Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15161 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF BURUNDI ECONOMIC MANAGEMENT AND PUBLIC ENTERPRISE CREDIT (CREDIT NO.1795-BUI) DECEMBER 6, 1995 Country Operations Division 2 Central Africa and Indian Ocean Department Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Burundi Franc (FBu) 1987: US$1.00 = FBu 123.6 1988: US$1.00 = FBu 140.4 1989: US$1.00 = FBu 158.7 1990: US$1.00 = FBu 171.3 1991: US$1.00 = FBu 181.5 1992: US$1.00 = FBu 208.3 1993: US$1.00 = FBu 242.7 1994: US$1.00 = FBu 252.7 1995: US$1.00 = FBu 241.7 (first trimester) FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS CADEBU Caisse d'Epargne du Burundi CAS Country Assistance Strategy COTEBU Complexe Textile de Bujumbura EMPEC Economic Management and Public Enterprise Credit IIDF Institutional Development Fund INABU Imprimerie Nationale du Burundi ISGE Institut Superieur de Gestion d 'Entreprises MOF Minister of Finance MOP Minister of Planning ONATEL Office National des Thkcommunications OTRABU Office des Transports du Burundi OTRACO Office des Transports en Commun PEP Public Expenditure Program PIP Public Investment Program REGIDESO Regie de Distribution d 'Eau et D 'Electricite SAC Structural Adjustment Credit SCEP Service Charge des Entreprises Publiques SOSUMO Societe Sucriere du Moso VERRUNDI Verrerie du Burundi FOR OFFICIAL USE ONLY TABLE OF CONTENTS PREFACE ................................................. SUMMARY EVALUATION ................................................ii PART I: EVALUATION OF PROJECT IMPLEMENTATION .........................................1 I. Project Objectives and Design ..I II. Project Activities and Results . . . 2 III. Analysis of Factors That Affected Project Execution . . 5 IV. Sustainability of Results . . . 8 V. Performance of The Bank and The Government 8 VI. Future Operations 10 VII. Lessons and Conclusions .................... 10 PART II. STATISTICAL INFORMATION Table 1: Summary of assessments Table 2: Related IDA Credits Table 3: Project timetable Table 4: Credit Disbursements: Estimated and Actual Table 5: Key implementation indicators Table 6: Key execution indicators (N.A.) Table 7: Project studies Table 8a: Project costs Table 8b: Project Financing Table 9: Status of Legal Covenants Table 10: Compliance with Operational Manual Statements Table 11: Bank resources: Staff Inputs Table 12: Bank missions ANNEXES A. Mission Aide-memoire B. Borrower's Evaluation of Project Implementation This document has a restricted distribution and may be used by recipients only in the performance of their |offcial duties. its contents may not otherwise be disclosed without World Bank authorization. i IMPLEMENTATION COMPLETION REPORT REPUBLIC OF BURUNDI ECONOMIC MANAGEMENT AND PUBLIC ENTERPRISE CREDIT (Credit No. 1795-BUI) PREFACE This is the Implementation Completion Report (ICR) for the fourth technical assistance credit (the Economic Management and Public Enterprise Credit, or EMPEC) to Burundi, for which IDA financing in the amount of SDR 6 million was approved on May 14, 1987. The credit was closed on June 30, 1995, 30 months after the initial closing date (December 31, 1992), with an undisbursed balance of SDR 434,000; it was extended three times. No co-financing was made available for this project. This ICR was prepared by Ms. Vera Wilhelm, Country Economist, with contributions from the Burundi Resident Mission (Messrs. Prosper Nindorera and Frangois Nankobogo), under the supervision of Mr. Michael Sarris, Division Chief (all of AF3C2). It was reviewed by Mr. P. Hari Prasad, Operations Adviser (AF3DR). Preparation time was three months. A draft of this report was discussed with the authorities. The government contribution was received on November 30, 1995. ii IMPLEMENTATION COMPLETION REPORT REPUBLIC OF BURUNDI ECONOMIC MANAGEMENT AND PUBLIC ENTERPRISE CREDIT (Credit No. 1795-BUI) SUMMARY EVALUATION Political Setting 1. Burundi's economic and social progress has, since independence, been derailed by repeated ethnic strife among its two main ethnic groups, the Tutsi (14%) and the majority Hutu (85%). In June 1993, the country held its first presidential and parliamentary elections, in which candidates from the primary Hutu party (Frodebu) won. The new government quickly consolidated its power through major staffing changes in the civil service and local administration. In October 1993, the President and other key officials were assassinated. Widespread ethnic upheaval left some 100,000 dead and 200,000 displaced within the country, and caused an additional 800,000 to seek safety in neighboring countries. In April 1994, the new President was killed in an airplane crash together with the President of Rwanda; the composition of the government has changed twice since then. Over the last two years, the situation has remained unstable, with a serious breakdown in the rule of law and continued civil unrest and ethnic violence. Technical Assistance For Economic Reform 2. During the latter half of the 1970s, Burundi embarked on a development strategy predicated on public investment and widespread creation of public enterprises, financed by relatively abundant resources derived from strong market prices for coffee (80% of export earnings). The steady weakening of coffee prices since the early 1980s led to a sharp deterioration in the terms of trade and serious fiscal and monetary imbalances. Burundi became increasingly dependent on external aid flows. It was in this context that the structural adjustment program -- supported by three structural adjustment credits (SACs) - - was launched to promote growth with poverty reduction. SACs I, II and III aimed at liberalizing the external and monetary sectors, pursuing budgetary reform as well as reform of public enterprises (PEs), and liberalizing prices of goods and public services. SAC III also sought to put in place a social safety net, improve living conditions of the population and introduce a more equitable financing strategy for education. iii 3. When SAC I was approved in May 1986, the Third Technical Assistance Credit (Cr. 1456-BU, or TA III), supporting reforms to improve the appraisal of investment projects and their implementation, had already been in place for two years. To facilitate implementation of SAC I, the government requested a new technical assistance operation from IDA with a special focus on PE reform and public sector management. The Economic Management and Public Enterprise Credit (EMPEC) was signed in late 1987 and, for three years, was implemented simultaneously with TA III. EMPEC sought to consolidate ongoing capacity building efforts under TA III aimed at better appraisal of public investment projects, and improved public expenditure programming and monitoring. Although originally designed to support SAC I implementation, it focused on supporting the policy reform agendas of SACs II and III, approved in mid-1988 and mid- 1992, respectively, and activities were regularly adjusted to reflect the new priorities of SACs II and III as they emerged. 4. Overall, performance of EMPEC was weak. This was intimately linked to: (i) the design and performance of the structural adjustment operations (in particular SACs II and III) that it was intended to support; (ii) weak institutional capacity and lack of performance-oriented incentives in the civil service; and (iii) Burundi's political constraints. (i) SAC II was designed and implemented under unfavorable circumstances. It had been prepared quickly and without substantive participation of the authorities due to an urgent balance of payments need; institutional capacity was too weak to implement the large number of monitorable actions(90), and few civil servants were privy to the program's contents. Although SACIII was designed with active government participation, its focus on reform of PE management (rather than privatization of assets), as well as active support of a public agency to implement such reform, contributed to the limited success in addressing the problems of the PE sector. (ii) Throughout EMPEC implementation, institutional capacity building was affected by the lack of a quality-oriented incentive structure, poor human resource development and insufficient transparency and accountability in public sector management. In spite of a UNDP project in 1990 to improve working conditions in the civil ser e, no reforms were carried out. Such shortcomings were reflected in weak project implementation due to unsatisfactory project management and coordination. EMlPEC's training component, moreover, was mostly ineffective in raising capacity, having been designed without reference to a long-term training strategy; trained staff, furthermore, were subject to high mobility. (iii) As a result of the political process leading to the elections in 1993, government focus on economic reform and capacity building declined, while numerous changes within the administration caused a loss of technical capacity. The onset of the political crisis in late 1993 seriously damaged the functioning of the administration, which continues to be plagued by absenteeism and a lack of qualified human resources. Implementation of economic reforms came to a standstill; SAC III was closed in June 1995 with only the first tranche disbursed. iv Credit Objectives and Design 5. EMPEC was intended to support the government in implementing public enterprise reform and improving public resource management. Technical assistance was to focus on: improved management of public enterprises; more transparent and efficient resource allocation and expenditure management; and rationalization of public investment. In 1991, the project was amended to support the Ministry of Labor in data collection and implementation of a professional reconversion program for employees expected to be laid off in the context of public enterprise reform. Credit objectives were in line with the need for strengthening institutional capacity necessary for implementing structural adjustment reform. The project included extensive training activities, the creation of consultative committees for project implementation and economic strategy formulation, and provision of advisory services to compensate for the lack of institutional experience. However, EMPEC was prepared prematurely insofar as it could not benefit from the lessons of the preceding (third) technical assistance credit, which, although then still ongoing and believed successful, was closed three years later with an undisbursed balance of SDR 590,000 and deemed a failure. In expenditure programming reform, the project relied heavily on foreign and local technical assistance to develop systems that failed to be internalized by the administration. 