FOR OFFICIAL USE ONLY Report No: ICR00005361 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON THREE DEVELOPMENT POLICY CREDITS IN THE AMOUNT OF US$75 MILLION (IDA-59360), US$125 MILLION (IDA-61550) AND US$100 MILLION (IDA-63510) TO THE REPUBLIC OF CÔTE D’IVOIRE FOR THE FIRST, SECOND AND THIRD FISCAL MANAGEMENT, EDUCATION, ENERGY, AND COCOA REFORMS DEVELOPMENT POLICY OPERATION September 24, 2021 Macroeconomics, Trade And Investment Global Practice Africa West Region The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) CURRENCY EQUIVALENTS (Exchange Rate Effective June 24, 2021) Currency Unit = CFA Franc CFAF549.50 = US$1 US$1.42887 = SDR 1 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AFD French Development Agency (Agence Française de Développement) AfDB African Development Bank ANRMP National Public Procurement Regulatory Authority (Autorité Nationale de Régulation des Marchés Publics) BCEAO Central Bank of West African States (Banque Centrale des États de l’Afrique de l’Ouest) BNI National Investment Bank (Banque Nationale d’Investissement) BOP Balance of Payments CCC Coffee and Cocoa Council CFAF CFA Franc CIE Côte d’Ivoire Energy (Côte d’Ivoire Énergies) CPF Country Partnership Framework CPI Consumer Price Index DEVF Directorate of Tax Verification (Direction des Vérifications Fiscales) DGD Directorate General of Customs (Direction Générale des Douanes) DGE Directorate of Larger Enterprises (Direction des Grandes Entreprises) DGI Directorate General of Taxes (Direction Générale des Impôts) DPF Development Policy Financing DPO Development Policy Operation DSA Debt Sustainability Analysis ECF Extended Credit Facility ECOWAS Economic Community of West African States EFF Extended Fund Facility EU European Union EUR Euro FCFA West African CFA franc FDI Foreign Direct Investment FIMR Rural Investment Fund (Fonds d’Investissement en Milieu Rural) FY Fiscal Year GDP Gross Domestic Product GER General Enrollment Rate GIDP Governance and Institutional Development Project i The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) GPE Global Partnership for Education GRS Grievance Redress Service HIPC Heavily-Indebted Poor Country ICR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IFRS International Financial Reporting Standards IMF International Monetary Fund IPP Independent Power Producer kWh Kilowatt hour LSMS Living Standards Monitoring Survey (Enquête sur le Niveau de Vie des Ménages) MEF Ministry of Economy and Finance MINEDD Ministry of Environment and Sustainable Development NDP National Development Plan (Plan National de Développement) PDO Program Development Objectives PEFA Public Expenditure and Financial Accountability PEMFAR Public Expenditure Management and Financial Accountability Review PER Public Expenditure Review PFM Public Financial Management PPIAF Public-Private Infrastructure Advisory Facility PPM Public Procurement Management PPP Public-Private Partnership PRSC Poverty Reduction Support Credit PVAM Forward Average Sales Program (Programme de Ventes Anticipées à la Moyenne) SCD Systematic Country Diagnostic SDR Special Drawing Rights SOE State-Owned Enterprise SME Small and Mid-Sized Enterprises TA Technical Assistance TSA Treasury Single Account VAT Value-Added Tax WAEMU West African Economic and Monetary Union WBG World Bank Group Regional Vice President: Ousmane Diagana Country Director: Coralie Gevers Regional Director: Abebe Adugna Practice Manager: Theo Thomas Task Team Leader(s): Andrea Coppola, Amina Coulibaly ICR Task Team Leader: Djedje Hermann Yohou ii The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES .................................................... 5 II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES ............................................ 15 III. OTHER OUTCOMES AND IMPACTS ................................................................................ 27 IV. BANK PERFORMANCE ................................................................................................... 28 V. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES .............................................. 31 VI. LESSONS AND NEXT PHASE ........................................................................................... 31 ANNEX 1. RESULTS FRAMEWORK ......................................................................................... 33 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES....... 39 ANNEX 3. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERS’/STAKEHOLDERS’ COMMENTS ............................................................................ 42 ANNEX 4. SECTORS AND THEMES......................................................................................... 43 ANNEX 5. SUPPORTING DOCUMENTS .................................................................................. 47 ANNEX 6. SUPPORTING DOCUMENTS TOC TEST ................................................................... 48 iii The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) DATA SHEET BASIC INFORMATION Program Series Project ID Short Name Full Name CI-DPO on Fiscal managment, Educ. & CI-DPO on Fiscal Management, Education and Energy P158463 Ener Reforms Cote d'Ivoire - Second Fiscal Management, Education, Cote d'Ivoire - Second Fiscal P163284 Energy and Cocoa Reforms Development Policy Management Operation CDI Third Fiscal Management, Education, Energy, and P166388 CIV DPO3 Cocoa Reforms DPF Series Details (USD) Project ID Approved Amount Disbursed Amount P158463 75,000,000.00 72,332,575.00 P163284 125,000,000.00 126,942,330.00 P166388 100,000,000.00 99,066,240.00 Total 300,000,000.00 298,341,145.00 KEY_D PF_OPTI ONS_ TBL P158463 P163284 P166388 Policy-Based Guarantees No No No Ln/Cr/TF IDA-59360 IDA-61550 IDA-63510 Concept Review 04-Oct-2016 26-May-2017 26-Apr-2018 Decision Review 26-Oct-2016 19-Oct-2017 26-Oct-2018 Approval 15-Dec-2016 05-Dec-2017 11-Dec-2018 Effectiveness 22-Dec-2016 19-Dec-2017 20-Dec-2018 Page 1 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Original Closing 30-Jun-2019 30-Jun-2020 30-Jun-2020 Actual Closing 30-Jun-2019 30-Jun-2020 30-Jun-2020 Crisis or Post-Conflict No No No Regular Deferred Drawdown Option No No No Catastrophe Deferred Drawdown Option No No No Sub-National Lending No No No Special Development Policy Lending No No No Organizations Series Project Borrower Implementing Agency P163284 Ministry of Economy and Finance Ministry of Economy and Finance P166388 Ministry of Economy and Finance Ministry of Economy and Finance P158463 Government of Cote d'Ivoire Ministry of Economy and Finance (MEF) Program Development Objective (PDO) Program Development Objective (PDO) (From last operation in the series) The Program Development Objectives (PDOs) are to: - (i) enhance tax revenue collection and public procurement; - (ii) strengthen efficiency and equity in the education sector; - (iii) improve the performance of the electricity sector by enabling private sector participation and diversification; - (iv) consolidate transparency in the management of the cocoa sector. PROGRAM FINANCING DATA (USD) World Bank Administered Financing Approved Amount Actual Disbursed P158463 75,000,000 72,332,575 IDA-59360 P163284 Page 2 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) 125,000,000 126,942,330 IDA-61550 P166388 100,000,000 99,066,240 IDA-63510 Total 300,000,000 298,341,145 RATINGS SUMMARY Program Performance Overall Outcome Relevance of Prior Actions Achievement of Objectives (Efficacy) Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory Bank Performance Moderately Satisfactory ACCOUNTABILITY AND DECISION MAKING At ICR: Regional Vice President Country Director Director Ousmane Diagana Coralie Gevers Abebe Adugna Dadi Practice Manager Task Team Leader(s) Theo David Thomas Andrea Coppola, Amina Coulibaly At Approval: P158463 Regional Vice President Country Director Director Makhtar Diop Pierre Frank Laporte Carlos Felipe Jaramillo Practice Manager Task Team Leader(s) Lars Christian Moller Samba Ba Page 3 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) P163284 Regional Vice President Country Director Director Makhtar Diop Pierre Frank Laporte Carlos Felipe Jaramillo Practice Manager Task Team Leader(s) Lars Christian Moller Jacques Morisset P166388 Regional Vice President Country Director Director Hafez M. H. Ghanem Pierre Frank Laporte Elisabeth Huybens Practice Manager Task Team Leader(s) Lars Christian Moller Andrea Coppola, Amina Coulibaly Page 4 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES A. Context at Appraisal Brief Overview of the Series 1. The Fiscal Management, Education, Energy and Cocoa Reforms (FMEECR) Development Policy Operations (DPF) were originally planned as a two-operation series. The first operation, DPF 1, was approved on December 22, 2016 (US$75 million), and closed June 30, 2018. The second operation, DPF 2, was approved on December 19, 2017 (US$125 million), and closed on June 30, 2020. The third operation was approved on December 20, 2018 (US$100 million), and closed on June 30, 2020. Challenges observed in the cocoa sector led the authorities to initiate a reform program aimed at improving the transparency of the cocoa sector management, so the Bank added a new (fourth) pillar to support an effective cocoa reform program and extended the series of DPOs by supplementing the two initial operations with a third. The Program Development Objectives (PDOs) were to (i) enhance tax revenue collection and public procurement; (ii) strengthen efficiency and equity in the education sector; (iii) improve the performance of the electricity sector by enabling private sector participation and diversification; (iv) consolidate transparency in the management of the cocoa sector. Context 2. Côte d'Ivoire was the largest economy in the WAEMU zone. The country accounted for 38.7 percent of WAEMU GDP and 44 percent of the Union's exports over the 2016-2018 period. Within the WAEMU framework, the country's monetary and exchange rate policies were managed by the Central Bank of West African States (BCEAO), which maintained a parity between the CFA franc and the euro. To support sustainable economic growth and poverty reduction, the region set the fiscal deficit target to 3 percent of GDP to be achieved through an adequate tax level of 20 percent of GDP. But because of low tax collection, well below the regional target, fiscal adjustment was generally achieved by rationalizing public spending. 3. With 40 percent of global production, the country was the world's leading exporter of cocoa for the previous six decades, but it still needs to leverage this key sector to boost shared prosperity. Over 2016-2018, cocoa accounted for about 40 percent of the country's exports, and 18.2 percent of total WAEMU exports and contributed to more than 10 percent of government tax revenues. It involves about one million farmers and provides income to one-fifth of the population (World Bank, 2019). However, low local processing of cocoa beans, low productivity, volatile international prices coupled with multiple dysfunctions in the management of the sector have contributed to limiting the country's ability to derive more benefits from the sector and significantly improve the living standards of farmers. According to a recent Bank study1, more than half of cocoa farmers and their families have lived below the poverty line, and the country reaps only 5-7 percent of the profits generated by the sector worldwide. The sector has been managed through a public- private partnership, but it has undergone multiple institutional and legal reforms that have disrupted its management. The 2011 reform was seen as laying down good principles by guaranteeing farmers a minimum price representing 60 percent of international prices, and stabilized during the same season, and by setting up a transparent institutional framework allowing for consensual management of the sector within the inter-professional body, the Coffee-Cocoa Council (CCC). But the crisis that followed the sharp drop in prices in 2016 showed that implementing the reform remained difficult. 