procurement activities for the Project's implementation are (a) CEDAF has not yet developed an administrative manual for i t s operations; (b) although the team benefited from training in archiving and i s technically ready to use the manual o f archives recommended by ARMP, the equipment for filing hard copies o f the relevant documents has not yet been purchased due to inadequate budget allocation; and (c) although it has received assistance from several donors including the European Union, UNDP, and the World Bank, CEDAF i s not familiar with World Bank procurement procedures and has insufficient experience in directly managing a project. 78. To address these risks, the Project will finance four activities: (a) elaboration o f a manual o f administrative procedures including procurement process and quality control responsibility; (b) acquisition o f office furniture and filing system; (c) training o f all CEDAF staff, as well as the staff from the Justice Ministry's Procurement Unit, in World Bank procurement procedures; and (d) recruitment o f a procurement specialist in a full time position at least for the first two years o f the Project's implementation to provide technical assistance to bring support and institutional capacity building to the whole CEDAF technical team and to the relevant staff o f the Ministry o f Justice. In developing the institutional capacity in procurement, the approach will be to emphasize that the technical specialists and experts will receive the basic procurement training. In this way, the technical responsibilities in preparing the procurement packages- including the terms o f reference-and amending the basic procurement document templates, such as data sheets, remain tasks that are carried out by the relevant specialistlexperts and are not passed to the procurement team. 23 D. Social 79. The primary goal o f the proposed project i s to contribute to improve economic governance through enhancing the investment climate and improving the performance o f the judicial system. The Project provides financial technical assistance for institutional reforms for well-defined, time-bound activities that include permanent improvements in the Borrower's institutional framework and investment climate. These changes are expected to translate into significant positive impacts on the population. 80. The three items listed below are examples o f benefits expected from the Project's implementation. a Under component 1, improvement o f the investment climate is expected to foster the competitiveness o f the economy and private investment. This, in turn, will lead to higher economic growth and j o b creation. l1 Similarly, supporting the justice sector performance i s intended to remove another key bottleneck to finance and private sector development, thus facilitating investment and economic growth. Indeed, as documented in the literature, l2judicial efficiency correlates positively with the supply o f external finance. a Under component 3, addressing corruption on both the demand and supply sides ultimately will help attract more private investments since investment is the main channel through which corruption affects economic performance. l3 81. Additional benefits o f the Project include the improved access to, and faster delivery of, justice for all citizens through component 2. The project also will improve governance, make several key institutions such as CENTIF and ARMP more effective, and ensure a level playing field in procurement o f goods and services funded with taxpayer revenues. The Economic Governance Project will contribute to ensuring that taxes collected from citizens are used more effectively and efficiently by fostering greater transparency in public procurement o f goods and services. E. Environment 82. The Project comprises mainly institutional capacity building and technical assistance for subsector reforms. There i s no direct or indirect physical investment. The proposed Project has no environmental impact. F. Safeguard Policy Checklist Safeguard policies triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) I1 World Development Report (2005). l2L a Porta and others (1997), Demirguc-Kunt and Maksimovic (1998), and Galindo (2001). l3Mauro (1998). 24 Physical Cultural Resources (OP/BP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [ XI Indigenous Peoples (OP/BP 4.10) [I [ XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OP/BP 4.37) 11 [XI Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [ XI Piloting the Use o f Borrower Systems to Address Environmental and Social Safeguard Issues in Bank- [I [XI Supported Projects (OP/BP 4.00) * By supporting the proposed project, the Bank does not intend to prejudice the final determination o f the parties' claims on the disputed areas. 83. Since the project does not trigger any safeguard policies i t s environmental category i s C. G. Policy Exceptions and Readiness 84. Compliance with Bank Policies. The proposed project complies with all applicable World Bank policies. 85. Readiness. The status o f readiness criteria is: a CEDAF will implement the project so no P I U needs to be set up. The World Bank will strengthen CEDAF's ability to implement the project. a A detailed draft Procurement Plan for the first 18 months o f implementation has been prepared. a Eight (8) terms o f reference for different technical assistance work to be carried out have been prepared jointly with the Borrower. a There are no safeguard disclosure requirements for this project and a Monitoring and evaluation arrangements and capacity are in place to collect the agreed monitoring indicators. Most baseline data have been collected, and the period between the negotiations and the Board Approval will be used to collect data related to the current performance o f the justice sector. 25 Annex 1: Country and Sector o r Program Background SENEGAL: Economic Governance Project 1. Senegal i s located on the West Coast o f Africa, and i s part o f the West African Economic and Monetary Union (WAEMU). With an estimated population o f 12 million, i t s economy i s dominated by several strategic sectors: groundnuts, fisheries, and services. Senegal has an average per capita income o f approximately US$820 (2007) and ranks 153 o f 177 countries in the 2007 UN Human Development Index. The informal sector accounts for approximately 60 percent o f i t s economy. The importance o f the agricultural sector has declined over time, from almost 15 percent o f GDP in 1960 to 7 percent in 2004. I t s rural economy suffers periodically from drought and lacks access to basic services and infrastructure. The country's challenges are compounded b y the fact that that almost half o f the population lives in cities, including 30 percent in Dakar and i t s surrounding areas. The urbanization ratio i s projected to increase by as much as 60 percent by 2015. Since the mid-l990s, Senegal's macroeconomic performance has been encouraging, with an average annual real gross domestic product (GDP) growth o f nearly 5 percent annual over a 10-year period. This was the first sustained increase in average per capita growth since independence in 1960, and was supported by a stable overall macroeconomic environment. For much o f this time, growth has been driven by tourism, construction, and telecommunication. Growth was supported by a significant increase in foreign direct investment (FDI) since 2003, as well as significant debt forgiveness within the Heavily Indebted Poor Countries (HIPC) initiativehlultilateral Debt Relief Initiative (MDRI). 2. From the mid-1990s until 2005, Senegal had one o f the best economic performances in Sub-Saharan Africa. Though there were brief episodes o f l o w growth, real GDP grew on average by approximately 5 percent annually, marking the first sustained increase in average per capita growth since independence in 1960. Poverty declined rapidly. The fraction o f the population who fell below the poverty line declined from 68 percent in 1994-95 to 51 percent in 2005-06. The regional monetary arrangement was a currency union, managed by the supranational Central Bank o f the.West African States that provided a framework o f monetary and price stability. The currency was pegged to the French franc until 1999, and to the euro since then. O n the fiscal policy front, the authorities pursued a broadly stable track, enhancing revenue mobilization and maintaining control o f current expenditures, while gradually increasing in capital and pro-poor spending. The achievement o f the HIPC completion point in 2004 and the MDRI in 2005 combined with prudent concessional external borrowing enabled a sharp reduction in the debt stock. 3. In 2006-07, however, a series o f shocks buffeted the Senegalese economy. The run-up in o i l prices and, starting in 2007, the surge in food prices weighed down the economy. From an average o f 0.5 percent over the previous 3 years, o i l and food prices drove up end-of-period inflation in 2006 to 4 percent and in 2007 to 6 percent. Escalating o i l and food prices also contributed to a widening o f the external current account deficit. Senegal imports all o f i t s o i l (which powers most o f i t s electricity), and 80 percent and 100 percent o f i t s rice and wheat consumption, respectively. Sharply higher o i l prices and a policy-mandated incomplete pass- 26 through to retail electricity prices compounded internal inefficiency in the electricity parastatal, SENELEC, resulting in high costs and blackouts, which hurt economic activity. l4 4. Other shocks were internal. Poor rains in both 2006 and 2007 depressed agricultural output by approximately 15 percent in each year. Despite the sector's small share o f GDP - approximately 7 percent in 2006. Falling agricultural output contributed to trim at least 1 percentage point in overall GDP growth in both years and to exacerbate the impact on the population o f escalating food prices. Deep financial difficulties in the largest exporting firm, the phosphate mining and phosphoric acid production firm, I C s which is majority foreign private- owned, led to a sharp slowdown in i t s activity, and another loss o f 1 percentage point o f GDP growth in 2006. (The company was recapitalized in early 2008.) 5. As stated in its Poverty Reduction Strategy Paper (PRSP) and Accelerated Growth Strategy, the government o f Senegal intends to reduce poverty by half by 2015.15 To do so, Senegal needs to increase its annual growth rate from 4 percent to 7 percent or more. Mindful o f the fact that this rate o f growth will not be generated by the public sector, the government has adopted a strategy that makes the private sector the engine of its economy. The Government also has determined that, to foster private sector growth, it must improve the investment climate and economic governance. Investment Climate 6. According to the recent investment climate assessment conducted in Senegal16, the following issues stand out as particular concerns for enterprises (Figure A. 1.1): 0 Poor electricity supply: Six f i r m s o f 10 rated erratic electricity as a serious problem. 0 Limited access to finance: Half o f interviewed managers rated it as Senegal's major growth constraint. 0 Corruption and regulations were also mentioned by Senegalese f i r m s as major concerns. 7. Overall, i t emerged from this analysis that, despite some recent improvements, Senegal's investment climate remains relatively poor. Hence, bold steps to reform the investment climate are essential to reach the goal o f accelerating growth. l4 SENELEC's 2006 losses alone required an injection o f budgetary subsidies equivalent to 1.8 percent of GDP. ''The overall poverty rate i s estimated at 57 percent. l6 Investment Climate Assessment for Senegal (June 2009). 27 Figure A.l.l Constraints Identified by Micro, Small, Medium, and Large EnterDrises in Senegal SMFEs Micrpsntap4isss Source: World Bank Enterprise Survey 2007. Governance Issues 8. Corruption has been recognized as a key obstacle to a l l economic development. A large body o f literature initiated by the seminal work o f Mauro finds that corruption has a negative effect on growth.17 These analyses argue that the bulk o f the effects o f corruption on growth affect private investment. One o f the consequences o f corruption has been to push poor countries more deeply into poverty. Developing countries' realities demonstrate the correlation between poverty rates and levels o f corruption, making the phenomenon a vicious cycle whereby corruption invites poverty and poverty incites further corruption. 9. As a result, corruption i s a significant obstacle for doing business in Senegal, as confirmed by private sector surveys. According to the Investment Climate Assessment 2008, 40 percent o f manufacturing f i r m s and 39 percent o f service companies reported that corruption i s a "major" or "very severe" constraint. Nine percent o f manufacturing companies reported that they give "gifts or informal payments'' when visited by government inspectors, with a higher frequency reported by large companies and exporting companies. Gifts and informal payments are more frequent among local firms (14 percent) than foreign companies (8 percent). The average value o f each o f the gift i s 0.15 percent o f the company's annual revenue. 10. Reflecting this situation, Senegal was ranked 85 o f 180 countries by Transparency International (TI) in i t s 2008 Corruption Perceptions Index (CPI).18 In addition, according to the Global Corruption Barometer 2007, 38 percent o f respondents in Senegal reported having to pay a bribe to obtain public service, and 56 percent perceived the government's fight against corruption as ineffective. As a comparison, Cape Verde, which i s the best-ranked country in the Region, i s 47 in the world, based on the same T I ranking. 11. In tackling corruption in Senegal, authorities will have to address corruption-prone areas such as procurement or the justice sector. Indeed, dysfunctions in the latter create opportunities "P. Mauro, Corruption and Growth, The Quarterly Journal o f Economics, 110 (3): 681-712 (1995). ''w w w . t r a n s p a r e n c y . o r ~ n e w s ~ r o o m / i n ~ ~ o c u s / ~ ~ ~ / c p i ~ ~ ~ ~ . 28 for petty or grand corruption. I t i s established that corruption in Senegal is widespread and '~ reaches all components o f the justice p r o c e ~ s . It i s common that bribes are paid to speed up or slow down cases, or to lose files.20 Despite islands o f integrity, some reports have shown that all professions within the justice system including judges, prosecutors, administrators, and secretaries, are involved in various corrupt practices.21 Justice Sector 12. The modernization o f the justice system i s among the priorities o f Senegal's Poverty Reduction Strategy Paper (PRSP) (Document de Strate'gie de Re'duction de la Pauvrete' 2006- 2010) as well as the revised National Economic Governance Program (Programme National de Bonne Gouvernance). The justice system also i s one o f the sectors in which the government is piloting the transition toward program budgeting, which entails the funding o f activities that are based o n a clear program and i s also used to set performance targets for the operation o f the courts. 13. To implement all o f these initiatives, in 2004 the government adopted the Justice Sector Program (Programme Sectoriel Justice, or PSJ). I t s goals are to (a) rationalize the construction and rehabilitation o f key infrastructure, such as the court house; (b) bring the judicial system closer to those seeking justice and improve the way that users experience the justice system; (c) hire and train professionals to reduce delays in carrying out justice and improving working conditions and performance in the Justice Sector; and (d) promote the use o f information and communication technologies as well as modernize work processes. With donor support, a process o f reorganization o f central services and capacity building is being carried out to implement the PSJ and to complete the transition toward program budgeting. 14. The PSJ covers 2004-12. I t is divided in four phases: a preparatory phase (2004) and 3 3- year programs (2004-06, 2007-09, and 2010-12). It follows the newly established program budgeting approach. The PSJ has organized Justice Sector expenditures according to the following modules. The first module aims to improve the working conditions o f justice sector professionals and reduce the gap between the justice sector and i t s users. The second module has the dual objective o f overcoming the under-performance o f the justice sector, especially by reducing delay, and contributing to the revalorization o f the work o f judges, prosecutors, and court staff. The third module aims at (a) improving the training o f the actors in the judicial system, (b) facilitating their reassignment, (c) enhancing their capacity, and (d) enabling the Ministry o f Justice to fully exercise i t s function to oversee the functioning o f the courts and related services. 15. The implementation o f the Justice Sector Program i s the responsibility o f the Cellule d 'Exe'cution Administrative et FinanciBre (CEDAF), which i s an administrative unit which reports to the Ministry o f Finance, as shown in the organization chart below. 19 USAID, Corruption Assessment Senegal (2007), 23. USAID, Corruption Assessment Senegal, (2007), 24; G. Blundo and J.P. Olivier de Sardan, La corruption au quotidien en Afrique de 1'Ouest-Approche socio-anthropologique comparative: BBnin, Niger et SCnegal (2003), 185-196. 21 M.T. Alou, La corruption dans la justice au Benin, au Niger et au SBnegal(2005). 29 16. The Government o f Senegal intends to mobilize some CFAF 50 billion (approximately US$110 million) to carry out the PSJ. At present, this amount has not been mobilized. The Government identified an overall need o f CFAF 118.5 billion to fully implement the PSJ and has requested technical and financial assistance from development partners. Based on current commitments from development partners, only part o f this funding has been secured. 17. In recent years, certain improvements in the justice sector have been achieved through increased investments under the PSJ. For, example, working conditions for some justice sector professionals have improved through the partially completed establishment o f an ICT-based case management system in civil, commercial, criminal, social, and family matters in many courts. The commercial registry in Dakar also has been automated and computerized, making registration faster and records more accessible. 18. Nevertheless, the consensus i s that, despite these efforts, the wide-ranging nature o f the reform needed and the challenges that it poses are such that a great deal remains to be done. The continuing under-performance o f the judicial system, especially delays in rendering and enforcing decisions and in closing businesses, undermines the credibility and relevance o f the courts. In addition, user-unfriendliness tends to disempower certain segments o f the population when they are in need o f judicial services. 30 3 m Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies SENEGAL: Economic Governance Project 1. Recognizing the critical importance o f improving the effectiveness o f justice and the investment climate, the government prioritized these two aspects in i t s Poverty Reduction Strategy Paper (PRSP). In fact, Pillar 1 o f the government's PRSP 11-Wealth Creation for a Pro-Poor Growth - and Pillar 4 - Good Governance and Decentralized and Participatory Development-emphasize the importance o f improving the effectiveness o f justice and the investment climate. The World Bank Country Assistance Strategy (CAS) for FY08-11 2 has : improve the effectiveness o f Senegal's justice and investment climate as key areas. 2. As such, the World Bank already i s providing assistance to the government o f Senegal for the PSJ and i t s investment climate reform as follows: Investment climate 3. With support provided through the ongoing Private Investment Promotion Project (PIPP), the government already has taken concrete actions to improve the investment climate. As a result, the 2009 Doing Business Report ranked Senegal the best performer in Sub-Saharan Africa in annual improvement o f the investment climate. 4. The private sector adjustment program (PSAC) supported the government's poverty reduction strategy through improving the investment climate. Assistance then was provided to the government to implement a private enterprise tax regime to stimulate investments through a level playing field and lower taxes. As a result, in 2005 the Marginal Effective Tax Rate (METR) was reduced from 45 percent to 25 percent. Justice ' 5. The World Bank provided CFAF 40 million for the drafting o f the original PSJ, which was completed and i s being updated. The Private Investment Promotion Project (PIPP) funded the automation o f the Commercial Registry (Registre de Commerce et du Cre`dit Mobilier) with an amount o f CFAF 350 million. The Bank also provided CFAF 19 million for the workshop on the revision o f the Medium-Term Expenditure Framework for the Justice Sector (CDSMT/Justice), which has provided the Ministry o f Justice the capacity to transition smoothly toward program budgeting. 6. Through i t s focused approach, the Economic Governance Project will complement activities that are supported by other development partners (Annex 12). 22 Approved by the I D A Board on May 2007. 32 Annex 3: Results Framework and Monitoring SENEGAL: Economic Governance Project Table A.3.1 Economic Governance Project Results Framework Project Development Objective rs Improve aspects o f the functioning - Reduced case processing delay and backlog Assess impact of Project o f the justice sector relevant to the by 30% between 2009 and 2014 at the and effectiveness of i t s investment climate. Tribunal Rkgional de lere Instance de Dakar different components. -The average time to enforce a commercial contract i s reduced from 780 to 365 days by 2014. -The average time to close a business i s Intermediate Outcomes Component 1: Improving the investment climate .................. ...~. ." -.........- ... ............... I Senegal's index rating for protecting investor , " " _"_" " "_ Shareholder protection i s enhanced. improves from 3.5 in 2010 to 7 in 2014. ! I ....... . _ i . ! .... . . I __ ~ " ___ ~ Component 2: Improving court performance management and user-friendliness .- . . . ~ . . The judiciary collects, evaluates j Annual publication on the performance o f the Officially publish I and acts upon accurate and timely statistical information that relates Tribunal Rkgional de PremiBre Instance de Dakar. 1 statistical reports, including from surveying that i s to be introduced. to case disposal delay and user ; satisfaction in the Tribunal i i Court exit surveys on Regional Hors Classe de Dakar. service delivery. ............................................... ._ . . .. i -__.I_._.-_ ~ Component 3:. Strengthening good governance CENTIF able to fully carry out i t s Number o f cases properly pursued doubled Economic governance mandate. ... " from 12 to 24 by 2013. - _ "" improvements assessed through, for example, T I ~ ~ Reinforce capacity o f Investigation Percentage of receivable cases investigated Unit. 1 increased from 0% to 85% between 2009 and ranking and improved 12014. procurement. ! User survey regarding .. .. specific case. " " 1 No-bribe integrity pact developed and adopted " ~ ~ Reduce acceptance of corrupt practices as normal course o f 1 _. by at least 100 firms ~.~ ....... doing business in Senegal. " ~ !Ethical business certification developed and ! adopted by at least 50 firms ....i....~ I ~ ..... 2 ~ ................. " _. Component 4: Strengthening CEDAF and implementationsupport ......"I.__._....... I CEDAF certified I S 0 900 1 by 20 14. .............................................................................................................................................................................................................................. "" CEDAF becomes center of Assess quality o f project excellence. I implementation and that ~ o f the Justice Sector i Program. 33 4 4 a 2 2 u u s 3 9 u - m E 'E 0 VI C + .I E 5 ? 0 V m h E : - W I- 4. c I P i L 6 ? m V n I > I- v \o s I- c U C a t C $ 5 0 v) E a u ! 0 m C 0 L m h m O C I r 4 00 L 0 0 4 Ifl N 00 N c. cr 4 c E: m c 3 O W E m s 0 E v) U 0 0 I- x 0 0 m 2 E: 0 C 3 E: 2 2 9 u 3 u 6 e ....... E E 0 e i J z I . E : I L i 2 ._........... 1_ ."_ - I 01 Annex 4: Detailed Project Description SENEGAL: Economic Governance Project Component 1: Improving investment climate (US$2,200,000) 1. As demonstrated in the World Development Report 2005: A Better Investment Climate for Everyone, the quality o f the investment climate drives both investment and productivity, the main sources o f long-term growth.23 As a result, many governments have embarked on reforms that should improve their investment climates. Senegal i s one o f these countries and has been partially successful in implementing these reforms, as reflected in i t s ranking as the best reformer in Sub-Saharan Africa in the Doing Business Report 2009. As such, this component will focus on legal reforms that are necessary to improve the investment climate. These reforms will complement the ones already completed - and those ongoing - aimed at making Senegal 1 o f the 10 countries with the best business enabling environment in Sub-Saharan Africa. The Project will focus on three subcomponents: (a) enforcing contracts, (b) closing a business, and (c) protecting investors. Under this component, the Project will provide technical assistance and capacity building to support legal and institutional reform and implementation to significantly improve the performance o f the three subcomponents. Subcomponent 1: Enforcing judicial decisions (US$1,300,000) 2. This indicator measures the efficiency o f the judicial system in resolving a commercial dispute. The data i s captured by following the entire process o f debt recovery through a dispute before local courts. The three aspects that are captured in the indicator-enforcing contract are the (a) number o f procedures; (b) time, and (c) cost. The procedures capture the number o f steps mandated b y law or court regulation that need to be undertaken to arrive at the enforcement o f the contract. The time aspect measures the number o f calendar days between the moment a plaintiff files the lawsuit in court until the payment i s made (enforced). The cost i s recorded as a percentage o f the claim made, assumed to be 200 percent o f income per capita. 3. Currently, 44 procedures and an average o f 780 days are needed to enforce a contract (a commercial sale) through the court system in Senegal. O n average, this process costs 26.5 percent o f the value o f the contract. The cost and complexity o f this tedious process hinders the investment climate in Senegal. As a result, less wealth i s created. For example, some studies found that when contracts can be enforced efficiently and cheaply, small businesses receive 23 Broadly defined, the term investment climate includes a country's unique attributes, or "geography" (climate, endowments o f natural resources, distance from important markets and so on), as well as the state o f its infrastructure, economic and social policies, institutions, and governance stability. For operational purposes, a narrower definition i s used that focuses on the endogenous determinants o f investment. For example, Stem (2000a) notes that it i s "the policy, institutional, and behavioral environment, present and expected, that influences the returns, and risks, associated with investment." This definition, in its reduced form, includes economic incentives, which are shaped by macroeconomic and regulatory policies and public administrative procedures, and incentives embodied in institutional arrangements, such as security o f property rights and rule o f law and governance stability. 36 better financial terms on their loans.24 Another study showed that when contracts can be efficiently enforced, f i r m s expand their activities and hire more employees.25 4. Thus, in wealth and employment creation, it i s important to help ensure the efficiency o f the debt recovery process. The Economic Governance Project will support the reduction o f procedures, time, and cost to enforce contracts in Senegal. This assistance will build on reforms started by the authorities with the assistance o f the World Bank Group to improve the investment climate. 5. In 2009, the WBG assisted Senegal to rapidly modernize i t s rules o f civil and commercial procedure. These efforts should be pursued and supported to achieve full impact in enforcement o f judicial decisions and to reduce the number o f procedures and time to enforce a contract. To these ends, the Project will provide assistance to: 0 Support the economic and financial section at the prosecutor's office 0 Specialize commercial judges and rationalize their rotations by extending them for longer periods to accumulate expertise 0 Increase the periodicity o f commercial hearings, currently bi-weekly 0 Improve the pretrial hearing process 0 Establish strict timeframes for commercial cases 0 Foster case management for faster enforcement o f judicial decisions 0 Improve enforcement procedures 0 Improve the speed o f issuance o f decisions 0 Foster M&E o f judges 0 Build a bridge with alternative dispute resolution (ADR) mechanisms 0 Reduce reliance o n and use experts more effectively. 