6. Moreover, the flawed design of the SACs weakened EMPEC's own design and outcome. Public enterprise reform was initially aimed at rehabilitating and strengthening management, under the direction of an administrative unit (SCEP) in charge of reform. This approach reflected the thinking at the time, but experience has shown that management reform in PEs often does not produce lasting results and suggests that technical support should have instead been provided towards privatization by privatization facilitators (e.g. merchant banks, investment advisors and venture capital funds) rather than a public sector unit. The latter approach, however, faced severe constraints in Burundi as the market for privatization is small and the investment climate unfavorable; for unprofitable PEs, besides, liquidation was the better alternative. In addition, SCEP was responsible for monitoring PE performance as well as preparing a privatization program, an agenda that was too ambitious. Project Activities and Results 7. The project was to: (i) launch the operations of SCEP; (ii) help improve the institutional framework and performance of public enterprises; (iii) support the rehabilitation of particular PEs; (iv) strengthen the existing planning system; (v) help design a unified budget system in the Ministry of Finance; (vi) strengthen the Ministry of Labor in designing a reconversion program for public employees who were laid off, and (vii) provide training in support of the above activities. v 8. The impact of EMPEC, judged on its own merits, is difficult to measure as project results were closely linked to the outcomes of SACs II and III. Moreover, implementation targets were set mostly in qualitative terms, through process-oriented action plans rather than quantitative monitoring indicators. The project helped strengthen the technical capacity of the SCEP, and assisted it in establishing a computerized data base on public enterprises, in financing diagnostic studies and action plans for PE rehabilitation and in preparing management performance contracts. It funded preparation of a pilot public expenditure program in eight sector ministries, and helped institute a unified budget system and public accounting framework. The project allowed the carrying out of training activities, including the launching of the Institute of Business (ISGE) whose graduates were expected to be prepared, inter alia, for managerial responsibilities in PEs. The project financed training activities in the Ministry of Planning and the SCEP and a large number of studies (34) and audits (12). In spite of these activities, the internalization of objectives was weak as implementation units and committees did not assume their responsibilities and training activities were carried out without a strategy in place. Reports (for example on training activities and project execution) were not delivered and disbursements, accounting and auditing were delayed. The reconversion program, although completed, was never implemented due to the lack of progress in the SAC III- supported privatization program. Sustainability of Results and Future Operations 9. Right from the start, the project experienced implementation difficulties in such areas as planning, procurement, accounting and auditing. A major problem was the high turnover among civil servants, resulting in insufficient experience with Bank procedures and poor internalization of assistance provided not only under previous TA operations but even during EMPEC itself. With the outbreak of the political crisis, implementation of reforms came to a halt and the performance of the administration deteriorated, as a result of widespread absenteeism. 10. Project management, under purview of the Director General of Planning, did not receive adequate attention, for a combination of reasons: high turnover among project managers (eight from project signing to completion); the typically heavy responsibilities of the Director General, encompassing numerous areas other than project management; and insufficient commitment to project objectives. During the early years, project audits were produced with delays, while project accounts were not well maintained. This situation improved in 1991 for the accounts of SCEP and in 1993 for all remaining accounts. Over the life of the project, the quality of implementation improved, with the recruitment of a project accountant and implementation unit in July 1992, long after the Bank initially voiced its concerns and made a recommendation regarding the deficiency. 11. The quality of TA provided was to be measured by the extent to which adjustment measures supported by EMPEC were implemented, as independent performance indicators were not specified; the adjustment agenda, however, never realized its objectives. Reform of public resource management and PE restructuring met with strong resistance within the vi government and bureaucracy. Such a risk had been anticipated, but was underestimated and inadequately addressed. Expatriate and local TA sought to compensate for this resistance by substituting for civil servants, but in line with experience, this approach was unsuccessful: the main ingredient missing was general commitment to reform at the ministerial and senior civil servant levels. In using primarily local technical assistance, however, the project contributed to human resource development and expanding local technical expertise, at least within the country, if not the administration (i.e. mobility to private sector); the progress is therefore believed to be sustainable, albeit modest in relation to the resources used. Also, the public expenditure programming instruments developed under the project still provide a good basis for future work. For the PE component, the project put too much emphasis on strengthening the bureaucracy (SCEP) rather than operating through private sector agencies (banks, trust funds, investment advisors). 12. Support for capacity building is currently being provided under an Institutional Development Fund (IDF) grant signed in 1994 for US$ 300,000. A new technical assistance operation is not envisaged in the Bank's 1995 Country Assistance Strategy. If the political and security situation were to improve, however, the resumption of the reform process would be high on the agenda, and an institutional assessment would be programmed to develop an action plan to strengthen public sector capacity. Meanwhile, using IDF resources, workshops on privatization and divestiture -- with public and private sector participation -- are being programmed to generate consensus on PE reform as a first, and admittedly difficult, step towards any future operations. Lessons and Conclusions 13. In conclusion, despite progress that has been made in a number of areas, the project's overall outcome has to be rated unsatisfactory. Reform of the budget and public accounting system and improved labor statistics collection that could help monitor economic performance, remained limited in scope. Much of the reform agenda is still unfinished, with respect to budget and PE reform, investment project appraisal, and training with a strategic focus. The reasons that limited the success of the project fall into two categories: (i) political and social constraints and (ii) project design. The political environment was unfavorable, marked by: the government's weak commitment to reform that resulted, in part, from a limited participation in design and preparation of the project; the political transition; and ultimately, the outbreak of crisis in October 1993. An important constraint to PE reform -- that should clearly have been foreseen -- originated in Burundi's ethnic divisions and resulting attitudes towards privatization and its effect on the balance of power in the country. As EMPEC's underlying objective was to facilitate implementation of the adjustment program, the project was held hostage to the success of a reform agenda that was politically very sensitive and in some areas too ambitious. Project design reflected the premature preparation of EMPEC, as lessons could not be drawn from the ongoing TA III (in particular in problem areas such as project management and training). vii 14. The lessons from EMPEC are many, including first and foremost, that capacity- building activities require the active participation and involvement of governments and stakeholders in order to yield good results. The design of such activities, moreover, should devote greater attention to specifying project objectives clearly, establishing a sound link between project objectives and components, defining project components precisely, and allowing for sufficient time to be able to build on lessons from the past. Specific performance monitoring indicators are necessary to facilitate effective project supervision. Training activities need to be transparent and placed within a medium-term training strategy. A positive outcome was derived from the use of local technical assistance which led to the development of know-how and human resources in the country. 15. An important lesson may be drawn from the experience with PE reform: where the means available to address a serious risk (resistance to privatization) can at best be superficial or only partial (consultative committees to create consensus), project objectives and targets should be lowered to reflect the uncertainty of success. In addition, although the adjustment program's privatization techniques were consistent with the thinking of those years, recent experience gained in Africa and Eastern Europe teaches that privatization of assets, or of management through concessions, is generally preferable to the performance contract approach; involvement of the bureaucracy should be minimized; support should be provided to reform the legal framework; and a well-designed information campaign should be conducted to help prepare and sensitize the public for privatization. Moreover, it appears right to question whether linking technical assistance projects so tightly with structural adjustment operations is appropriate; free-standing, well-focused technical assistance, in selected areas of need, might have a better chance for success in the medium term. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF BURUNDI ECONOMIC MANAGEMENT AND PUBLIC ENTERPRISE CREDIT (Credit No. 1795-BUI) PART I: EVALUATION OF PROJECT IMPLEMENTATION 1. With an estimated population of about 5.8 million inhabiting an area of 25,734 sq. km, Burundi had in 1993 a population density of 225 persons per sq.km, about ten times the average for sub-Saharan Africa. Annual population growth of 3.1% is among the fastest on the continent. About 94% of the population lives in rural areas. The population consists of two main ethnic groups, the Tutsis and the Hutus, the latter accounting for 85% of the total. Burundi has been plagued by repeated ethnic strife (1965, 1969, 1972, 1988, 1991 and 1993/94), which has prevented the country from achieving its full potential. In June 1993, the country held its first presidential and parliamentary elections, in which candidates from the primary Hutu party (Frodebu) won. The new government moved swiftly to consolidate its power through major staffing changes in the central and local administration. Three months after taking office, the President and other key officials were assassinated. Widespread ethnic upheaval left some 100,000 dead and 200,000 displaced within the country, and caused an additional 800,000 to seek safety in neighboring countries. In April 1994, the then appointed President was killed in an airplane crash together with the President of Rwanda. A new President and government were named in October 1994, but the composition of the government changed again when a new Prime Minister took office in February 1995. Over the last two years, the situation has remained unstable, with continued civil unrest and ethnic violence. 1. PROJECT OBJECTIVES AND DESIGN 2. EMPEC was designed to support the implementation of reforms under SACs I and II and was later slightly modified to facilitate the preparation and implementation of SAC III. It aimed at helping to consolidate reforms already pursued under the Third Technical Assistance Credit (TA III) and introduced the strengthening of public enterprise (PE) management as a new area of capacity building in Burundi. Its four main objectives were to: (i) launch the operation of the unit in charge of PE reform (SCEP) in order to create a PE management information system, conduct diagnostic studies, foster the ongoing 2 rehabilitation process and develop a consistent strategy for public enterprise reform; (ii) support budgetary reform and public investment programming; (iii) develop planning and project appraisal capacity and launch the preparation of pre-investment studies; and (iv) strengthen data collection on labor market and social indicators. When the project was amended in 1991, a component was included to prepare a rehabilitation program for the training of staff laid off by public enterprises and to support the statistical unit in the Ministry of Labor. To achieve all these objectives, the project provided short-, medium-, and long-term technical assistance and training inside the country and abroad. 3. In line with the PE reform agenda of SACs I and II -- which focused on preparing studies, liquidating bankrupt enterprises and rehabilitating others expected to become profitable over the medium term -- EMPEC was to focus mainly on establishing SCEP and making it operational. Privatization of public enterprises and the development of a related strategy became an objective only during the preparation of SAC III, when the government committed itself to privatize the capital or management of selected PEs by the time of effectiveness and second tranche release. The project supported SCEP to help it perform its two new functions: monitoring and supervising PEs as well as preparing the privatization program. 