1Cote d'Ivoire Economic Update (Vol. 2) (French). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/277191561741906355/Cote-dIvoire-Economic-Update Page 5 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) 4. The series built upon a period of unprecedented GDP growth with sustainable fiscal as well as external balances. Côte d’Ivoire’s economy recovered well after the 2010 post-elections crisis, though the long-lasting crisis left government capacity dispersed and depleted. The real growth rate averaged 8.5 percent annually between 2012 and 2015. The fiscal deficit averaged 2.4 percent of GDP, declining from 4.1 in 2011 to 2 percent in 2015. Inflation was subdued averaging 1.4 percent, well below the regional target of 3 percent. The current account deficit was also low, averaging 0.5 percent of GDP. The main drivers of economic growth were a combination of recovery of pent-up demand (after a decade of political crisis), a favorable external environment (rising terms of trade and good rainfalls), and solid fiscal and monetary policies. After the 2010 post-elections crisis, the country embarked on a reform program which aimed at generating broad-based and sustainable economic growth with active engagement of development partners. 5. Though economic growth was rapid and poverty declined, approximately 44.4 percent of the population was poor at the end of 2015. Poverty declined by 10.6 percent compared to the highest peak of 2011 during the post-election crisis of 55.0 percent, down to 44.4 percent in 2015. Monetary poverty also declined thanks to an increase in both cocoa and cashew farmgate prices and a rise in minimum wages in the public sector. Still, poverty remained overwhelmingly concentrated in rural areas, accounting for 70 percent of poor households while the country was ranked among the lowest human development countries (171st out of 188) in 2015 by the UN. Inequality and poverty in Côte d’Ivoire have therefore remained critical issues for economic policy. 6. The DPF series was conceived during the launch of the second National Development Plan (2016-20 NDP) by the government. The plan aimed to halve poverty and foster structural transformation. It was organized through five pillars: i) enhancing the quality of governance and institutions; ii) accelerating the development of human capital and social welfare; iii) accelerating the structural transformation of the economy through industrialization; iv) developing infrastructure across the economy, while protecting the environment; and v) strengthening regional integration and international cooperation. Steps included to upgrade the quality of the education and training system and making it inclusive, enhance energy efficiency and infrastructure. Fiscal policy was geared to increasing public investment while ensuring that public debt remains sustainable through better quality public spending and revenue mobilization. 7. However, securing consensus on economic reforms proved challenging over the program’s preparation cycle. The country went through a decade of political turmoil that ended in 2011 with a post-election conflict. President Ouattara, supported by the ruling coalition parties, was largely re-elected for a second term in a peaceful presidential election in 2015. The political climate subsequently improved markedly, but some social tensions, mostly a legacy of the crisis, continued to weigh on the political economy agenda, forcing the government to sometimes revamp the pace of its reforms. In 2016, citizens protested an increase in electricity tariffs, which was intended to improve the sector's financial situation after a legacy of unpaid bills in the central-north-western regions of the country during the decade of crisis. The government reversed course. In 2017, soldiers mutinied twice, in January and May, to demand bonuses payment for their alleged role during the post-election crisis. The government conceded to their demand to restore calm, which cost about 0.6 percent of GDP. Civil servants also went on strike in the same year to demand higher pensions and social benefits and salary arrears of about 1 percent of GDP. While the government rejected the alleged wage arrears, it agreed to pay higher pensions and social benefits, phased in over 2017 and 2018, at a cost of about 0.1 percent of GDP per year. In 2018, the private sector protested the new tax measures over a lack of dialogue, leading the government to rescind the measures and reconsider the state-private sector framework dialogue. These social pressures led the government to revise the timeline of the fiscal targets of the IMF program, which ended in missed indicative tax revenue targets despite overall satisfactory implementation. Page 6 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Macro Framework at the Time of Appraisal 8. Côte d’Ivoire’s macroeconomic policy framework for 2016‐2018 provided an adequate basis for the DPF series. Côte d’Ivoire emerged from a period of extreme economic instability and continued to achieve strong economic growth of about 7.2 percent annually in real terms. Côte d’Ivoire’s monetary and exchange rate policies were well-managed at the regional level by the Central Bank of West African States (BCEAO) which contributed to monetary stability. Although risks in the volatile external environment and the narrowing of fiscal space in recent years were concerns, the Government responded to changing circumstances while continuing to make tangible progress with its long‐term structural reform agenda. Cote d’Ivoire conducted a GDP rebasing exercise in early 2020 (with support from AFRITAC) and released new data for 2015-2019 reflecting slightly lower growth rates and a higher GDP level (see Table below).2 9. The WBG and the IMF collaborated closely in Côte d’Ivoire, notably in coordinating national budget support operations with IMF programs, as well as regular collaboration on the joint Debt Sustainability Analyses (DSA) . The country successfully completed a three‐ year program supported by the IMF through the Extended Facility Credit. The eighth and final review under the Extended Credit Facility (ECF) arrangement was completed on December 9, 2015. The Ivoirian authorities requested an IMF arrangement to support the 2016‐2020 National Development Plan and a new three‐year arrangement under the Extended Credit and Extended Fund Facilities (ECF and EFF) was approved by the IMF Board on December 12, 2016 and closed in December 2020 (after a one-year extension). This program included (inter alia) measures to promote transparency and accountability (including more data and reports on SOEs, and improving fiscal tables), with performance criteria balancing fiscal and debt sustainability with targets on government tax revenue and floors on pro-poor expenditure and the primary basic fiscal balance. The IMF also supported fiscal sustainability by encouraging the registration of enterprise taxpayers with a unique number (STIN) – a measure directly complementing the World Bank’s DPF series. Table 1: Selected Economic Indicators 2016-2021 2015 2016 2017 2018 2019 2020 (e) 2021 (p) Real Economy Percentage change Real GDP 8.8 7.2 7.4 6.9 6.2 2.0 6.2 Private Consumption 13.7 11.1 7.3 8 6 1.9 3 Gross Fixed Investment 14.6 3.2 5.8 18.7 5.5 12.2 14.7 Exports 6.9 -6.8 10 5.6 5.7 -1.3 9.5 Imports 15.9 0.5 11.2 2.2 4.4 8.8 17.0 Prices Percentage change GDP Deflator 42.5 -2.1 -1.8 0.6 0.2 0.9 25.7 CPI Inflation (% change average) 1.2 0.7 0.7 0.4 0.8 2.4 2.9 Fiscal Percent of GDP Total Revenues and Grants 14.5 14.7 15.1 14.8 15.2 15.0 14.8 Tax revenues 12.3 12.8 12.2 12 12.3 12.3 12.4 Expenditures 16.5 17.6 18.4 17.7 17.3 20.5 20.5 2This entailed changing the base year for national accounts from 1996 to 2015, and revising deflators and growth rates downward. Page 7 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Of which wages 4.9 4.9 5 5 5 5.2 5.1 Of which interest 1.1 1.3 1.3 1.3 1.5 1.9 1.6 General Government Balance -2 -2.9 -3.3 -2.9 -2.3 -5.6 -5.6 Primary Balance, LCU -0.9 -1.7 -2.1 -1.6 -1.6 -4.2 -5.0 General Government Debt 29.2 35.6 36.8 40.2 41.2 51.3 49.4 of which External Debt 16.6 21.4 22.6 27.8 29.9 33.5 30.7 of which Domestic Debt 12.6 14.3 14.3 12.4 11.3 17.7 18.7 Selected Monetary and Financial Base Money (% change) 19.1 10.1 8.8 14.3 5.5 3.1 36.8 Current Account Balance (% GDP) -0.3 -0.9 -2 -3.5 -2.7 -3.8 -4.4 Net Foreign Direct Investment (% GDP) 1 1.3 1.4 1.2 1 0.2 1.3 Terms of Trade (% change) 2.3 7.3 -0.6 -11.3 7.4 36.0 -0.5 Memorandum items GDP nominal in LCU (billions) 27,086 28,424 29,955 32,222 34,299 35,311 47,143 GDP nominal in US$ (millions) 45,796 47,932 51,558 58,058 58,583 60,333 80,546 GDP per capita (real USD) 1,972 2,0120 2,110 2,316 2,278 2,287 2,972 Source: World Bank, International Monetary Fund and Ivorian authorities Sector Context3 Tax revenue collection and public procurement 10. The level of domestic revenue was low in Côte d’Ivoire with total tax collection at 12.3 percent of GDP in 2015, well below the WAEMU target of 20 percent of GDP. Though this relatively low tax-to-GDP ratio is exacerbated by the recent rebasing of GDP, neither did the pre-basing levels approach the regional target with total tax collection at 15.9 percent in 2015.4 Performance was especially weak in the collection of Value Added Tax (VAT), which represented only 2.5 percent of GDP in 2015 (collected by DGI and DGD together, post rebasing), compared to 5.9 percent in Senegal. Value‐added tax (VAT) accounted for one fifth of domestic tax revenues in 2015. Several factors help explain low tax revenue collection. This includes: (i) a narrow tax base due to the high share of the informal sector in the economy; (ii) an inefficient tax administration; (iii) a complex tax system with multiple exemptions; (iv) an unbalanced tax structure; and (v) tax evasion and fraud. To increase revenues, the government initiated several reforms in revenue administration and tax policy. However, the still-fragile socio-political context posed enormous challenges to its implementation’s efforts. In 2018, the government initiated a series of important tax policy measures to boost revenue collection. These measures included the introduction of an excise tax on cosmetic products, money transfers, increases in excise rates on alcoholic and non-alcoholic beverages and tobacco, and a reform of the minimum tax rate for SMEs. These measures 3The cocoa sector was not part of the original series design and its context is therefore presented at the beginning of section two where the contexts for the second and third operations are presented. 4 Cote d’Ivoire conducted a rebasing exercise in early 2020. This entailed changing the base year for its national accounts from 1996 to 2015 and revising GDP deflators and growth rates downward. New data was released for 2015-2018 by the authorities with support from AFRITAC. The rebasing was mostly driven by services, and increased nominal GDP by more than 30 percent over the period in question. As a consequence, several key macroeconomic indicators such as fiscal balance and debt indicators expressed as share of GDP improved while other indicators such as tax revenue and social spending (education and health) as a as a percentage of GDP declined. Page 8 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) sparked strong social discontent, backed by the private sector trade unions over a lack of dialogue, which forced the government to cancel the taxes. 