6. Supporting the economic and financial section in the prosecutor's office. The introduction o f an economic and financial section, or pole (F&EP), also referred to as pole e`conornique etjnancier is a home-grown initiative of the Ministry o f Justice to resolve the slow execution o f contracts, as well as handle bankruptcy proceedings. This newly established organization has six mandates: 0 To foster the specialization o f courts and judges through the establishment o f a pool o f expertise located jointly. These experts would have access to a shared set o f information through a management information system (MIS) that would include computer software to track all commercial cases. This tracking system would foster better follow-up by the judges, who are responsible for handling a certain number o f cases. The absence o f a tracking system coupled with the lack o f the clear responsibility o f one individual, as opposed to the court, have been identified by the Ministry o f Justice as the main causes o f the long delays in resolving insolvency cases. 0 To train relevant stakeholders in the use of the tracking software for all the judges who will be working in the financial and economic section, or pole (F&EP). The software will Qian and Strahan (2006). ''Desai and others (2004); Laeven and W o o d r u f f (2004). 24 37 include a window to track all economic and financial decisions so that all judges can verify whether a business has had or has a decision that may affect an ongoing case. The cost for the technical assistance to develop and implement the tracking software and provide the training i s allocated in this component under subcomponent 2, Closing a Business (see below). To develop a performance evaluation system that will be used in the economic and financial section so that the tracking system i s used to assess and reward best-performing judges. The Project also will finance the preparation and establishment o f an evaluation and promotion system for judges thus creating incentives to ensure the timely payment o f creditors. To monitor the financial situation o f firms using the same software to prevent or quickly address insolvency. This innovation i s important in Senegal, in which reorganization procedures often fail because they have been initiated too late, when the finances o f the company are too compromised to be corrected. The development o f this monitoring role does not entail any specific assistance under the project. I t would result as a normal course o f the p d e e'conomique e t j h a n c i e r . To monitor more active participation in insolvency procedures to ensure a continuous flow o f information on the viability o f companies and on securing the interests o f stakeholders. The economic and financial section also would handle the relationship with insolvency administrators and the experts whom the court may consult. This approach would include the participation in the adjudication o f commercial cases through the formulation o f the economic and financial section's position and participation in hearings. To support the establishment o f this economic and financial section through the adoption o f a regulatory framework that governs i t s functioning. The Economic Governance Project will finance the drafting and adoption o f the necessary regulation. 7. The above-mentioned assistance will be financed under component 2 o f the Project and are mentioned here for completeness. 8. Specializing courts and judges. Senegal has focused on ensuring that judges will be capable o f handling courts o f general jurisdiction. Hence, judges typically all have received one standard type o f training yet have been handling cases arising in all areas o f the law. During the same period, a typical judge may handle cases related to divorce, rental payment, robbery, and bankruptcy proceedings o f a large company As a result, commercial cases generally have been handled by judges who may not always have specific training or expertise in that field. 9. Moreover, the Senegalese judiciary has developed a pattern o f relatively rapid rotations. Even when judges are assigned to a court section specialized in handling commercial matters, they are reassigned relatively quickly to a court that generally will handle other types o f cases. This rapid rotation means that judges do not accumulate expertise in one area over time. 38 10. In contrast, examples from around the world illustrate that commercial cases are handled faster and better in countries whose commercial judges are specialized (Australia, Rwanda, The Gambia). This better result based on specialization i s due in part to the particular complexity and the versatility o f commercial rules and practices. The capacity o f specialized judges to provide faster solutions to commercial disputes i s crucial to efficient enforcement o f contracts. Indeed, more than in other areas o f the law, expeditiousness i s the central concern o f commercial parties. For them, cash flows will determine the potential or even the survival o f their business, and a delay in debt recovery always comes at a high opportunity cost. Increasing the time necessary for debt recovery also exposes creditors to the risk o f insolvency and their employees to the risk o f dismissal. 11. Aware o f these realities, the Senegalese Ministry o f Justice and the judiciary have taken initial steps to ensure the specialization o f judges. In some o f the main tribunals, commercial sections have been created, and the judges already have participated in some capacity building activities. These efforts need to be deepened and broadened to ensure that they translate into meaningful impacts in enforcing contracts. Some o f the key steps to sustain the ongoing efforts include: 0 Formalizing the specialization o f commercial judges by adopting regulations establishing the status o f commercial sections and judges. In particular, it i s crucial to avoid commercial judges being assigned cases in matters other than commercial. 0 Introducing regulation that limits the rotation o f commercial judges and creates a career path in which commercial judges can capitalize on their expertise in that field and are given enough time to train more junior judges (to ensure that institutional knowledge and memory i s maintained) before they move to a new position. 0 Contemplating the introduction o f specialized commercial judges in the courts o f smaller cities. 0 Promoting the training o f commercial judges in all areas o f commercial law but also in accounting, finance, and, more generally, in all disciplines directly related to the subject matters o f the cases that they handle. 12. To address these needs, the Project will finance the recruitment o f a consultant to carry out an assessment o f the demand for specialization throughout the country, including in smaller cities to determine whether the introduction o f specialization would be justified. This consultancy will be financed under component 2 under the judicial mapping technical assistance. 13. Additionally, the Project will finance critical training to bring about a speedier execution o f contracts in business law, bankruptcy proceedings, alternative dispute mechanisms, basic accounting, understanding financial statements, finances for nonfinancial specialists, corporate governance, valuation (book value, adjusted book value, and market value), and efficient commercial court proceedings. These will be among the courses available for commercial judges; insolvency administrators; bailiffs; court staff; staff from the Ministry o f Justice, including CEDAF; and relevant personnel from regions outside o f Dakar, such as Thies, St Louis, and Kaolack. These training activities are expected to be delivered to approximately 70 people over 4 years at an estimated cost o f US$150,000. 39 14. Increasing the number o commercial hearings. Judges in Senegal, particularly in f Dakar, had been faced with the lack o f available court rooms that characterized the period that preceded the construction o f the new court house in Dakar, which opened in June 2009. Due to this scarcity, commercial hearings could be held only biweekly. As a result, the backlog o f commercial cases became very significant. This backlog, in turn, affected the efficiency o f commercial judges in two ways: They had to conduct particularly long hearings to hear the dozens o f cases in their docket, leaving them very little time to hear each individual case and better understand it. They developed a positive bias toward granting the postponements that one o f the parties asked for, even if it often may have been a delaying tactic on the part o f one o f the parties or that party's attorneys. This bias led to a situation in which the postponements delayed the timeline o f the proceedings even more significantly, because the hearings were too rare to allow rapid re-hearings o f cases. 15. With the opening o f the new Dakar Court House in June 2009, more courtrooms are available to judges. The Project will provide assistance so that court rooms at the new court house are adequately organized and equipped. It will assist with the revision o f court regulations to ensure that regular commercial hearings are held and that all the necessary court staff are properly trained to handle the technicality o f commercial cases; the training o f court staff will be financed under component 2, as described in the paragraph on support to the economic and financial section at the prosecutor's office. The cost o f the additional consultant to revise the court regulations i s estimated to cost US$50,000. 16. Improving pretrial hearings process. Senegal uses a system called mise en e`tat, which differentiates pretrial hearings from trials, and grants responsibility to specific judges to supervise the preparation o f a particular case. In practice, however, rather than distributing all cases to certain judges who would be in charge only o f pretrial hearings, judges have split the burden among all judges. This solution has been criticized by many professionals who argue that this system has resulted in long delays at the pretrial stage. Moreover, this tends to indicate that the lack o f specialization does not seem to be the only issue. Clear timeframes also are needed as well as better incentives for parties to proceed rapidly. 17. Two solutions that the Senegalese authorities have been contemplating are: Judges specialized to be exclusively in charge o f pretrial hearings. Their rotation should be rather quick (6 to 12 months) as this i s a very specific task, and it is important that judges do not narrow down their scope o f intervention for too long a time. 0 Contrats de procedures agreement, signed either between the individual parties or between the bar association and the court, which creates specific frameworks for conducting pretrial hearings. The Project will finance the technical assistance for the preparation o f a draft framework agreement. The Project will provide assistance so as to reduce the duration o f the pretrial hearings process and make it more efficient through the temporary specialization of judges. Assistance will take the form o f drafting o f contrats de procedure as well'as their promotion and actual adoption. The project will also support the regulatory changes and reorganization necessary to temporarily assign certain judges specifically to mise en etat ( U S I 0 0 , 000). 40 18. f Establishing strict timeframes for the litigation o commercial cases and enforcement o commercial decisions. As highlighted above, given the need for speedy solutions in a f commercial environment, swiftness i s a central quality for the commercial section o f a court. Two major orientations have been discussed to drive courts toward more time efficiency: regulatory and contractual. 0 Regulatory solution. The Ministry o f Justice could, with the support o f the Project, conduct a systematic review o f i t s rules o f civil procedures. The purpose would be to diagnose the current system and identify the provisions that have caused the delays, and to formulate recommendations for their amendment. Senegal could also introduce specific rules o f commercial procedures to address certain aspects specific to this field. The consultancy will also consider introducing sanctions for the legal professionals who would try to use dilatory techniques (US$l50,000) during both the trial and enforcement stage. 0 Contractual solutions. This approach could be in line with the above-mentioned contrats de procedures but expand their scope beyond pretrial hearings to the entire judicial process. Here again, the Project could provide support. 19. O f all three aspects that determine the overall score o f the Doing Business indicator on enforcing contracts, the time needed to enforce judicial decisions is the main reason for Senegal's l o w score. This lengthy time i s due, in part, to the complexity o f the process that leads to the issuance o f decisions to the parties. 20. Several additional constraints exacerbate the slow enforcement time: 0 Lawyers' repeated requests for grace periods and judges' propensity to grant them. This issue should be addressed under the consultancy above (review o f the rules o f civil procedure). 0 Lack o f supervision o f the bailiff system. In practice, this lack o f supervision means that bailiffs often do not make their best efforts to ensure timely enforcement o f decisions. The limited control over bailiffs not only leads to the poor quality o f their service but also increases the risk o f corruption. The Project will help develop the necessary framework for the regulation and supervision o f bailiffs, building on existing initiatives by the judicial authorities. 0 When required to liquidate the claim, the sale o f assets i s a slow and time-consuming process. The project will review the rules on judicial sales as well as examine the practical obstacles to a speedier process. I t will help formulate recommendations for regulatory and operational improvements. 21, A consultancy will examine these two latter aspects and design workable solutions to speed up the enforcement process (US$lSO,OOO). This consultancy could be conducted in parallel with the one above focused on reviewing the rules o f civil procedure (hence for a total o f US$250,000). 41 22. Fostering case management for faster enforcement.' Of judicial decisions. As highlighted above, postponements and delays are major issues during commercial trials. Case hearings are regularly deferred, and no clear timeframe i s specified in either law or regulation within which cases should be decided. In parallel with the regulatory approach mentioned above, case management could be introduced in the civil procedure rules. This feature would enable judges to establish a hearing schedule for each case. The contrats de proce'dure mentioned above are essentially a conventional approach to that same concept. 23. To address this constraint, the Project will use a dual approach to capacity building: regulatory or contractual. Once the decision has been made regarding the more suitable o f the two approaches to use, the Project will finance the technical assistance for commercial judges, enabling them to learn from the experience o f countries that have been using case management in their courts. The Project also will finance the development o f templates used in other countries to support case management and facilitate the discussions among partners including the bar association. The training, which will take the form o f both on-the-job training and targeted study trips for trainers, i s estimated to cost US$lOO,OOO ad will be carried out jointly with the training activities under component 2. 24. Improving enforcement procedures. The Project will assist in addressing these constraints by financing three activities: A comprehensive review o f the rules o f civil procedures to eliminate the potential for delays and to introduce sanctions for the legal professionals who would try to use dilatory techniques. A comprehensive review o f the rules regarding the liquidation o f assets to remove rules that constrain the implementation o f speedy sales. These reviews will emphasize rules and regulations with a national dimension. The reviews will not encompass rules that are established by the Organisation pour 1 'Harmonisation en Afrique du Droit des Affaires (OHADA), or Organisation for the Harmonisation o f Business L a w in Africa Uniform Act on Contract Law. The Uniform Act aims at harmonizing business law in 16 countries in Africa. The Act establishes the common rules governing the establishment, operation, and closing down o f businesses. These rules can be changed only at the regional level. A wide-ranging technical assistance i s being provided to the O H A D A Secretariat by the IFC, part o f the World Bank Group, to address constraints contained in the O H A D A texts. Moreover, the Project will finance the consultative workshop to discuss the recommendations made by the two reviews mentioned above and use this platform to obtain input and build understanding and consensus on the changes proposed. The Project also will help develop the necessary fiamework for the regulation and supervision o f bailiffs, building on existing initiatives by the judicial authorities. 25. The project will finance these three activities as reflected in the budget allocation for subcomponent 3 below. 42 26. Speeding up the issuance o decisions. In Senegal, the issuance o f judicial decisibns.and f their delivery to the parties is a lengthy process due to several constraints. First, a number o f judges are not equipped or do not use computers. As a result, many decisions are drafted by hand. Staff at the court registry takes time to decipher the hand-writing. Following these transcriptions, there i s a back and forth between judges and registry employees to amend the decisions. The significant time often spent on this process would not be necessary if judges directly typed their own decisions. 27. Once the court registry has drafted a decision, the back and forth (for stamps) between the court registry and the tax administration significantly increases the time needed for enforcement. Moreover, this process creates a significant risk that important documents could be lost. Losing documents, in turn, affects the possibility o f enforcing a decision since, once documents are lost, the decision no longer would be enforceable. 28. To address these issues, the Ministry o f Justice, with support from the European Union and USAID, has started to equip the judges with computers. The Project will help ensure that criteria for being a commercial judge are developed and that these criteria include meeting minimal typing speed and basic computer proficiency. The Project has an allocation o f US$50,000 to help provide relevant computer and typing training, where necessary. 29. Additionally, the Project will finance a consultancy to map out all processes at the court registry level to make specific recommendations regarding the simplification o f procedures and the adoption o f new templates to facilitate the issuance o f decision. Based on the recommendations o f this study, the Project will provide assistance needed to improve the efficiency o f the court registry, which would be financed under component 2 o f this Project. The terms o f reference for this mapping exercise have been drafted, and the procurement process for this study has been launched with funding from the World Bank PIPP to gain time in obtaining the recommendations needed to improve the quality and speed o f issuing decisions. Based on the results o f this study which would be financed under the PIPP, the project will finance the implementation measures recommended for an amount o f US$ 150,000. 30. Fostering monitoring and evaluation o judges. While important and necessary, none o f f the above-mentioned reforms can individually or jointly improve the efficiency o f the judiciary if it i s not associated with an M&E system that has two characteristics. They are: (a) transparency in that judges' performance will be fully open to evaluation (this evaluation will focus on the timely delivery of decisions and not include any form o f review o f the substance o f the decisions); and (b) an incentive system in which good performance is linked to promotions and other benefits. 31. To these ends, the Project will finance the development o f a performance evaluation system for all commercial judges. This performance system also will include a learning plan to enable judges to use the feedback obtained from the performance evaluation to be trained o n the relevant aspects and improve their performance. Prior to finalizing and implementing this system, the Project will finance the consultative workshop to seek feedback and build consensus on the proposed performance evaluation and monitoring system. This model will be based o n 43 emerging and existing good practices and will emphasize relevant and objective criteria. As this technical assistance i s financed under component 2, the activity will be financed under that component and no allocation i s made under this component. 32. Building a bridge with alternative dispute resolution mechanisms. Building bridges between the formal judicial process and alternative dispute resolution (ADR) mechanisms will be an important advance to limit the inflow o f commercial cases into courts to disputes that cannot be solved amicably or through ADR mechanisms such as arbitration, mediation, and reconciliation. This approach will empower judges to direct cases to ADR mechanisms when appropriate. It i s worth noting the importance o f allowing-but not compelling-judges to direct cases to ADR mechanisms. The Center for Arbitration and Mediation could provide training to the judges who would, in all types o f conflict resolution mechanisms, serve as arbitrator, mediator, and conciliator. Given that under the World-Bank-financed PIPP, 120 people were trained and certified in arbitration and in 80 in mediation, the Project will finance training in conciliation techniques for an amount o f only US$50,000. Moreover, to foster the use o f alternative dispute mechanisms, the Ministry o f Justice will discuss with the A M P the suitability o f inserting a clause compromissoire in commercial contracts issued by the State. This approach would foster a greater use o f alternative dispute mechanisms. The reason i s that the absence o f this clause would make it less likely that the alternative dispute mechanism could be used since it would not then be required. Thus, ADR mechanisms would be used only if both parties to the dispute agreed to use them. Given that the party more likely to lose the case prefers a slow resolution, to delay the decision, this party would be more likely to simply opt out o f the option to resolve the dispute through ADR. 33. Reducing reliance and using experts more effectively. Experts increasingly are used by courts to provide an opinion on technical matters. Experts' interventions often delay trials and pose a risk o f capture b y external parties or excessive influence on judges if the judges do not have the required specialization. 34. The specialization o f judges described above will reduce over-reliance on experts to influence in decision-making in commercial cases. Following the development o f capacity o f judges under the Project, they will be able to use experts more parsimoniously and form an independent opinion on the recommendation made by an expert when one i s used. To help experts be more effective, the Project also will finance the training o f experts in business law, bankruptcy proceedings, alternative dispute mechanisms, basic accounting, understanding financial statements, finances for non-financial specialists; valuation (book value, adjusted book value, and market value), and efficient commercial court proceedings. Additionally, the Project will also finance the training o f commercial judges; insolvency administrators; bailiffs, court staff; staff from the Ministry o f Justice, including CEDAF; and relevant personnel from areas outside o f Dakar, such as Thies, St Louis, Kaolack. These training activities are expected to be taken separately from the ones delivered to judges and court staff. These courses would be offered to approximately 40 people over 4 years at an estimated cost o f US$150,000. In addition to this training, the Project would help improve the rules regarding the role qualification and liability o f experts and establish clear time limits for their intervention as well as sanctions in case o f delay. An amount o f US$lOO,OOO i s allocated for this activity. 44 Subcomponent 2: Closing a business (US$700,000) 35. This indicator measures the time, cost, and recovery rate in a bankruptcy proceeding. The time tracks the duration that i s necessary to complete a bankruptcy. The cost, which is captured as a percentage o f the value of the estate value o f the bankrupt business, measures the percentage o f the value o f the estate that i s being used to go through the bankruptcy procedure, including lawyers and accountants, court costs, and independent evaluator. The recovery rate measures the percentage o f the estate that i s recovered by claimants. This rate i s measured by h o w many cents on the dollar claimants recover from the insolvent firm. 36. Currently, it takes 3 years in Senegal to close a business, and 7 percent o f the value o f the estate i s used in going through the bankruptcy procedure. Moreover, only 3 1 cents on the dollars are recovered by the claimants from the insolvent business. This situation leaves creditors hesitant to engage in business with new partners since they are likely to only recover only 30 percent o f their claim if the partner fails. 37. The procedures to undertake a bankruptcy in Senegal are established by the Organisation pour I 'harmonisation en Apique du droit des Affaires (OHADA) Uniform Act. The Uniform Act establishes the common rules governing the establishment, operation, and closing down o f businesses. O H A D A adopted a bankruptcy law effective January 1, 1999 called proce'dure collective d'apurement du passif: 38. Given that Senegal envisages having an investment climate that performs comparably to an average OECD country, there is a need to understand the causes o f Senegal's unsatisfactory performance and address them through the Economic Governance Reform Project, including for insolvency procedures. In an average OECD country, the claimants recover 69 cents on the dollar through an insolvency procedure while the cost i s 8 percent o f the estate. 39. The Project will help speed up insolvency procedures, reduce costs and increase the recovery rate (this rate i s calculated as cents o n the dollar recovered by a secured creditor through the insolvency process). This will be done by supporting the specialization o f commercial judges, as described above in the sections related to enforcement o f judicial decisions and further developed below. The specialization o f commercial cases would be done through the operationalization and organization o f the F&EP, the P61e e'conomique et financier and complemented by training for judges. 40. Specializing commercial litigation. The specialization o f the courts in commercial matters will be done through the establishment o f the economic and finance section, which will handle legal commercial matters. This section was established in mid-2009 by the Ministry o f Justice. The section will need support under this Project to finance the conception and implementation o f computer software to track o f all commercial cases. Tracking cases will foster better follow-up b y the judges who have the overall responsibilities for the cases. Lack o f tracking o f judges responsible for a particular case have been identified by the Ministry o f Justice as the main causes o f the long delays in the resolution o f insolvency cases. 45 41. The computers and other information technology equipment needed to operate, such as software, are being financed by other development partners (USAID and European Union). The Bank project will complement this effort by providing training in the use o f the tracking software for all the judges who will be working in the economic ,section. The software also will include a window on the tracking o f all economic and financial sentences so that all judges can verify whether a business has had or has a sentence which may affect an ongoing case. The technical assistance to develop and operationalize the tracking software and provide the training i s estimated to cost US$lOO,OOO. 42. Additionally, the Project will develop a performance evaluation system which will be used in the economic and financial section so that the tracking system i s use to assess and reward best-performing judges. The Project also will finance the preparation and establishment o f a evaluation and carrier development system (grading, promotion, etc) for bankruptcy judges that would create incentives to ensure the timely payment o f creditors. The cost o f the two technical assistance activities is estimated at US$lOO,OOO. 43. The Project also will finance the training o f judges in economic and commercial matters related to the bankruptcy o f firms. The areas o f training will include the following: UnderstandingFinancial Statement, Finances for non financial specialists; valuation (book value, adjusted book value and market value), among other courses. These training activities are aimed at giving the judges the capacity to independently assess and make a judgment on economic matters without having to overly rely o f experts who some feel often can capture the process because o f the judges lack o f understanding o f basic economic and financial principles. The training activities will be provided to 25 judges o f which 10 from Dakar, and 5 from Thies, St. Louis, Kaolack, and Ziguinchor. The training i s expected to cost US$100,000. 