4. Technical assistance (TA) in the areas of budget reform, expenditure planning and programming, and project evaluation reflected the needs detected during the implementation of SAC I, and was subsequently adjusted to meet the targets set under SACs II and III. Related activities, to improve Burundi's planning capacity by emphasizing project preparation, monitoring and evaluation, had already been the objective of the preceding technical assistance credit. However, as EMPEC was approved before the closing of TA III (which had disbursed less than 40% at that time), it did not have the benefit of the recommendations made by that project's completion report on problem areas such as training and project management; indeed, judging from the President's report for EMPEC, the First, Second and Third Technical Assistance projects in Burundi were then all believed successful. II. PROJECT ACTIVITIES AND RESULTS A. Overall Results 5. Some partial advances were made, marking steps that were necessary but far from sufficient in meeting the depth and breadth of the reform objectives envisaged. Thus, EMPEC helped: in public enterprise reform, to strengthen the technical capacity of SCEP; in expenditure planning and programming, to create the necessary instruments (PIP and PEP), in part by funding the preparation of a pilot PEP in seven sector ministries; in budget reform, to institute a unified budget system and accounting framework, and in financing many training activities and seminars; and in the labor component, to support the 3 creation of a data base on labor markets and employment. The project provided about 212 staff months of TA, compared to a targeted objective of 265 (the shortfall being due to partial TA financing by another donor). A total of 34 studies was carried out, including 18 on privatization. Overall, however, the management of PEs did not improve; project appraisal capacity has remained weak; and the preparation of PEPs has not been internalized by the administration. Capacity building through training activities was generally unsuccessful. B. Project Activities Public Enterprise Reform 6. The project provided support to SCEP, which had been created in 1986. It helped SCEP establish a data base on PEs in 1988, complete an inventory of all PEs in 1989, and install a computerized PE management system in 1990. It contributed to the launching of the Institute of Business (Institut Superieur de Gestion d Entreprises, ISGE). It financed diagnostic studies with the objective of establishing an action plan and performance indicators that were easy to monitor. The legal framework for PEs was revised with the help of two legal decrees in July and December 1988 to provide for more managerial autonomy. The project helped create a PE performance evaluation system (1991) to foster the quality of PE management (which involved the government, the Board of the enterprise and the oversight, or tulelle, ministry). As SCEP assumed the key role in implementing the privatization strategy, EMPEC upgraded the unit with the help of two foreign technical assistants. In order to implement the para-public sector reform quickly and successfully, SCEP was restructured during the preparation of SAC III in 1992 and most of its staff contracted out, under the supervision of Kost International, a consulting group hired to provide technical assistance from 1993 to 1995. 7. Despite these measures, success in implementing PE reform was limited by a variety of factors. The privatization strategy formulated in SAC III was not implemented, due partly to vested interests and the lack of government commitment. In Burundi's ethnically divided society, resistance to the program reflected attitudes not so much towards economic efficiency as towards the implied shift in the balance of power. The program's design was flawed, moreover, and its objectives overambitious. Also important were problems of financing, related to difficulties in raising local and foreign investment capital, as well as a complicated institutional and legal framework, the latter aimed more at protecting those involved in the process than supporting successful privatization. The recommendations of studies and management contracts were applied either partially or not at all. As competition remained virtually non-existent in the PE sector, steps taken to replace senior management and create performance incentives with the help of management contracts and training programs had little impact on efficiency and output. Seven years after the start of EMPEC, management of PEs has not improved. The new draft privatization law has not yet been adopted by parliament. Since 1993, the financial health of a number of PEs has deteriorated further, due both to the political and economic crisis and to continued poor management. 4 Budget Reform: Public Investment and Expenditure Programming 8. Budgetary reforms started in 1989 resulted in the adoption of a unified budget integrating investment and current expenditures in 1992. However, budget reviews still do not provide information on the execution of all expenditures. As the functional breakdown proposed for budgetary classification has not been fully adopted, and with the growing number of autonomous agencies and offices benefiting from lump-sum allocations, the transparency of budget allocations has remained limited. 9. A Public Investment Program (PIP) produced by the civil service since 1988 has provided a useful basis for donor coordination and project screening, although the quality of the document needs to be improved. A methodology for the public expenditure program (PEP) was prepared in 1990 with the assistance of a foreign consulting company, and PEPs were prepared by a local consultant for four sectors for the 1992-94 period and extended the following year to cover six sectors for the 1993-95 period. With the outbreak of ethnic violence in 1993, the planned training of expenditure units within the administration did not take place and expenditure programming stopped in all sectors with the exception of agriculture. Since October 1993, the administration has made no real effort to improve the PIP, reactivate the PEPs or internalize programming activities. However, a new public accounting system was finalized in early 1995. Project Planning and Appraisal 10. In spite of efforts under the project to build capacity in the Ministry of Planning and key sectoral ministries, project planning and appraisal capacity have remained weak. Clear economic and financial selection criteria have been established, but most projects, generally packaged by donors, continue to be included in the PIP in the absence of satisfactory feasibility studies. A project evaluation unit in charge of feasibility and sectoral studies was created late in 1991 but was ineffective, lacking both the capacity and commitment to perform its functions. The component was closed down when project funds were reallocated in 1993 to help implementation of SAC III. Strengthening of Labor Ministry 11. Actions taken in 1992 were limited to support for two subcomponents: (i) improvement in compilation of labor statistics, to help monitor the progress of economic performance under the structural adjustment program, and (ii) a retraining program for employees expected to be laid off as part of PE restructuring. Under the first subcomponent, financing was provided for ministry staff to attend a number of training courses in and outside the country. Collection and organization of labor statistics were improved. Even though technical assistance helped design the reconversion program, the second subcomponent did not materialize, as the government did not implement the PE restructuring program. As very few enterprises were privatized after 1993, the reconversion program was no longer a priority. 5 Training activities 12. This component was by far the weakest, flawed in its design insofar as training activities were not conceived as part of an overall training strategy. The project co- financed the launching of the ISGE and then withdrew, before any outcome was realized. Technical assistants were supposed to contribute substantially to capacity building by training their national counterparts, but little was done in spite of frequent requests by IDA. Civil servants in all ministries financed by the project attended several courses in and outside the country; lacking strategic focus, however, the training had limited impact. HI. ANALYSIS OF FACTORS THAT AFFECTED PROJECT EXECUTION 13. The implementation of EMPEC was negatively affected by a number of factors, including: flaws in the design, as well as conception, of the adjustment operations it was meant to support; the drain on already poor technical capacity brought about by the crisis; political constraints; the high mobility of Bank task managers in the first years of the project; and non-performing project management. 14. Weak project design of SACs II and III (with respect to PE reform) affected the project's outcome. Due to an urgent need for balance of payments support, SAC II had been prepared quickly and without substantive participation by the authorities. Implementation was handicapped by the excessive number of monitorable actions (90). Although SAC III was prepared with broad participation by the authorities, the PE component was weak: the timetable for reform was unrealistic, and weaknesses of the PEs' institutional and legal framework were not fiilly assessed.. During SAC III, SCEP was responsible for supervising and rehabilitating PEs as well as preparing a privatization program; this agenda was too ambitious. Further, experience has shown that management reform often does not produce lasting results, as long as PEs' management is subject to political influence. Although this experience was taken into account after the early years, a comprehensive privatization program was developed only under SAC III, shortly before the political situation impeded reform; that program, however, was overly ambitious and poorly designed, and lacked government commitment. 15. Finally, preparation of EMPEC did not benefit from the lessons learned in the previous technical assistance operation. That credit, ultimately deemed a failure, closed three years after EMPEC was approved, with an undisbursed balance of SDR 590,000; its completion report, issued only in June 1993, cited lessons relating to the existing capacity in the ministries, a formal monitoring system for the project, early training of staff in Bank policies and procedures, supervision of all aspects of implementation, and the inclusion of sectoral, organizational and administrative experts in supervision missions -- all lessons from which EMPEC could have benefited. The use of EMPEC as a source of financing to support the timely implementation of conditionality, under the structural adjustment 6 program, resulted in its being extended three times in spite of poor performance and project management. 