11. A published audit report (2014) revealed challenges for procurement reform. The audit report revealed a reduction in the value of single‐source procurement contracts as a share of total contracts from 37 percent in 2012 to 14 percent in 2014. However, 59.3 percent of public contracts were awarded with several irregularities and 15.3 percent were approved without the required documentation. The high proportion of irregular contracts suggested the need for reform to achieve greater efficiency and transparency of the country’s procurement system. Efficiency and equity in the education sector 12. The Education Sector Public Expenditure Review (PER) showed a high level of disparity across regions and genders, limited learning outcomes, and low levels of value for money. The quantitative efficiency index of the education system in Côte d’Ivoire ranked among the lowest in sub‐Saharan Africa, with 1 percent of national GDP spent on education producing 1.55 years of schooling in Côte d’Ivoire against an average of more than 2 years in Africa.5 The completion rates for primary education (63 percent) and secondary education (33 percent) were lower than those observed in the rest of the region (on average 72 and 46 percent, respectively). Learning outcomes indicated a low level of student learning achievement, as shown by the national evaluation conducted in 2012 for third grade, with 87 percent of students having a low or very low level in language arts and 73 percent in mathematics. 13. Enrollments in upper secondary as well as in higher education saw little progress in reducing gender inequality during 2012-2015. For example, at the upper secondary level, the gap between male and female enrollment remained the same at 16 percentage points. At the higher education level, overall general enrolment rate (GER) remained low for both males (10 percent) and females (7 percent). The urban‐rural gap in access to education also persisted in 2015 and in fact worsened for post‐ primary levels. While the access rates increased in urban areas at all levels of education, rural GERs remained comparatively low. Moreover, the gap at lower and upper secondary levels worsened over the same period, with GERs in rural areas dropping from 28 to 11 percent and from 12 to 5 percent, respectively. 14. Access to higher education in rural areas remained very low at 0.4 percent compared to 14 percent in urban areas. Similar findings are also observed across geographic regions (with the North, Center, and West regions most affected) as well as income groups. There remain important sources of inefficiencies within the system, in particular dropout and grade repetition rates. Dropout rates are high at the lower and upper secondary levels (3.7 percent and 6.7 percent, respectively) but are significantly higher for students in rural areas (7.7 percent in lower secondary and 16.2 percent in upper secondary) and among female students (4.3 percent in lower secondary and 9.2 percent in upper secondary). In addition to these inefficiencies, Côte d’Ivoire had repetition rates that were high at all grade levels (15.9 percent in primary, 13.5 percent in lower secondary, and 14.1 percent in upper secondary education). Performance of the electricity sector 15. Financial sustainability was the most urgent challenge facing the electricity sector. CI‐ENERGIES, the SOE operating in this sector, experienced financial shortfalls exceeding CFAF 100 billion (US$200 million) in 2011 and 2012, equivalent to 0.7 percent of GDP, and CFAF 85 billion (US$170 million) in 2013, equivalent to 0.5 percent of GDP. The 2014 deficit 5 World Bank (2017): LE DÉFI DES COMPÉTENCES Pourquoi la Côte d’Ivoire doit réformer son système éducatif ? https://documents1.worldbank.org/curated/en/489601485265757400/pdf/112243-WP-FRENCH- PUBLIC-Cote-dIvoire-4th-economic-update-feb2017-ligth.pdf. Page 9 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) fell to CFAF 55 billion then to CFAF 39.9 billion in 2015 and was expected to further decline in 2016 to about CFAF 5‐10 billion. However, continued weak performance led to a rapid accumulation of arrears to independent power producers (IPPs) and gas suppliers as well as short-term debt to commercial banks that approached US$400 million by the beginning of the series. A failed tariff reform that was reversed just prior to the DPF series was a significant contributing factor to this decline in financial performance. 16. The access rate to electricity was close to 75 percent in urban areas, but below 30 percent in rural areas. The Government focused on improving the performance of this sector by consolidating its financial position over time and increasing the provision of electricity through private sector participation and an improved mix of energy sources. Côte d’Ivoire relied on a combination of imported oil and domestically produced natural gas and hydropower. Increasing domestic demand and a lack of investment in generating capacity led to a gradual shift toward more expensive hydrocarbon fuel. Côte d’Ivoire was an exporter of power to the region but faced a lack of generating capacity and rising fuel costs. Imports of liquefied natural gas (LNG) were predicted by 2021‐2022 to provide fuel for new thermal plants. The Government was in the process of negotiating with a private partner to build an LNG import terminal in Abidjan. In the meantime, the Government secured a deal to increase the volume of gas supply from Foxtrot International to be able to expand the generation capacity of the two IPPs, namely CIPREL and AZITO in 2018 and 2019. The Government also sought to incentivize private sector participation in renewable energy, including biomass (using cocoa by-products) and hydropower, and was working on a set of incentives for IPPs. Long‐term objectives set in the country’s energy policy included an increase in the share of renewable energy in the national energy mix from 1 percent in 2015 to 16 percent in 2030. The country also aimed to diversify energy production sources from 80 percent fossil fuel and 20 percent renewable energy in 2015 to 34 percent renewable energy by 2020, and 42 percent renewable energy in 2030, but there was no clear roadmap to achieve targets. Rationale for WBG Support The programmatic DPF series was an integral part of the WBG’s support to Côte d’Ivoire under the IDA /IFC/MIGA Country Partnership Framework (CPF) for the period FY16-FY19 (Report No. 96515). The DPF series was also closely aligned with the 2016‐2020 National Development Plan. The CPF, endorsed by the Bank’s Executive Board on September 29, 2015, consisted of three Focus Areas of engagement: (i) accelerating sustainable private-sector-led growth; (ii) building human capital for economic development and social cohesion; and (iii) strengthening public financial management and accountability. The DPF series was a major contributor to the second and third Focus Areas through the strengthening of revenue collection and improvements to public resource management, particularly increasing efficiency in public spending on education. The Performance and Learning Review of the CPF for Côte d’Ivoire confirmed the relevance of the DPF series to support the Government in its efforts to boost revenue mobilization and to improve the efficiency of public spending. By supporting the country’s strategy to facilitate diversification of the power sector and adoption of renewable energy, the series helped fulfill the IDA Policy Commitment to ‘Increase the use of DPFs that support climate CoBenefits’. This selectivity was based on the combination of the Government’s priorities, the findings of the 2015 Systematic Country Diagnostic (SCD) and other analytical work. 17. The rationale for WBG involvement in this DPF series included the direct complementarity with other WBG investment financing operations (IPFs) and Technical Assistance (TA) projects in Côte d’Ivoire. Reforms under Pillar 1 (tax revenue collection and public procurement) were closely linked to activities supported by the Governance and Institutional Development Project (GIDP - P107355). The GIDP aimed at enhancing transparency and efficiency in the management of the public finances. The WBG also provided TA to support the implementation of the Public Financial Management (PFM) action plan. Moreover, a Governance and Service Delivery operation (P164302) was under Page 10 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) preparation to support the strengthening of the public procurement system (implementation is still ongoing). A regional tax study (covering also Cote d’Ivoire-P163693) was under way (completed in 2019) and provided analytical inputs to the first pillar for the third operation of the series. Objectives under Pillar 2 (strengthen efficiency and equity in education) were aligned with the Emergency Basic Education Support project (P119328), which provided direct support for restoring and increasing access to basic education, thus contributing to greater inclusion. The series was also aligned with the Global Partnership for Education project to support the Ministry of Education to carry out students learning assessments in reading and mathematics. Reforms under the energy pillar were aligned with: (i) the Electricity Transmission and Access Project (P157055), to improve the efficiency and reliability of electricity supply, thus reducing losses, and increase access to electricity in Cote d’Ivoire; and (ii) the CI-ENERGIES Guarantee Project (P164145), which provided an IDA partial credit guarantee to backstop the refinancing by commercial banks of CI-ENERGIES’ short term liabilities to improve the electricity sector’s financial performance and its ability to attract investments. Reforms under Pillar 4 (cocoa sector reform) were complementary to the Agriculture Sector Support Project (P119308), which (inter alia) supported capacity building of farmers, associations and the Conseil Café Cacao (CCC) to strengthen cocoa production. Original Program Development Objective(s) (PDO) (as approved) 18. The Program Development Objectives (PDOs) were to support the Government’s ability to: (i) strengthen tax collection and efficiency; (ii) improve accountability and targeting in education spending and; (iii) improve the management of fiscal risk stemming from the electricity sector and from Public and Private Partnerships (PPP). Original Policy Areas/Pillars Supported by the Program (as approved) The original series supported the Government’s reforms in the areas of fiscal management, education and electricity, and was organized around three pillars: 20. Pillar 1: Enhancing tax revenue collection and public procurement. This pillar addressed the Government’s priority to increase domestic revenue in order to finance its infrastructure and social sectors programs and to maintain public debt at a manageable level. The efficiency of public spending also had to be improved, especially complex and non‐ transparent procurement procedures that led to unnecessary delays and costs. To broaden the tax base, the program aimed to improve the identification and monitoring of potential taxpayers operating in the informal sector, which comprised a significant portion of the economy, through surveys and setting up of a single taxpayer identification system. This measure would lead to the necessary first step of identifying who should pay taxes and was expected to reduce tax evasion through the exchange of information across different public administration agencies. In addition, a tax amnesty to small and medium enterprises was offered to encourage taxpayers to register and pay taxes in the future (beginning in January 2016). 