44. In addition to the specialization changing performance measures, it would be important to ensure a better level o f expertise among insolvency judges. This would guarantee faster trial o f these cases (as judges would not need extra time to review the specificities o f insolvency law) and also would benefit the quality o f the decisions. 45. Streamlining insolvency litigation. Similarly to enforcement procedures, insolvency procedures need to be streamlined: all obstacles to the speedy resolution o f these disputes need to be identified and either removed or addressed with a special focus on: 0 Specialization in practice (selection, training and rotation o f insolvency judges), 0 The role o f the tribunal (appointment, supervision and dismissal o f the ``juge commissaire ", co-supervision o f the "syndic ", preparation ad organization o f the hearings); 0 The role o f other insolvency actors (public attorney, registrar, representative o f creditors,. ..) and; 0 The management o f insolvency cases (circulation and assignment o f cases, automation.. .); 46. The consultancy will review these questions and formulate organizational and regulatory recommendations to address them (US$200,000). 46 47. Improving the regulation o f insolvency administrators. Earlier studies and reports, prepared by the Senegalese Ministry o f Justice, have examined the activity o f insolvency administrators. Lack o f transparency was identified as one o f the major constraints limiting the efficiency o f these procedures. Administrators play a central role in ensuring the reorganization or rapid and efficient liquidation o f the debtor company. Since they are in practice managing the company throughout the insolvency process, it i s crucial that they be sufficiently qualified in management and finance and that their incentives be aligned with the interest o f the debtor and i t s creditors. 48. Hence, the consultancy will examine rules and practices regarding the selection o f administrators, their liability, their fee structure and their supervision. (US$ 100,000) 49. Fostering collaboration with the IFC/OHADA team to improve insolvency law and investor protection. Senegal i s part o f the O H A D A treaty with 15 other countries. As such, the insolvency rules applicable to the country are established in the O H A D A Uniform A c t on insolvency procedures. An IFC team i s leading an initiative to amend all uniform acts including the one related to bankruptcy procedures and those related to the indicator on protecting investor. 50. To complement these efforts, the Project will support the regional initiative to allow that Senegal supports and advocates the adoption o f changes to the current O H A D A text and help foster greater support for change by the member states. Since Senegal established a national Secretariat for the follow up on O H A D A reform through Decree No2008-1049 o f September 2008 and made it operational on June 5, 2009, the Project will provide targeted assistance to the staff o f this small secretariat to play this advocacy role regarding both enforcing contract and protecting investors. More specifically, the Project will finance the recruitment o f a specialist who has an excellent understanding o f the Doing Business indicators, including the one related to closing down a business to help the Secretariat fully support relevant changes to the OHAD legislation. The secretariat i s expected to be better able to play an advocacy role by closely working with the consultants and by working with the IFC team working o n this Project. This assistance will be coupled with the preparation o f an operational manual o f financial and administrative procedures for the Secretariat. Additionally, the staff o f the secretariat will be able to take part in the training offered under this Project to help improve contract execution or the understanding o f what constitute good corporate governance practice. The cost o f this assistance i s estimated at US$lOO,OOO. Subcomponent 3: Protecting Investors (US$200,000) 5 1. Three complementary indexes are used to measure the level o f investor protection. These are: (a) transparency o f transactions (extent o f disclosure index), (b) liability for s e l f dealing (extent o f director liability index) and (c) shareholders' ability to sue officers and directors for misconduct (ease o f shareholder suit index) and strengthen o f investor index. The indexes go from 0 to 10, with the higher score indicating greater disclosure, greater liability o f directors, greater powers o f shareholders to challenge the transaction, and better investor protection. 52. Senegal ranks 165th in the world out o f 183 economies with i t s relatively satisfactory extent o f disclosure index o f 6, but one o f the worst extent o f director liability index in the World at 1 and a strength o f investor protection index o f 3. As such, improving the protection o f 47 investors in Senegal would require improvement in protecting investors against self dealing, particularly as well as progress on transparency o f transactions and shareholders ability to sue officers and directors. For example, protecting investors against self dealing - the use o f corporate assets for personal gains will help contribute to the development o f stock markets. While it i s just one corporate governance issues many in Senegal the most important one. 53. The benefits that can be gained from protecting investors are significant. It leads to higher equity investment and ownership concentration is lowered.26 Doing so would help investors feel more confident about purchasing shares in firms, thus lowering the cost o f capital to firms and helping foster growth and employment creation. Moreover, this allows entrepreneurs to gain access to cash at a lower cost while investors gain portfolio diversification. Conversely, the absence o f investors' protection leads to the underdevelopment o f equity markets and commercial banks become the single source o f financing. However, as shown in several investment climate assessments (ICA), access to credit through commercial banks i s limited. As a result, businesses invest less for lack o f financing, and the economic growth and employment creation i s forgone. 54. To help improve investor protection, the Project will support the activities through a three prong approach. The first dimension i s to provide technical support for capacity building and advocacy to Senegal's national Secretariat for the follow up on O H A D A reforms. The second aspect i s the training o f key stakeholders such as directors, managing director, as well shareholders in corporate governance. The third aspect is to support the development and adoption o f Economic Governance practices in companies-on a voluntary basis-so as that the practice would anticipate on the legal changes and could be used to strengthen the case for the need for the legal reforms. This would not be new or unique since it is already done by a company like SONATEL. 55. The Project will strengthen the institutional capacity o f the national Secretariat for the follow up on O H A D A reforms to review analyze and propose or accompany the changes that are necessary to the O H A D A Uniform Act so that it brings about an improvement in the investment climate as measured by the indicators on protecting investors and closing down business. More specifically, the Project will finance the presentation and discussion o f the proposed reforms o f the O H A D A Uniform Act in Dakar to the national Secretariat for OHADA, the Ministry o f Justice, including CEDAF and private sector representative the ahead o f OHADA formal meeting. 56. This would allow the Secretariat to h l l y understand the nature and scope o f the proposed changes so that the secretariat, the Ministry o f Justice and other key stakeholders to buy into the proposed reforms and create the conditions for Senegal to effectively carry out the critical advocacy role. The changes that need to be implemented in the O H A D A Uniform Act are identified at the end o f the section through a detailed matrix. 57. The approach use for this consultancy will emphasize the active participation o f the members o f the Commission who will have the responsibility o f identifying and collecting all legal texts in business law ahead o f the consultancy, and also will draft the terms o f reference for 26 Djankov and others (2005). 48 this consultancy. The estimated cost for this consultancy, including the consultative workshop, i s US$50,000. 58. To broaden the coalition o f advocate for change in the OHADA texts, the Project will finance three missions to CBte d'Ivoire to discuss with the Ministry o f Justice, the Conseil Re`gional de I'Epargne Publique et des Marche`s Financiers (CREPMF), the regional securities regulator and the Bourse des Valeurs Mobili2res (BRVM) all based in Abidjan. These missions will be closely prepared with the IFC team responsible for the technical assistance to O H A D A to undertake the legal changes to the Uniform Act, as well as with the World Bank financed CGte d' Ivoire Emergency SME Revitalization Project, which also aims to improve the investment climate in CBte d'Ivoire and also will encounter constraints to improving the investment climate in the O H A D A Uniform Act, including in the establishment o f the minimum capital requirement. This approach will broaden the coalition to do the advocacy for the reform o f the O H A D A Uniform Act. Additionally, the IFC team providing the technical assistance to O H A D A will be invited to participate in the supervision missions o f the Economic Governance Reform Project so that there i s an exchange o f information regarding the progress being made and next steps both at the O H A D A level and in Senegal and discussions on next steps can also take place. This assistance will be coupled with the financing o f a study tour to South Africa and Mauritius, the best ranked countries in Africa in terms o f investor protection and another one to France to drawn lessons from their reforms and use them as a basis in the changes o f the OHADA Uniform Act. The cost o f this assistance is estimated at US$50,000. 59. The Project also will finance the training o f the management o f 100 f i r m s including managing directors, directors, and shareholders to contribute to the betterment o f corporate governance in Senegal. These training activities will be in relevant areas including: (a) Corporate Governance Legal and Institutional Framework; (b) The Rights o f shareholders and key ownership functions; (c) The Equitable treatment o f shareholders; (d) The role o f stakeholders in Corporate Governance; (e) Disclosure and Transparency; and (f) the role and responsibilities o f the Board. This training will be delivered by experts in the respective fields and i s estimated to cost US$50,000. 60. Additionally, the Project will broaden the coalition o f stakeholders by financing training o f journalists and key civil society members with a proven track record o f pushing for better corporate governance to enable them to understand the consequences o f weak investor protection and help bring about the necessary changes. The Project aims to train a total o f 50 people who are either journalists or representatives o f civil society. The training will encompass the same subject areas mentioned above for the training o f a director but with fewer details, as the course i s not meant for practitioners. This training activity is estimated to cost US$50,000. 49 I Q 0 Y U 5 C 0 .I CI PI 0 E G 2 0 E z - Y U L 6? h 0 0 0 E c5 0 M .I Y E u .n CI hl e, ep Y E L a 3 5) e, a 5 H e, r - E E U M 0 a .I Y CI v1 E 0 E L Y a n G 4 v1 e, 1 5, B e, ep .I L 2 B 3 F El Y -- E 0 + F a .I M H a e, .I Y m 0 e, a .I CI e, E L a B I sf - b e 0 .I c a 0 E e 2 - 6? 8 e M E .I 3 c E 4 b a2 co U e M E .I c rt L e B a .- Q L Q * 8 a e U - J 3 c r 0 L) P c ? e .I M e .I Y u a2 c P & - G? 0 0 u M E .I c 3 E 3 v E H e rr 0 s 8 a 2 .I c, 3 0 0 cf 8 -a U e - let M E .I c, E L (El a a .I L + cp 8 -a e U 2 II 0 - e 0 ! c, e .I M e .I c, 0 a e c . , & Component 2: Improving court performance and user-friendliness (US$3,100,000) 61. The modernization o f the justice system i s among the priorities o f Senegal's Poverty Reduction Strategy Paper (PRSP) (Document de Strate`gie de Re`duction de la Pauvrete` 2006- 2010) as well as the revised National Economic Governance Program (Programme National de Bonne Gouvernance). The justice system also i s one o f the sectors in which the government i s piloting the transition toward program budgeting, which entails the funding o f activities that are based on a clear program and is also used to set performance targets for the operation o f the courts. 62. To implement all o f these initiatives, in 2004 the government adopted the Justice Sector Program (Programme Sectoriel Justice, or PSJ). Its goals are to (a) rationalize the construction and rehabilitation o f key infrastructure, such as the court house; (b) bring the judicial system closer to those seeking justice and improve the way that users experience the justice system; (c) hire and train professionals to reduce delays in carrying out justice and improving working conditions and performance in the Justice Sector; and (d) promote the use o f information and communication technologies as well as modernize work processes. With donor support, a process o f reorganization o f central services and capacity building is being carried out to implement the PSJ and to complete the transition toward program budgeting. 63. The PSJ covers 2004-12. It i s divided in four phases: a preparatory phase (2004) and 3 3- year programs (2004-06, 2007-09, and 2010-12). It follows the newly established program budgeting approach. The PSJ has organized Justice Sector expenditures according to the following modules. 64. The first module aims to improve the working conditions o f justice sector professionals and reduce the gap between the justice sector and i t s users. The second module has the dual objective o f overcoming the under-performance of the justice sector, especially by reducing delay, and contributing to the revalorization o f the work o f judges, prosecutors, and court staff, The third module aims at (a) improving the training o f the actors in the judicial system, (b) facilitating their reassignment, (c) enhancing their capacity, and (d) enabling the Ministry o f Justice to fully exercise i t s function to oversee the functioning o f the courts and related services. 65. The Government o f Senegal intends to mobilize some CFAF 50 billion `(approximately US$1 10 million) to carry out the PSJ. At present, this amount has not been mobilized. The Government identified an overall need ofCFAF 118.5 billion to fully implement the PSJ and has requested technical and financial assistance from development partners. Based on current commitments from development partners, only part o f this funding has been secured. 66. The European Commission supports the National Economic Governance Program and i t s component, "Judicial Governance," with approximately CFAF 2.4 billion. The activities ' comprise the transition to ICT-based case management for all the first-instance jurisdictions in Senegal. The installation o f I C T equipment for criminal justice (chaine pe`nale) i s finalized. The four other areas o f justice (civil, commercial, social, and family justice) are under implementation and will be finalized and start operating by end-November 2009. Automation of archives and the interconnectivity o f these jurisdictions are included. This program also 55 comprised some training in the new ICT-based case management system to ensure i t s effective operationalization, in particular for criminal cases. 67. France also has pledged the equivalent o f CFAF 1.44 billion to support the PSJ for 3 years. One o f the activities being funded by France i s training judges and other court staff in court management. Another activity i s the establishment o f procedure manuals for the grefle (registry's office). 68. Additionally, the Spanish Agency for International Development has provided a grant o f approximately CFAF 765 million to increase the capacity o f the Centre d 'Adaptation Sociale in Sebikotane. UNDP has financed approximately CFAF 100 million to support the National Economic Governance Program to finalize and publish the PSJ. Within the framework o f the new Economic Governance Capacity Building Project (Projet de Renforcement des Capmite's de Bonne Gouvernance, or PRECAGB), UNDP i s funding the review o f the PSJ. The World Bank was consulted in this review, which i s scheduled to be completed by December 2009. Based on discussion with the Ministry of Justice, the revision o f the PSJ also will allow an updating o f the activities as well as greater emphasis on certain areas such as the improvement o f the investment climate. 69. The World Bank provided CFAF 40 million for the drafting o f the original PSJ, which was completed and i s being updated. In addition, the Private Investment Promotion Project (PIPP) has funded the automation o f the Commercial Registry (Registre de Commerce et du Cre'dit Mobilier) with CFAF 350 million. The Bank also provided CFAF 19 million for the workshop on the revision o f the Medium-Term Expenditure Framework for the Justice Sector (CDSMT/Justice), which has provided the Ministry o f Justice the capacity to transition smoothly toward program budgeting. 70. The joint commitments by the government o f Senegal and the development partners have increased the budget o f the Ministry o f Justice as follows: Table A.4.2 Evolution o f the Budget Allocated to the Ministry o f Justice, 1998-2008 (CFAF billion) 2005 11.966 2006 23.470 2007 24.669 2008 26.519 71. Other key activities carried out under the PSJ involve the hiring o f judges and court staff as well as the establishment o f justice centers (maisons de justice) in 3 pilot locations in 2004 (Rufisque, Dakar: HLM, Diamagdne and Sicap and Mbao) and subsequently in 3 additional locations in 2007 (Parcelles Assainies in Dakar, Mbour, and Ziguinchor). Additionally, 3 information and orientation offices (Bureaux d'accueil et d 'orientation du justiciable, or BOJ) and 3 citizen information offices (Bureaux d 'information du justiciable, or BIJ) recently were 56 established to improve the populations' understanding o f the administration o f justice and, ultimately, the access to justice. 72. Among the planned activities in the justice sector, two seem particularly important: the reform o f the judicial map and the finalization o f the automation o f the case management system. For the reform o f the judicial map, funding has not yet been secured. For the automation o f the case management system, the EU i s undertaking major activities. to be finalized by November 2009. 73. A reform o f the judicial map i s an important approach to solve case management issues at the macro level as well as challenges related to access to justice. The map decides how cases are distributed across the courts. According to a study commissioned by the Ministry o f Justice based on statistics gathered by the Observatoire Sectoriel de la Justice, the Dakar courts deal with approximately 75 percent-80 percent o f the national caseload. This high share o f the case load i s only partly due to the comparatively high population density and high concentration economic activity in the Dakar region. Another significant contributing factor i s the way that subject matter jurisdiction has been assigned. According to this study, the majority o f criminal cases dealt with by the Tribunal Rigional Hors Classe de Dakar originates in areas within the jurisdiction o f Tribunaux Dipartementaux outside Dakar, but go to Dakar because o f the nature o f the cases. The reallocation o f cases to the respective Tribunaux De'partementaux and the creation o f an additional appeals court in Thiks would significantly alleviate the backlog o f cases in the Dakar courts. Similar considerations apply in other areas. 74. With respect to the finalization o f the automation o f the case management systems, computers and software purchased with EU funding enable electronic management o f penal cases, as well as their administrative processing within courts. Training in using the new equipment has been provided to staff. The Project will extend this automation to the Appeals Courts and the Supreme Court. The activities funded by the EU have focused on the first- instance jurisdictions in Senegal. The installation o f I C T equipment for criminal justice cases is complete. The four other areas (civil, commercial, social, and family justice) are scheduled to be finalized by October and become operational by end o f November 2009. Automation o f archives and the interconnectivity o f these jurisdictions also were included. There also must be sufficient capacity to centrally manage this system; and to collect, analyze, and utilize the data generated for management purposes. This interconnectivity will improve case management but also will provide useful input for court performance management. 75. In 2005 the Administrative and Financial Implementation Unit (Cellule d 'Exe'cution Administrative et Financiire, or CEDAF) was established to ensure the overall coordination, monitoring, and evaluation o f CEDAF and that the i t s objectives are achieved. Given the scope and complexity o f this task, the CEDAF is in need o f increased capacity in project management, procurement, and statistics. This increased institutional capacity within CEDAF will be supported under a component o f the Project so that CEDAF i s fully capable o f carrying out i t s role and responsibilities. 76. A review o f the PSJ is under preparation and will be completed by the end o f 2009. Certain improvements in the justice sector have been achieved through the activities undertaken within the PSJ, although baseline data on judicial performance i s scarce. In 2004 an assessment 57 4 was carried out during the preparation o f the PSJ. The evaluation o f the PSJ pointed out the key constraints to the program meeting i t s development objective including the following (a) lack o f human financial and material resources; (b) inadequate and dilapidated infrastructure; (c) lack o f predictability in the process; (d) delay, existence o f corrupt practices; (e) high caseload volume; ( f ) inadequate client orientation and access; and (g) lack o f credibility o f the justice system. A justice sector expenditure review provides some statistics with respect to human and financial resources, but the empirical elements in the assessment are scarce. 77. Overall, the justice sector budget has increased from approximately CFAF 10 billion in 2004 to CFAF 26.5 billion in 2008. A significant portion o f this salary increase went into more human resources through the recruitment o f additional staff and higher salaries. The number o f judges and prosecutors (rnagistrats) went up from 318 in 2003 to 420 in 2007. The number o f grefJiers en chef(chief registrar) increased slightly from 63 to 65 over the same period, while the number o f grefJiers decreased slightly from 185 to 176. Additionally, the number o f secretaries to the greffes and parquets (public prosecutor's office) went up significantly from 52 to 91. The current review o f the PSJ i s expected to provide more empirical data about achievements and remaining challenges. 78. In the meantime, practitioners have highlighted that the increase in the number o f judges was not necessarily associated with better judicial performance since issues o f capacity, organization, and integrity also needed to be addressed. For example, the 2010 World Bank's Doing Business Report indicates that enforcement o f contracts at the Tribunal Rkgional Hors Classe de Dakar takes 780 days compared to an average in Sub-Saharan Africa o f 660 days; and closing a business takes 3 years on average. According to these indicators on enforcing contracts and closing a business, Senegal's performance has not improved over the last few years. In particular, the time taken to enforce a judicial decision i s particularly high, as shown above. As shown under the section for component 1, these long times are related partially to the lack o f organization (specialization o f courts and judges) and the paucity o f resources allocated to the greffe (registry). Other constraints include the slow issuance o f decisions and the lack o f supervision o f bailiffs. These aspects need to be addressed to improve judicial performance. Addressing them would be partially achieved under component 1. The assistance under this component would need to be coupled with assistance to the greffes as well as to ensure that the bailiffs are supervised. 79. The legal caseload in the Dakar courts has increased over time. The caseload statistics o f this court in particular provide only the number o f decisions in a given year without providing information about the incoming cases and the age o f the existing stock. Statistics in other courts in Dakar seem to suggest that the number o f incoming cases i s consistently higher than the number o f cases disposed. Consequently, the case backlog keeps growing. The automation effort, combined with better case management, is expected to help address the significant delay in executing a contract. Courts and judges also are expected to experience some difficulties in the transition, during which they may be running a manual and an IT-based system simultaneously. 80. The objective o f this component is to enable the judicial system to more effectively play i t s role as warrantor o f the regulations o f economic activities and transactions. Examples o f these regulations are to provide fair and efficient commercial dispute resolution, effective protection of property rights, and predictable enforcement o f legally binding rules. 58 81, In recent years, certain improvements in the justice sector have been achieved through increased investments under the Justice Sector Program. Working conditions for some justice sector professionals have improved, for example, through the partially completed establishment o f an ICT-based case management system in civil, commercial, criminal, social, and family matters in many courts. The commercial registry in Dakar also has been automated and computerized, making the registration faster and the records more readily accessible. Increased budgets have enabled hiringjudges and court staff. Justice centers (rnaisons de justice) have been established in several places. Additionally, 3 information and orientation offices (Bureaux d'accueil et d'orientation du justiciable, or BOJ) and 3 citizen information offices (Bureaux d 'information du justiciable, or BIJ) have recently been established to reach out to the public and help make justice more accessible. Additionally, training has been provided to improve the capacity o f some o f the actors in the justice system. At this stage, there is no comprehensive assessment available on whether all o f these activities have improved the quality o f justice services provided in Senegal. A review o f the PSJ, funded by UNDP, will provide insights on the evaluation o f the justice sector performance and recommend new approaches to the PSJ to be more effective. 82. Nevertheless, there i s consensus that, despite these efforts, the wide-ranging nature o f the reform and challenges that it poses signal that much remains to be done. The continuing under- performance o f the judicial system, especially delays in rendering and enforcing decisions as well as in closing a business, undermines the credibility and relevance o f the courts. In addition, the lack o f user-friendliness tends to disempower certain segments o f the population when they need o f judicial services. These dysfunctions create opportunities for petty corruption that further undermine the ability o f the courts to perform their function. I t i s established that corruption i s widespread and reaches all components o f the justice process.27It i s common that bribes are paid to speed up or slow down cases, or to lose files.28 Despite islands o f integrity, some reports have shown that all professions including judges, rosecutors, administrators, and secretaries, are involved in corrupt practices o f various kinds?