16. Low technical implementation capacity remained a problem even in those areas where training was carried out appropriately, as trained staff were subject to high mobility, and were often replaced out of political considerations. Throughout EMPEC, civil service performance was affected by the lack of a quality-oriented incentive structure and poor human resource development. In addition, the executing agencies' limited knowledge of Bank procedures during the project's early years slowed disbursement and caused delays in project accounts and audits. Mostly to blame was the high turnover among civil servants, a factor that also led to poor internalization of assistance provided not only under previous TA operations but even during EMPEC itself 17. Politicalfactors relate to the lack of sustained government commitment to public sector, and more specifically PE, reform. Between 1988 and 1992, the government made some advances -- many belatedly -- in implementing agreed reforms, related largely to the satisfaction of conditions for the three tranches of SAC II and effectiveness of SAC III. With the start of the pre-election period, however, government focus on economic reform and capacity building fell off sharply, and the situation deteriorated with the outbreak of the political crisis. Factors Outside Government Control 18. The drawbacks related to the political constraints were clearly beyond the control of the authorities. The project was negotiated in April 1987 shortly before a new President and a new government came into power, which had a negative effect on internalization and ownership. As mentioned above, the democratization campaign in 1988 and the pre-election period in early 1993 attracted attention away from economic issues and caused delays in reform implementation. Finally, the first democratic elections in June 1993 and subsequent assassination of the President marked the beginning of economic decline and political instability, slowing down economic reform. Factors Under Government Control 19. Lack of commitment. Even after allowing for the effect of the political climate, high-level authorities did not show much interest in the timely implementation of project objectives. A number of examples illustrate this: (i) liquidation and privatization of PEs, once agreed by the government, took over two years to be implemented (seven enterprises with liquidation decrees signed between 1991-1994 are still under liquidation); (ii) commitments entered into under PE management contracts were often not respected, in particular with regard to tariff reform and non-interference by the government in management issues; (iii) the revised 1991 privatization law, prepared in late 1993 and aimed at streamlining the privatization process, has still not been promulgated; (iv) the screening criteria for investment projects were not applied; and (v) no measures were taken to provide consistency in project management and improve the functioning of the units in charge of implementing various project components. Senior government officials 7 in charge of the project were replaced frequently. During the implementation period, the Minister of Planning -- in charge of central project coordination -- changed eight times, and the Director General of Planning and the Commissaire General du SCEP were each replaced five times. 20. Project implementation structure. Project management, under purview of the Director General of Planning, did not receive adequate attention, for a combination of reasons: high turnover among project managers; the typically heavy responsibilities of the Director General, encompassing numerous areas other than project management; and insufficient commitment to project objectives. The units that were put in charge of implementing EMPEC components, in particular SCEP and the unit responsible for investment project administration and studies, were also ineffective. In the early years, this was mainly due to insufficient technical know-how and inexperience with IDA procedures. EMPEC responded to SCEP's problems by providing technical training and long-term foreign technical assistance, which helped increase the unit's capacity. The quality of investment studies and sectoral investment strategies, however, remained insufficient, as the responsible unit did not monitor their preparation or evaluate their outcome -- a reflection of both weak capacity and commitment to project objectives. The implementation unit also failed to establish project evaluation criteria requested under EMPEC and, overall, to have a positive impact on investment project selection and resource allocation. Partly to blame was the meager level of technical capacity; although this risk was proposed to be addressed through systematic provision of staff training and design of consultant services to promote learning by doing, these efforts fell clearly short of their objective. The quality of project appraisal also suffered from the absence and/or frequent change of the government officials in charge (minister, secretary of state and director general). 21. Training. Another factor responsible for the limited success of the project was the absence of an overall training strategy. SCEP was virtually the only beneficiary of the vast training activities offered annually under the project. It was only during the last years of the project that training (on the job and through seminars) was provided for public enterprise managers. For its part, external training was ill-conceived and could have been more effective if SCEP had proposed greater participation in local training activities instead of sending a limited number of senior civil servants for training abroad. The same was true for the Ministry of Planning, where until 1992 all training took place abroad and was limited to higher-level civil servants. For the remaining project components, no training program was prepared until end-1993 in spite of frequent recommendations by supervision missions. Overall, the effectiveness of training activities was limited, as staff selected often changed assignments or obtained training in areas supportive of project objectives but not always relevant to trainees' work. 8 IV. SUSTAINABILITY OF RESULTS 22. Designed to support SACs II and III, EMPEC's success was directly affected by the extent to which the adjustment measures were implemented. As the political will for divestiture and more transparent management of PEs did not exist, the technical support provided under the project had little impact in this area. The institutional capacity to handle public expenditure programming instruments has remained low, but the pilot programs that were developed under the project still provide a good basis for future work. Budget reform that took effect in 1992 and the new accounting framework introduced in 1995 should sustain progress in these areas. The system of collecting labor statistics is also a good basis for sustainable monitoring of the labor market. However, the situation in the civil service has deteriorated, with spreading absenteeism and frequent staffing changes that have served to further erode the limited impact of the training activities launched under the project. In using primarily local technical assistance, the project has contributed in some measure to human resource development and technical expertise within the country -- a factor that could help support the government's strategy of increased contracting-out of public services. V. PERFORMANCE OF THE BANK AND THE GOVERNMENT 23. The Bank. The Bank devoted the time and resources necessary to support project implementation. Four full missions for supervision under EMPEC took place between 1988 and 1992, in addition to regular supervision under SAC II. However, project supervision suffered as task managers changed four times in the first four years of the credit and responsibility for the project was transferred between divisions. Project design did not facilitate supervision; the degree of progress was difficult to measure, as the President's report did not identify specific performance indicators and only referred to action plans to be carried out over the first two years. 24. The project was extended the first time to cover financing needs for technical assistance related to the delayed implementation of SAC II, and was expected to be closed in 1992. In 1992, supervision was transferred to the Resident mission, and improved. Disbursements increased, a number of budgetary reforms (new nomenclature and unified budget) were implemented, and a new public accounting system was finalized. The project's second and third extensions resulted from the financing need for technical assistance created by SAC III. Then, project activities were directly linked to actions required under the adjustment program (submission of public expenditure program, signature of management contracts), and the project focused more on helping the government fulfill conditionality than create lasting institutional capacity. 9 25. In designing the project, the Bank tried to address the risk of low institutional capacity through extensive training activities, and provision of advisory services to furnish on-the-job training and substitute for the lack of institutional experience. However, training in some areas was either not provided or not internalized. Weak project management, already a problem under TA III, had been addressed by the creation of units in charge of implementing specific project components; however, as some of these units were not efficient and the project coordinator did not fulfill his role, the Bank should have made better use of the frequent extensions to bring about improved performance in this area. On PE reform, the Bank did not account for the importance of an adequate institutional framework for privatization and focused on improved management rather than privatization. 26. Overall, the Bank appears to have underestimated the risks related to administrative changes, vested interests and inertia within the government, as well as lack of the basic commitment to PE divestiture and transparency. Cited in the President's report, these risks were expected to be mitigated through establishment of a Consultative Committee of senior public and private officials for the PE sector and a consultative process in Planning/Programming/Budgeting matters to enable technical ministries to voice their respective concerns; these solutions proved of no value, however. In addition, the Bank prepared the operation prematurely -- when TA III had about 60% of its funds left to disburse: awareness of problems plaguing that credit at the time could have helped improve the design of EMPEC (for example, the choice of project coordinator). 27. The Government. The government had recognized early on that it had insufficient technical capacity to implement the structural adjustment program and actively participated in the design of the project. However, government participation was limited to a few high-level civil servants who lacked the time for day-to-day project follow-up and who were subsequently replaced, which left the project without a sound basis of ownership. Government commitment was weak from the start as the authorities did not respect, with the exception of SCEP, the procedures laid out in the credit agreement for yearly preparation of annual training plans, work programs and progress reports. 28. Project coordination and implementation were inadequate as the Ministry of Planning did not perform its role, with project activities pursued individually by different units. As a result, the Bank had no single interlocutor with whom to discuss project matters, and project execution and recommendations made during supervision were not followed up systematically. Overriding objectives, such as improving the efficiency of administrative services and better use of training funds, were neglected. Civil servants' inexperience with IDA procedures (reflecting high turnover) slowed project disbursements and audits during the early years, while project accounts were not well maintained. This situation improved in 1991 for the accounts of SCEP, and for all remaining accounts after appointment of the project management unit in July 1992. Although long resistant to the Bank's recommendations for improving accounts maintenance, the government moved to resolve the matter only in response to tighter supervision by the Resident Mission (when supervision changed hands) and the pressure brought to bear by the prospect of an extension of the credit. 