21. The series also aimed to improve public procurement by supporting government’s efforts to operationalize: (i) public procurement units in four key sectoral ministries and (ii) a Monitoring and Evaluation unit within the Ministry of Economy and Finance. The second operation of the series intended to strengthen the public procurement system through the implementation of an electronic system for public procurement, which was expected to reduce delays in the procurement of public goods and services and increase efficiency in public resource management. The results indicator of number of days to complete a procurement was key because reducing delays meant less time for tampering with the procurement process. 22. Pillar 2: Strengthening the efficiency and equity in the education sector . Education outcomes lagged in Côte d’Ivoire compared to regional peers. International experience showed that improving the efficiency and equity of the Page 11 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) national education system is a prerequisite to skill development and ultimately job creation for the fast-growing young population. The series contributed to improved efficiency of the education system through reforms to reduce repetition rates (i.e. requiring a student to repeat a grade when only partial remediation was needed, which is closely associated with high dropout rates), including eliminating repetition within the three sub‐cycles (Grades 1 & 2; Grades 3 & 4; and Grades 5 & 6). At the end of each sub‐cycle children were to be evaluated before their promotion to the next sub‐cycle. This sub-cycle approach would allow the identification of problem areas where children are having difficulties to better remediate them. Another priority area for reform was to better target transfers to the poorest students which would include taking into account the socioeconomic situation of students to ensure that the per‐ student subsidy for enrollment in private schools covers the total cost of such enrollment. It was necessary to involve private schools because there were not enough public schools to meet demand. The series intended to achieve this objective through a pilot cash transfer (voucher) system. The social inclusion benefits of education reforms were needed in Cote d’Ivoire, particularly in view of the context of its high growth and high inequality history. 23. The series also supported the recruitment of teachers at the regional level in order to reduce regional disparities in the supply of public education and increase opportunities for education in underserved regions and other key measures to improve efficiency. The reforms included systematic measurement of educational outcomes to improve policy making. The reforms also required that all newly recruited teachers are bivalent, that is, able to teach at least two subject areas, which would effectively double the teaching capacity of teachers. The Ministry of Education would also be supported by the World Bank’s Emergency Basic Education Support Project in the reform measures. 24. Pillar 3: Improving the performance of the electricity sector and enhancing private sector participation . Access to electricity was low in Côte d’Ivoire and the sector had become a fiscal burden. The program aimed to improve sector performance, including through the enhanced participation of the private sector in power generation, especially in renewable energy. Very little investment had taken place, maintenance was neglected, and the State‐owned enterprises (SOEs) operating in the sector were been under financial stress. Finally, access in rural areas, where the vast majority of the poor live, remained relatively low. 25. Therefore, the DPF series supported the participation of the private sector and the use of the most appropriate energy mix, including renewable energy. The program supported a number of government initiatives6 in this regard including: (i) establishing a framework of incentives for promoting renewables, especially for independent power producers (IPPs) and auto‐producers; (ii) setting a methodology and principles for determining tariff structures for electricity sales. Specifically, the series supported the adoption of regulations implementing these regulatory changes. The Government also needed to rationalize the number of IPPs as the 94 projects that were in the pipeline, if all enacted, would have created contingent liabilities of about US$25 billion, equivalent to 75 percent of Côte d’Ivoire’s GDP in 2015. The program supported the Government commitment to rationalizing the list of PPP projects in the pipeline, implementing its least‐cost development plan, and establishing a mechanism for updating that plan on a regular basis, through reforms to ensure competitive selection of IPPs. In addition, as part of this strategy, the program supported setting up the regulations outlining tariffs for future IPPs as this will reduce uncertainty for future private investors. 6Electricity Bill approved in March 2014 was the starting point by permitting the unbundling of system operations and bringing Côte d’Ivoire’s legislation into conformity with the Economic Community of West African States (ECOWAS) Energy Protocol. Page 12 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) These pillars incorporate lessons from previous budget support operations in Côte d’Ivoire by focusing on critical drivers of change, in particular, the provision of energy, education, and the effectiveness of fiscal policy B. Significant Changes During Implementation Updated Context for DPF 2 26. As an FCV country at the start of DPF 2, the context for the program was fluid, although Côte d’Ivoire’s economic performance remained relatively strong by both historical and regional standards. Strong growth was achieved despite the impact of a series of domestic and external shocks. At the time of DPF 2, growth was forecast to reach 7.6 percent and 7.2 in 2017 and 2018, respectively, somewhat lower than previous years, but still one of the fastest growing economies in Sub-Saharan Africa. The main drivers continued to be agriculture - due to good weather and government support - the rapid expansion of communication, transport, finance services, as well as construction activity supported by an ambitious public investment program. Yet, the external environment was less favorable after early 2016 with the gradual decline of the cocoa prices on the international market and the tightening of monetary policy by the Central Bank of West African States (BCEAO), which made it more difficult for the Government to borrow on the regional market. The drop in cocoa prices and the defaulting of cocoa contracts pushed the need for transparency reform measures in the sector to the forefront. Increased spending for the military forces as well as civil servants led to unexpected strain on government finances. These two categories of shocks led to a readjustment of the program agreed with the International Monetary Fund (IMF) in December 2016. The FCV context, it should be noted, was not based on weak implementation capacity, but rather political instability during the program implementation. Revised Program Development Objectives (PDOs) 27. The PDO was revised during DPF 2 including wording changes to improve accuracy of the PDOs’ links to the prior actions and the addition of reforms to the cocoa sector. The new PDO for DPF 2 was to: (i) enhance tax revenue collection and public procurement; (ii) strengthen efficiency and equity in the education sector; (iii) improve the performance of the electricity sector by enabling private sector participation and diversification; (iv) consolidate transparency in the management of the cocoa sector. The PDO was not revised for the third operation in the series Revised Policy Areas/Pillars supported by the Program 28. Adjustments were made to the policy areas to allow more time for implementation, as well as to strengthen certain policy actions and to add a policy area to the reform program. One major adjustment was to include reforms in the cocoa sector, which accounted for about one-third of the country’s exports and employed 600,000 households. Cocoa became the fourth pillar in the DPF series. The decline of the cocoa prices on international markets by about 35 percent between 2016 and 2017 severely impacted cocoa farmers and exposed several weaknesses in the management of this strategic sector. These developments motivated the Government to ask for WBG support. The design of the existing legal and institutional framework was an integral element of the Heavily-Indebted Poor Country (HIPC) completion program and of the previous DPF series. Adding the new pillar was therefore an opportunity for the WBG to help the authorities to ensure that this framework is adequately implemented and followed the principles of good governance. The specific reforms under the new pillar, namely audits of the sector, had been part of the country dialogue for some time under the previous Poverty Reduction Support Credit (PRSC) series, but had been too politically challenging to move forward. Page 13 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) 29. The second adjustment was the addition of a third operation to broaden the series’ scope and ensure that all reforms were sustainably implemented over time. The initial timeframe of two operations was too short given the scope and magnitude of all the reforms embedded in the DPF series, particularly in an FCV context and also given the addition of the fourth pillar. By adding one more operation, new reforms could be included to assist the authorities further in their effort to implement key policy actions in mobilizing domestic resources (such as the reduction of tax exemptions), in increasing the efficiency and the quality of the education sector (by increasing the teaching time toward targeted poor performing students), and in restoring the financial viability of the energy sector (by ensuring the payment of all arrears). Adding a third operation increased the probability of achieving expected results by consolidating the reforms in strategic sectors such as energy and cocoa, which proved to be difficult areas that faced resistance from vested interests. Other Changes 30. There were a number of trigger changes as the prior actions were finalized for subsequent operations. These changes are detailed in the next section in the context of the ex-ante assessment of relevance of prior actions. Page 14 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES Summary of Results Indicators, Targets and Actuals at Program Close7 Pillar 1 – Enhancing tax revenue collection and public procurement Indicator 1: Percentage of new firms provided with a unique electronic identification number. DPF 3 Baseline (2015): 0% Target (2019): 90% Actual: 100% (16,786 firms) Achieved Indicator 2: Percentage of enterprises (with turnover greater than CFAF 200 million) using the electronic platform to declare and pay their taxes. DPF 3 Baseline (2015): 0. Target (2019): 75 percent. Actual: 72.8%-Almost Achieved Indicator 3: Decline in revenue losses associated with exemptions DPF (2 &) 3 Baseline (2015): 2.1 percent of GDP Target (2019): 1.9 percent of GDP Baseline revised for 2016 was 1.6%. Target also revised upward from 1.7% (less ambitious) Actual: 1.5% in 2019 – Not achieved (improvement 0.1% rather than 0.2% targeted). Indicator 4: Number of days on average to complete a public procurement from the preparation of tenders to approval. DPF (1, 2 &) 3 Baseline (2015): 159 days. Target (2019): less than 100 days Target reduced from 120 days (i.e., more ambitious) Actual: 95.4 days (2019), 94.7 days (2020) Achieved (both original and revised) Note: e-procurement was implemented in 25 ministries through 2019. 