`Many users do not have the capacity to navigate the intricacies o f the court system so are taken advantage o f by intermediaries and court officials.30 The two subcomponents are intended to improve court performance and user- friendliness for court users. Subcomponent 1: Improving court performance (US%2,900,000) 83. This subcomponent aims to improve the performance o f the courts in Dakar in both efficiency and quality o f services. The partially completed automation o f the case management system in many courts, funded by the European Union, has given the judiciary a modern case management tool. However, Senegal's current approach to court performance management has not been able to improve i t s services to the public due to i t s structural deficiencies; lack o f performance management capacity and tools; and the inadequate access to justice. The current diarchic structure o f Premier Prbsident and the Procureur de la Re`publique, who are jointly responsible vis-a-vis the Ministry o f Justice for the functioning o f the courts, does not have 27 USAID, Corruption Assessment Senegal (2007), 23. 28 USAID (2007), 24; Blundo and de Sardan, La corruption au quotidien en Afiique de 1'Ouest-Approche socio- anthropologique comparative: Btnin, Niger et Senegal (2003), 185-96. 29 M.T. Alou, La Corruption dans la justice au Benin, au Niger et au Senegal (2005). 30 Blundo and de Sardan, 192-194; M. Alou, 21-23. 59 effective performance management tools and the capacity to adopt effective caseload management approaches. Moreover, the daily processing o f cases-an important part o f this performance-is seen as a lower function taken care o f by the greffier. As a result, the country has no predictable, transparent, and consistent approach to managing the performance o f judges and court staff. 84. The main factors contributing to the under-performance o f the courts in Dakar are weaknesses in court administration and case management. The project therefore will address these two key constraints in two ways: 85. Courr administration (US$1,300,000). Improving court administration requires the establishment o f a three-part approach based on an effective court performance management structure, increased court performance management capacity, and meaningful court performance management tools. 86. Regarding court performance management structure, the current set-up leads to a fragmented approach, ultimately leading to a lack o f accountability and under-performance. This approach puts judges and prosecutors in charge o f running the courts, as the courts are managed under a diarchy composed o f the Premier Prksident and the Procureur de la Rkpublique, who are jointly responsible for the functioning o f their court. However, the vast majority o f these magistrats do not have training or professional background in management. This generally prevents them from developing an operational vision o f the courts and from effectively managing the performance o f judges and court staff. This situation i s exacerbated by the fact that there i s no systematic training for them in court management. 87. Instead, the operational side o f justice i s considered b y many to be a less noble function that has to be left to the greffier, who i s in charge o f the day-to-day functioning o f the courts. The lack o f coordinated work between the world o f the magistrats and that o f the greffiers and other court staff i s significant and not effectively bridged. This disconnect leads to fragmented court management. The problem i s substantial in courts such as the Tribuna1 Rkgional de Dakar, because there are additional services in charge o f various court administration and case management aspects, such as the services d 'enrollement operated by the gendarmerie. Unfortunately, there i s no effective management structure that unites all o f these services and manages them. As a consequence, there i s a lack o f effective court performance management and an integrated approach in the Dakar court administration. 88. Therefore, the Project therefore will assess the effectiveness and efficiency o f the court management structure. In particular, the assessment will focus on the management structure in the Tribunal Rkgional de Dakar, which handles an estimated 80 percent o f the caseload. Based on these findings, the Project will finance the development o f an improved and integrated management model (US$lOO,OOO for consultancy). This model will develop an approach to monitor and evaluate judges' and court staffs performance based on detailed judicial statistics. The Project will assist with the implementation o f this model by training the relevant users (US$lOO,OOO). A more effective court administration structure also i s key for the court system's ability to fully implement the program-budgeting approach, which i s used in Senegal and sets certain performance targets for the operation o f the courts. I t requires effective measurement tools and other management mechanisms to make this system fully operational. This improved 60 administrative structure would contribute to the establishment o f a performance measurement and management culture in the courts and ultimately improve judicial services. 89. Concerning court performance management capacity, the Project w i l l build the capacity o f a cadre o f court administrators by providing training to both judges and other court staff in charge o f court administration. This capacity building w i l l take form o f a consultancy for training needs assessment, curriculum development, and training itself (US$500,000). The training should cover relevant issues o f court administration. It w i l l aim at developing an integrated team and enhancing an esprit de corps o f all the staff working in court administration (judges, and other staff) to improve coordination between them. The overall objective i s to increase the capacity for court management and to build team spirit. Through a consultancy, the Project will assess the human resources (HR) system and processes o f recruiting, evaluating and promoting staff to ensure a satisfactory performance and suggest ways to improve the HR Function (US$l 00,000). 90. Regarding court performance management tools, the discussions held during project preparation indicate that the under-performance o f the courts i s caused by, among other things, the absence o f meaningful court management tools. At present, basic statistics about key court performance indicators such as number o f incoming cases, cases disposed, disposal rates, age o f the stock, timeframes, and quality o f the decisions are not available. When they are generated, their reliability leaves room for improvement. The Project w i l l develop management tools by building on the ongoing automation to establish a system able to generate relevant statistics, and a mechanism to integrate them into existing or to-be-established court management processes and structures (US$300,000 for consultancy), which would include training. The Project also w i l l build the capacity and create structures to develop, carry out, analyze, and utilize court user surveys and other stakeholder feedback mechanisms to integrate both productivity and quality issues into performance management processes (US$lOO,OOO for consultancy). The Project assesses current approaches to evaluate the performance o f judges and court staff, and identify approaches to enhance performance and accountability (US$ 100,000). The performance evaluation system w i l l include positive incentives to encourage and foster improved performance, instead o f emphasizing only sanctions. These court performance management tools also w i l l contribute to the better implementation o f the program budgeting approach, which requires the measurement o f key performance functions. 9 1. Case management (US$I,600,000). Improving case management requires reforming the judicial map, improving enforcement structures, developing case management tools, adapting infrastructure, and building capacity for case management at various levels. 92. Regarding reforming the judicial map, the PSJ estimates that the Dakar courts handle about 80 percent o f the national caseload. The reason i s partly that the capital i s the demographic and economic center o f the country. In addition, many cases actually generated in other areas end up in the Dakar courts because o f the rule o f jurisdiction that assigns certain types o f cases to the Dakar courts. For example, because o f i t s seriousness, a case generated outside o f Dakar.may be sent to Dakar. In combination with the concentration o f judicial infrastructure in the Dakar area, these rules create an imbalanced caseload distribution and a serious obstacle to geographic access to justice for people living outside Dakar, while overloading the court system in Dakar and reducing the access for those residing in greater Dakar. 61 93. The Project therefore will support the reform o f the judicial map. It will assess the case distribution across the territory as well as the potential demand for judicial services in under- served areas (US$lSO,OOO for consultancy). Guided on its findings, the Project will support the revision o f rules o f jurisdiction and other measures to rebalance the judicial map (US$200,000 for consultancy). For example, the establishment o f a court in an area will be determined based not on the administrative organization, but on the caseload volume, which i s a more appropriate indicator. An area such as M o u r , a department, may warrant the establishment o f a Tribunal de Grande Instance, the equivalent o f what exists at Thies. This may be so even though Thies i s administratively considered a region. The project will explore how specialization o f judges or the establishment o f specialized chambers in some places could contribute to an improved judicial map and how the broadening o f the court responsibilities could improve access to justice, as well as the speed o f delivery. 94. The Project will address additional weaknesses in the enforcement structures through a consultancy (US$200,000). This amount comprise both the cost for the consultancy and the cost for holding a consultative workshop to present findings, collect contribution and build consensus on the adopted actions. Specific attention will be paid to supervision o f bailiffs and to the timely issuance o f judicial decisions. The two main limitations to timely enforcement o f decisions are: a. Inefficient Processes for the production o f decisions. Most judges pronounce their decisions without having prepared written versions. They later handwrite their decisions and send them to the grefle. Grefle employees then are forced to decipher handwriting, and decisions often need to go back and forth several times before the grefier gets it right. b. Complex process for the issuance o f decisions. Decisions then need to be registered with the tax administration before the grefle issues them. They need to be physically transferred to the tax office and stamped. This process i s time consuming and risks loss o f documents. 95. Then starts an enforcement process that may be delayed by the grace periods granted by judges and by the inefficiency o f bailiffs (due in large part to the lack o f supervision), as well as the complexity o f liquidation procedures/sales o f assets). 96. Regarding case manapement tools, the European Union has supported the automation o f case management in the courts, starting with the criminal aspects o f the law. Currently, implementing the civil, commercial, social, and family aspects o f the l a w i s taking place and scheduled to be completed by the end o f November 2009. The Project will complement these efforts and map the work processes in the remaining courts, streamline them, and then put in place ICT-based case management systems in these courts. Additionally, the Project will ensure the interconnectivity o f this system with the recently established work flow for (civil, commercial, social, and family aspects) which are all elements which form part o f the justice system so that these systems are able to generate complementary, complete, and meaningful performance data (US$SSO,OOO for consultancy and goods). 97. As for adapting infrastructure, the Project will focus on the organization o f the new Justice Palace (Palais de Justice) in Dakar. The Project will ensure that the workspace 62 organization in the new premises responds to the needs o f case management efficiency and effectiveness. For example, the new building will separate public space and restricted access areas to ensure that unauthorized people do not have access to restricted areas and information (US$120,000 for consultancy and some goods). 98. To increase case management capacity, the Project will provide training to those responsible for the new case management systems. The Project will focus on ensuring the full transition from the manual to the ICT-based case management systems, which currently to parallel each other. The Project also will strengthen the central capacity to manage the I C T infrastructure to ensure i t s smooth functioning, maintenance, and future upgrading (US$200,000 for training). Subcomponent 2: Improving user-friendliness o f courts (US$200,000) 99. Subcomponent 2 aims at improving the access to and user-friendliness o f the courts in Dakar for court users. Many o f those who go to court are not repeat players, may not be literate, and, to a certain extent, must rely on the justice system to guide them. Most courts in Senegal are not user friendly. Some court staff or "intermediaries" benefit from this situation by extracting payments from court users who do not feel sufficiently em owered to navigate the system on their own. This dynamic has become a real line o f business.`PPeople with connections inside the court offer their services to people who are ignorant or under time pressure to obtain certain services. The former make the latter pay for services that are supposed to be free, for example, delivery o f a copy o f the birth certificate. In addition, those with connections serve as intermediaries to market corrupt practices o f judges and court employees to users, for example, finding the right agent in the system to lose a file or accelerate a case.32 Improving user- friendliness therefore will reduce the opportunities for petty corruption and upgrade the quality o f judicial services. The Project will do this through a variety o f activities including analytical work, improvement o f user guidance, and increased community outreach. a. Assessing the obstacles. The Project will carry out analytical work involving sociologists to assess the nature and extent o f the difficulties that court users experience when they go to court in Dakar. General access to justice i s a broader issue that goes beyond the scope o f this Project. Using both quantitative and qualitative methods, the analysis therefore will focus on the user-friendliness o f the courts. This focus will include an analysis o f the ease o f obtaining legal aid, a system that exists but i s underutilized by court users. Based o n the empirical findings, the study will suggest concrete measures to improve the situation (US$100,000 for consultancy). b. Improving user guidance. The Project will implement recommendations made in the analytical work on ease o f court use. In addition, it will finance the preparation o f materials to be distributed in the recently established reception and help desks to provide information to court users. Moreover, communication campaigns on the radio, including in the Wolof language, will explain the working o f the justice system. These campaigns will be complemented by training the staff at the informatiodorientation desks to be user 3' Blundo and de Sardan (2003), 192-94. 32 Blundo and de Sardan (2003), 193. 63 friendly and to fully master the information that needs to be provided to users (US$50,000). c. Fostering Community outreach. Many users, especially if they are not repeat players, experience courts in Senegal as mystifying and impenetrable. The proceedings are based on the culture o f the French system and therefore may feel foreign and/or inadequate, particularly to uneducated court users. The various steps and procedures to resolve a dispute oftentimes are unclear and at times archaic. To facilitate the population's understanding o f the process o f obtaining a conflict resolution, the Project will support the courts in Dakar to hold "open house" days during which the courts demonstrate and explain their inner workings to the population and to other community outreach activities. (US$5 0,OO 0). d. Training judges on business-enabling environment. Past work in Senegal has demonstrated the need to train judges about commercial realities. The lack o f specialization that has characterized Senegalese judges to date has made it difficult to familiarize them with the stakes o f commercial activities and the specific logic o f commercial litigation. In particular, judges have not absorbed the significance o f timely decisions and enforcement when handling commercial cases (time value o f money, opportunity cost associated with delayed payment). To this end, the Project will finance on-the-job training to help train judges through twinning and other arrangements, as described under component 1. Component 3: Strengthening the demand side for Economic Governance (US$l, 500,000) 100. Promoting efficiency o f justice and economic governance requires action on both the demand and supply sides. To accompany the supply-side work described in the preceding components 1 and 2, the Project will support complementary demand-side activities. Under component 3, the Project targets two institutions that are critical in meeting the project development objective from the demand side. The proposed subcomponents are (a) strengthening CENTIF, (b) strengthening the new Investigation Unit o f the national procurement agency, ARPM, and (c) helping business-led actions against corruption. 101. Corruption has been recognized as a key obstacle to development. A large body o f literature initiated by the seminal work o f Mauro (1995)33finds that corruption has a negative effect on growth. Mauro (1 998) argues that the bulk o f the effects o f corruption on growth affect private investment. To illustrate, if a given country improved i t s corruption grade from 5 to 7 on an index o f 10, this improvement would translate into a 4 percent increase in i t s investment rate and over a half-percentage point increase in the annual growth (Mauro 1998).34 One o f the consequences o f corruption has been to push poor countries more deeply into poverty. Developing countries' realities demonstrate the correlation between poverty rate and level o f corruption. This linkage creates a vicious cycle whereby corruption invites poverty, and poverty incites further corruption. 33 Mauro (1995), 681-712. 34 P. Mauro (1998), 96-98. 64 102. Consequently, corruption i s a significant obstacle for doing business in the country as confirmed by private sector surveys. According to the 2007 Investment Climate Assessment, 40 percent o f manufacturing f i r m s and 39 percent o f service companies reported that corruption i s a "major" or "very severe" constraint. Nine percent o f manufacturing companies reported that they give "gifts or informal payments" when visited by government inspectors, with a higher frequency reported by large companies and exporting companies. Gifts and informal payments are more frequent among local firms (14 percent) than foreign companies (8 percent). The average value o f the gift i s 0.15 percent o f annual company revenue. 103. Reflecting this regional situation, in its 2008 Corruption Perception Index, Senegal was ranked 85 o f 180 countries by Transparency International (TI). Meanwhile, according to the Global Corruption Barometer 2007, 38 percent of respondents in Senegal report having to pay a bribe to obtain public services, and 56 percent perceive the government's fight against corruption as ineffective. As a comparison, Cape Verde, which i s the best ranked country in the Region, ranks 47 in the world based on the same TI ranking. 104. In tacking corruption and related aspects such as money laundering, the Senegalese authorities have established a number o f institutions that have complementary mandates in these areas. These institutions include the Anti-Corruption Commission (Commission de lutte contre la non transparence, la corruption et la concussion), Cellule Nationale de Traitement des Informations FinanciBres (CENTIF), and Public Procurement Unit (Agence de Rkgulation des Marchks Publics). 105. Component 3 will improve two o f these institutions, as well as help address corrupt practices in private firms. More specifically, the objective o f component 3 i s to strengthen the CENTIF, the Anti-Corruption Commission, and the Public Procurement Investigating Unit, and to promote business-led actions against corruption to help reduce the acceptance o f corrupt practices as the normal course o f doing business. The assistance provided under the Project i s presented below. Subcomponent 1: Strengthening Cellule Nationale de Traitement des Informations Financi2res (CENTIF) for more efficiency in fighting against money laundering and promoting finadcial security for a better investment environment (US$300,000) 106. Senegal began the fight against money laundering by adopting Law No2004-09 o f February 2004 against money laundering. This law translates the regional requirements into country-specific applicable measures against financial crime. More specifically, this law creates the legal conditions to deter, detect, and repress money laundering; and fosters international cooperation in the fight against money laundering. 107. In addition and to implement the later law, decree No 2004-1 150 o f August 2004 established a specialized and independent institution, Cellule Nationale de Traitement des Informations FinanciBres (CENTIF). This institution has the mandate to (a) prevent money laundering, (b) detect and investigate for the sake o f judicial action all money laundering activities, and (c) promote international cooperation to fight financial crime. The recent adoption o f Law No2009-16 against terrorism financing represents a significant milestone in the legal framework to meet the international standards for an efficient fight against financial criminality. 65 This law provides the necessary means for incrimination and repression (freezing assets and penal pursuit). As a result, in 2009 Senegal became the fifth African country `to officially integrate the prestigious Egmont The Group provides a forum and promotional support for cooperation between international and regional organizations working on anti money- laundering and terrorism financing (AMLlCFT). This new step expands Senegal's necessary institutional framework to address money laundering at the national level. Joining Egmont gives Senegal access to an international database and expertise o f 116 financial intelligence units (FIUs). 108. Senegal set up CENTIF as an administrative information unit operating under the supervision o f the Ministry o f Finance. The institutional arrangement legally guarantees the independence o f CENTIF's decision-making and budget management. The unit transmits all relevant cases directly to the judicial system. The administrative unit has a cross-skilled team and works under strict confidentiality in fulfilling i t s mandate. 109. CENTIF understands that the nature o f financial crime in a global economy illustrates the interconnection among countries and the requirement for agencies to cooperate with similar agencies around the world. CENTIF has signed agreements with various countries' FIUs including Algeria, Belgium (CTIF), Gabon, Indonesia, Lebanon (SIL), and Nigeria (NFIU). In addition, through compliance with GAFI (Groupe d 'Action Financi2re International) recommendations, Senegal has set up various other official cooperation agreements to facilitate operations across borders. For instance, it has worked with European counterpart institutions to investigate cross-border money laundering cases. 110. Although CENTIF i s a relatively new institution, the increasing demand for i t s services nationally and regionally has established i t s relevance. However, the increasing volume o f declarations to be investigated and the seriousness o f content have stretched the new institution. It requires assistance to carry out i t s mandate properly, as well as to respond to the demand and sustain the momentum. This need for assistance to adequately carry out its responsibilities i s reflected in the significant increase in the number o f declaration-of-suspicion cases reported to CENTIF. They rose over 600 percent in 2 years-from 11 in 2005 to 72 in 2007. Concomitantly, the number o f cases investigated and submitted to the justice system quadrupled from 3 in 2005 to 12 in 2007. However, these numbers show that CENTIF w i l l not able to keep up with the demand if additional assistance i s not provided. 111. In carrying out i t s mandate, the applicable regional legislation (WAEMU Directive 39) gives an important judicial power to CENTIF. As noted earlier, the unit submits its investigative results directly to the Attorney GenerallProcureur de la Re`publique, who i s required to immediately assign the case to a competent court for independent investigation. This legal mandate ensures that the judicial process moves forward and that the prosecution o f crime starts promptly. 35 The Egmont Group o f Financial Intelligence Units i s the prestigious informal organization that has created a global network o f FIUs. The group i s named after the location o f the 1995 formative meeting at the Egmont- Arenberg Palace in Brussels. The group's goal i s to provide a forum for FIUs to improve support to their respective national antimoney laundering and antiterrorism financing programs. Senegal became a member during the 17* Egmont Group Plenary in Qatar in May 2009. The other African members are Malawi, Mauritius, Nigeria, and South Africa. www.egmontgroup.org. 66 112. Another institution involved in governance and anticorruption actions, the Commission de lutte contre la nontransparence, la corruption et la concussion (Anti-Corruption Commission) does not have this authority to submit i t s investigation results directly to the Attorney General. However, CENTIF i s required to immediately assign the case to a competent court for independent investigation. Discussions with stakeholders during Project preparation indicated that this arrangement would need to be addressed if, like CENTIF, the Commission de lutte contre la non transparence, la corruption et la concussion succeeds in ensuring that the investigations that it carries out and that have merit are prosecuted to the full extent o f the Law. 113. CENTIF has a website (www.centif.sn) that presents i t s mission and activities to the public. In addition, the website provides access to important information on financial crime, money laundering, and the legal framework applicable in the W A E M U region. The unit published a yearly report o f activities on the website, including general information. 114. CENTIF has been established and i s monitoring, investigating, and reporting money laundering activities to the judicial system. Nevertheless, it i s facing an ever increasing demand for i t s services and could have a greater impact if it has the inadequate technical assistance and resources to carry out i t s mandate. 115. CENTIF's activities have shown i t s ability to identify and investigate financial crimes and the necessity for i t s services. The legal and institutional frameworks are in place. However, CENTIF requires assistance to improve the effectiveness and efficiency o f i t s operations. The two main constraints are i t s (a) limited technical capacity due to relative lack o f staff experience and (b) limited financial resources to access necessary modern technology available to facilitate financial analysis and investigation work. The Project w i l l respond with targeted capacity building, access to expertise, and funding for required technical and logistical equipment in line with CENTIF's action plan and long-term objectives. 