10 VI. FUTURE OPERATIONS 29. The objectives of the adjustment program, which EMPEC tried to support, remain highly relevant, as explained in the Bank's 1995 Country Assistance Strategy (CAS). Public sector reform and a reduced role for the state, as well as a more efficient and transparent allocation of public expenditures, lie at the heart of a development strategy for Burundi. The CAS recommends the accomplishment of a number of measures which were part of the reform agenda pursued under SAC III: (i) adoption of a new legal framework for privatization; (ii) consensus building on divestiture; (iii) strengthening of capacity within the civil service; and (iv) promotion of greater transparency of budget and public investment management. Technical assistance support is currently being provided under an Institutional Development Fund (IDF) grant signed in 1994 for US$ 300,000. In light of the difficult political circumstances, the CAS does not envisage new capacity-building operations. If the political and security situation were to improve, however, the resumption of the reform process would be high on the agenda. An institutional assessment could be programmed to develop an action plan for strengthening public sector capacity. Meanwhile, using IDF resources, workshops on economic reforms (including privatization and divestiture) are planned, to generate consensus on improved economic management before any future operations are initiated. VII. LESSONS AND CONCLUSIONS 30. The reasons for the limited success of the project fall into two categories: (i) political and social constraints and (ii) project design. Political constraints were reflected both in the government's weak commitment to reform that resulted, in part, from a limited participation in design and preparation, and in insufficient project management. Later on, the political environment turned unfavorable with the political transitions, and ultimately, the crisis. As EMPEC's underlying objective was to facilitate the implementation of the adjustment program, the project was held hostage to the success of a reform agenda that was politically very sensitive. With respect to PE reform in particular, resistance to privatization -- reflecting attitudes towards its implications for the balance of power -- was a fundamental problem that should clearly have been foreseen. Project design reflected the premature preparation of the EMIPEC, as TA III had not been completed, and the flawed design of the structural adjustment program. The latter was particularly true of PE reform, which, in line with the views at the time, initially focused on management contracts for PEs and support to SCEP, rather than on privatization of assets. When a privatization program was finally prepared under SAC III, it overstretched the role of SCEP, a government unit with no political power. Finally, for the project as a whole, long-term technical assistance was insufficient to improve weak capacity, as it was not internalized. I1 31. The lessons from EMPEC are many, including, first and foremost, that capacity- building activities require the active participation and involvement of governments and stakeholders in order to yield good results. Moreover, the Bank should prepare projects carefully and allow for sufficient time to be able to build on lessons from the past. Specific performance-monitoring indicators are necessary to facilitate effective project supervision. Training activities need to be transparent and placed within a medium-term training strategy. A positive outcome was derived from the use of local technical assistance which led to the development of know-how and human resources in the country. However, the transfer of technical expertise by both expatriate and local TAs to civil servants remained limited. As a recent study on strengthening core functions within the government has shown, long-term technical assistance to public institutions could be more effective if replaced by partnerships and twinning arrangements. 32. An important lesson may be drawn from the experience with PE reform: where the means available to address a serious risk (resistance to privatization) can at best be superficial or only partial (consultative committees to create consensus), project objectives and targets should be lowered to reflect the uncertainty of success. Regarding the program's emphasis on management performance contracts, recent experience gained in Africa and Eastern Europe teaches that: privatization of assets, or of management through concessions, is generally preferable to the performance contract or contral-plan approaches; involvement of the bureaucracy should be minimized; support should be provided to strengthen the legal framework for privatization; and information and communication activities are necessary to prepare and sensitize the public. More generally, it appears right to question whether linking technical assistance projects so tightly with structural adjustment operations is appropriate; well-focused, free-standing technical assistance, in selected areas of need, might have a better chance for success in the medium term. PART II. STATISTICAL INFORMATION Table 1: Summary of Assessments (A) Achievement of Obiectives Substantial Partial Negligible Not applicable Macroeconomic Policies Sector Policies W X Financial Objectives X r Institutional Development L _ I _ I X Public Sector Management _ _ _ _ _ X Private Sector Development I X 7 Other (specify) _ _ _ _ (B) Proiect Sustainabilitv Likely Unlikely Uncertain x Highly (C) Bank Performance Satisfactory Satisfactory Deficient Identification ll x Preparation Assistance X Appraisal X Supervision l I X* | Highly (D) Borrower Performance Satisfactory Satisfactory Deficient Preparation X Implementation x Covenant Compliance X Operation (if applicable) Highly Highly (E) Assessment of Outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactory __w I I I Xw *After 1991 Table 2: Related IDA Credits Credit Credit Purpose Year of Status Title Number Approval Preceding operations 1. Second Technical Assistance 917-BU Improve planning and project preparation in the 1979 Closed ministries of Agriculture and Induatry, provide training in statistics and project analysis; esablish pipeline of feasible projecta thdt could be externally financed. 2. Third Technical Assistance 1456-BU Improve project identification, preparation, evaluation 1984 Closed and monitoring in the Ministry of Planning; strengthen the directorate for Agricultural planning of the Miniatry of Agriculture (DGPA) to improve its capacity to handle project cycle; provide training in statistics, project work and management for the staff of DGPA. 3. Structural Adjustment Credit (SAC 1) 1705-BU Strengthcn macroeconomic management; improve the 1986 Closed efficiency of public sector reaource management; rationalize incentives for export growth Following operations 1. Structural Adjustmnent Credit (SAC II) 1919-BU Pursue and strengthen SAC I objectives. SAC U also sought 1988 Closed to accelerate supply reaponae to the new incentive structure, including notably liberalization of the labor market and deregulation of the fiancial sector. 2. Structural Adjustment Credit (SAC III) 2376-BU Improve public resource management and access to 1992 Closed ocial evices; reduce fiacal deficit and non-developmental expenditure; liberalize axternI transactions, agricultural and factor markets; reform the regulatory, legal and fiscal systems; maintain a "safety net" for social expenditure. Table 3: Proiect Timetable Date Date actual Steps in Project Cycle Planned u Identification April 1986 April 1986 Preparation May - October 1986 May - October 1986 Appraisal November 1986 November 1986 Negotiations March 30, 1987 March 30, 1987 Letter of Development Policy n.a n.a Board May 1987 May 14, 1987 Signing June 1987 October 9, 1987 Effectiveness September 1987 January 6, 1988 Project completion June 30, 1992 June 30, 1995 Loan closing December 31, 1992 June 30, 1995 \2 As provided in the President's Report. Table 4: Credit Disbursements: Cumulative, Estimated and Actual FY FY FY FY FY FY FY FY FY 1987 1988 1989 1990 1991 1992 1993 1994 1995 (US$ thousands, unless indicated otherwise) appraisal estimate 300.0 1,800.0 3,800.0 5,800.0 7,300.0 7,500.0 n.a. n.a. n.a. actual disbursement 0 932.5 1,513.0 2,501.8 4,088.3 4,744.1 5,687.0 6,656.9 7,716.2 actual as % of estimate 0 51.8 39.8 43.1 56.0 63.3 n.a. n.a. n.a. Date of final disbursement August 31, 1995 Table 5: Key Indicators for Project ImDlementation I. Key Implementation Indicators \1 Estimated Actual N.A. II. Modified Indicators Estimated Actual N.A. III. Other Indicators Estimated Actual 1. Action Plan on SCEP implemented 2. Action Plan on Planning component partially implemented 3. Action Plan on Training not implemented \1 As indicated in President's Report Table 6: Key Execution Indicators (N.A.) Table 7: Studies Included in the Proiect Study Purpose * Status Impact of Study A. Strengthening of Public Enterprise Management and Rehabilitation 1 Study for restructuring of OTRABU Viability study Completed Liquidated 2 Study for restructuring of Verrundi Preparation of mana- Completed Establishment of management gement contraet performance contract 3 Study for restructuring of Onapha Rehabilitation study Completed Scheduled for privatization 4 Study for restructuring of SOSLTMO Preparation of mana- Completed Establ. of management gement contract _ performance contract 5 Study for restructuring of REGIDESO Preparation of mana- Completed Establishment of management Rement contract performance contract 6 Sector study on PE privatization Preparation of priviti- Completed Privatization program 1992 sation program 7 Accounting framework for Verrundi Strengthening of Completed Improved Accounting I__________________________________management I system 8 Study for restructuring ONATEL Rehabilitation study Completed Scheduled for Pfivatization 9 Updating of accounting framework of Sosumo Preparation of mana- Completed Improved Accounting Rement contract system 10 Study for restructuring COTEBU Preparation of mana- Completed Management performance gement contract contract 1_ Technical Assisitance to OTRACO Rehabilitabion study Completed Scheduled for pfivatization 12 Study for restructufing of L.C.B. Rehabilitation study Completed privatized 13 Study for restructuring of INABU Rehabilitation study Completed Scheduled for privatization 14 Sector study on public/PE relations Analysis of flow of Completed Reduction of direct local PE budget subsidies 15 Study of the restructuring of S.T.B. Study for restructuring Completed N.A. 16 Study for the preparation of issuance of Preparation of mana- Completed Management contract bids and management contract for some gement contract 1993-1995 functions of COTEBU I 17 Diagnostic and viability study of SIP Viability study Completed Scheduled for privatization 18 Cogestion COTEBU Improved management Completed Managt. contract 1993-1995 19 Financial and organisational audit of CADEBU Viability study Completed Liquidation 20 Accounting and financial audit of Verrundi Audit Completed Improved management of (86-88) database 21 Financial audit and assessment of hotels Audit Completed Improved management of _database 22 Accounting and financing management audit Audit Completed Improved management of (1986-1988) of SIP database 23 Accounting audit of CADEBU Audit Completed Improved management of database 24 Accounting audit of ONATEL (88-89) + Audit Completed Improved management of Assessment of fixed assets database 25 Audit OTRABU-OTRACO Viability study Completed OTRABU Liquidated 26 Accounting and financing audit of INABU-ONAMA Viability study Completed Liquidation underway 27 Study on the reinforcement of planning Strengthening of Plan- Completed Pilot Public expenditure _ system in Burundi ning Ministry ___ programs. Table 7: Studies Included in the Proiect Study Purpose * Status Impact of Study B. Expenditure Programming Reform 28 Study of PIP/PDP (I st phase) Preparabon of public Completed Pilot expenditure program _ ____________________________________________ expenditure program for seven ministries 29 Covenant No. I Finalization of PIP 1991-1993 Preparation of public Completed Budget preparation and presentation of the 1991 budget as a expenditure program program. 30 Technical Assistance to the govemment to Preparation of public Completed Pilot expenditure master the consolidated public IEB for 1993; expenditure program programs consistency among the unified general budget, PIP and PEP; revision of the accounting system; design and implementation of accounting plan for the state. 31 Preparation of the PEP of the Ministries of Preparation of public Completed Pilot expenditure Transport and Telecommunications expenditure program programs 32 Technical Assistance to the Ministry of Preparation of public Completed Pilot expenditure Planning for the implementation of PEP expenditure program programs in the health, education, transport, roads, energy and mines, and rural development sectors. 33 Sector study for sugar at MOSO Marketing study Completed Restructuring of SOSUMO 34 Regional comparative advantage study Economic study Completed Restructuring of SOSUMO at MOSO and BUYENZI 35 Sector study on fertilizers from the MATONGO Feasibility study Completed Improved management minerals in the KAYANZA province of agro-industries. C. SAC III Preparation & Implementation 36 Private Sector development project Sectoral study Completed Preparation of SAC Im 37 Technical Assistance to the Executive secreta- Implementation of Completed Training riat of the program for professional reconver- reconversion program sion in the pursue of the Burundian program and transfer of technical knowledge of the reconversion phase. 