7 The full prior action and trigger matrix, along with program results indicators that were not in DPF 3 is provided in Annex 6. The ICR makes assessments based on the DPF 3 indicators in Table 2 and the full set of DPF 1-3 indicators in Annex 6 which have been fully validated. Page 15 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Pillar 2 – Strengthening the efficiency and equity in the education sector Indicator 5: Reduction in the repetition rate in primary school. DPF (1, 2 &) 3 Baseline (2015): 15.6 percent Target (2019): less than 10.5 percent Target changed from less than 10% in DPF 3 (less ambitious) Actual: 9.5% (2020)-Achieved (both original and revised targets) Indicator 6: Number of new teachers recruited primary schools with the ratio of students/teacher above the national average 8. DPF (2 &) 3 Baseline (2015): not applicable Target (2019): 5,000 Actual (2019): 9,898 Achieved. Indicator 7: Increase in the completion rate in lower secondary, of children from families in the poorest families. DPF (1, 2 &) 3 Baseline in 2015: Boys 25 percent Girls 13 percent Target in 2018: Boys 33 percent Girls 22 percent Revisions: Completion rate in lower secondary education-DPF 3, “poorest families” deleted. Baseline (2015): Boys-47 percent, girls-35.2 percent Target (2019): Boys: more than 60 percent; Girls: more than 49.5 percent. Actuals: Boys (2019-2020): 63.6 percent-Achieved Girls (2019-2020): 57.2 percent-Achieved Note: Completion targets were increased, but do not apply only to “poorest families.” 8 The authorities prefer to refer to classrooms than schools arguing having data and policies with a focus only on classroom. Ratio of students to teacher above 50 is considered above the national average and regarded as crowded classrooms. Page 16 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Pillar 3 - Improving the performance of the electricity sector by enabling private sector participation and diversification Indicator 8: Reduced commercial and technical losses on an annual basis. DPF (1, 2 &) 3 Baseline (2015): 22 percent Progress (2017): less than 20 percent Target (2019): less than 20 percent Actual: 16.92 (2019) - Achieved Indicator 9: Improvement in the collection rate of electricity bills paid by domestic customers. DPF (2 &) 3 Baseline (2016): 85 percent Progress (2017): 98 percent Target (2019): 95 percent Actual: 97 percent - Achieved Indicator 10: Reduction of all arrears accumulated by the public sector on its electricity bills. DPF (2 &) 3 Baseline (2016) CFAF 80 billion Progress (2017): CFAF 32 billion Target (2019): CFAF 20 billion or less. Target revised upward from CFAF10 billion (less ambitious) Actual: CFAF9.9 billion (2019) – Achieved Pillar 4 : Consolidating transparency in the management of the cocoa sector. Indicator 11: Reduction in the proportion of defaulted contracts by buyers/exporters in total production. DPF (2 &) 3 Baseline (2017): 15 percent Target (2019): <5 percent No change Actual: 0% - Achieved Page 17 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) A. Relevance of Prior Actions Rating: Satisfactory 31. The DPF series PDO was relevant to country priorities, and the prior actions of the program, in turn, were relevant to the PDO. An ex-ante assessment of the relevance of the prior actions is presented by reform area. The trigger changes are also discussed in this section to show how the program adjusted to the evolving context for the program. In general, these trigger changes, which were considerable in number during the course of the series, were required to maintain program relevance under changing conditions. Under DPF 1 there were eight triggers to DPF 2 Actions. For DPF 2 there were 10 triggers to DPF 3 actions. Pillar I: Enhance tax revenue collection and public procurement 32. The prior actions were relevant to enhancing tax revenue collection through broadening the tax base and eliminating economically unjustified tax exemptions. The prior actions centered on identifying taxpayers by establishing a taxpayer database, reconciling databases with other agencies, and further facilitating tax compliance with e-payment which were essential to enhancing tax revenue. In addition, prior actions required elimination of some tax exemptions. Specifically, in DPF 2, the Government opted to eliminate VAT tax exemptions on certain products. The action to implement an electronic single taxpayer identification system was shifted to the third operation (end-2017), because the authorities’ timetable was slightly too late to be incorporated into DPF 2. Improving revenue mobilization and procurement were especially relevant to an FCV country like CIV. 33. Procurement measures were highly relevant to improved PFM, but were also highly sensitive. The key measure of instituting e-procurement, first as a pilot and then throughout the government was directly relevant to enhancing procurement performance because it created a more transparent and better controlled procurement process. Political realities required a scaling down of the original full government rollout to one that covered 10 ministries by the end of DPF 3. 34. In maintaining relevance over the course of the program the program strengthened some actions but also had to adopt a slower pace for e-procurement rollout. In DPF 3, Trigger 3’s formulation was changed to: a) ensure the new e-procurement system is operational and provided with legal force; b) ensure that the country’s public procurement system can rely on a fully operational National Authority for the Regulation of Public Procurement; c) reflect that the electronic system has been extended to 10 Ministries. Because of the political resistance to the increase in transparency, the expansion of e-procurement units was more gradual beginning with five ministries and increasing to 10 by the end of the series. Pillar 2: Strengthen efficiency and equity in the education sector 35. The prior actions were highly relevant to the PDO of strengthening efficiency and equity by addressing key priorities. These priorities included the high repetition rate in primary schools, the need to better serve rural schools, improvements in measuring education outcomes and helping poor households have better access to lower secondary schools. Other key priorities that the actions addressed included low completion rates in lower secondary schools, particularly for girls, and overall low outcomes despite high spending. Page 18 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) 36. To adjust to the changing circumstances for the second and third operations, triggers were revised. For example, Trigger 6, was related to the pilot voucher system for poorer students, but was postponed from the second to the third operation, and then dropped. This measure proved to be highly sensitive politically because of additional transparency requirements for funding tuition in private schools and required substantial preparatory work on targeting and distribution as well as monitoring mechanisms. Another adjustment was to DPF 3—Trigger 4 which clarified that all new teachers in lower secondary schools (including also colleges de proximite) must be bivalent teachers.9 These changes maintained relevance of the education reforms given the changing context for the program. Pillar 3: Improve the performance of the electricity sector by enabling private sector participation and diversification 37. The actions of the program were focused on reducing arrears and technical losses in the sector that would improve the environment for IPPs (private sector participation) and get the sector on a sound financial footing. This approach was highly relevant to the PDO. DPF 2 prior action 8 spelled out in detail which arrears were owed to which entities and what the rules were for current and future payments. This action was particularly relevant to private operators who suffered late or lack of payment on a chronic basis. DPF 3 prior action 6 followed up to ensure implementation of the arrears plan. Another key element in improving the performance of the electricity sector was support to reschedule CI-ENERGIES short-term, high- cost commercial debt. This effort was aided by the WBG’s provision of an IDA guarantee instrument to enhance CI-Energies’ ability to attract long-term commercial debt financing, and accompanied by further private sector investments into the energy sector. The IMF’s program also included program targets on domestic arrears reductions. While there was also a reform effort to improve tariff setting to a cost recovery level, the actual implementation of such tariffs entailed high risk that it would not be implemented, particularly in light of the failed attempt to sustain tariff increases prior to the series. Other components of the program could achieve improvements in electricity performance (signing a performance contracts) and encourage private sector participation as well, but at lower risk and were more relevant to the country context in terms of feasibility of implementation. 38. Revisions to the program triggers were necessary in several instances to allow more time for implementation, reflect realities of the sector, and increase the likelihood of a successful outcome. For example, tariffs could not be set for specific renewable technology types (Trigger 8 DPF 2) because of the rapid changes in these technologies. Instead, the modalities for determining tariffs were defined. The signing of a performance contract with CI Energies (Trigger 7) was postponed to the third operation because the Government was in the process of assessing the overall institutional framework in the electricity sector. With respect to arrears, in DPF 3 (Trigger 7), the third component of the prior action was strengthened to support the overall reduction of SOEs’ arrears. The previous formulation focused only on the five SOEs with an arrears reduction plan and did not capture the arrears’ reduction efforts in the 10 SOEs which did no t formally sign an arrear reduction plan. DPF 3 Trigger 8 was dropped because the manual of accounting procedures for the electricity sector required additional time for authorities to consult with all relevant stakeholders (including commercial banks and IPPs) before adopting the revised manual. Pillar 4: Consolidate transparency in the management of the cocoa sector 9 Bivalent refers to teachers who are qualified to teach at least two subjects. Page 19 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) 39. The cocoa sector reforms were added during DPF 2 and were key to transparency of the sector which had strong implications for cocoa farmers who are among the poorest and most vulnerable population groups in Cote d’Ivoire. The reforms were based mainly on a series of audits of the sector which was the first step to improve governance. These audits were a critical first step in improved sector management in the wake of the steep fall of cocoa prices in 2016. During that crisis, there was concern that the cocoa Reserve Fund was not properly used as stipulated in the 2012 cocoa law because of poor management of the CCC. The audits were, therefore, critical in determining exactly what had happened, in particular, PVAM’s performance of its duties. The audits would provide key information on changes that were needed to ensure that cocoa contracts could be upheld, which was essential because 80 percent of cocoa was required to be sold on the forward market. 