116. Specifically, Project assistance w i l l comprise the following activities: a. Provision o f specialized technical advisory support through the recruitment o f an internationally recognized expert. The expert will advise CENTIF management and provide in-house training to analysts and CENTIF partners to fully adopt international standards and practices in all operations. This assistance would total 12 months over the first 3 years o f the Project. This technical assistance i s expected to aim primarily at building the capacity o f CEDAF's staff so that, by the end o f 2012, the expert will no longer be needed. A possible decreasing use o f the technical assistance could be as follows: Year 1: 6 months; Year 2: 4 months; and Year 3: 2 months. Estimated cost: us$200,000. b. Provision o f critical information technology equipment to support investigation and operations. Specifically, the Project w i l l purchase specialized analytical software (ANACRIME and ANALYSIS NOTEBOOK) and high-level security software to protect and encrypt information. This software will limit access to confidential information, even to sophisticated hackers, as well as improve CENTIF's analysis and performance. This assistance would be complemented by the purchase o f two vehicles to supply CENTIF 67 with the transportation to carry out i t s investigation. The absence o f a vehicle has hindered CENTIF's carrying out i t s investigatory work effectively and efficiently. Estimated budget: US$lOO,OOO. 117. Rather than financing CENTIF's operational costs, the Project w i l l fund critical investments to promote governance through the fight against money laundering, terrorism financing, and corruption. There are correlations between corruption and money laundering because the second often i s subsequent to the first. Additionally, the task team intends to use Project preparation and implementation to help secure counterpart funding for CENTIF above and beyond i t s usual budget for additional support to the unit's operations costs. The improved performance o f tracking and prosecuting money laundering cases also w i l l help create the conditions for businesses to take action against corruption. Tracking and prosecuting w i l l help to provide a level playing field and to ensure the reliability o f the source o f foreign direct investment (FDI). Subcomponent 2: Strengthening the Anti-Corruption Commission (Commission de lutte contre la non transparence, la corruption et la concussion) (US$250,000) 118. To start tackling corruption in Senegal, the authorities created the Commission de Lutte Contre la Non-Transparence, la Corruption et la Concussion (CNLCC) through Law No 2003- 35. This Commission i s established to complement existing governance structures and has both preventive and repressive roles. I t s two main objectives are to (a) identify structural obstacles to effectively fight corruption and propose practical judiciary and cross sector reforms and (b) collect complaints from individuals regarding corruption cases, investigate the validity o f claims, and determine whether to submit them to the Justice. 119. The Commission membership i s tripartite and includes public, private, and civil society representatives. Members are chosen by their peers based on integrity, ethical history and expertise. They are nominated by the head o f state through a Decree and have operational independence. 120. While the Commission was created in 2003, it effectively started operations in 2006. In 2006 the Commission received 34 complaints and produced a report that was transmitted to the Office o f the President. Based on the Commission recommendations, none o f the cases investigated by the Commission had merit to be submitted to the Justice. For 2007 and 2008, the Commission produced a combined 2007-2008 report which addressed several highly confidential cases and included important recommendation o f reforms to the attention o f the Office o f the President to make the Commission more effective. 121. However the Commission's report has not been published. This i s so despite the fact that Article 4 o f the Law No 2003-35.states that the Commission shall produce a yearly report with all o f i t s activity and i t s recommendations and that the report shall be given to the President and be made public. 122. Discussions with relevant stakeholders during project preparation indicate that CNLCC faces significant challenges in establishing i t s credibility and that there i s a negative public image related to this institution. The fact that the CNLCC has not published a report since its 68 establishment in 2003 may have contributed to this perception. Moreover, restrictions on autosaisie as well as direct transfer o f the cases it investigates to the Attorney General Office (Procureur de la Rkpublique) have not contributed to building the reputation o f the CNLCC with all stakeholders, many o f whom see it as an ineffective institution. Moreover, while the Commission has reviewed 34 complaints o f alleged corruption cases, it concluded that none o f the alleged cases had merit. Improving its effectiveness could benefit significantly from in- house capacity building and exposure to good practices related to the operations o f similar institutions. 123, Technical assistance for capacity building (US$150,000) Specifically, the project will provide training to CNLCC members on anti-corruption, by providing access to an internationally recognized expert in the field o f Governance and Anti-Corruption to help build the capacity o f the members of the Anti-Corruption commission and provide them with key principles in preventing, investigating and prosecuting corrupt practices. Additionally, if a relevant and cost effective twining arrangement i s identified, the finance it to provide the members o f the Commission with the technical assistance required to carry out their functions effectively. 124. The project also will provide technical assistance to revise the anti-corruption unit legal authority and institutional arrangements, to adopt good practices in institutional arrangements and mandate. 125. Technical assistance for Communication (US$lOO,OOO). Additionally, the project also will help finance the formulation and implementation o f a communication strategy to allow to help the Commission with the prevention and prosecuting aspects and to also show to the general public that the Commission i s accountable to the tax payer and wants to report on i t s activities. 126. The project also will assist in the dissemination o f annual report o f CNLCC. The annual report o f CNLCC i s a public report according to the Law 2003-35. The publication o f the report i s a mean to validating the Commission's work and a way to show to all stakeholders and the general public the relevance of i t s work. This dissemination includes publishing the report on the CNLCC website (www.cnlcc.net). The project will support the website management services. Additionally, yearly workshops will be organized for public information and to help build the network with stakeholders involved in the area o f Governance and Anti-Corruption. 127. To complement the above-mentioned activities, the project will finance an awareness communication on CNLCC mission and work. The objective o f CNLCC awareness campaign i s to promote anti-corruption behaviors and provide public exposure to the Commission's work so that more individuals and organizations will use i t s service and access its annual reports. The awareness campaign will include a nationwide anti-corruption campaign using culturally adapted advertizing (poster, TV and radio spots.. .) to explain what corruption is, how it i s recognized, as well as the consequences o f corruption on everyday people's lives. The campaign also will show how corrupt behavior can be reported. This activity w i l l only initiated after the year one to allow the start o f the capacity building activities o f the CNLCC mentioned above. 69 Subcomponent 3: Strengtheningthe Public Procurement Investigating Unit (US$250,000) 128. Following the approval o f the 2003 Country Procurement Assessment Review (CPAR) action plan (AP), the government carried out an in-depth reform o f the national procurement system (NPS). This reform also took account o f WAEMU's procurement directives adopted in December 2005 by the Council o f Ministers o f the Union. To date, substantial improvement of the NPS has been done through setting up the Public Procurement Regulatory Authority (ARMP). ARMP i s comprised o f representatives from public and private sectors and civil society. The Authority i s responsible for formulating policy, handling complaints, and carrying out non jurisdictional audits (ex-post reviews). Additionally, the reform led to the establishment o f a functional Public Procurement Directorate (DCMP) responsible for controlling procurement transactions handled by contracting authorities. A new procurement management information system (SIGMAP) has been set up to make publicly available all o f the information related to procurement (policy, procurement notices, procurement plan, audit results); monitor procurement processes; collect data; and provide statistics. A procurement training program has been adopted and implemented to strengthen the capacit o f the private sector and the civil services. Procurement audits are carried out regularly, ;3 and complaints from bidders properly handled.37 All related decisions, including sanctions, are made public. 129. The A R M P also has a mandate38to carry out ex-post reviews (non jurisdictional audits) to investigate any public procurement processes or contract awards o f goods, works, or services that might have been done without adherence to principles o f transparency, competition and fairness, or that may have been carried out without adherence to national procurement procedures, or the WAEMU's procurement directives. All information related to procurement audits carried out by the A M P - a s well as complaint decisions made, which include possible debarment o f firms/contractors that have been involved in fraud and corrupt practices - are made public through the ARMP website. This important responsibility taken by the ARMP led the government, through Decree No2009-501 o f M a y 2009, to create in 2008 and establish in mid-2009 within the A M P an Investigation Unit (IU). The IU will improve the (a) application o f the principles o f transparency, efficiency, and fairness when carrying out procurement audits; and (b) quality o f decisions made by the A R M P to declare misprocurement and recommend sanctions. 130. Since i t s establishment, ARMP has recruited a procurement specialist and a lawyer for the Investigation Unit. When i t s core team i s in place, the IU can start to create the conditions to effectively review potential violations o f national procurement principles and procedures. At this early stage, the IU has qualified staff who could benefit from technical assistance to operate based on good practices developed by other IUS around the world. Moreover, A R M P would like to ensure that the violations o f procurement and related laws by corrupt practices that are duly uncovered by the IU are prosecuted in a timely and effective manner once reported to the justice 36 Audits o f contracts awarded by contracting authorities under the 2008 budget are ongoing. It i s expected that most o f the recommendations will be implemented in an acceptable timefiame due to the independence o f the A M P ; involvement o f the private sector and civil society representatives; and right to make public all audits contracts, findings, and recommendations. 37 Complaints are by the ARMP through its Complaints Resolution Committee (CRD). 38 In accordance with provisions o f article 30 o f the procurement law (COA)38No. 2006-16 o f June 2006 modifying that o f July 1965 (NO65-51). 70 system. To address these dual challenges, the Economic Governance Project will provide technical assistance to both (a) strengthen the IU's internal capacity, and (b) support the establishment o f an adequate follow-up o f the results o f investigations by the justice system by helping the justice sector track and monitor the timely prosecution and enforcement o f legal decisions., The Project's targeted assistance will be to: a. Support the strengthening o f investigation capacity o f the new unit by providing on-the- j o b technical assistance related to investigation techniques, public procurement, and regulatory matters. Additionally, to expose staff to investigation techniques, the Project will finance the study tour o f one institution (national or international) that deals with procurement investigations and that i s recognized as performing well. This assistance will be provided to ensure that corrupt practices in procurement are investigated in a timely and effective manner to fight corrupt practices in this field. Additionally, the Project will finance the acquisition o f specialized documentation on investigation techniques and finance the development o f a manual o f procedures to carry out investigations. Estimated cost: us$loo,ooo. b. Finance the acquisition o f investigation materials such as information technology equipment (laptops, digital recorder, digital scannerhender, and digital camera) and a vehicle. Estimated cost: US$150,000. c. The Project will help ensure a link and follow-up between the results o f the ARMP's Investigation Unit and the justice system by helping the justice sector track and monitor the timely prosecution and enforcement o f legal decisions. This assistance will be provided under component 2 in the form o f a monitoring system o f all legal decisions. In short, to ensure timely decisions and enforcement, the different cases submitted for prosecution - including those submitted by ARMP's investigation unit - will be handled in a newly established financial and economic pole by judges who have been trained and are specialized in financial and economic cases. This process i s shown below in the chart o f A M P inquiries in procurement matters. In this case, ARMP has submitted a recommendation for a prosecution by the judicial branch o f the investigations related to corrupt practices in the procurement o f publicly funded goods and services. These investigations will benefit from the establishment o f a management information system (SIGMAP) to track the performance o f the judicial sector in legal cases. As a result o f this assistance provided under component 2, the performance o f each o f the steps and processes in the justice chain, or chaine pinale, would be tracked down to ensure that appropriate follow up actions are undertaken and when they are not corrective actions are adopted. 71 Figure A.4.1 ARMP Inquiries ____________________----_----------- ................................. Demande d'enquste .................. _--____ -+ Retour rPsultats enqustes Dossiers transm'spour poursuites _____, - Legend - RC: Regulatory Council - DRC: Dispute ResolutionCommittee - MD: ManagingDirector - IU: Investigation Unit - NAO: National Audit Office - F&EP: Financial & Economic Pool 72 Subcomponent 4: Fostering business-led actions against corruption (US$700,000) 13 1. Despite the clear governance problems, the private sector is showing indications that it i s willing to address the problem within itself. In part, this willingness may reflect greater business confidence in aspects o f the public procurement process. The private sector i s now represented in the tripartite Public Procurement Regulatory Authority (Agence de Re'gulation des Marche's Publics, or ARMP). This authority provides a channel for formal consultation with the private sector on any changes to procurement legislation, offers a complaint mechanism for companies to raise concerns over particular public procurement processes, and entrusts the private sector with the mandate to undertake regular compliance reviews o f procurement transactions handled by contracting authorities. 132. In 2008, 48 substantiated complaints were filled with A M P . In addition, this agency received 25 requests for opinions and 2 anonymous complaints. Eleven o f these requests were found unsuited for review based on Procurement L a w and Decree L a w N'546-2007. Some 50 percent o f the investigations resulting from complaints have favored the complainant. Only 2 findings have been disputed to date, suggesting private sector acceptance o f the process as fair and credible as far as it goes. Business associations also have had some success in lobbying for improvements in public procurement, such as in reducing the number o f sole source contracts issued in public procurement. In a complementary move to improve accountability in public procurement in April 2009, A R M P launched the recruitment o f independent auditors to carry out compliance reviews o f procurement transactions under the 2008 state budget. 133. Concomitantly, private sector associations have begun to take their own actions to promote economic governance that look beyond the procurement aspects. For example, the Confederation Nationale des Employeurs du Se'ne'gal (CNES) has a partnership with Forum Civil on integrity issues under which the two will jointly host a series o f workshops on 11 o f 14 sectors identified by Transparency International as the most vulnerable to corruption problems. The Conseil National du Patronat du Se'nigal (CNP) has made a public commitment to economic governance. Furthermore, in 2007, 19 local businesses formed a Senegalese chapter o f the United Nations Global Compact. The Compact i s a strategic policy initiative for businesses that commit to align their operations with 10 universally accepted principle^.^^ One o f these i s that businesses should work against corruption in all o f its forms, including extortion and bribery. 134. Despite these meaningful advances, the private sector remains a major contributor to - as well as victim o f - corrupt practices. Companies and business associations still have many 39 (Principle 1) Businesses should support and respect the protection of internationally proclaimed human rights; (Principle 2) and make sure that they are not complicit in human rights abuses. (Principle 3) Businesses should uphold the freedom of association and the effective recognition o f the right to collective bargaining; (Principle 4) the elimination o f all forms of forced and compulsory labor; (Principle 5) the effective abolition of child labor; and (Principle 6) the elimination of discrimination in respect of employment and occupation. (Principle 7) Businesses are asked to support a precautionary approach to environmental challenges; (Principle 8) undertake initiatives to promote greater environmental responsibility; and (Principle 9 ) encourage the development and diffusion of environmentally friendly technologies. (Principle 10) Businesses should work against corruption in all of its forms, including extortion and bribery. 73 concerns about vulnerability to corruption-not only in procurement, where they still see room but for impr~vernent;~' also in other areas o f doing business, ranging from tax inspections to customs procedures. Self-regulation mechanisms for the private sector to prevent corruption and collective business action against corruption are s t i l l lacking in Senegal. Internal staff codes o f conduct within individual f i r m s have a limited effect. The efforts o f the business associations are disparate and lack coordination or verification. Given these limitations, i t is difficult for individual entrepreneurs or f i r m s to resist engaging in corrupt practices. As a result, many see payment o f bribes and engagement in other forms o f corruption as simply part o f the cost o f doing business and necessary for survival. 135. Given the pressures on individual companies, there i s a strong case for companies to work together to increase their ability t o resist corrupt practices. One particular type o f corruption that i s important i s demands for bribes. Accordingly, the objective o f this subcomponent i s to encourage reform-minded entrepreneurs to come together with industry peers and key stakeholders to recognize that they have a common stake in a better operating environment and to implement joint anticorruption activities. Private sector action to clamp down on bribery and related measures that reinforce a reputation for clean business should help provide a level playing field and foster competition leading to a better allocation o f resources in , the economy. 136. The Project will work with committed local business associations and chambers o f commerce to forge a collective anticorruption initiative. Specifically, it will facilitate the development and adoption o f a No-Bribery Pact for private firms. Companies would become signatories o f the Pact by which they would publicly commit to uphold a common code o f c ~ n d u c t . ~ ' bribery i s one o f the key corruption challenges in Senegal, the pact will include As rules on gifts and entertainment, facilitation payments and sponsorship, as well as o n conflicts o f interest, collusion, and bid rigging. These activities will be implemented in close collaboration with A M P so that Project activities are mutually reinforcing in addressing corrupt practices. 137. Local businesses and business associations will have ownership o f the design o f the pact. They will take the lead in determining appropriate pact principles, verification, sanctions, complaint mechanisms, and organizational structure (working groups, secretariat), as well as in reaching out to industry peers to j o i n the pact. Local businesses and business associations must agree on the range o f activities to be undertaken by and for the pact members. Since no-bribery pacts do not consist solely o f a code o f conduct but include advocacy, training, and other activities for signatories, members will commit to a code o f conduct and carry out advocacy functions. The development o f a Pact will be guided by an approach that comprises a core element that embodies all o f the shared principleskodes and some optimal elements which are 40 The ARMP-composed o f representatives from the private sector, civil society and the Administration-proposed for government the establishment of an investigation unit of fiaud and corrupt practices in public procurement to be housed within the ARMP's Managing Directorate. This Unit was established in mid 2009 and will receive assistance under this same component o f the Economic Governance Reform project to help ensure that corrupt practices in procurement are investigated and prosecuted in a timely and effective manner. The establishment o f this Investigating Unit helps fulfill the mandate o f the ARMP in the area o f compliance reviews of public procurement transactions. 4 ' Transparency International's Business Principles for Countering Bribery might be one model for such a common code. 74 customized based o n the specific needs o f the pact's members (advocacy, training, verification o f compliance, certification) (Figure A.4.2). Figure A.4.2 Elements of a No-Bribery Pact for the Private Sector: Core and Optional 138. It is expected that signatories o f the No-Bribery Pact will show different levels of commitment to pact principles and different levels o f engagement in pact activities. Therefore, the Project envisions a tiered membership structure for the pact that correlates engagement and commitment levels to pact certification and rewards. This model is followed by existing no- bribery pact initiatives in other countries. For example, the Convention for Business Integrity in Nigeria established a five-star rating system for i t s members. The details o f the tiered membership structure for Senegal will be designed by companies and associations themselves and reflect their local needs and ambitions. One model could consist o f the following stages, described below and captured in Table A.4.3: 0 Stage 1 (mandatory) YeriJcation: Peer-monitoring/evaluation through Pact Secretariat. Incentivesheward Clean business logo in their marketing. 0 Stage 2 (by application) YeriJication: Unpublished internal review, verified by third party, accessible only to company board and P A C T secretariat, followed by documented actions rectifj4ng any areas for concern identified in the review. Incentives/reward; Join preferred provider network, that is, pact-approved companies. When looking for a particular product or service, some parties might first look within the firms generated from the network o f Stage 2. 0 Stage 3 (optional): YeriJication: Official, published verification and certification by third party. Incentivesheward Incentives could result in being included in a preferred network provider vis-a-vis customs and airport clearances. 75 Table A.4.3 Stages for the Development of a Generic No-Bribery Pact Stage I Stage 2 Stage 3 b t Signature to PACT *Active participationin Train new Pact c Pact activities, such as endorsees C Public endorsement i advocacy Development of Internal .Additional financial 0 3 program and training r? 0 Minimum financial and in-kind contributions and in-kind contributions to Pact c 0 Peer-monitoring Unpublished internal Official published review - u i Verification by Pad review Certified by independent E Certified by independent par?, >" party 8 Ckan business logo Preferredprovider Fast track procedures in s Sharing experience network selected public sector approvals 2 sessions 139. The Project also will finance the provision o f ethical audits and issuance o f certificates to qualifying companies carried out by independent service providers/auditors that have the necessary credibility and reputation. 140. The targets o f this assistance project are (1) the development o f such a pact with at least 100 member f i r m s over the l i f e span o f the Project and (2) at least 50 companies obtaining a higher level ethical certification. 14 1. To have a successful launch o f the pact, the public announcement and formal launch will take place only when a critical mass o f companies, (approximately 30 firms) have agreed to sign up for the pact. The launch will be accompanied by an awareness-raising campaign to establish the pact as a recognized brand in Senegal and neighboring countries in Francophone West Africa. During Project preparation, many companies and associations mentioned that i t will be necessary to establish strong "brand recognition" o f the pact in Senegal and in neighboring countries as the latter are Senegal's main export partners. 142. While initial seed funding to facilitate the development o f the pact will be provided by the Project, to demonstrate their commitment and ensure that the effort i s sustainable, the member companies will commit to financial and in-kind contributions. 143. Specifically, from 2010 t o 20 12, the Project will finance the following activities: a. For the preparatory and start up phase, the Project will finance a series o f roundtables/workshops co-convened by leading private sector representatives f r o m companies, business associations, and chambers o f commerce with the World Bank, as well as interested and credible NGOs and government agencies, to agree on the design 76 and roll-out o f the pact. These workshops will enable assessing the needs and incentives o f the relevant stakeholders, as well as their capacity to design and implement a pact. The Project envisions up to 3 roundtable discussions in the first year during the primary consultation and design phase, then 1 or 2 follow-up roundtables in Years 2 and 3 o f the Project. Additionally, selected Pact Team members also would participate in the regional forum on the establishment and implementation o f pacts. This phase o f the activity i s expected to be completed by December 2010 or during the first quarter o f 201 1. The total estimated cost to prepare and hold these consensus building workshops i s US$50,000. b. To help support the design and implementation o f the preparatory phase described above, the Economic Governance Project will finance technical assistance. This technical assistance includes capacity building support to develop the coalition and undertake outreach to relevant government and civil society stakeholders. To this end, the Project will finance the recruitment o f a local consultant to coordinate and ensure follow up o f the Project activities in Senegal. The Project also will fund additional specialized consultants. For example, legal advice is likely to be required for the design phase o f the pact. The Project also will support a twinning arrangement with an existing integrity pact initiative from another country, which has first-hand experience and advice/experience to share (US$l 00,000). c. Following the design o f the pact, the Project will finance capacity building activities to support the implementation o f No-Bribery Integrity Pact for champion companies and associations in Senegal that are committed and capable o f playing a leadership role in launching the pact in Senegal. The Project will develop customized training materials and deliver at least two targeted trainings. The Project also will organize up to two trainings for the auditing and certification providers, utilizing local and international experts to build capacity o f local consultants and organizations to enable them to provide these services. The Economic Governance Project will also finance a targeted training o n governance principles for directors o f firms. Once the pact i s launched, the Project will co finance the training o f signatory company employees on the relevant pact (US$400,000). d. This marketing campaign will be complemented by supporting the No-Bribery Integrity Pact in financing a Business Integrity Award ceremony. The Project will thus help organize the preparation and the ceremony for an annual award competition for Senegalese firms. This high-level event would be organized by the pact, and the awards would be decided by an independent jury panel o f experts. During Project preparation, many o f the companies and associations consulted felt that such awards would be a good incentive for companies to show more ethical leadership. To give prestige to the event, the awards would be handed to f i r m s by respected and well-known personalities. This annual event would be disseminated through radio, television, print media, and the internet ($50,000). e. To foster business-led actions against corruption, the Project will provide seed funding for a pact secretariat, including hiring one full-time staff to complement staff time commitments from coordinating business associations and member companies 77 (US$lOO,OOO). The pact secretariat would be housed by one o f the leading private sector organizations such as the Chamber of Commerce, CNES, CNP, or UNACOIS. Component 4: Strengthening CEDAF & Project Implementation Support (US$1,000,000) 144. The objective o f this component i s two-fold. First, it will strengthen Cellule d'Exe`cution Administrative et FinanciBre (CEDAF) to enable it to implement the Justice Sector Program successfully and to become a center o f excellence in the public administration. Second, the Project will provide the implementation support to ensure that the Project meet its development objective. 