38 Organisation of a seminar on the analysis Strengthening of Completed Improved statistical of statistical data. Ministry of Labor database 39 Exploration and analysis of surveys on Household surveys Completed Poverty assessment consumption budget and lifestyle of rural households realized in Burundi from 1986 to 1990. D. Recovery Program 40 Organisation of a seminar and technical Preparation of Emer- Completed Emergency Program assistance for the preparation of a plan of gency reconversion 1994 action for reconstruction program 41 Follow up of reconstruction plans for Preparation of Emer- Completed Emergency Program provinces gency progoram Completed 1994 * The purpose of studies was defined throughout the project and is only implicitly defined in the appraisal report. 34 studies - 7 enterprise audits - 5 project and sector audits. Table 8a: Proiect Costs Appraisal estimate Actual (or latest estimate) (USS mil) (USS mil) Local Foreign Total Local Foreign Total costs costs costs costs Item i _v____ 1. SCEP component 1.30 3.10 4.40 2.71 4.721 7.431 2. Planning component 0.70 2.70 3.40 0.7 1.09 1.79] 3. Finance component 0.05 0.10 0.15 0.05 0.27 0.32 Total Base Cost 2.051 5.901 7.951 3.461 6.08 9.54| 14. Contingencies 0.10 0.20 0.30 0.001 Total Project Cost 2.15 6.10| 8.251 3.461 6.08| 9.54 %of total 26.1% 73.9% 100.0% Table 8b: Proiect Financin2 Appraisal estimate Actual (or latest estimate) (USS mil) (USS mil) Local Foreign Total Local Foreign Total costs costs _ costs costs Item 1. IDA _ 1.40 6.10 7.50 1.68 6.08 7.76 2. Government contribution 0.80 0.80 1.77 0 1.77 3. Other 0.00 0.00 TOTAL 2.201 6 1O 8.301 3.451 6.08| 953] Table 9: Status of Legal Covenants Agreement Covenant Present Original Revised Description of covenants Comments section type status fulfillment fulfillment date date 2.02 (b) Financial c Opening and use of Fulfilled special I____ ____ _____ ___ ____ account 2.03 Managerial cd 12/31/92 06/30/95 Loan closing date Fulfilled 3.02 Procurement c Respect of procurement Fulfilled directives 3.03 Monitoring cd Dec. 15 of Annual review of SCEP Fulfilled review each year proposed program and I ~~~~~~budget 3.04 Monitoring cd March 31 of Annual review of Fulfilled review each year progress achieved by SCEP the previous year 3.05 Project c Before March Creation of an Fulfilled implementation 9, 1998 intervention arrangements (effectiveness fund for financing PE condition) rehabilitation plan 3.06 Project c No funds are released Fulfilled until the implementation from the Intervention fund was liquidated arrangements Fund unless SCEP prior for redundancy with review of the local bank system rehabilitation plan and approval of the plan by the managerial committee of the Intervention Fund 3.07 Monitoring/ cd 06/30/88 Furnish to IDA SCEP Fulfilled review training program for 1988, 1989 and 1990 3.08 Monitoring / nc July 31 Furnish to IDA MOP and Not fulfilled except review of each MOF training program for for 1989 and 1993 __ year review and after delays 3.09 (a) Sector policy cd February 1, Carry out a review of Fulfilled conditionality: 1988. PEP system and budgetary preparation of action plan to improve the coordination of the ministries involved in this activity 3.09 (b) Sector policy cp Implementation of the Due to lack of conditionality: action plan concerning the training and staff budgetary PEP system mobility, the PEP system is not yet effectively applied by the administration 3. 10 (a) Studies nc October 31 Furnish to IDA the Not fulfilled except and (b) of each year annual program of for 1989, 1990 and sectoral, sub-sectoral, 1993 and delays prefeasibility, feasibility studies for its approval Table 9: Status of Legal Covenants ( cont'd) Agreement Covenant Present Original Revised Description of covenants Comments section type status fulfillrment fulfillment date date 4.01(a) (b) Accounts/audits cd June 30 of Borrowers to have records, From 1988 to 1991 the (c) each year account and financial accounts were not statements related to properly established project audited by Since 1992 annual audit independent auditors reports are unqualified 4.02 (a) (b) Accounts/audits cd June 30 of Borrowers to have records, Fulfilled with delays (c) (d) each year account and financial due to the auditor statements related to The recruitment process. Intervention Fund and SCEP audited by independent auditors c - completed cd - completed with delay cp - partially completed nc - not completed Table 10: Compliance with Operational Manual Statements Statement Number and Title Manual sa teme |compliance Complied with Operational Manual statements Table 11: Bank Resources - Staff Inguts Stage of Planned Revised Actual Project Cycle Weeks USS Weeks US$ Weeks US$ Through appraisal 20 39006 17.2 33545 17.2 33545 Appraisal-Board 15 26680 13.19 23461 13.19 23461 Board-Effectiveness 15 34662 11.87 27429 11.87 27429 Supervision 70 123461 65.25 115083 65.25 115083 Completion 9 26700 10 29667 10 29667 .~~~~~~~~~~~~~~~~~~~~~ Total 129 250,509 117.51 229,185 117.51 229,185 Table 12: Bank Resources - Missions Number Specialized Implemen- Stage of Month/ Of Days in staff skilis tation Development Types of project cycle Year Persons field Represented Status Problems Problems Through appraisal May486 3 45 Country Officer Economist Economist Appraisal-Board Nov-86 3 45 Country Officer Economist Jan-87 3 45 Economist Board-Effectiveness Supervision Oct48 3 21 Country Officer Apr-89 2 18 TA Officer Weak Mana- Nov-90 4 30 PE specialist gement Unit Sr. Operations Of. Jul-92 3 35 Operations Off. Operations Asst. Completion 11/95 1 15 Economist APPENDIX A: AIDE-MEMOIRE RAPPORT D'ACHEVEMENT DU PROJET D'APPUI A LA GESTION DE L'ECONOMIE ET DES ENTREPRISES PUBLIQUES (AT IV, CR.1795-BUI) 1. Une mission de la Banque Mondiale, composee de Madame Vera Wilhelm, 6conomiste, et assistee par Monsieur Prosper Nindorera , charge des operations a la Mission Residente a sejourn6 au Burundi du 6 au 14 novembre 1995. Cette mission avait les objectifs suivants: (i) Presenter le projet de rapport d'achevement aux autorites pour commentaires; (ii) Completer et finaliser le rapport d'achevement sur base des elements recueillis aupres des services impliques dans 1'execution du projet. La mission a eu des entretiens avec Monsieur le Ministre de la Planification du D1eveloppement et de la Reconstruction, Monsieur le Commissaire General du SCEP, Monsieur le Directeur General de la Planification et Monsieur le Directeur Gen6ral des Depenses. La mission a tenu des reunions de travail avec les cadres de leurs services ayant ete les plus activement engages dans la gestion du projet. La mission tient a remercier tous ses interlocuteurs pour leur accueil chaleureux et leur disponibilite, ainsi que pour leurs commentaires et contributions au rapport d'achevement. Le rapport du Gouvernement sur l'execution du projet a ete re,u au cours de la mission. 2. Le contenu du projet de rapport rencontre le point de vue du Gouvernement. Le rapport rend bien compte de la vie du projet. Les entretiens et reunions ont permis de corriger quelques erreurs de forme, inexactitudes ou oublis mineurs contenus dans le rapport. L'appreciation portee par la Banque sur les resultats du projet a cependant et jugee severe. Le Gouvernement a tenu a signaler le r6le de certains facteurs dans les resultats peu satisfaisants qui, bien que parfois indiques dans le rapport, ne sont sans doute pas appr6cies dans leur juste dimension ou des sujets de satisfaction pas assez soulignes ou ignores. Pour l'essentiel les points de vue exprimes par le Gouvernement concordent avec ceux de la mission. Quelques modifications seront donc apportes au rapport dans sa version finale. Cependant ces modifications ne devraient pas changer de maniere notable l'appreciation globale de la Banque sur les resultats du projet. Ces commentaires sont repris ci-apres en suivant les rubriques du rapport. 3. Objectif et Conception du projet. Le lien trop etroit entre le CAS et le projet d'Appui a la Gestion de l'Economie et des Entreprises Publiques (AT IV) a porte gravement prejudice au projet. La Banque comme le Gouvernement ont employe le projet comme un moyen pour remplir plus rapidement les conditionnalites du CAS. Cela n'etait pas compatible avec l'objectif primordiale de renforcement des capacites 4. Les activites du projet et ses resultats. Le CAS I et dans une moindre mesure le CAS II mettaient l'accent sur le redressement des EP - d'oii notamment la creation d'un 2 fonds d'intervention pour le financement des activites de redressement - la liquidation des EP non viables et une diminution du poids des EP sur les finances publiques. Le projet d'assistance technique a permis d'atteindre des r6sultats estimables comme la reduction des subventions directes aux entreprises publiques qui a ete consequente entre 1988 et 1993 ou encore la meilleure connaissance des EP grace notamment a une bonne macitrise du systeme d'information de gestion. Si en matiere de gestion les resultats sont peu satisfaisants, il a surtout manque la volonte politique de prendre en temps opportuns certaines mesures (augmentation des tarifs, e1imination de l'ingerence de l'6tat dans la gestion des EP, reduction des effectifs) plus que la capacite technique. 5. Le desengagement de I'Etat du secteur productif etait un objectif du CAS III et non du projet AT IV. L'echec du desengagement doit etre apprecie au titre du projet y relatif. Le Gouvernement a neanmoins precise que bien que le CAS III ait ete prepare conjointement par la Banque et le Gouvernement, les conditions de deblocage de la seconde tranche relatives aux EP etaient un des rares points de divergence. Suivant l'opinion du Gouvemement ces conditions etaient trop ambitieuses compte tenu du contexte propre au Burundi. L'environnement est, de surcroait, devenu bien plus difficile avec la periode electorale et ensuite la crise d'octobre 1993. 6. La resistance aux reformes a sans nul doute ete importante. Le poids des resistances et inerties ont ete tout autant le fait des divisions de toutes formes de la societe burundaise - les divisions se retrouvent sous differentes formes dans toute societe - que la consequence d'une absence de strategie adequate d'internalisation des reformes et plus singulierement de celles portant sur les entreprise publiques. L'internalisation des reformes n'a retenu serieusement l'attention des autorites gouvernementales que depuis moins d'un an. 7. Analyse des facteurs ayant influence 1'execution du projet. A l'instar du Gouvernement, la grande rotation des responsables du projet au sein de la Banque a porte prejudice au suivi de l'execution du projet comme a ses resultats. Au cours des quatre premieres annees, quatre responsables de projet se sont succedes. En outre le fait que ce projet ait ete place sous la direction du responsable du projet d'ajustement structurel a ete bien plus un inconvenient qu'un avantage. De maniere generale, au cours de la supervision de ce projet par la Banque, peu d'attention a et6 accordee a ses problemes specifiques, celle-ci etant plus portee aux activites en rapport direct avec le CAS. La qualite de l'assistance technique au SCEP laissait a desirer durant les premieres annees du projet, cela a egalement nui aux chances du succes du projet 8. Le manque de coordination entre d'une part les divisions sectorielles de la Banque et les Ministeres d'equipement (Transport, Energie, Telecommunications etc..) et d'autre part les macro-economistes de la Banque et du Gouvernement (Finances, Plan) ont souvent conduit a des contradictions; ainsi d'un c6te on demandait plus de fonds de 3 contrepartie a l'Etat et de 1'autre la reduction de certains investissements et 'elimination des subventions. Les liens intersectorielles n'ont pas ete suffisamment pris en consideration dans la definition et conduite des reformes des EP en ce qui concerne le secteur agricole, plus particulierement en ce qui concerne le cafe. 9. Le rapport ne faisait pas cas des actions de formation menees par le SCEP en faveur des EP sur site comme dans le cadre des seminaires. Celles-ci ont ete menees a partir de 1993 et sont un succes. Les EP sont de plus en plus demanderesses de conseils et de formation du SCEP. 10. L'absence de revue a mi-parcours du projet a et egalement prejudiciable au projet. En effet, il ne faut pas attendre la fin du projet pour tirer des le,ons et apporter des changements. Par ailleurs, le Gouvernement s'est interroge sur le bien fonde de l'apport de structures nouvelles - la cellule d'Etudes et d'Administration des Projets, la cellule du Programme Reconversion Professionnel et la cellule d'appui a l'Inspection General des Finances - apposees a 1' administration, au regard de leurs resultats. Suivant le Gouvernement, il serait plus indique a I'avenir de recourir a des missions ponctuelles de consultants en appui aux services de l'administration . 