40. Triggers were revised to ensure better prioritization and sequencing of actions to increase cocoa sector transparency. For example, DPF-3—Trigger 9 was revised to not attempt to adopt and implement all recommendations of the PVAM, but only those of highest priority (based on Government’s priorities and WB technical assessment). DPF 3—Trigger 10-was revised to take into account the longer time needed to finalize the first audit and the broader scope of the second audit supported by the finalized prior action. The prior action was further strengthened through the requirement that the first audit be published. B. Achievement of Objectives (Efficacy) Review of Results Indicators 41. There was a manageable number of results indicators throughout the series (16), some of which were revised. There were eight indicators for DPF 1, of which four continued to be included in the policy matrix through to the final operation of the series, DPF 3. There were 11 indicators total for DPF 2, seven of which carried through to the end of the series. There were 11 indicators for DPF 3. Note that Table 2 does not include the indicators that were dropped before DPF 3. These indicators remained valuable to the assessment of PDO achievement and are presented in Annex 6, Table 1. Relevance of Indicators 42. Results indicators were relevant to both the PDOs and the prior actions, though some supplementary evidence is necessary for evaluation for some prior actions. The indicators took into account attribution for these measures including decline in revenue losses associated with exemptions and number of taxpaying firms and individuals recorded in the government’s taxpayer database. This was an improvement over the previous indicator of the overall increase in VAT revenue, which was less specific and attributable. For procurement, the reduction in single source selections would have been a good indicator to measure impact of the prior actions, however, it was considered too politically sensitive by the government. Instead, the results indicator of reducing delays in completing procurements was used. This indicator captures some of the assessment value of single source reductions because by simply reducing the time to complete procurements there is less time for tampering with the process, i.e., corruption. The education indicators were also relevant in capturing efficiency and equity through improved completion rates in lower secondary schools, lower repetition rates in primary schools and measuring the increase in bi-valent teachers. Electricity sector results indicators focused primarily on financial performance (net income, arrears reduction, Page 20 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) collections rate), but also captured the reduction of technical losses. Results indicators that capture increasing access and/or affordability for consumers were also considered as a measure of performance of the sector, but were judged outside the scope of this operation. The results indicator for the cocoa reform was also relevant because reducing the number of defaulted export contracts is a strong indicator of the improvement in the quality of exporters and the overall export process. Measurability 43. Almost all results indictors were reasonably measurable as evidenced by their availability to the ICR team. One of the education indicators required more effort to measure because the indicator had to be calculated relative to student: teacher ratios of individual schools before it could be aggregated. This indicator was substituted with an indicator of total number of teachers recruited (target 5,000) and was measured.. Indicators for improved tax administration, procurement, electricity and cocoa sector management were all readily measured as part of normal operations of the agencies responsible for the data and implementation of the underlying actions. Feasibility of Targets 44. The indicator targets generally struck the right balance of representing substantial improvements in each reform area, while also being feasible to attain. The education targets, for example, targeted meaningful drops in repetition rates and increases in lower secondary school completion rates. Procurement and electricity indicator targets also captured substantial improvements in performance. Ex post, almost all of the indicator targets were reached. Achievement of PDOs 45. The program took on several highly challenging areas that faced potential resistance because of political obstacles. These areas include in particular: electricity arrears, transparency of management in the cocoa sector, and e-procurement. Increased transparency in tax administration, eliminating tax exemptions and measures to improve the education culture are also potentially transformative. PDO 1: Enhance tax revenue collection and public procurement – Moderately Satisfactory Enhancing Tax Revenue Collection (sub-rating moderately unsatisfactory) 46. The most significant measures in enhancing revenue collection were those that identified taxpayers and leveraged technology for tax compliance. The program theory of change was based on the premise that revenue would be more easily enhanced because reforms to identify tax payers would be successful in assigning unique electronic identification numbers not only to new firms as was envisioned under the series, but to all firms. Currently, 100 percent of the 16,786 newly created firms receive unique electronic ID numbers exceeding the target of 90 percent for new firms only. The percentage of larger (existing) enterprises (turnover greater than CFAF 200 million) using the electronic platform to pay taxes, now compulsory, reached 78.5 percent (59,853 out of 76,213 large enterprises) against a target of 60 percent. For medium firms, 81.8 percent (116,006 out of 141,809) paid taxes online compared with the target of 50 percent. These two accomplishments should lead to improved revenue collection over time. The tax amnesty program (p.a. 2, Page 21 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) DPF 1) was an important success factor in incentivizing companies to register with the Tax Administration (by April 30, 2016). It concerned companies that were no longer paying taxes and whose systematic closure would have had a significant impact given their turnover. It allowed to rearrange their tax payment schedule and ensure a partial recovery of the amounts that would otherwise have been totally lost. The setup of the segmentation mechanism through the creation of four Medium Enterprise Centers (CMEs) enabled a better follow-up and reduced the risk of further amnesties. 47. The measures to eliminate VAT exemptions with inadequate economic rationale initially translated into overall modest gains in VAT revenue, but were later reversed. VAT revenue collected by DGI reached 2.0 percent of the GDP in 2019, in line with the target of 2.0 percent for 2019 compared to the baseline of 1.7 percent (2015)10. This results indicator was replaced in DPF 2 with a more attributable indicator, the decline in revenue losses associated with exemptions. Thus, it was a positive achievement if the indicator decreased. The baseline for this indicator was revised for 2016 and was 1.6 percent of GDP and the actual achieved was 1.5 percent (2019). This improvement was less than the targeted improvement of 0.2 percent of GDP (original baseline of 2.1 percent minus the target of 1.9 percent of GDP by 2019). Thus, the target was not achieved. Of particular concern was that despite the initial progress on exemptions supported by the DPF, the removal of VAT exemptions was reversed, despite the lack of economic justification (although the Fiscal Annex for 2021 achieved some progress in meeting fiscal targets because of additional export taxes). The reasons for this reversal and a description of mitigating measures are presented in section 4 and are captured in Lessons Learned. Overall, the decline in exemption-related tax revenue losses appears to have only modestly contributed to the PDO of enhancing tax revenue and will not be sustained until. Enhancing Procurement (sub-rating-Satisfactory) 48. Important progress was made in e-procurement though it was politically challenging because it aimed at increased transparency, which led to initial targets (triggers) being scaled back . The theory of change maintained that transparency and therefore procurement performance would be furthered by moving to an electronic platform. From DPF2 onward, the electronic procurement system began implementation through a sequencing plan, with the Audit des marches publics, June 2018. The reform helped transition from paper to electronic format, and was planned for all public contracts. E-procurement was implemented in 5 ministries for DPF 2 and was originally intended for all ministries for DPF 3, but then was scaled back to 10 ministries plus some strengthening measures of renewing members of the Board of ANRMP and an Arrête to give legal force to contracts awarded by e-procurement. As a result of these measures, significant improvement was measured in the indicator, number of days on average to complete a public procurement from the preparation to tenders to approval. The actual achieved was 95.4 days in 2019 and a further improvement to 94.7 days in 2020, compared with a revised target of 100 days and a baseline of 159 days. The revised target was more ambitious than the original target (120 days) and the overall improvement in procurement speed was impressive. In addition, by the end of 2019, e-procurement had been implemented in 25 ministries, 15 more than required in DPF 3 and extended to all the ministries by end-2020. PDO 2: Strengthen efficiency and equity in the education sector—Moderately Satisfactory 49. The education pillar of the program made significant progress in repetition rates. The program pursued a rational improvement to reduce repetition rates by creating sub-cycles in primary education. This measure 10 Numbers based on GDP pre rebasing. Post rebasing, VAT collected by DGI improved from 1.2% in 2015 to 1.5% in 2019. Page 22 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) addressed the inefficiency of requiring a student to repeat a grade when only partial remediation was needed, thus improving efficiency.1112 This measure was supported by a reform to improve the measurement of education outcomes at the end of each sub-cycle in primary schools. Unfortunately, the measurement and publication of education outcomes was not sustained, but carried out only for one year, thus limiting the gains of the reform. The reason cited for not continuing the outcomes measurement was the lack of resources. The results target was to reduce the primary repetition rate from 15.6 percent to less than 10.5 percent. The actual achieved was 9.5 percent. The Ministry of Education has expressed that the repetition rate needs to be reduced further to 5 percent and is pursuing additional measures, mainly to improve teacher quality, to achieve this target. 