145. The Project will be implemented by CEDAF, which i s the technical and administrative unit responsible for the implementation o f the Justice Sector Reform, the main Project beneficiary. Three additional beneficiaries: CENTIF, Investigation Unit o f the Agence de Rkgulation des Murchks Publics ( A M P ) , and private firms, in essence will implement their own activities while the fiduciary responsibilities will be carried out by CEDAF. Additionally, Component 2 will be implemented by the Grefle du Tribunal de PremiBre Instance de Dakar. 146. Component 4 will provide the resources necessary to strengthen CEDAF's fiduciary capacity in the first phase. In the second phase, the Project will help CEDAF become a center o f excellence. Building on the institutional capacity that will be provided to support Project implementation, resources will be allocated to help CEDAF become a center o f excellence within the Senegalese public administration, in other words, to enable this unit to have all the capacities and skills set necessary to successfully implement the PSJ. This support will be based on the development and adherence to a quality approach in management and applied to the implementation o f the Justice Sector Project, which i s assessed by independent evaluators. Thus, the I S 0 9001-2008 quality management certification process would be financed under the Project. I S 0 9001-2008 Certification o f CEDAF: I S 0 9001-2008 i s an international standard related to quality management applicable to any organization from all type o f activities. This certification is based on various quality management principles including among others: leadership, use o f people process approach, fact-based decision-making. The project will finance the technical assistance so that CEDAF completes the I S 0 9001-2008 certification process by completing the key steps and milestones described below: Educate the organization on what I S 0 9001-2008 standards mean and provide the staff with some basics aspects on quality management systems and the implementation process. Identify the processes: CEDAF, as every organization is made up o f a series o f interacting processes. Therefore identifying the processes that would be part o f the I S 0 certification i s a key step in understanding the organization. The project will assist all the departments o f CEDAF in clearly identifying and charting their respective processes to form the basis for the diagnosis to obtain the quality management certificate. 78 Gap Analysis: A preliminary operational and organizational audit o f CEDAF w i l l be carried out with THE project's financing to compare the organization's current quality management system (QMS) to the requirement o f the I S 0 9001 standard. Formulate a new Q M S adhering to I S 0 9001 standards. Based on the gap analysis, the project w i l l finance the design o f the processes new procedures, or modify the current procedures so that those w i l l be meeting I S 0 9001 requirements. The new procedures w i l l be introduced to the CEDAF staff and then implemented. Complete the pre certification audit: Subsequently, a new audit w i l l be carried out to ensure that all the findings o f the gap analysis were understood and addressed. A l l non compliance issues identified would then be addiessed. If required, a second internal audit can be performed. Certification audit: Once the internal audit has clearly shown that the organization i s complying with all the QMS requirements, a third party audit by an accredited institution w i l l be performed to issue the I S 0 9001-2008 certification. The financing o f this I S 0 9001 certification will allow consolidating and maintaining a high level o f service standards and performance within CEDAF. The project will thus finance the technical assistance to bring CEDAF to the point where it i s certified I S 0 9001 for the quality o f i t s implementation o f the Justice Sector Program. Creating in CEDAF a Quality Management System meeting I S 0 9001-2008 standard will not only help this institution improve i t s productivity and efficiency, it also w i l l reinforce i t s credibility and open up possibilities for leveraging additional financing from other development partners to finance the implementation o f the Justice Sector Reform Program, which faces a funding gap. I t i s worth noting that certification o f CEDAF as an entity encompasses certification o f i t s various functions, including the fiduciary, as well as monitoring and evaluation functions. Today, CEDAF i s a small organization which comprises 10 staff and has a drive for excellence. The organizational chart presented below describes the current number of departments and staffing o f CEDAF. The project w i l l help transform CEDAF as described above and the estimated cost o f the certification i s o f US$400,000. 147. Additionally, this component o f the project will finance the development o f a digital law library physically located at the Ministry o f Justice to give electronic access to legal documents to all o f the country's administrative departments. This law library w i l l be made available through the Ministry o f Justice website and will have i t s search engine adequately calibrated to facilitate the search o f documents. (US$ 100,000) The support under component 4 w i l l also finance the purchase one vehicles as well as office equipment and furniture, the establishment o f an intranet, and the setting up a video conferencing facility for capacity building. (US$lOO,OOO) ' 79 Institutional and Implementation Arrangements 148. Implementation period. The Project will be implemented by the Ministry o f Justice over 5 years, from March 26, 2010 to June 30, 2015. There will be a normal 6-month winding-down period from December 31, 2014 to June 30, 2015, the closing date. December 31, 2015 would thus be the completion date. 149. In line with the Paris Declaration and the increased emphasis on national systems to implement projects, no Project Implementation Unit (PIU) will be set up to implement the Economic Governance project. In fact, the day-to-day implementation o f the Project will be the responsibility o f CEDAF, the technical unit in charge o f the implementation o f Senegal Justice Sector Reform. Project beneficiaries such as CENTIF, CNLCC, and A M P will implement their own activities while obtaining support from CEDAF for the Project Coordination and fiduciary functions. Implementing their own activities will entail drafting terms o f reference for the technical assistance that they will be recruited, evaluate and award the different proposals received, with support from the Procurement Specialist that will be recruited, administer the technical assistance for their respective institutions, as well as confirm whether a technical assistance provided the agreed upon deliverables with the appropriate quality to allow for the payments to take place. 150. While the beneficiaries will undertake these technical functions for their respective assistance under the project, CEDAF will provide the fiduciary functions under the project. As such, CEDAF will oversee the project's financial management (FM), procurement, M&E, audit, and public information campaign. 151. To carry out i t s functions effectively, CEDAF will recruit the following key staff with terms o f reference, qualifications and experience satisfactory to the Association: (i) Project Coordinator; (ii) Procurement Specialist; (iii)Financial Specialist and (iv) part-time monitoring and evaluation specialist. These additional recruitments will come complement CEDAF's current structure, which i s depicted below in Figure A.4.3. CEDAF's key responsibilities under the project will be as follows: a. Overseeing the day-to-day execution o f the project; b. Identifying necessary project adjustments based on monitoring and evaluation results; C. Preparing updated Procurement Plan and related budgets to be submitted to the Steering Committee for approval; d. Carrying out project financial management; and e. Monitoring and evaluating the project and preparing project progress reports and monitoring and evaluation reports. 80 Figure A.4.3 CEDAF Organizational Chart Cwrdinator AhmadouTALL ExecutiveAssistant Mame Betty MBENGUE b Monitoring & Evaluation Planning Officer officer Souleymane BARRY NdiCmC PAVE I Mamadou Toure Finance and Accountant Administntion Blnta Niaroum SAGNA Cheikh NDIAVE Mamadou Waiv DlOUF Oumar MBAVE Moussa SEMBENE 152. To complement these institutional arrangements, the Project will be overseen by a Project Steering Committee (which will comprise all the Project stakeholders, including CEDAF) supported by a professional secretariat (CEDAF). The Steering Committee will provide the strategic orientation to the project, review and approve annual work plan and budget, and propose any needed corrective measures to be adopted during project implementation. The Steering Committee i s made up o f the members o f the Justice Sector Project Evaluation and Coordination Committee (Comite' de Coordination et d 'Evaluation du Programme Sectoriel Justice) as established by the Borrower in accordance with Decree No. 2006-1279 dated November 23, 2006. The Steering Committee i s responsible for the follow up o f the entire Justice Sector Program, including the contribution o f this Economic Governance Project. It i s expanded to include the fact that several o f the project beneficiaries such as the ARMP, CENTIF, CNLCC and private sector f i r m s are not members o f the Comite' de Coordination et d 'Evaluation du Programme Sectoriel. The establishment o f the Steering Committee uses existing institutional arrangements which will contribute to strengthening the coordination o f the Justice Sector Program among the several stakeholders, including development partners and w i l l strengthen the use o f the Comite' de Coordination et d'Evaluation du Programme Sectoriel Justice as the coordination mechanism o f the Justice Sector Reform Program. Moreover, expanding the Comite' de Coordination to likeminded institutions such as ARMP, CENTIF, and CNLCC which all aim to improve economic governance will foster better coordination and follow up on investigations carried out by A M P , CENTIF, CNLCC by the judiciary branch and foster a strengthening o f collaboration while enhancing the project's effectiveness. 81 153. The Steering Committee which i s headed by the Borrower's Ministry o f Justice and composed o f representatives o f the Recipient's Ministry o f Justice and agencies participating in the project w i l l have the specific tasks shown below: a. Carrying out of annual reviews o f proposals, work plans and budgets prepared by CEDAF and ensuring their consistency with the Justice Sector Program and the Project's development objectives; b. Overseeing the execution o f the Project and provide overall strategic orientation; C. Monitoring the physical progress (achievement o f coverage objectives) and the financial execution on the basis o f the progress reports prepared by the CEDAF; d. Taking measures to facilitate resolution o f problems or conflicts that may arise during the course o f the Justice Sector Program; e. Facilitating the coordination o f the Project's activities among the entities represented in the Steering Committee, and making recommendations to the Minister o f Justice in view o f the removal o f any impediment to the achievement o f the Project's objectives; f. Providing comments on reports and reviews prepared by CEDAF for the benefit o f the Association; g. Approving the updated Procurement Plan and related budgets submitted by CEDAF; h. Carrying out o f annual reviews o f proposals, work plans and budgets prepared by CEDAF and ensuring their consistency with the Justice Sector Program and the Project's development objectives; i. Overseeing the execution o f the Project and provide overall strategic orientation; j. Monitoring the physical progress (achievement o f coverage objectives) and the financial execution on the basis o f the progress reports prepared by the CEDAF; k. Taking measures to facilitate resolution o f problems or conflicts that may arise during the course o f the Justice` Sector Program; 1. Facilitating the coordination o f the Project's activities among the entities represented in the Steering Committee, and making recommendations to the Minister o f Justice in view o f the removal o f any impediment to the achievement o f the Project's objectives; m. Providing comments on reports and reviews prepared by CEDAF for the benefit o f the Association; and n. Approving the updated Procurement Plan and related budgets submitted by CEDAF. 82 Financial Management Arrangements 154. The Project's detailed financial management and disbursement arrangements are found in Annex 7. The project will help strengthen CEDAF's financial and disbursement capacity. Doing so will enable CEDAF to have the staffing, process, and internal control systems for a sound implementation o f the Project. Strengthening financial management and disbursement functions also will contribute to the establishment o f CEDAF as an institution able to effectively discharge i t s functions. This process has started during project preparation and will continue throughout the Project's implementation. For example, the Project prepared the procurement plan for the first 18 months. Although this process will process was slower than if a consultant had been asked to do so, it helped build capacity and the subsequent updating o f the procurement plans will be done faster. 155. To help strengthen CEDAF, the Project will ensure that an FM specialist who has the relevant educational qualifications and experience, as well as familiarity with financial management o f World-Bank-funded projects i s appointed (US$l 00,000). Moreover, CEDAF'S accountant will be given additional training. The Project also will strengthen the accounting and FM by establishing a computerized accounting and FM system at CEDAF, as well as adopting an administrative and financial accounting manual. These steps will be complemented by strengthening an internal audit function and completing an annual financial audit o f the Project's account. In the spirit o f building country systems, and subject to reaching an agreement with other development partners, one joint financial audit will be carried out for all the funds managed by CEDAF. As part o f the financial management system, CEDAF will furnish to the Association not later than 45 days after the end o f each calendar quarter, an interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association. 156. Additionally, CEDAF shall have its Financial Statements audited each fiscal year starting with the fiscal year in which the first withdrawal was made under the Preparation Advance for the project. The audited Financial Statements for each such period shall be furnished to the Association not later than six months after the end o f such period. 157. To further complement, the financial management arrangements, no later than four (4) months after the Effective Date, the Recipient shall have recruited an independent external auditor for the project to carry out the financial audits o f the project. Procurement 158. The assessment carried out during project preparation showed that the main issuedrisks concerning the procurement activities for the Project's implementation are: (a) CEDAF has not yet developed an administrative manual for its operations; (b) although the team benefited from training in archiving and is technically ready to use the manual o f archives recommended by A M P , the equipment for filing hard copies of the relevant documents has not yet been purchased due to inadequate budget allocation; and (c) although it has received assistance from several donors including the European Union, UNDP, and the World Bank, C E D A F is not familiar with World Bank procurement procedures and has insufficient experience in directly managing a project. 83 159. To address these risks, the Project will finance four activities: (a) elaboration o f a manual o f administrative procedures including procurement process and quality control responsibility; (b) acquisition o f office furniture and filing system; (c) training o f all CEDAF staff, as well as the staff from the Justice Ministry's Procurement Unit, in World Bank procurement procedures; and (d) recruitment o f a procurement specialist in a full time position at least for the first two years o f the Project's implementation to provide technical assistance to bring support and institutional capacity building to the whole CEDAF technical team and to the relevant staff o f the Ministry o f Justice. (US$150,000) In developing the institutional capacity in procurement, the approach will be to emphasize that the technical specialists and experts will receive the basic procurement training. In this way, the technical responsibilities in preparing the procurement packages-including the terms o f reference-and amending the basic procurement document templates, such as data sheets, remain tasks that are carried out by the relevant specialistlexperts and are not passed to the procurement team. Monitoring and evaluation o f outcomes/results 160. The M&E system will be based on the agreed Results Framework and monitoring arrangements (Annex 3, Results Framework and Monitoring). The M&E function will be carried out by CEDAF. A quarterly monitoring table and progress reports will be prepared and submitted to IDA by CEDAF. A Project Implementation Plan (PIP), a Financial Management Plan, and an overall Procurement Plan will be prepared to help produce a Project Implementation Manual (PIM). The P I M will include all periodic reporting and M&E arrangements throughout the Project cycle. The P I M w i l l state that independent operational audits will provide impact assessments and identify ways to improve project management and results. The reports for such operational audits will be furnished to IDA by June 201 1, December 2012, and March 2014, respectively. 16 1. The CEDAF M&E team will be responsible for collecting the data and managing and monitoring the agreed project development outcome indicators. To that end, CEDAF already has a team comprising o f a monitoring and evaluation specialist, and monitoring and evaluation assistant. The project will recruit a specialist to building the capacity o f the CEDAF team in monitoring the project's progress as well as designing a monitoring and evaluation framework for the Justice Sector Program. 162. The primary monitoring mechanism will be quarterly reports and annual reports prepared by the CEDAF Coordinator and presented to the steering committee. These reports will assess achievements against the PIP and overall project progress using the indicators defined in the results framework. All reports will be submitted to the World Bank and shared with other development partners involved in the sector when needed. A mid-term review will be carried out to assess results and draw lessons from the Project. An Implementation Completion and Results (ICR) report also will be prepared. 163, Public information and communication campaign. To ensure that the general public i s also aware o f the project's objectives, activities and achievements, the Project will finance the conception and implementation o f a communications campaign for the all the Project components since an effective communication will be critical to the success o f the proposed 84 activities. A public communications strategy has been integrated within all relevant project activities. Additionally, stakeholders have requested that stand-alone communication activities be financed by the Project to address cross-cutting issues such as investment climate reform activities (US$50,000). 85 Annex 5: Project Costs S E N E G A L : Economic Governance Project Table A.5.1 Senegal Economic Governance Project Costs (US% millions) Project cost by component and/or activity Local Foreign Total Improving the investment climate 0.6 1.6 2.2 Improving court performance and user-friendliness 1.1 2.0 3.1 Strengthening the demand-side for economic 0.6 0.9 .5 governance Strengthening CEDAF and project implementation 0.4 0.6 .o support Operating costs 1.o 0.0 .o Total baseline cost 3.6 5.2 8.8 Physical contingencies 0.1 0.1 Price contingencies 0.1 0.1 Total project costs* 5.4 8.0 Interest during construction Front-end fee T o t a l financing required 3.6 5.4 9.0 * The total project cost, net o f taxes, i s US$8.0 million. 86 Annex 6: Implementation Arrangements SENEGAL: Economic Governance Project 1. In line with the Paris Declaration and the increased emphasis on national systems to implement projects, no Project Implementation Unit will be set up. In fact, the day to day implementation o f the project will be the responsibility o f CEDAF, the technical unit in charge o f the implementation o f Senegal Justice Sector Reform. I t is noteworthy that the task team considered an alternative in which the fiduciary functions (procurement and financial management) would be carried out by an existing government agency (APIX), which i s already experienced in managing Bank financed projects. However, based on Bank reviews and discussions with representatives o f the Borrower, the task team adopted an approach that the project, including its fiduciary responsibilities, will be implemented by CEDAF. This approach will enable fostering a center o f excellence beyond the existing ones. As such, CEDAF will oversee the financial management, procurement, monitoring and evaluation, audit, and public information campaign. 2. To complement these institutional arrangements, the project will be overseen b y a Project Steering Committee, (which will comprise all the project stakeholders, including CEDAF) supported by a professional secretariat (CEDAF). The committee will provide the , strategic orientation to the project, review and approve annual work plan and budget and propose any corrective measures to be adopted in the course o f the project's implementation, if needed. 3. Implementation support: The project will provide the resources to strengthen CEDAF's ability to carry out the overall coordination functions o f the project in particular implementation support for components 1 to 3 and fiduciary functions. Additionally, to ensure adequate contribution o f the Steering Committee to the Project oversight, the Steering Committee will meet quarterly for ordinary meetings and as required for exceptional meetings. This approach reflects experienced acquired in other projects, including Credit 3762 SE for the Private Investment Promotion Project, as well as Credit SE 3875 Private Sector Adjustment Credit, as well as Credit MZ 3317 Mozambique Enterprise Development Project, and the IDA Credit 3483 LSO for the Lesotho Utilities Reform Project. Rationale and details o f the assistance are described below. It is important to note that the credit will not finance operational costs for CEDAF such as salaries, utilities bills (electricity, telecommunication costs, water) so that the sustainability o f the institution i s strengthened and not undermined by the financing o f these operating costs. In fact, counterpart funds secured during the preparation phase will be used to this effect. 4. The project will finance the activities to establish systems and procedures which ensure an effective and timely implementation o f the Justice Sector Program. The support under this component will include short term targeted technical assistance for capacity building, the purchase o f office equipment and furniture, the establishment o f an intranet, the development o f a digital law library physically located at the Ministry o f Justice, to give electronic access to legal documents to all departments. This l a w library will be made available through the Ministry o f Justice website and will have i t s search engine adequately calibrate to facilitate the search o f documents. The Project will also finance the setting up o f a video conferencing facility and the 87 purchase of one vehicle for CEDAF. The cost breakdown reflecting the financing for this component can be found on Annex 3. 5. Building on the institutional capacity that will be carried out to support the project implementation, the project will support CEDAF in becoming a center o f excellent within the Senegalese public administration, to enable this Unit to have all the capacities and skills set to successfully implement the Justice Sector Program. This support will be based on the development and adherence to a quality approach in management and applied to the implementation o f the Justice Sector Project, which i s assessed by independent evaluators. The I S 0 9001-2008 certification process would thus be financed under the project. 6. I S 0 9001-2008 Certification o f CEDAF: I S 0 9001-2008 i s an international standard related to quality management applicable to any organization from all type o f activities. This certification i s based on various quality management principles including among others: leadership, use o f people process approach, fact-based decision-making. The project will finance the technical assistance so that CEDAF completes the I S 0 9001-2008 certification process by completing the key steps and milestones described below: Educate the organization on what I S 0 9001-2008 standards mean and provide the staff with some basics aspects on quality management systems and the implementation process. 0 Identify the processes: CEDAF, as every organization i s made up o f a series o f interacting processes. Therefore identifying the processes that would be part o f the I S 0 certification i s a key step in understanding the organization. The project will assist all the departments o f CEDAF in clearly identifying and charting their respective processes to form the basis for the diagnosis to obtain the quality management certificate. 0 Gap Analysis: A preliminary operational and organizational audit o f CEDAF will be carried out with THE project's financing to compare the organization's current quality management system (QMS)to the requirement o f the I S 0 9001 standard. 0 Formulate a new Q M S adhering to I S 0 9001 standards. Based on the gap analysis, the project will finance the design o f the processes new procedures, or modify the current procedures so that those will be meeting I S 0 9001 requirements. The new procedures will be introduced to the CEDAF staff and then implemented. 0 Complete the pre certification audit: Subsequently, a new audit will be carried out to ensure that all the findings o f the gap analysis were understood and addressed. All non compliance issues identified would then be addressed. If required, a second internal audit can be performed. 0 Certification audit: Once the internal audit has clearly shown that the organization i s complying with all the QMSrequirements, a third party audit b y an accredited institution will be performed to issue the I S 0 9001-2008 certification. 88 7. The financing o f this I S 0 9001 certification w i l l allow consolidating and maintaining a high level o f service standards and performance within CEDAF. The project will thus finance the technical assistance to bring CEDAF to the point where it i s certified I S 0 9001 for the quality o f its implementation o f the Justice Sector Program. Creating in CEDAF a Quality Management System meeting I S 0 9001-2008 standard will not only help this institution improve i t s productivity and efficiency, it also w i l l reinforce i t s credibility and open up possibilities for leveraging additional financing from other development partners to finance the implementation o f the Justice Sector Reform Program, which faces a funding gap. It i s worth noting that certification o f CEDAF as an entity encompasses certification o f i t s various functions, including the fiduciary, as well as monitoring and evaluation functions. Today, CEDAF i s a small organization which comprises 10 staff and has a drive for excellence. The organizational chart presented below describes the current number o f departments and staffing o f CEDAF. The project will help transform CEDAF as described above and the estimated cost of the certification i s o f US$400,000. 