11. Opierationsfutures. Les autorites ont fait part de leur souhait de voir un nouveau projet d'assistance technique demarrer dans un proche avenir. De l'avis des autorit6s, les besoins en la matiere sont importants d'autant plus que la crise que traverse le pays a eu des effets negatifs sur les capacites nationales en matiere de gestion de l'economie. Afin de preserver les acquis, s'atteler a corriger les lacunes ayant trait a la faiblesse de la maitrise des instruments de gestions de l'economie et ameliorer la capacite tant des cadres et agent de l'administration que du secteur prive, le Gouvernement souhaiterait qu'on envisage la conception d'une nouvelle operation d'assistance technique. 12. Concernant ce dernier point, la mission a rappele les conclusions de la strategie- pays de la Banque au Burundi laquelle date de mai 1995 et reprise dans le rapport d'achevement du projet. II n'est pas envisage a court terme de nouvelles operations dans le secteur a moins que le Gouvernement manifeste par des actes concrets sa volonte de reprendre et accelerer le processus des reformes economiques. La Banque pourrait soutenir des actions d'intemalisation des reformes et de renforcement de la maitrise des instruments de gestion des ressources publiques grace a des ressources du Fonds de Developpement Institutionnel ("IDF" sigle en anglais). Le Gouvemement a manifeste un interet particulier pour les actions touchant les domaines suivants: (i) Renforcement de la maitrise des PIP/PDP; (ii) Internalisation de la reforme des EP. II importe pour cela que le premier don soit cl6ture et qu'une demande en bonne et due forme soit presentee par le Gouvernement. APPENDIX B: BORROWER CONTRIBUTION TO THE ICR RAPPORT D'ACHfEVEMENT I. INTRODUCTION Cadre General 1. Le projet d'appui a la gestion des entreprises publiques et a l'Economie communement dit Projet d'Assistance Technique IV faisait suite a trois autres projets (AT I, AT II et AT III) qui ont ete negocies et ex6cutes entre 1976 et 1987. Pendant cette periode, il y a eu creation de beaucoup d'entreprises publiques. Les cours eleves du cafe ont pousse le Gouvernement A adopter une politique expansionniste. Mais vers les annees 80, ces entreprises ont commence a ne pas etre rentables en meme temps que les cours du cafe chutaient. C'est ainsi que l'AT IV fut negocie dans une periode ou les entreprises publiques causaient un prejudice au developpement economique du Burundi. En effet, par le truchement des subventions ou de subsides, les entreprises publiques exercaient un poids enorme dans les finances publiques. En 1986, il fut cree le Service Charge des Entreprises Publiques ( SCEP ). Ce service s'occupera specialement de l'analyse strategique du secteur para-public, de l'elaboration et de l'application d'une politique d'ensemble du secteur, du suivi et de l'assistance a la gestion des entreprises publiques. L'un des objectifs du projet fut alors d'appuyer le secteur public par des actions d'Assistance Technique, etudes de diagnostic, de restructuration . 2. Aussi, le projet a ete negocie au cours d'une periode ou le courant de l'Ajustement Structurel etait A la une. La rationalisation des depenses publiques etait consideree comme l'un des piliers du D6veloppement economique du pays. Dans ce cadre, des actions furent entreprises grace au projet. Le projet avait deux volets: le SCEP d'une part, le volet constitue par le Ministere de la Planification du Developpement et de la Reconstruction (MPDR), celui des Finances et celui ayant le Travail dans ses attributions d'autre part. Ce dernier est couvert par le projet des Juillet 1992. 3. Le present rapport s'articule sur la conception du projet, les objectifs du projet et leur realisation, les prestations du Gouvemement et celles de la Banque Mondiale. Nous concluons le rapport en tirant les lecons qui se degagent ainsi que les perspectives d'avenir. H. DE LA CONCEPTION DU PROJET 4. Le projet d'appui A la gestion des entreprises publiques et a 1'economie faisait suite au troisieme Projet d'Assistance Technique. Celui-ci a ete cl6ture au 31 Decembre 1990, deux ans et neuf mois plus tard que prevu. Le projet AT IV a ete signe en date du 9 Octobre 1987. Les premiers deboursements sont intervenus en 1987 pour le SCEP et en 1989 pour le volet B, C et D, (Planification, Budget, Statistiques) soit deux ans apres sa signature. Le Service Charge des Entreprise Publiques ( le SCEP ) avait ete cree dans le cadre du projet et avait pour mission d'assainir le secteur des entreprises publiques et para- publiques. Le projet avait ete concu pour repondre aux exigences du moment A savoir la planification realiste et sure et la rationalisation des Depenses Publiques pr6n6e par le Programme d'Ajustement Structurel. 2 ]JI. DES OBJECTIFS DU PROJET 5. Selon l'accord de pret, les objectifs du projet consistent a aider le Burundi a: - ameliorer la gestion du secteur des entreprises publiques; - renforcer les fonctions de rationalisation des choix budgetaires; - renforcer le processus de preparation du Programme de Depenses Publiques. En vue d'atteindre ces objectifs, les actions suivantes ont ete programmees des la conception du projet. Partie A: Service Charge des Entreprises Publiques 6. Le projet devrait appuyer le SCEP par la realisation des actions suivantes: - des etudes concernant les politiques du Gouvernement vis-a-vis des entreprises et definitions des criteres d'intervention du Gouvernement dans le secteur des Entreprises Publiques; - le renforcement du cadre institutionnel des entreprises publiques; - la mise en place d'un systeme pour evaluer et suivre les resultats du secteur des Entreprises Publiques; - la r6alisation d'evaluations economiques des plans de redressement pour les entreprises publiques; - 1'elaboration d'un programme de formation destine au personnel du SCEP et des Entreprises Publiques - la formation du personnel et des dirigeants du SCEP et des EP en matiere de comptabilite, financement, gestion et planification strategique; - la fourniture du materiel de bureau et de quatre vehicules au SCEP Partie B: Volet B,C,D 7. Ce volet consiste a realiser les actions suivantes: - Renforcement des activites d'evaluation des projets a la Direction de la Planification; - Renforcement du processus de preparation du PIP; - Renforcement des moyens de Planification Sectorielle de divers Ministeres; - Pr6paration, Selection et execution d'etudes Sectorielles; sous-sectorielles, de prefaisabilite, de faisabilite et d'ingenieurs; - Formation du Personnel du MPDR aux methodes d'evaluation economique et financiere des projets; - Renforcement de l'ISTEEBU; - Elaboration et mise en oeuvre d'un programme unifie de depenses publiques; - Formation du personnel des secteurs appuyes par le Projet. IV. NIVEAU DE REALISATION DU PROJET 8. D'une fa,on generale, on peut souligner que le projet a atteint ses objectifs. Mais la crise a fait que certains acquis se volatilisent en raison de la demobilisation de l'administration, la rotation et mobilite de ses 3 cadres et agents, la rationalisation des Depenses Publiques qui n'est plus de rigueur, etc... A part cela, on peut dire que la contribution du projet a e positive. Ci apres les resultats atteints volet par volet. Resultats atteints au niveau du Secteur des Entreprises Publiques 9. Au cours de la periode 1987-1990, le SCEP etait pratiquement dans sa phase de d6marrage. D'importants travaux visant a connaitre le secteur des EP ont ete realises. Il s'agissait notamment de: -l'inventaire de tout le portefeuille de l'Etat dans les entreprises publiques ( environ 80); - la classification des EP par categories juridiques et par secteur d'activite; - la revision du cadre organique des EP avec pour objectif de renforcer leur autonomie de gestion et de clarifier leurs relations institutionnelles avec l'Etat; - la mise en place d'une base de donnees sur le secteur des EP; - la conduite d'etudes diagnostiques suivies de plans de redressement pour certaines entreprises; - la liquidation des EP non viables et la generalisation de I'audit externe des etats financiers des EP.; 10. Dans la suite et grace A une meilleure connaissance du secteur des entreprises publiques, le Gouvernement a decide de renoncer A I'approche au cas par cas pour envisager des reformes profondes et globales du secteur. C'est ainsi qu'au debut de l'annee 1991, le Gouvemement a adopt6, sur proposition du SCEP, la politique sectorielle de reforme des EP. Cette derniere s'articule autour de trois axes: - le redressement des entreprises jugees strategiques; - la privatisation des EP qui sont retables ou potentiellement rentables et qui ne revetent pas de caractere strategique; - Ia liquidation de celles qui ne sont ni strategiques ni rentables Du redressement des EP 11. Plusieurs EP ont fait l'objet d'6tudes diagnostiques pour mieux orienter les plans de redressement. Cinq entreprises ont 6te soumises A des contrats de performance. Il s'agit de l'OTRACO, la REGIDESO, la SOSUMO, la VERRUNDI et l'OTB. Les contrats de la VERRUNDI et de la SOSUMO ont expire tandis que ceux des trois autres entreprises sont en cours. Le projet de contrat de performance entre l'Etat du Burundi et le COTEBU est disponible; il sera signe tres prochainement. Le SCEP continue a suivre et evaluer l'execution de tous les contrats de performance en vigueur. De la privatisation 12. La promulgation de la loi sur la privatisation et les operations de privatisation ont 6te lanc6es en 1991 apres l'adoption de la politique sectorielle de reformes des EP. Des lors, l'Etat s'est desengage de huit entreprises: quatre etablissements publics ( Laiterie Centrale de Bujumbura, CNI, CPI et ECODI ) et quatre societes d'economie mixte ( SICOPP, SIRUCO, ARNOLAC et AMSAR ). En general, ce sont des entreprises de taille modeste et leur cession se situe entre le milieu de 1992 et le premier semestre 1993. Les appels d'offres de privatisation du capital de certaines entreprises comme COTEBU, ONAPHA, FADI, Alcovit, OPHAVET ont 6te lances au debut de l'annee 1993, mais la cession de ces entreprises n'a pas pu se concretiser pour diverses raisons. 