50. The series also supported the equitable assignment of students to lower secondary schools. To achieve better equity, the program supported the establishment of criteria in assigning students (lower secondary) on socio-economic household indicators and teachers (primary schools) in underserved regions. To further support the implementation of this assignment of students, the program had planned to support a voucher system (first a full, then a pilot-see triggers) so that poorer students would not have out of pocket expenses if they were assigned to fee-based private schools. However, that voucher system proved to be too politically difficult during the series. So, while the criteria for student assignment were established, the full effect was reduced because the expenses of poor students were not fully covered. The indicator assigned to the effort to assign students more equitably was the completion rate in lower secondary of children from the poorest families and this indicator was revised to, simply, the completion rate in lower secondary divided by gender. The actual results attained on this score were significant. For boys, the completion rate increased from 47 percent (2015) to 63.6 percent (2019-2020 school year) against a target of >60 percent. For girls, the completion rate increased from 35.2 percent to 57.2 percent during the same period against a target of >49.5 percent. The indicator for the establishment of criteria for teacher redeployment in underserved regions was the number of new teachers recruited in primary schools with a ratio of students/teacher that was above the national average. This indicator is somewhat more difficult to obtain because of the need for individual school student/teacher ratios. The actual results were 5,135 new teachers recruited against a target of 5,000, not accounting for the student/teacher ratio criterion. The Governance and Service Delivery operation (P164302) is supporting further measures, including a student tracking system that will sustain and improve impact of the reforms. 51. The education pillar also made significant progress in improving the efficiency of teachers by requiring bivalent qualifications. The requirement that newly hired teachers had to be competent in at least two basic disciplines, for example, math and physics, history and French, natural science and biology, effectively doubled the supply of teachers, who were underutilized, to lower secondary schools. Fewer teachers were required for the schools and individual teachers could be more fully employed. This measure was achievable with additional teacher training (colleges de proximités). Efficiencies were gained particularly because these colleges de proximités have lower student populations than other, more urban schools. The indicator for completion rate in lower secondary education was also relevant to this reform (whose targets were achieved). 11 A simplified example illustrates. If a child learns to count to 8 by the end of grade but should have learned to count to 10 before moving to second grade, then rather than holding that child back to repeat the entire first grade, she may receive remedial instruction as necessary. 12 Repeating grades impacts the students’ ability to complete each education stage on time, increasing the like lihood of dropping out and delaying the student’s ability to join the labor market and therefore reducing potential lifetime earnings. It also increases costs significantly as the system re‐educates children who occupy school spaces over multiple years, th us crowding out those who would otherwise be there. Page 23 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ICR discussions revealed that the bivalent requirement should be strengthened with continually upgraded teacher training. 52. An important measure to improve both equity and efficiency was the institution of Wednesday morning school. This measure increased the number of school hours for students and gave more time for instruction for those who needed remediation, thus improving equity. This measure was key to addressing the fact that students in CIV were schooled for only 500-600 hours per year, well below the recommended yearly number of hours (roughly 900). 53. The program also aimed to improve the performance of private colleges and made progress in the establishment of criteria to receive government subsidies . The criteria were established to assess the performance of private colleges on which government subsidies to the colleges could be based. This reform measure was important to ensuring accurate policy making, in particular the allocation of subsidies. 54. Though the PDO of improved efficiency and equity in education could be partially be achieved, weaknesses lower the rating to moderately satisfactory. These weaknesses include the failure of vouchers to cover the costs of the poor for lower secondary education, the lack of sustainability of measuring and publishing education outcomes at the end of the sub-cycles in primary school, and the quality of teacher training to ensure success of bivalent teachers. It should be noted that teacher accountability tends to be weak in CIV and with strong unions, wages are relatively high compared with other countries’ teachers and strikes are common, all of which hamper efforts to improve education quality. PDO 3: Improve the performance of the electricity sector by enabling private sector participation and diversification - Satisfactory 55. The most significant electricity reforms in the series were those to settle arrears to CI-Energies, and to deal with the debt overhang of the sector. Both were essential to the program theory of change because improving the financial performance of the electricity sector was a prerequisite to better electricity service delivery. Analytical underpinning was key to this reform, particularly the SCD and the diagnostic of cross arrears, which spelled out how much each entity owed to another. DPF 2 prior action 8 was very detailed in terms of settling each party’s obligation, in ensuring the payment of bills, and that arrears would not reappear.13 For example, the Government made a permanent commitment to pay the electricity bills of the city of Abidjan city to CI-ENERGIES. The next operation, DPF 3, through prior action 6, reinforced the commitment by requiring implementation of the payment of electricity bills, not only for the city of Abidjan, but other permanent commitments as well, including those related to SOE obligations. Results include, that payables to the electricity authority were reduced substantially, from approximately six to two months. Particularly difficult was to clear arrears from SOEs and municipalities to CI-ENERGIES. The target for the results indicator for reduction of all arrears accumulated by the public sector on its electricity bills was to reach a level of CFAF10 billion (revised downward from CFAF 20 billion) against a baseline of CFAF80 billion. The result achieved was CFAF 9.9 billion for the target year of 2019, though the amount increased to CFAF12.9 billion in 2020. Thus, the target was met. 56. Another key reform was the use of the WBG guarantee (P164145), which leveraged up to US$600 million to help deal with CI-Energies’ debt overhang. The debt had become unsustainable as it was continuously 13 Note that this prior action dealt with arrears owed to CI-Energies, not CI-Energies’ liabilities/arrears to suppliers. Page 24 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) turned over on a short-term basis with ever increasing rates of interest as the debt level climbed. The IDA guarantee was instrumental in helping CI-ENERGIES restructure its debt at more favorable terms. The reduction in debt service costs was key to the theory of change by freeing up funds for operations. 57. The reforms also achieved the envisaged positive results for CI-Energies’ financial position as reflected in several results indicators. Results indicators give a reasonably clear picture of improvement. Commercial and technical losses (target 2019, <20 percent) were reduced to 16.92 percent (2019) against a baseline of 22 percent. The collection rate of electricity bills paid by domestic customers (target of 95 percent against a baseline of 85 percent) improved to 97 percent for 2019. Thus, financial and technical performance of the electricity sector was improved, consistent with the PDO. 58. The reforms in the electricity sector encouraged private sector participation also through establishing fair rules for private participation and promoting renewables. The program included a decree to promote private sector participation and renewable energy (DPF 1), and to defined modalities for IPP selection and pricing of IPP produced electricity (DPF 2). At the time of the series, there was a large pipeline of IPPs and it was key to ensure competitive selection which these measures supported. Seven PPAs were signed with IPPs, 2 in 2016, 3 in 2018 and 2 in 2019, against a target of 2 PPAs. The PPAs contributed to diversification of the power mix with two of the PPAs based on geothermal energy, one on biomass (using cocoa byproducts), two solar and one hydropower. The IFC was a major partner within the WBG in supporting the IPPs. The program supported measures that could lay the groundwork for cost recovery tariffs (i.e., adopting a methodology), however, the political climate was not conducive to achieving progress on tariff adjustments, especially in the wake of the failed tariff reform that predated the series. PDO 4: Consolidate transparency in the management of the cocoa sector – Moderately Satisfactory 59. The reforms of the management of the cocoa sector responded to severe mismanagement of the sector in the wake of the precipitous drop in cocoa prices, and achieved some success in improving the transparency. Greater transparency was the sine qua non of progress in this sector which is the backbone of the Ivoirian economy. The 2012 reform required that 80 percent of cocoa be sold on the forward market. With the 40 percent drop in international cocoa prices in 2016, it fell upon the reserve fund, which had been built up during good cocoa price years of 2012-15, to compensate farmers for the loss of revenue. This compensation had also been required by the 2012 cocoa reforms. However, this did not happen which was the impetus for incorporating cocoa sector transparency reforms into this DPF series. Chief among the reforms was to conduct audits (required by the 2012 reform) of PVAM-2017 and the Reserve Fund (which had accumulated CFAF 170 billion by 2017). These audits, which included a census of cocoa farmers, most of whom fell below the national poverty line, uncovered major problems with the management of one of the most lucrative sectors of the economy and one which could have major implications for poverty reduction. One of these findings was that only 40 percent, rather than the required 80 percent, of cocoa was being sold on the forward market. As part of prior action 9 of DPF 3, the audit was required to be published to further enhance transparency. The audits would be regular and take place six months after the end of the harvest season. DPF 3 followed up to ensure that additional audits were launched. The results indicator was to reduce the proportion of defaulted contracts by buyers/exporters in total production from 15 percent to less than 5 percent. There are currently no contracts under default, thus the target was achieved. The greater transparency is also evidenced in the dismissal of officials who had committed inappropriate actions including the Managing Director of the CCC. The success of implementing these reforms over political obstacles reflects Page 25 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) government support at the highest (presidential) level. However, the lack of continuing the audits has raised serious concerns about sustainability of this action. Thus, while important progress was made and the results indicator was met, the rating for this PDO is moderately satisfactory. Sustainability of the reforms is detailed in the Risk to Development Outcomes section. 