89 Annex 7: Financial Management and Disbursement Arrangements SENEGAL: Economic Governance Project Summary o f Financial Management Assessment 1. The objective o f the Financial Management Assessments i s to determine whether the implementing unit o f the Project, namely, CEDAF (Cellule d 'Exe`cution Administrative et Financidre), under the oversight o f a steering committee, has acceptable financial management (FM) arrangements in place to take on the Project's fiduciary responsibility. These arrangements include the existence o f an accounting system and reporting, auditing, and internal controls. The Implementing Unit (IU) FM arrangements are acceptable if (a) the unit i s capable o f recording correctly all transactions and activities; (b) it supports the preparation o f regular and reliable financial statements; (c) it safeguards i t s assets, and (d) it i s subjected to a satisfactory auditing process. The FM assessment o f CEDAF was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Sector Board on November 3,2005. 2. CEDAF i s the technical unit in charge o f the implementation o f the Justice Sector Reform under the oversight o f Ministry o f Justice, but it does not have a FM unit and i s not yet experienced in managing Bank-financed projects. The conclusion o f the assessment i s that the FM arrangements for the Project must be established to satisfy the World Bank's minimum fiduciary requirements under OP/BP10.02, after which they will be adequate to provide, with reasonable assurance, accurate and timely information on the status o f the Project as required by the Bank. The main areas o f focus will be: 0 Staffing 0 Accounting Auditing 3. The overall fiduciary risk rating i s assesseG as "substantial and is expected to be moderate once the mitigation measures are implemented. " Country Issues 4. The inherent risk o f the public financial management system in Senegal i s rated "Substantial" at the country level. The 2007 Public Expenditure and Financial Accountability (PEFA) report shows that the reform program has yielded progress in public financial management (PFM). However, a number o f challenges remain. They include (a) putting in place a reliable system to track expenditure payment arrears and avoid budget deviations, (b) eliminating delays in the consolidation o f budget information and the production o f comprehensive and regular in-year annual budget execution reports, (c) reinforcing the internal and external controls o f budget execution and state-owned enterprises and national agencies, and (d) strengthening the external scrutiny and audit by increasing the capacity o f the Section of Accounts o f the Supreme Court and the effectiveness o f the legislative scrutiny. 90 5. With the support o f the development partners, the government will implement the action plan resulting from the conclusions o f the PEFA exercise to address the key challenges and strengthen the public FM system. 6. In line with the Paris Declaration, the institutional arrangements o f this Project have been designed under Ministry o f Justice. CEDAF, the national coordination unit o f the Justice Sector Program, will support the Project's implementation. The use o f country system will be based o n a gradual approach depending on progress made in strengthening the P F M system. Fiduciary Risks and Mitigation Measures Table A.7.1 Fiduciary R i s k s and Mitigation Measures Risk Residual risk Risk Risk mitigation measure rating rating Inherent risks S S Country: Poor governance C F A A and PEFA action plans R i s k s remain regarding quality are under implementation; and timeliness o f in-year budget government has created an reports and annual financial Executive Secretariat to statements and effectiveness o f S follow up. S external audit and legislative Multi-Donor Trust Fund scrutiny o f annual budget law. (MDTF) also is being implemented to support key reforms. Entity: Bank will monitor While legal and institutional implementation plan, annual framework is in place, action plan, and budget to implementation may be make sure that they are in line S S hampered by political with objectives. interference on which should receive attention. Project: FM manual will be developed, Lack o f FM capacity and weak and training will be provided S M internal control environment. to Project team before effectiveness. Control risks: M Budgeting: FM manual will be developed N o experience in preparation and to define budget preparation execution o f a relevant project and execution processes. budget. Training on procedures will M be provided after project effectiveness. Accounting: N e w computerized accounting S M No experience in dealing with system will be customized to 91 Risk Residual risk Risk Risk mitigation measure rating rating project accounting system. fit project needs and generate useful information and financial statements. Staffing : FM staff with competence and Fiduciary function does not yet experience satisfactory to S M exist. Bank to fulfill FM function within CEDAF. Internal control: FM manual will be set out There are no internal control with a clear description o f S M arrangements for Project. approval and authorization processes. Funds flow: FM staff will be trained in Difficulties in timely submission Bank FM and disbursement o f acceptable withdrawal S procedures after Project M applications may delay funds effectiveness. mobilization. Reporting and monitoring: Recruitment o f a qualified and Delays in submission o f agreed experienced FM staff, and Intermediary Financial Reports accounting software will be and annual project financial S customized to facilitate S statements as CEDAF i s not compilation o f accounting familiar with IDA FM information. requirements. Internal audit : Project will support Internal Lack o f capacity o f internal audit Audit Department to carry out department within Ministry o f S internal audit o f Project with M Justice. TOR acceptable to IDA and will issue half-yearly report. Auditing: Recruitment o f qualified, Inadequate institutional experienced, and independent arrangements in place for S external auditors with TORS M appointment o f external auditors. acceptable to IDA. Overall Risk: S M Note: H = High, S = Substantial, M = M :st, L = Low. o Strengths and Weaknesses 7. To mitigate the country and entity risks, CEDAF will have the overall FM responsibility o f the Project. A FM officer familiar with the Bank procedures will be recruited to strengthen the FM capacity within the CEDAF. A new computerized accounting system will be customized to fit project needs and generate useful information and financial statements. The Project will strengthen the capacity o f the internal audit o f the ministry to carry out internal audits o f the Project. 92 8. The Project financial management i s weakened by the following salient features: 0 Lack o f fiduciary function: CEDAF FM staff i s not yet in place, and there are not a FM manual and an accounting software. 0 CEDAF staff not familiar with IDA-financed projects and FM procedures. 0 Weak internal control environment. ImplementingEntity 9. The CEDAF will have the overall coordination o f the FM and accounting activities. With the oversight o f the coordinator, FM staff will oversee the FM aspects o f the Project including the consolidation o f financial statements for project activities, providing quarterly Interim Financial Reports, monitoring financial transactions on the Project's account through the Direction de la Dette et de l'lnvestissement (DDI)) and making the necessary arrangements for the annual financial audit. DDI i s the entity o f the Ministry o f Economy and Finance in charge o f managing the designated accounts in Senegal. All payments under the Project will be paid through the DDI charhel. Funds Flow and Disbursement arrangements Disbursement methods 10. Disbursements under the Credit would be transactions based. Direct payment and Statement o f Expenditures (SOE) methods will apply as appropriate. A Designated Account will be opened at a commercial bank to facilitate payment for eligible expenditures. The Designated Account will be managed according to the disbursement procedures described in the Administrative, Accounting and Financial Manual and Disbursement Letter. 11. The allocation o f the Designated Account will cover approximately four months' expenditures. The minimum value o f applications for reimbursement, direct payment, and special commitment i s 20 percent o f outstanding advance made to the designated account. Report-based disbursement 12. The conversion to report-based disbursements may be envisaged when CEDAF has the capacity to produce acceptable Interim Financial Reports (IFRs). Disbursement schedule 13. Table A.7.2 sets out the expenditure categories to be financed from the Credit proceeds. The allocations are as follows below: 93 Table A.7.2 Credit-Funded Expenditure Categories Eligible Amount o f expenditures to Category financing allocated be financed (USW ("/.I 1. Goods, Consultants' services, 7,550,000 100 including operating costs,42 training and audits for Parts A, B, C.1, C.3, C.4 and D ofthe Project 2. Goods, Consultants' services, 250,000 100 including training f o r Part C.2 o f the Project 3. Unallocated, including 200,000 contingencies Total amount 8,000,000 14. The budgeting process w i l l be clearly defined in the FM Manual and the budget w i l l be adopted by the Steering Committee before the beginning o f the year. Annual draft budgets will be submitted to the Bank's review and non objection following its adoption by the Steering Committee before adoption and implementation. Accounting Policies and Procedures 15. The current accounting standards in use in Senegal for ongoing Bank-financed projects w i l l be applicable. SYSCOHADA i s the assigned accounting system in West African Francophone countries. Project accounts will be maintained on a cash basis, supported with appropriate records and procedures to track commitments and to safeguard assets. Annual financial statements will be prepared by the CEDAF in accordance with the SYSCOHADA. The ROSC Accounting and Auditing identified some differences with the International Accounting Standards but they are not expected to impact the Project. Accounting and control procedures w i l l be documented in the Administrative, Accounting and Financial Manual. Reporting and Monitoring 16. Interim Un-audited Financial Reports (IFRs) w i l l be prepared by CEDAF. The IFR will include sources and uses o f funds by project expenditures classification. I t also w i l l include a comparison o f budgeted and actual project expenditures (commitment and disbursement) to date 42Operating Costs means the incremental operating expenses, based on annual budgets approved by the Association, incurred by CEDAF, on account o f additional staff costs for the financial specialist and the procurement specialist, but excluding the salaries and indemnities o f officials and public servants o f the Recipient's civil service. 94 and for the quarter. CEDAF will submit copies o f the IFRs to the Bank within 45 days following the end o f the calendar quarter. The format and content o f the IFR will be agreed by negotiations. 17. The CEDAF will produce Annual Financial Statements, which will compl with SYSCOHADA and World Bank requirements. These Financial Statements will comprise4 . l Statement o f Sources and Uses o f Funds Statement o f Commitments Accounting Policies Adopted and Explanatory Notes Management Assertion that project funds have been expended for the intended purposes as specified in the relevant financing agreements Audit Arrangements Internal audit 18. Internal audit functions for CEDAF will be assumed by the internal audit entity within Ministry o f Justice. In addition, the DDI controls in advance all expenditures and withdrawal applications before sending them to the Bank. External audit 19. The Financial Agreement will require the submission o f Audited Financial Statements for CEDAF to IDA within six months after year-end. An external auditor with qualifications and experience satisfactory to the World Bank will be appointed to conduct an annual audit o f the Project's financial statements. A single opinion on the Audited Project Financial Statements in compliance with International Standards o n Auditing (ISA) will be required. The external auditors will prepare a Management Letter giving observations and comments, and providing recommendations for improvements in accounting records, systems, controls, and compliance with financial covenants in the Financial Agreement. Table A7.3 summarizes the auditing requirements: . . Audit report Financial Statements Management letter Due Date End o f June Supervision Plan 20. Supervision activities will include: (a) review the financial management aspects o f quarterly IFRs; (b) review o f annual audited financial statements and management letter as well as timely follow-up o f issues arising; (c) and participation in project supervision missions, as appropriate. The Bank Financial Management Specialist in chgge o f this Project will monitor 43Project financial statements should be all inclusive and cover all sources and uses o f funds, not only those provided through IDA finding. The statements thus should reflect all program activities, financing, and expenditures, including funds from other development partners. 95 the timely implementation o f the FM arrangements. However, intensity o f supervision could be reassessed on the evolution o f the rating for the overall control risk. Financial Management Action Plan Table A.7.4 Financial Management Action Plan Action When By whom 1. Appoint F M officer familiar with the WB FM By effectiveness CEDAF procedures within the CEDAF to handle FM and accounting activities. 2. Set up a computerized financial and accounting By effectiveness CEDAF system in CEDAF. 3. Prepare and adopt the administrative, financial, and By effectiveness CEDAF accounting manual. 4. External audit CEDAF Draft the TOR for financial audit of Project By negotiations 5. Internal audit CEDAF Draft TOR for internal audit to be performed BY negotiations by Internal Audit Department within Ministry o f Justice First-year internal audit plan 13 Financial Covenants 21. The Borrower shall establish and maintain a financial management system including records, accounts, and preparation o f related financial statements in accordance with accounting standards acceptable to the Bank. The financial statements will be audited in accordance with international auditing standards. The audited financial statements for each period shall be furnished to the Association (IDA) not later than six (6) months after the end o f the Project fiscal year. 22. The Borrower shall prepare and furnish to the Association not later than 45 days after the end o f each calendar quarter, interim unaudited financial reports for the Project, in form and substance satisfactory to the Association. 23. The Borrower shall be compliant with all the rules and procedures required for withdrawals from the Designated Accounts o f the Project. 96 Annex 8: Procurement Arrangements SENEGAL: Economic Governance Project A. General 1. Procurement in the context ofthe country. Following the government's approval o f the 2003 CPAR action plan, the government has adopted in 2007 a new Procurement Code (decree no2007-545 dated April 25, 2007) which complies with the WAEMU's Procurement Directives and best international practices. In accordance with this code, (a) a Public Procurement Directorate was created in 2007 (decree No 2007-547 dated April 25, 2007) for controlling ' procurement transactions o f any public contracting authority and (b) a Public Procurement Regulatory Authority (Autoriti de Rigulation des Marchis Publics-ARMP) was set up in 2007 (Decree no2007-546 dated April 25, 2007) for handling policies, complaints and audits. These two entities are operational. In addition, the government already prepared main national bidding documents which have been adopted by the ARMP. Except the limitation to bidders from W A E M U for NCB, there i s no major deviation o f the national Code from the Bank's Directives.. 2. Applicable guidelines. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and I D A Credits," dated May 2004 and revised by October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004 and revised by October 2006. Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by %RD Loans and IDA Credits and Grants" dated October 15, 2006", and the provisions stipulated in the Legal Agreement. The items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and timeframe are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan, defining the procurement and selection methods and the requirement o f IDA prior review, w i l l be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 3. Procurement Documents. The procurement w i l l be carried out using the Bank's Standard Bidding Documents (SBDs) or Standard Request for Proposal (RFP) respectively for all I C B for goods and recruitment o f consultants. For National Competition Bidding (NCB), while waiting for the government and the Bank to respectively validate and give the no objection on the national bidding documents in preparation, the Borrower will use the WB's SBD for I C B for goods and the WB's RFP for recruitment o f consultants. In the same vein, the Sample Form o f Evaluation Reports developed by the Bank, will be used until the new national samples are reviewed and satisfactory to the Bank. The ICB's Thresh'old for goods in Senegal i s US$500 000 for goods. 4. Advertising procedure. General Procurement Notice (GPN), Specific Procurement Notices (SPN), Requests for Expression o f Interest, results o f the evaluation and contracts award should be published in accordance with advertising provisions in the following guidelines: "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 and revised by 97 October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004 and revised by October 2006. 5. Procurement o Goods: Goods procured under this Project would include but are not f limited to the acquisition o f office equipment and furniture, vehicles, video conference facility, I T equipment and software, electronic platform to process and archive judicial documents. Goods estimated to cost above US$500,000 equivalent per contract may be procured under ICB. Goods estimated to cost less than US$500,000 may be procured under NCB. Goods estimated to cost less than $50,000 equivalent per contract, may be procured under contracts awarded o n the basis o f shopping procedures; the suppliers to be invited may include foreign suppliers, depending on local availability o f the goods. 6. Selection o Consultants: Consultants Services procured under this Project include but f are not limited to: consultants for technical assistance, capacity building o f legal / institutional reform, communication plan, design and operation o f a management information system, external audits. Short lists o f consultants for services estimated to cost less than $200,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. The procurement plan will indicate the selection methods and all cases where IDA review and no objection are needed. 7. Procurement o non-consulting services: Non-consulting services to be financed under f the Credit will include mainly communication, targeted operating cost needs for the project implementation. Those services are likely to be o f small values, and as such, they may be procured by shopping in accordance with paragraph 3.5 o f procurement Guidelines. In case o f large values, N C B procedures will be used in accordance with the same provisions as the procurement o f goods. 8. Operating Costs: Incremental recurrent expenditures will be procured using the implementing agency's administrative procedures reviewed and found acceptable to the Association. Therefore, procurement procedures and SBDs to be used for each procurement method, as well as model contracts for goods procured, will be presented in the Administrative Procedures Manual that will be developed by the CEDAF. B. Assessment o f the Agency's capacity to implement procurement 9. Procurement activities will be carried out by the CEDAF (Cellule Cellule d'Ex,'cution Administrative et Financidre. The CEDAF i s staffed by a Coordinator, two planners (a lawyer and an economist), a statistician, an I T engineer, and an administrative and financial specialist and an accountant. This staff will be responsible for preparation o f terms o f reference, technical specification, bidding documents and draft contracts. The procurement functions are handled by the Procurement Unit (Cellule Pussation de Marche's) o f the Ministry o f Justice for the funds allocated by the government to CEDAF. For the implementation o f the Senegal Economic Governance Reform Project (SEGRP) the strategy i s to reinforce the CEDAF and convert i t to a strong executing agency which will be fully responsible o f the fiduciary function. Therefore the Administrative and Financial Analyst who has been trained on both World Bank and public procurement procedures shall be entrusted with the procurement responsibility to build sustainable procurement capacity within the agency. 98 10. An assessment o f the capacity o f the Implementing Agency to implement procurement actions for the Project has been carried out by the Bank's procurement specialist on September 17,2009. The assessment reviewed the organizational structure for implementing the Project and the interaction between the Project's staff responsible for procurement and the Ministry's relevant central unit for administration. Most o f the issues/ risks concerning the procurement component for implementation o f the Project have been identified and include: (a) The CEDAF has not yet develop an Administrative Manual, (b) Equipment for filing procurement files or any other administrative records does not exist although the team benefit from training on archive and i s ready to use the ARMP's manual o f archive, (c) The CEDAF i s not familiar with Bank's procurement procedures and has insufficient experience in managing directly a project although it benefited from other donors' support (EU, PNUD, etc). 11. The agreed corrective measures are to (a) elaborate a Manual o f Administrative Procedures including procurement process and quality control responsibility, (b) procure office furniture for the filing system, (c) Train the whole team o f experts including members o f the Ministry Procurement Unit, in World Bank procurement procedures, (d) recruit a procurement specialist in a full time position at least the first two years o f the Project's implementation to provide technical assistance to bring support and institutional capacity building to the whole CEDAF technical team and to the relevant staff o f the Ministry o f Justice. The overall project risk for procurement is Substantial and i s expected to be moderate once the mitigation measures are implemented. Procurement Plan 12. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on February 9, 2010 and i s available at Cellule d'Exicution Administrative et F i n a n d r e du Programme Sectoriel Justice (CEDAF), r u e 55 x 70, Farm Hock, Dakar, Senegal, Tel./Fax.: +221 33 842 72 99. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. C. Frequency o f Procurement Supervision 13. I n addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended supervision missions at least every six (6) months to visit the field to carry out post review o f procurement actions D. Details o f the Procurement Arrangements Involving International Competition 1. Goods and Non Consulting Services (a) List o f contract packages to be'procured following I C B and direct contracting: 99 1 2 3 4 5 6 7 8 9 Review Expected Domestic by Ref. Contract Estimated Procurement Bid- P-Q Preference Bank Comments No. (Description) cost Opening Method (yeslno) (Prior / Date Post) 2. I Improvement o f the courts performance and user-friendliness 2-A-I Acquisition of 700 000 ICB No No I Prior August It i s a package computer 2010 that includesthe equipment to acquisition, strengthen the installation and computerization of training of users the judicial system for the implementation. There are USD 70,000 for the Investigation Unit equipment and the rest i s for the courts and justice - centers. 2-A-2 Acquisition o f 80 000 NCB No July 2010 Amount for equipment for the acquisition and reception, security installation management and surveillance systems at Palais Lot Dior 5n nnn - 2-A-3 Acquisition o f NCB No August maintenance 2010 equipment for the information technology Strengthening economic governance A. - 3-A-I Acquisition of 4 160 000 NCB No No Post I October These vehicles vehicles to support 2010 will be distributed the structures in s a follows : 2 for the performance of CENTIF, 1 for their activities ( 2 CEDAF, 1 for for CENTIF, 1 for ARMP CEDAF and 1 for Investigation Unit - ARMP) 3-A-2 Acquisition o f 60 000 Shopping No No The acquisitions economic analysis will be made after software and basic the Technical computer system Assistant has been recruited, who, I taking into account his experience, will identify the needs 100 - 1 2 3 4 1 5 1 6 1 7 1 8 9 Review Expected Ref. Contract Estimated Procurement Domestic by Bid- P-Q Preference Bank Opening Comments No. (Description) cost Method (yeslno) (Prior I Date - Post) B. Strengthening the Procurement Instruction Unit - 3-B-1 Acquisition o f Post I February specialized 201 1 documentation on procurement and - survey techniques C. Promotingthe Integrity and - Governance Pact 3-C-1 Selection o f 50 000 Shopping The workshops hotels/conference will be organized rooms for by the pact awareness implementation meetings within unit the framework o f the organization of the "Integrity - Award" ceremony 3-C-2 Acquisition o f 20 000 Shopping o f i c e equipment 4. Strengthening of CEDAF's capacities - - 4-A- 1 Acquisition of a 20,000 NCB No No Post June 2010 Providing and single-site configuring integrated software in software for accordance with monitoring and the particular evaluation, project needs and management and conditions of the financial and project. The accounting service provider management shall furnish the information to the users for database takedown and maintenance 4-A-2 Acquisition, 150 000 NCB No No Post May 2010 There will also be construction and the installation o f communication videoconference equipment to and acquisition of assist with the ofice and execution of the computer communication equipment plan o f the Ministry o f Justice (b) ICB contracts estimated to cost above US$200,000 per contract and all direct contracting will be subject t o prior review by the Bank. 2. Consulting Services 101 (a) List o f consulting assignments with short-list o f international firms. 1 2 3 4 5 6 7 Review Expected Ref. Estimated Selection by Proposals Description of Assignment Comments No. Cost Method Bank (Prior, Submission Date Post) 1. Improving the investment climate A. Execution o f agreements 7 1-A-1 Recruitment o f a consultant to Prior June 2010 Need to take into account perform a study on the the results o f the study on I I organization and management o f the economic litigation and commercial procedures financial reform financed within the framework o f PPIP 1-A-2 Recruitment o f a consultant to ~ Prior December NB : All the other perform a study on the feasibility 2010 activities o f sub-component I I o f the implementation o f 2 are training activities specialized commerce courts in the interior B. Company liquidation I-B-1 Development o f software for 100 000 QCBS Post July 2010 The 100 00 are reserved for commercial business follow up the training o f 25 judges: and user training Dakar (10) I I Kaolack (05) Thits (05) Saint-Louis (05) 1-B-2 Technical assistance for the 100000 IC Prior January This activity shall be implementation o f an judge 2012 executed after the project performance evaluation system has already reached achievements on commercial justice matters C. 1-c-1 Study for an evaluation o f the 30000 QCBS Post January implementation o f OHADA laws 201 1 and the preparation o f reforms to be made to the different Uniform Acts 1-c-2 Study for the strengthening o f 60000 QCBS Post June 201 1 40 000 will be used for the enterprise governance capacities organization o f workshops to share and validate the results o f the study 1-C-3 Recruitment o f a specialized firm 150 000 QCBS Post November These trainings will be to perform training on enterprise 201 1 executed after the governance validation o f the report on strengthening o f enterprise governance capacities 1-C-4 Technical assistance to 50 100000 QCBS Post March 2012 This technical assistance companies in the adoption o f best shall follow the training practices concerning company activities governance 2. Improving the .performance and user-friendliness of courts 102 1 2 3 4 5 6 7 Review Expected Ref. Estimated Selection by Proposals Description o f Assignment Bank Comments No. Cost Method Submission (Prior, Date Post) A. Improving the efficiency of courts 2-A- 1 Development of an improved and Post January A consultant will be integrated statistic model for the 2013 recruited. This activity will evaluation ofjudges and of the be performedafter performance of judicial branch evaluation o f the technical personnel. assistance for the implementationof a judge performance evaluation system in accordance to Comoonent 1 2-A-2 Recruitment of a firm for the Prior June 20 10 strengthening o f jurisdiction management capacities 2-A-3 Recruitment o f a firm to improve Post June 20 10 human resources management 2-A-4 Selection of a consultant to Prior June 20 10 The studies have been support the new judicial map. The made and the text drafts consultant will be responsible for have been prepared. I t will preparing a diagnostic o f the mainly be about, as to the present situation and to prepare an DSJ, supporting the efficient justice access implementationo f the new management program and map procedures I CQS I 2-A-5 Study for strengthening the 50000 Post July 2010 computerization of the judicial system 2-A-6 Study for the implementation of a Post September reception system, o f security and 2010 surveillance management at the Pafais Lat Dior and training o f I IC agents 2-A-I Strengthening of computer 50 000 Training based on Prior November capacities of the Ministry o f equipment chosen and 2010 Justice Ineeds C. 2-c- 1 Selection of a consultant to 100000 IC Prior June 2010 A study for the identify the implementation improvement of methods of the recommendations jurisdictional help i s being aiming to improving jurisdictional prepared. This amount help could be used for the implementation of the conclusions o f the study 2-c-2 Training o f agents in reception 50 000 IC Post August 2010 This activity will be offices and offices that provide carried-outjointly with the information to persons subject to person in charge of the trial. community justice system 2-C-3 Information and awareness 50000 CQS Post January community activities on the 201 1 functioning of the courts 2-C-4 Recruitment of a communication 40,000 CQS Prior March 201 1 This activity will be carried consultant to develop a out when the action plan, communication strategy for as mentioned in the PAD CNLCC and Financing Agreement 103 1 Review Expected Ref. Estimated Selection by Proposals Description o f Assignment Comments No. cost Bank Submission Method (Prior / Date Post) and satisfactory to the Bank i s provided mentioned 3. A. 3-A-I Recruitment of an expert for a 125000 IC Prior October technical assistance to CENTIF. 