13. Pour d'autres entreprises, les commissions techniques d'evaluation destinees A conduire la privatisation du capital ou de la gestion ont et6 nommees par decrets. Les entreprises concernees sont les suivantes: 4 * BCB, BRARIDI-BRAGITA, EPB, HPB, INABU, FERME DE RANDA, SIP, SOCABU, UCAR, VERRUNDI pour la privatisation du capital. ** Cogerco, Onatel, Regideso, Sobugea, Sosumo pour la privatisation de la gestion. Pour l'Inabu, le HPB, la SIP, la RUZIZI, I'OPHAVET, les rapports sont au Comite Interministeriel de Privatisation ( CIP ) pour analyse et decision. Pour le reste, les commissions sont a pied d'oeuvre et l'etude de ces dossiers se poursuivra au cours de l'exercice 1996. De la liquidation 14. Afin d'arr8ter l'hemorragie financiere que certaines entreprises publiques causaient au Tresor Public par des subventions de toutes natures, le SCEP a propose leur dissolution. Cette mesure a frappe les entreprises suivantes: AGRIBAL, EPIMABU, ONIMAC, Fonds de l'Habitat Rural, Minoterie de Muramvya, SOGESA, ONL, OTRABU, HALB, Ferme de Karuzi, Ferme de Kiryama , Hotel Club des Vacances, ONAMA et la CADEBU. Pour la plupart de ces entreprises, le processus de liquidation est cl6ture, il reste a finaliser pour les cinq derni&res. 15. En resum6, d'enormes efforts ont ete deployes et continuent de 1'8tre pour redynamiser le secteur des EP. Grace a l'assistance et aux conseils du SCEP, les resultats suivants ont pu 8tre enregistres: 10 Les subventions directes et indirectes consenties aux EP ont considerablement baisse. Seules deux entreprises recoivent des subventions directes, il s'agit de l'OTRACO et la REGIDESO; 20 Les entreprises publiques non strategiques ont e soumises au meme regime fiscal que les entreprises privees. Actuellement les EP paient, bien plus regulierement que par le passe, leurs imp6ts et taxes; 30 Les services de comptabilite et d'informatisation ont et redynamises; 40 La rationalisation de la gestion des ressources humaines produit progressivement des effets positifs; 50 la programmation des investissements a moyen terme devient de plus en plus systbmatique de meme que les previsions de tresorerie. Donc la contribution du projet a ete positive et pour ne pas perdre les acquis, il s'avere indispensable de negocier un autre projet. Resultats atteints au niveau de la partie B, C, D du projet 16. Le premier deboursement est intervenu pour cette partie deux ans apres sa signature. Mais cela n'a pas cause beaucoup d'entorses au bon fonctionnement du projet. Le projet a permis aux Ministeres concernes de disposer des moyens materiels necessaires a l'accomplissement de leurs missions. La realisation des objectif est developpee dans les lignes qui suivent. II convient de souligner que cette evaluation est un peu difficile a cause du manque d'indicateurs de performance. 17. L'objectif de Renforcement des activites d'Wvaluation des projets a la Direction de la Planification a ete atteint. En effet en 1989, une btude sur le renforcement du systeme de Planification a et realisee. Des s6minaires sur la Planification Regionale ont btb organises. Des formations tant a l'btranger qu'a l'intbrieur du pays ont ete organisees pour les cadres du Ministere de la Planification du Dbveloppement et de la Reconstruction. Des outils de planification ont btb mis en place. Bref, l'on remarque aisement que cet objectif a ete suffisamment realis& 18. L'objectif de renforcement du processus de preparation du programme d'investissement public a ete realise. En effet une etude sur les PIP/PDP/PCT a ete rbalisbe et a permis aux cadres des Ministeres 5 concernes par le projet de maitriser le processus de leur preparation. Des cellules PIP/PDP/PCT dans les Ministeres concemrs ont &e mises en place. II reste a generaliser cette action dans tous les Ministeres. 19. Malgre des bourses accordees dans le cadre du projet, on peut dire que l'objectif de formation du personnel du MPDR n'a ete que partiellement atteint du fait que pendant la periode du projet (1987-1995), il y a eu beaucoup de rotation de personnel faisant que les besoins se font sentir m8me aujourd'hui. Bien plus l'absence d'un programme de formation n'a pas favorise la realisation de cet objectif a un taux eleve. 20. L'objectif de Renforcement des moyens de Planification Sectorielle de divers Ministeres de l'Emprunteur a ete atteint par le fait que les Ministeres concernes a savoir ceux de l'agriculture, de l'education, de la Sante, ont leurs outils de programmation a savoir le PIP et le PDP. Des cadres de ces Ministeres ont ete formes au cours d'un seminaire qu'a organise le Ministere de la Planification du Developpement et de la Reconstruction avec le financement du Projet. Preparation, selection et execution d'etudes sectorielles, sous-sectorielles de prefaisabifite, de faisabifite et d'engineering 21. Cette action a souffert d'un manque d'organe charge des etudes. En effet, au d6part le volet 6tudes totalisait un montant de 1.585.000 DTS, soit 26,42% de l'ensemble du credit. Mais peu d'etudes ont ete financees par le projet faute d'organes initiateurs et en raison de la disponibilite de ressources des bailleurs bilateraux ou sous formes de fonds de contrepartie generes par le credit d'ajustement structurel. La creation de la Cellule chargee des Etudes de Projet en 1991 au sein du Ministere de la Planification du D1veloppement et de la Reconstruction (MPDR) a comble le vide et a mis en place des cellules correspondantes dans tous les Ministeres concernes par le projet. La reallocation du credit intervenue en mars 1993 en faveur du SCEP, ce volet n'a pas fonctionne faute de budget. Le montant non transfere servait A payer les etudes deja faites mais non encore payees jusqu'en Juillet 1992. 22. L'objectif de renforcement de l'ISTEEBU a ete atteint , le projet a finance une assistance technique pour l'exploitation et l'analyse de l'enqu8te budget-consommation et des conditions de vie des Menages Ruraux au Burundi. Le service a aussi beneficie d'un appui logistique grAce au projet. 23. L'objectif de " Renforcement du Ministere des Finances "a ete partiellement atteint avec un taux satisfaisant au niveau de la reforme budgetaire et comptable. En effet, au niveau de ce volet on peut noter les resultats positifs suivants: - la reforme de la nomenclature des recettes , dons , des financements et de participations a ete operee et appliquee depuis Janvier 1990; - la nomenclature des depenses de fonctionnement, des services de la dette publique et la centralisation des depenses financees par le budget de fonctionnement ont ete operees depuis janvier 1991; - des 1991, un budget test consolide est lis en place et en 1993 le premier budget unifie et consolide est vote. 24 A c6t6 des ces resultats satisfaisants, on peut citer les insuffisances suivantes: - I'assainissement des finances publiques n'est pas realisee et doit se poursuivre; - I'unicite du budget et de la tresorerie n'a pas ete atteint a 100%; - la programmation financiere n'a pas encore demarre; 25. Dans le cadre du Ministere ayant le travail dans ses attributions, le projet a recrute pour le compte de ce Ministere une assistance technique dans le cadre du Programme de la Reconversion. Les cadres ont 6 beneficie d'une formation en matiere de reconversion professionnelle. Un seminaire sur l'analyse des donnees statistiques a et organise. Le Ministere a aussi beneficie d'un appui logistique de la part du projet. V. PRESTATION DU GOUVERNEMENT: ORGANISATION ET GESTION DU PROJET 26. L'organisation du projet etait sous la responsabilite du Ministre ayant le Plan dans ses attributions. Mais le projet a ete subdivise en deux grandes parties avec deux centres de responsabilite a savoir le Service des Entreprises Publiques ( SCEP ) et la partie B, C, D du Projet constituee par le Ministere ayant le Plan dans ses attributions, le Ministere des Finances et le Ministere ayant le travail dans ses attributions. Cette partie a comme centre de responsabilite le Ministere de la PDR appuye par le Ministere des Finances. En fait, ces deux ministeres cogeraient la partie BCD. 27. La partie A du projet qui est le SCEP a bien marche. Cela est dfu a l'existence d'un programme d'activites et budget annuel, I'utilisation des fonds etait programmee. A ce niveau, il y a lieu de signaler que tout a bien marche. Le SCEP a aussi beneficie d'un appui tant politico - administratif que financier de la part du Gouvernement.et de la Banque Mondiale lors des differentes mission de supervision. 28. La gestion du volet B,C,D souffrait du manque de programmation des activites et des previsions budgetaires. En effet, a la fin de chaque annee, il aurait fallu faire une programmation de l'utilisation des fonds en conformite avec les objectifs du credit et les regles d'emploi des ressources de l'IDA. Cela ne s'est pas fait. Par ailleurs bon nombre des activites du projet ont ete financees sur les fonds de contrepartie g6ner6s par le credit d'ajustement structurel, les ressources du projet devant servir a financer les depenses en devises, d'ou la faiblesse des deboursements jusqu'a la fin de 1992. A partir de mi-1993, les fonds de contrepartie se sont rarefies alors que les ressources du credit avaient e reallouees pour financer l'assistance technique au SCEP et au COTEBU ( conditions de mise en vigueur du CAS III), si bien que le financement des etudes s'est trouve sans ressource au moment oil le service cree pour suivre ce volet proposait une serie d'etudes a realiser. 29. Il semble donc que l'utilisation de ce credit n'ait pas ete bien programmee, en temoignent les faits suivants: - elargissement des volets du projet aux Ministeres initialement non concernes par le projet; - financement des actions initialement non prevues;. - reaffectation des lignes non debours6es au profit des actions pas necessairement profitables, mais consommatrices des fonds. Tout cela montre que le projet a ete execute d'une facon non planifiee et les actions ci-dessus avaient principalement pour objectif l'utilisation rapide des fonds devenu quasi impossible avec la premiere allocation. VI. LES PRESTATIONS DE LA BANOUE MONDIALE 30. Le projet a souffert du manque de" task manager" bien connu et stable. Ceci est demontr6 par les differentes correspondances adressees soit au chef de Division des Pays des Grands Lacs, soit au chef de Deboursement, soit encore au responsable du Burundi, bref on avait l'impression que le projet est place au deuxieme rang par rapport aux autres projets tel le CAS, le projet de developpement du secteur prive. Donc l'encadrement des gestionnaires de la partie B,C,D n'a pas ete optimal dans les premibres annees, les 7 problemes auraient pu trouver des solutions avant que le projet soit classe parmi les projets a problemes. II faut egalement noter que parmi les problemes du projet le faible niveau de deboursement a souvent ete mis en avant par la Banque, alors qu'il fallait mettre en exergue la disponibilite des ressources du Gouvernement qui lui permettait de ne pas recourir au cr6dit pour certaines activites. 31. La situation s'est amelioree avec les faits suivants: - le Representant Resident est devenu le "task Manager" du Projet; - la mise en place de la Cellule des etudes au sein du Ministere de la Planification du Developpement et de la Reconstruction comme organe charge de la gestion du projet et interlocuteur direct des services techniques de la Banque. VII. LECONS ET PERSPECTIVES D'AVENIR 32. A cause d'un manque d'organe competent charge de la gestion du projet, celui -ci n'a pas marche et a ete classe parmi les projets A problemes. En effet, le projet n'etait pas utilise et aucun deboursement n'a ete enregistre durant plusieurs mois et ceci est valable pour la partie B, C et D du projet. 33. Une autre source de probleme fut le manque de programmation de l'utilisation des fonds du projet. Meme les actions qui ont ete financee l'ont souvent ete par les fonds de contrepartie lesquels fonds n'apparaissent nulle part dans le dossier de convention de credit. 34. Les points suivants devraient etre tenus en consideration dans l'avenir: - II faut des relations de travail etroites et regulieres entre le gestionnaire des projets et le task manager comme cela s'est fait les deux dernieres annees du projet. - II faut s'attacher A respecter les dispositions relatives a l'etablissement des programmes et budgets annuels d'activites; - 11 faut un task manager du projet fixe ou limiter sa rotation, et celui-ci doit etre l'intermediaire entre les gestionnaires du projet ou l'administration et les differents departements de la Banque mondiale; cela eviterait de confondre les correspondants. - A la signature des projets, il faut que les parties etablissent ensemble des criteres de performance. Ceci permettrait a la Banque et au Gouvernement d'evaluer les performances du projet A tout moment de maniere objective.; - il faut que les projets d'assistance technique servent d'abord au renforcement des capacites et non la mise en oeuvre du programme d'ajustement structurel. 35. En matiere de gestion du projet, il semble opportun de creer un organe de gestion du projet avec des termes de reference bien precis et des indicateurs de performance preetablis en commun accord entre la Banque et le Gouvernement. 36. Compte tenu des actions en cours au SCEP et des actions de Reconstruction et de relance de l'economie, il est indispensable de negocier le Wime Projet d'Assistance technique ( ATV). Ce nouveau projet est indispensable, les acquis du IVe projet d'assistance technique doivent etre p6rennises et renforces tant au niveau de la reforme des EP qu'au niveau de la reforme budgetaire, comptable et au niveau de la maitrise des instruments de programmation des depenses (PIP/PDP/PCT). IMAGING Report No: 15161 Type: ICR