2010 The consultant will be in charge o f preparing and executing an anti- money laundering, financial crimes, economic governance and financial analysis training program. Also, he will provide consulting services to CENTIF B. 3-B-1 Preparation o f a procedure manual 40 000 IC Prior August 2010 The consultant in charge o f on survey techniques preparing the procedure manual will propose a l i s t o f manuals to be acquired 3-B-2 Recruitment o f a communications 40 000 CQS Post October These training activities consultardfacilitator to organize 2010 will include police, capacity strengthening workshops gendarmerie and judiciary personnel C. Favor actions against corruption 34-1 Recruitment o f a local consultant 100 000 QCBS Post July 2010 The consultant will have to coordinate and provide follow- the role o f focal point for up o f project activities in Senegal the implementation o f anti- corruption project activities. The consultant will bring hisher experience to CNLCC where he will be based. 3-C-2 Selection o f a consultant or a firm 200000 IC Prior January This training will cover the specialized on governance for the 2011 aspects o f the Pact as well design and execution o f the as the training o f the training program aimed at stakeholders such as implementing the Integrity Pact in CNLCC and private Senegal operators, as well as the civil society 3-c-3 Selection o f a consultant for the 160,000 QCBS Post January The operation cost i s design and execution o f "Senegal 2012 estimated at 160 000. The clean business brand" marketing partners will contribute campaign 50%, the other half will come from the project (80 000) 3-c-4 Recruitment o f a full-time 30000 IC Prior July 2010 coordinator to assist in the implementation o f the Integrity Pact and to the execution of additional activities. The Coordinator shall have at least a 104 1 `2 3 4 5 6 7 Review Expected Estimated Selection by Bank Proposals Description of Assignment Comments No. Cost Method (Prior, Submission Date Post) college degree (BAC+4), speak French and English, and be Senegalese. 4.' Reinforcement of CEDAF's capacities I: I 4-A-I 1 Implementation o f an Intranet and I 40 000 I IC I Post July 20 10 improvement o f the Ministry o f Justice website with the creation o f a digital library with the essential July 2010 I CEDAF'S ISO 9001 certification I T 4-A-3 I Preparation o f an administrative I 40 000 I QCBS I Prior Prior specialist and training o f CEDAF shall provide the training o f members and the procurement unit the personnel at CEDAF's o f the Ministry o f Justice on World ofices I Bank procedures 4-A-5 I Technical assistance and capacity I 100 000 I QCBS 1 Post June 2010 I strengthening on monitoring and evaluation (b) Consultancy services estimated to cost above US$50,000 per contract and every single source selection o f consultants (firms) for assignments will be subject to prior review by the Bank. (c) Short lists composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than US$50,000 equivalent per contract, may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. 105 Annex 9: Economic and Financial Analysis SENEGAL: Economic Governance Project 1. Given that this operation consists o f technical assistance which aims at building capacity and support for reforms, its direct benefits will be intangible or difficult to attribute to the Project's activities. Therefore, a full economic and financial analysis, including cost and benefit quantification would not be the appropriate tool to assess the significance o f this Project. 2. The pace and depth o f the reforms envisioned as well as the quality o f the technical assistance delivered in this operation will determine the ultimate economic and financial benefits o f this Project. The Project's resources will be used to foster better economic governance. A. Project's economic benefits: For example, under component 1, improvement o f the investment climate i s expected to foster competitiveness o f the economy and private investment. This in turn will lead to higher economic growth and job creation44. Similarly, supporting the justice sector performance i s intended to remove another key bottleneck to finance and private sector development henceforth higher investment and economic growth. Indeed, as documented in the literature4', there i s a positive correlation between judicial efficiency and the supply o f external finance. Finally, under component 3, addressing corruption both on the demand and supply-side will ultimately help attract more private investments since investment i s the main channel through which corruption affects economic p e r f ~ r m a n c e . ~ ~ 3. The above items are examples o f economic benefits expected from the Project's implementation. The Project will contribute to long term development impact. B. Some measurements o f economic costs: IDA credit amount to US$S.O million; and Government contribution o f US$l million in funds for salaries and operating costs. C. Technical 4. The Project i s technically sound. The Project will extend the support provided for private- 1 sector-led growth consistent with Pillar 1 o f the government's PRSP 1 : wealth creation for a pro- poor growth as well as pillar 4 on economic governance, decentralized and participatory development. The Project i s consistent with the CAS and i s one o f the IDA operations under the 44 World Development Report (2005). 45 La Porta and others (1997), Demirguc-Kunt and Maksimovic (1998), and Galindo (2001). 46 Mauro (1998). 106 IDA Country Assistance Strategy for FY08-114' which i s aligned with both the PRSP and Accelerated Growth Strategy strategic objectives. 5. I t s design takes into account lessons learned from previous operations in Senegal and elsewhere. Its estimated economic benefits are high, and its development impact i s significant. The Project's four components are well focused and mutually reinforcing and are based on a PSJ, which benefits from strong government commitment. Each component i s well defined and draws on World Bank group experience and good practices. Component 1: Improving the Investment Climate (US$2,200,000) 6. The design o f this component benefited from the participation o f the Investment climate Unit, coupled with a prior consultation with the Doing Business Unit and the lessons drawn from World Development report 2005. As such, the design reflects Africa and world wide experience on how to improve the investment climate. Additionally, the Project design benefited significantly from the lessons learned from the implementation o f two World Bank investment implemented in Senegal and which contained investment climate reform. These two operations are Credit 3762 SE for the Private Investment Promotion Project, as well as Credit SE 3875 Private Sector Adjustment Credit. Experiences from these two projects show that investment climate reform is iterative and requires strong champions and consensus building. Component 2: Supporting the Justice Sector Reform and improving access to Justice (US$3,100,000) 7. Lessons learned from the implementation o f the Private Sector Capacity Building Project (Credit 2759 SE), Credit SE 3875. Private Sector Adjustment Credit, as well as the Private Investment Promotion Project, (Credit 3762 SE), as described in section D. "Lessons learned and reflected in the Project design" were taken into account in the preparation o f the project. 8. Additionally, this component reflects a flexible approach which would first finance technical assistance to help the Ministry o f Justice and stakeholders fine tune the institutional arrangements for the improved' performance and access to justice before implementing part o f the assistance. This approach is necessary to provide flexibility in the implementation and to respond to the specific needs o f the reform as the overall action plan for the improvement o f access to justice i s further defined. Component 3: Strengthening the demand side for Economic Governance (US$l,500,000) 9. The preparation o f this component benefited from WBI's knowledge o f emerging good practices and international experience in the field o f economic governance and in line with the World Bank's Governance and Anti-Corruption (GAC) strategy. The Project also builds on the Report on the Observance o f Standards and Codes (ROSC) Corporate Governance Country Assessment, Senegal, June 2006. To benefit from relevant stakeholders perspectives, the ROSC was drafted following wide ranging consultation on the subject o f governance. I t i s worth noting 47 Approved by the IDA Board on May 2007. 107 that the approach under the business-led actions against corruption subcomponent will emphasize a joint and sustained process of. collective action which enables private f i r m s to implement anticorruption mechanisms together with industry peers and key stakeholders since tacking corruption i s more difficult for individual businesses. Moreover, the assistance for Agence de Rkgulation des Marchks Publics (ARMP) also builds on the successful reform carried out through the World Bank Private Investment Promotion Project. Component 4: Strengthening CEDAF and supporting the Project implementation (US$l,000,000) 10. By using an I S 0 9001 quality management certification to build CEDAF's institutional capacity, the Project ensures adherence to emerging good practices in institutional capacity building. 11. The design o f the proposed project also draws on the experience acquired in other projects, including Credit 3762 SE for the Private Investment Promotion Project, as well as Credit SE 3875 Private Sector Adjustment Credit, as well as Credit MZ 3317 Mozambique Enterprise Development Project, and the IDA Credit 3483 LSO for the Lesotho Utilities Reform Project 12. Moreover, Project preparation benefited from the fact that substantial consensus building at the technical level and involving relevant stakeholders was carried out with the financing o f another World Bank operation, the Private Investment Promotion project. In addition, the Project was prepared based on a participatory approach and an exemplary collaboration with the Borrower's representatives. This approach was significantly facilitated by the fact that several o f the Bank staff working on the Project are based in Dakar and have acquired a good knowledge o f the country and can consult with the Borrower on a daily basis in a cost effective manner. 108 Annex 10: Safeguard Policy Issues SENEGAL: Economic Governance Project Safeguard Policies triggered by the Project Yes No Environmental Assessment (OP/BP 4.01)* [I [XI Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OP/BP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OPBP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OPBP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI Piloting the Use o f Borrower Systems to Address Environmental and Social Safeguard Issues in Bank- [I [XI Supported Projects (OP/BP 4.00) Note: The Project i s a technical assistance. Therefore, no safeguard policies are triggered by the Project. ' By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination ofthe parties' claims on the disputed areas 109 Annex 11: Project Preparation and Supervision SENEGAL: Economic Governance Project ~~ _ _ _ ~ ~ ~ _ _ __ Planned Actual PCN review June 23,2009 June 30,2009 Initial PID to PIC June 15,2009 July 7, 2009 Initial ISDS to PIC October 2,2009 Appraisal October 26,2009 December 14,2009 Negotiations February 8,2010 February 22,2010 Board/RVP approval April 8,2010 Planned date o f effectiveness July 19,2010 Planned date o f mid-term review June 2012 Planned closing date June 30,201 5 Key institutions responsible for preparation o f the Project: 0 CEDAF as Government counterpart, and 0 The World Bank Finance and Private Sector Development Department. Bank staff and consultants who worked on the Project included: Name Title Unit Gilbert0 de Barros Task Team Leader AFTFW Nathalie Munzberg Sr. Counsel LEGAF H e l h e Bertaud Sr. Counsel LEGAF Solange Alliali Sr. Counsel LEGAF Klaus Decker Legal Reform Specialist LEGAF Lucy Fye Sr. Private Sector Specialist AFTFW Sidi Boubacar Lead Operations Officer MNC03 Michael Jarvis Private Sector Development Specialist WBI Kathrin Frauscher Governance Specialist WBI Haroune Sidatt Private Sector Specialist AFTFW Julien Levis Private Sector Specialist IFCEIAS Magueye Dia Economist AFTFW Wolfgang Chadab Sr. Finance Officer LOAFC Ronnie Hammad Sr. Operations Officer AFTRL Sidy Diop Procurement Specialist AFTPC Eric Yoboue Procurement Hub Coordinator AFTPC Maimouna Mbow Fam Financial Management Specialist AFTFM Aissatou Dicko Team Assistant (Dakar) AFCFl Jacqueline Veloz Lockward Program Assistant (HQ) AFTFW 110 Bank funds expended to date on project preparation: 1. Bank resources: US$150,000 Estimated Approval and Supervision costs: 1. Remaining costs to approval: US$5,000 2. Estimated annual supervision cost: US$ 110,000 111 Annex 13: Documents in the Project File (References) S E N E G A L : Economic Governance Project "Document d'orientation strattgique de Lutte contre la Corruption." Senegal. Alou, Mahaman T. "La corruption duns la justice au Be`nin, au Niger et au Se`ne`gal. 2005. )) Beatty, D R. "Where were the Directors?" Private Sector Opinion Issue 12. Blundo, G. and Olivier de Sardan, J.P. "La corruption au quotidien en Afrique de I'Ouest- Approche socio-anthropologique comparative: Be`nin, Niger e t Se`ne`gal.)'2003, Davis S ., Lukomnik, J. and Pitt-Watson, D. "Toward an Accountable Capitalism." Private Sector Opinion Issue 13. Kar, P. "Crashes, Bailouts, Regulations." Private Sector Opinion Issue 1. Mauro, P. "Corruption and Growth." The Quarterly Journal o f Economics, vol. 110 (3): 681- 712. 1995. Mauro, P. "The Effects o f Corruption on Growth, Investment and the Composition o f Government Expenditure." IMF Working Paper. WP/96/98, Ministire de la Famille, de la Solidarite` nationale, de I'Entreprenariat fe`minin et de la Microjnance. "Cadre de Dkpenses sectorielles 21 Moyen terme 2009-201 I." [Medium-term Sector-based Expenditure Framework 2009-20 111. Senegal. MinistBre des Infrastructures, des Transports terrestres, des Te`le`communications et des TICS. "Cadre de De`penses sectorielles 21 Moyen terme 2009-201 1." [Medium-term Sector-based Expenditure Framework 2009-201 13, Senegal. Ministire des Se`ne`galais de I 'Exte`rieur et du Tourisme. "Cadre de De`penses sectorielles 21 Moyen terme (2009-201 1)." Medium-term Sector-based Expenditure Framework 2009-201 11. Senegal. USAID. "Corruption Assessment." Senegal. 2007. World Bank. "Doing Business Report 2009." Washington, D.C. 2009. World Bank. "Poverty Reduction and Growth Strategy Paper 2006-2010 for Senegal." Washington, D.C. World Bank. "Report on the Observance o f Standards and Codes" (ROSC) Corporate Governance Country Assessm'ent. Senegal. June 2006. 113 World Bank. "World Development Report 2005. A Better Investment Climate for everyone." Washington, D.C. 2005. 114 Annex 14: Statement o f Loans and Credits SENEGAL: Economic Governance Project Difference between expected and actual Original Amount in US$ m i disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm Rev'd PO97181 2007 SN-Nutr Enhanc. Prog 11-APL (FY07) 0.00 15.00 0.00 0.00 0.00 10.50 -1.12 0.00 PO89254 2007 SN-Quality EFA APL 2 (FY07) 0.00 30.00 0.00 0.00 0.00 25.68 5.16 0.00 PO84022 2007 SN-Local Authorities Development 0.00 80.00 0.00 0.00 0.00 76.62 7.43 0.00 Program PO83609 2006 SN-Agr Markets & Agribus Dev (FY06) 0.00 35.00 0.00 0.00 0.00 47.79 2.93 0.00 PO88656 2006 SN-Participatory LOC Prgm (FY06) Dev 0.00 50.05 0.00 0.00 0.00 45.84 8.80 0.00 PO93622 2006 SN-Agr Svcs & Prod Orgs APL 2 (FY06) 0.00 20.00 0.00 0.00 0.00 16.38 0.06 0.00 PO86480 2005 SN-GIRMAC SlL (FY05) 0.00 10.00 0.00 0.00 0.00 5.68 1.36 0.00 PO85708 2005 SN-Elec. Sew. for Rural Areas (FY05) 0.00 29.90 0.00 0.00 0.00 24.03 17.61 0.00 PO58367 2005 SN-GEF Intg Marine Cstl Res Mgmt 0.00 0.00 0.00 5.00 0.34 2.92 3.42 0.00 (FY05) PO73477 2005 SN-Elec Sec E f i . Enhanc.Phase 1 APL-1 0.00 15.70 0.00 0.00 0.00 12.41 9.64 0.00 PO70530 2005 SN-GEF Elec Srvc for Rural Areas (FY05) 0.00 0.00 0.00 5.00 0.00 4.81 4.08 0.00 PO69207 2005 SN-Casamance Emerg Reconstr Supt 0.00 20.00 0.00 0.00 0.00 8.64 4.94 0.00 (FY05) PO80013 2004 SN-Priv Sec Adj Crdt (FY04) 0.00 45.00 0.00 0.00 0.00 21.40 20.21 20.21 PO51609 2003 SN-Priv Inv Promotion SIL (FY03) 0.00 46.00 0.00 0.00 0.00 15.67 12.64 0.00 PO74059 2002 SN-HlV/AIDS Prevent & Control APL 0.00 30.00 0.00 0.00 0.00 12.42 6.82 -3.36 (FY02) PO41528 2001 SN-Long Term Water Sec SlL (FYOl) 0.00 125.00 0.00 0.00 0.00 25.76 -0.19 -1.13 PO55472 2000 SN-Urb Mobility lmprovement APL 0.00 70.00 0.00 0.00 0.00 12.63 4.85 6.19 (FYOO) PO02366 1999 SN-Transp SlL 2 (FY99) 0.00 90.00 0.00 0.00 0.00 6.89 2.85 1.58 Total: 0.00 711.65 0.00 10.00 0.34 376.07 111.49 23.49 SENEGAL STATEMENT OF IFC's Committed and Outstanding Portfolio (US$ mil) Committed Outstanding IFC IFC FY ADDrOVal ComDany Loan Eauitv RM Partic. Loan Eauitv RM Partic. 1980 BHS 0.00 0.46 0.00 0.00 0.00 0.46 0.00 0.00 1999 Ciments du Sahel 2.93 0.68 0.00 0.00 2.93 0.68 0.00 0.00 1998/1999/2000/ G T l Dakar 5.92 1.71 1.20 6.3 1 5.92 1.51 1.17 6.3 1 2002 2006 Kounoune 19.97 0.00 0.00 0.00 17.65 0.00 0.00 0.00 2007 Sococim 29.33 0.00 0.00 0.00 29.33 0.00 0.00 0.00 ~ ~~ 2008 Chain Hotel 10.26 10 26 Total portfolio 68 42 2 85 1 20 631 6609 2 65 1 17 6 31 115 Annex 15: Senegal at a Glance Sub- Keg Development Indicators Saharan Low Senegal Africa income = / I Population, mid-year [millions] 12.2 800 1.296 Surface area [thousand sq. km] LV 24,242 21,846 Population growth PA] 2.7 2.4 2.2 Urban population [A of total population] A #' 36 32 GNI [Atlas method. US$ billions] 10.3 761 744 GNI per capita [Atlas method, US$] 870 951 574 GNI per capita [PPP. international $1 1 m 1,869 1.489 GDP growth [A] 2.5 6.2 6.4 GDP per capita growth [A] -0.2 3.8 4.2 /mrrsf trcraf r s f b a f r . Z'##.T-AWSJ Pouerty hcadcount ratio at $1.25 a day [PPP. x ] 34 51 Poverty headcount ratio at $2.00 a day [PPP, x ] 60 73 Life expectancy at birth [years] 63 51 57 Infant mortality [per 1,000 live births] 60 89 80 Child malnutrition ( of children under 51 A 15 27 28 Adult literacy, male [ of ages 15 and older] A 52 71 72 Adult literacy. female [A of ages 15 and older] 33 54 55 Gross primary enrollment, male (A of age group] 81 99 100 Gross primary enrollment, female [ X of age group] 79 88 89 Access to an improved water source [ x of population] I 77 58 68 Access to improved sanitation facilities [ of population] A 31 39 im ipw 2cQ3 Xm Net Aid Flows 1980 1990 2000 2008 I L m - q b /m & % Net ODA and official aid 260 812 425 843 Growth olGl3Pand ODPperupita[90 T q?&?cvs/~~W,~, France 108 230 147 177 P I European Commission 24 24 42 81 Canada 7 31 11 48 Aid [ x of GNI) 7.6 14.7 9.2 7.5 Aid per capita [US$] 44 103 41 71 Long-Term Economic Trends Consumer prices [annual x change] 8.7 0.3 0.7 5.8 GDP implicit deflator [annual x change] 11.0 0.0 1.9 7.3 Exchange rate [annual average. local per US$] 211.3 272.3 710.1 450.5 Terms of trade index (2000 :1001 99 99 100 111 1980-90 1990-2000 2000-08 /MV ma4-wMh.::;, Population, mid-year [millions] 5.9 7.9 10.3 12.2 3.0 2.7 2.1 GDP [US$ millions] 3,503 5,717 4.692 13,209 2.6 3.0 4.4 p'&&s=) Agriculture 17.9 17.9 16.9 13.6 1.9 2.4 1.0 Industry 17.9 19.9 20.5 20.9 3.2 3.8 3.9 Manufacturing 12.0 13.7 12.9 12.3 3.1 3.1 1.7 Services 64.2 62.2 62.7 65.4 2.6 3.0 5.2 Household final consumption expenditure 73.1 79.2 76.0 82.3 3.8 2.6 5.3 General gov't final consumption expenditure 24.8 18.4 12.8 10.0 0.3 0.9 0.0 Gross capital formation 16.6 9.1 20.5 30.2 0.2 3.5 10.0 Exports of goods and services 8 23.9 25.4 27.9 24.9 1.6 4.1 4.0 Imports of goods and services 38.4 32.2 37.2 47.4 1.9 2.0 7.9 Gross savings 0.1 -0.5 14.6 17.9 Note: Figures in italics are for years other than those specified 2008 data are preliminary ..indicates data are not available. 5.Aid data are for 2007. Development Economics, Development Data Group (DECDG]. 116 Senegal at a Glance (contd.) Senegal Balance of Pagments and Trade 2000 2008 i Governanceind4caiors. ZDOOand 2#07 /LWJd$k+l Total merchandise exports (fob] 922 2.033 Total merchandise imports [cif] 1,517 5.137 Net trade in goods and services -436 -2.968 I I Ill Current account balance -275 -1,627 as a x of G D P .5.9 -12.3 RWUtnv Workers' remittances and compensation of employees (receipts] 233 L v . ? Reserves. including gold 385 1,760 Central Government Finance p'0C-l Current revenue (including grants) 17.3 20.2 Tax revenue 16.1 18.3 Current rxprnditure 12.3 16.0 Technologg and Infrastructure 2000 2007 Overall surplusfdeficit -1.4 -4.3 Paved roads [z of total] 29.3 -3.7 Highest marginal ta1t rate (A) Fixed line and mobile phone Individual 50 w . subscribers [per 100 people) 4 31 Corporate 36 25 High technology exports [A of manufactured exports) 7.6 4.0 External Debt and Resource Flows Enuironment L -l / W: Total debt outstanding and disbursed 3.622 2,787 Agriculturalland (X o f land area) 42 M Total debt service 224 139 Forest area (A of land area] Debt relief [HIPC. M D R I ] 682 1,374 Nationally protected areas (X o f land area) Total debt ( X of G D P ) 77.2 21.1 Frrshwater resources per capita (cu. meters] ?i 3 . .s 2.079 Total debt service (X of exports] 13.9 2.9 Freshwater withdrawal(billion cubic meters] L?2 Foreign direct investment (net inflows) C 0 2 emissions per capita (mt) 038 R M Portfolio equity [net inflows] G D P per unit of energy USQ (2005 PPP S per kg of oil equivalent] 5.5 . 6- Ccmpcsiticn of total external d e b t 2007 Energy use per capita (kg o f oil equivalent] 256 %? ' A% /La-? IBRD Total debt outstanding and disbursed 1 - Disbursements 124 66 Principal repayments -161 228 Interest payments - IDA Total debt outstanding and disbursed 1,330 663 Disbursements 127 120 Priuate Sector Development 2000 2008 Total debt service - - I Time requiredto start a business (days] 8 IFC /Acra/p.qt Cost to start a business [ X of GNI per capita] 72.7 Total disbursed and outstanding portfolio 23 46 Time requiredto register property (days) 124 of which IFC own account 13 38 Disbursements for IFC own account 5 13 Ranked as a major constraint to business 2000 2007 Portfolio sales, prepayments and [ X of managers surveyed who agreed] Access totcost of financing Taxrates ,V# .WB repayments for IFC own account MlGA 2 4 iI Gross exposure 0 0 1 Stock market capitalization (X of G D P ] Bank capital to asset ratio [ X I 9.9 10.4 Note Figures in italics are for years other than those specified 2008 data are preliminary 6f8109 .indicates data are not available -indicates observation is not applicable Development Economics. Development Data Group [DECDG) 117 Senegal at a Glance (contd) r MilIenniurn Development Goals Senegal Goal 1: halue the rates for estreme powerg and malnutrition 1390 1395 2000 2007 Poverty headcount ratio at $1.25 a day (PPP, x of population] Poverty headcount ratio at national poverty line [ X of population] ?? ..* Share of income or consumption to the poorest qunitiie (A] .?5 6.5 66 Prevalence of malnutrition ( of children under 51 A 21.0 20.3 M5 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment [net. z ) 45 56 7J Primary completion rate [ x of relevant age group] 42 37 38 4.q Secondary school enrollment [gross, X ] /ii 16 24 Youth literacy rate [ X of people ages 15-24) 38 4.0 Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (A] i fY 82 &' Women employed in the nonagriculturalsector (A of nonagriculturalemployment] I/ Proportion of seats held by women in national parliament [A] 13 &9 12 22 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate [per 1.000) 149 148 133 K J Infant mortality rate [per 1,000 live births) 72 72 66 n, Measles immunization[proportionof one-year olds immunized.x ] 51 80 48 .w Goal 5: reduce maternal mortality bg three-fourths Maternal mortality ratio [modeled estimate. per 100,000live births] .w Births attended by skilled health staff (A of total] 47 60 .' % Contraceptiveprevalence[ X of women ages 15-49) J.? 11 &9 Goal 6: halt and begin to reuerse the spread of HlVlAlDS and other major diseases Prevalence of HIV [ X of populationages 15-49] R4 10 incidence of tuberculosis[per 100,000 people] 192 214 238 Q L ? Tuberculosis cases detected under DOTS [ X I 62 53 4.Q Goal 7: hafue the proportion of people without sustainable access to basic needs Access to an improved water source [ of population] A 67 69 72 ,? ?, Access to improved sanitation facilities [ of population) A 26 27 27 . w Forest area [ X of total land area] 48.6 46.2 450 Nationally protected areas [ X of total land area] J1.9 C02 emissions[metric tons per capita] 0.4 0.4 0.4 n/ GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 4.8 5.9 5.5 68 Goal 8: deuelop a global partnership for development Telephone mainlines [per 100 people) 0.6 0.9 2.0 2.2 Mobile phone subscribers (per 100 people) 0.0 0.0 2.4 33.2 Internet users [per 100 people] 0.0 0.0 0.4 6.6 Personal computers [per 100 people] 0.2 0.7 1.5 2-1 Eduution indicatcrsm) ICT indiutorilper 10Dpcople) n Note Figures in italics are for years other than those specified. ..indicates data are not available. 4129109 Development Economics, Development Data Group [DECDG) 118 Annex 16: Country Map SENEGAL: Economic Governance Project 119 18°W 16°W 14°W M A U R I TA N I A SENEG AL SELECTED CITIES AND TOWNS Sénégal To Podor Nouakchott REGION CAPITALS Rosso Doue Dagana NATIONAL CAPITAL SENEGAL Ndiayène Richard-Toll Haïré Lao RIVERS Lac de Guier SAINT- To MAIN ROADS Kaedi LOUIS Mbout Saint-Louis RAILROADS 16°N 16°N Thilogne REGION BOUNDARIES Mpal Lagbar V INTERNATIONAL BOUNDARIES Léona Matam Ndiaye Louga Koki Tioukougne Peul This map was produced by the Map Design Unit of The World Bank. Daraa Linguère The boundaries, colors, denominations and any other information Kébémèr shown on this map do not imply, on the part of The World Bank Fâs Boye Group, any judgment on the legal status of any territory, or any Va én LOUGA llée S ég endorsement or acceptance of such boundaries. Darou Khoudos du al F Mékhé Darou Mousti Mamâri er lllo CAP- Kayar Vèlingara Tivaouane Mbaké M ATA M Bakel VERT Thiès DIOURBEL La Ferdo DAKAR Va Rufisque THIÈS Diourbel l To Gossas Kayes Payar Mbour FATICK Toubéré Bafal Nayé oum Fatick Guinguinéo Sal Falém Kaffrine KAOLACK m lo u mé m Sa Kaolack Ndangane 14°N 14°N Niahène Sakone Koungheul Koussanar AT LAN TI C Keur Madiabel Nganda MALI Tambacounda OCEAN Karang Nioro du Rip Maka dou gou S an To Gambia Barra TH E TAMBACOUNDA To Banjul IA GAM B I A Meedina Dialakoto Gounas e KOLDA Vélingara M anc Bounkiling Ko K K Diouloulou al am ink ulllo as e unt Diana Kolda ZIGUINCHOR C n ou n Malari Gam bie Mako Bignona nga Saraya Kaya Casamance Sédhiou Tanaf Ziguinchor 419 m To Kédougou Oussouye Goudomp Farim To To Diembéreng Bafata Koundara To Ingore 0 25 50 75 100 Kilometers GUINEA-BISSAU IBRD 33475R To AUGUST 2006 Balake 0 25 50 75 Miles GUINEA 12°N 12°N 18°W 16°W 14°W 12°W