60. Another significant accomplishment of the series which also contributed to the reduction in defaulted contracts was the assessment of financial condition of each cocoa exporter . As a result of this assessment the number of exporters eligible to enter cocoa contracts fell from 60 to 22 after weeding out the financially weaker participants. This measure also reduced the risk of exporters defaulting on contracts because they might not have the staying power to survive a fall in international prices below the strike price. Rating: Moderately Satisfactory 61. Table 3 provides a summary of achievement of PDO indicator targets at program close showing a generally positive picture of PDO achievement. Nine of the 11 end of program indicator targets were fully achieved or exceeded. PDO 1 achieved or almost achieved, three out of four indicator targets, with one policy reversal on VAT exemptions. Efficiency and equity in education achieved all three indicator targets. The electricity sector made good progress in improving diversification, private participation and financial soundness of CI-Energies, achieving its four indicator targets. Progress was made in cocoa sector transparency of management through audits, but evidence that the audits are being conducted on an annual basis is lacking, so, there are sustainability concerns. If the earlier indicators, those not included in the DPF 3 policy matrix, are considered, the performance picture is essentially the same14 with PDO 1 looking somewhat stronger. Table 3: Summary of Results Indicator Target Achievement by PDO at Program Close (DPF 3) PDO Achieved Almost Not Total Achieved Achieved 1. Enhance tax revenue collection and public 2 1 1 4 procurement 2. Strengthen efficiency and equity in the 3 0 0 3 education sector 3. Improve the performance of the electricity 3 0 0 3 sector by enabling private sector participation and diversification 4. Consolidate transparency in the management 1 0 0 1 of the cocoa sector Total 9 1 1 11 C. Overall Outcome Rating and Justification Rating: Moderately Satisfactory The rating of relevance of prior actions is satisfactory, while the efficacy rating is moderately satisfactory 14 A total of 12 indicator targets were met, two almost met, one not met and one indicator was not measured-see Annex 6. Page 26 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) and therefore the overall outcome rating is moderately satisfactory. III. OTHER OUTCOMES AND IMPACTS A. Poverty, Gender and Social Impacts Much of the program was expected to improve equity and reduce poverty, while none of the actions supported were expected to have a significant negative impact on poverty and inclusiveness . On the indirect side, prior actions related to domestic resource mobilization and public procurement improved the Government’s fiscal space and its ability to implement socially beneficial programs. For example, the broadening of the tax base enhanced domestic revenue for this end. Likewise, reforms to the public procurement system represent efficiency gains, which are saved public resources that may ultimately be used for poverty reduction. More direct impacts are achieved by improving the quantity and quality of education services, especially for poorer households, with higher education outcomes the main determinants of long- term economic growth and poverty alleviation. The revision of parameters used to allocate teachers across regions should help reduce the teacher/student ratio in poor regions. The definition of performance criteria should account for the current ranking of schools in rural areas to avoid that they end up under-funded. Reforms under pillar 2 also contribute to correct gender disparities through better fiscal resource allocation in basic and secondary education in order to facilitate girls’ access to social services. 63. Improving the performance of the electricity sector was expected to have a series of positive impacts, both direct and indirect, on poor households. By consolidating the financial situation of the sector, the DPF series should help encourage further investment in generation and distribution capacities. The most visible impact should be an increase in access to electricity, including for the poorest households (only 47 percent of the population had access to electricity in 2015). Improved access would not only contribute to improved living conditions but also boost firms’ productivity, leading to their expansion as well as to higher demand for labor over time. Concurrently, the reduction in Government transfers to the electricity sector (which would have been necessary in the absence of efforts to improve the collection rate) increased budgetary resources that could be allocated to pro-poor expenses. 64. Finally, addressing the weaknesses in the management of the cocoa sector offered several direct and indirect benefits for poor people. The direct benefits are significant for producers, half of which live near the poverty line, as the improved functioning of the PVAM has reduced the rate of defaults by buyers and exporters and the risk that farmers will not be able to sell their harvest. The indirect benefits would mainly arise from the expected increase in government revenue (as the result of less mismanagement) that can be used to finance additional public services and infrastructure or possibly social protection targeted to poor producers. B. Environmental, Forests, and Natural Resource Aspects 65. The reforms supported by the proposed operation did not have significant negative effects on the country’s environment, forests, or other natural resources. The reforms aimed primarily to strengthen economic governance at the national level. Any adverse environmental effects were minor and manageable through the existing country’s framework. Measures aiming to improve PFM did not expected to have any Page 27 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) environmental impact. The cocoa sector faces significant issues of deforestation and child labor. These issues are the subject of the follow on DPF, but were not the subject of this DPF which focused on financial audits of cocoa sector entities and improving the qualifications of exporters. C. Institutional Change/Strengthening Institutional change was achieved in several areas including electricity, procurement and cocoa. The electricity sector was strengthened on a financial basis through reforms instilling a more permanent solution to arrears and debt. This change was a prerequisite for a functioning electricity sector in which all players are properly compensated in a timely fashion. The launch of e-procurement was a major change in achieving transparency and efficiency as evidenced by the reduction in days to conduct a procurement. The transparency introduced through audits in the cocoa sector was a critical first step in improving management in one of the most important sectors of the economy though there is still significant political resistance to further progress in transparency. 67. The series also sought to incorporate a strong element of inclusiveness in the design which was an important need in the Ivoirian context given long years of internal divisions. The WBG SD team had already been preparing an employability and education project and the reforms under the series were an effective complement to that IPF. The series made progress in achieving this inclusiveness through reforms in the education sector. These reforms mainly benefited poorer households. The education sector proved to be a promising sector for addressing inclusiveness and inequality, as evidenced by measured outcomes in the sector. These gains were important in promoting the country objectives of “harmony and consolidation” after a period of prolonged unrest. D. Other Unintended Outcomes and Impacts Not applicable. IV. BANK PERFORMANCE Rating: Moderately Satisfactory WBG Preparation 69. The series benefited from the experience of previous operations and analytical work that covered each reform area. Previous operations include three Poverty Reduction Support Credits (2012-2015). The main analytical backing was from the Systematic Country Diagnostic (2014) and the Education Sector Public Expenditure Review (2016), Table 4. Page 28 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Table 4: Analytical Underpinnings of the Series Pillar and Reform Analytical Underpinnings 1. Enhancing tax revenue collection and public “Evaluation Report on Tax and Administration Reforms under the procurement IMF Technical Assistance (IMF Fiscal Affairs Department, March • Broadened the tax base 2016). • improve processes for awarding public “Diagnostic Study of Governance in Côte d’Ivoire” (January 2013). contracts “Côte d’Ivoire: PEMFAR” (2008 and 2013). • Reduce tax exemptions and improve VAT Western Africa: Benin/Burkina Faso/Cote d'Ivoire/Togo Tax Study administration (P163693) “Côte d’Ivoire: Public Expenditure Review (PER) in the Education 2. Strengthening efficiency and equity in the Sector” (World Bank, 2016). education sector ‘’A Hybrid Approach to Estimating the Efficiency of Public • Improve enrollment rates by improving Spending on Education in Emerging and Developing efficiency. Economies,” IMF, Francesco Grigoli (2014). • improve the efficiency of education 2004 World Development Report (WDR): ‘’Making Service Work spending. for Poor People’’ (World Bank, 2004). 3. Improving the performance of the electricity sector by enabling private sector “Systematic Country Diagnostic – SCD” (2014). participation and diversification • bring the electricity sector back to financial equilibrium-debt and arrears measures “Welfare and Poverty Impacts of Cocoa Price Policy Reform in 4. Consolidating transparency in the Côte d’Ivoire”, Poverty and Equity GP, (2016). management of the cocoa sector . • Reduce cocoa market price changes impact “Document de Stratégie: Réformes de la filière café-cacao, on the level of poverty (Gouvernement de la Côte d’Ivoire, 2011). 70. A number of lessons were applied from the analytical work and previous operations, one of the most important being that that fiscal sustainability and public spending efficiency are critical conditions for stable and sustained economic growth and the provision of high-quality public services. Specific lessons learned from the previous PRSC series (three operations 2013-15, DPF 3-P155259) that were applied in this series included:15 i) Fiscal management reforms remain critical to maintaining budgetary stability and reducing fiscal risk; ii) Upgrading human capital through a better education system is a prerequisite to job creation and inclusive growth; iii) Reform champions are needed for the effective implementation of reforms in strategic areas such as public procurement and energy; iv) Building up gradual consensus for reforms among key stakeholders helps ensure further ownership and accountability over time; and v) the impact of budget support is leveraged by combining it with TA, as well as investment projects in relevant sectors. Additional studies undertaken by the Government, the IMF and EU were also important to program design. In the case of the VAT exemptions, the lesson to build consensus among key stakeholders more gradually, probably should have been more fully applied because the private sector raised strong opposition, leading to a policy reversal after the reform passed.16 15 Note that the ICR for the previous series was submitted after preparation of this series. However, the preparation team was aware of these lessons and could apply them. 16 The government has attempted to remedy this shortcoming in stakeholder communication by involving the Comite de Concertation du Secteur Prive in ensuring that the private sector is fully and officially consulted and informed of policies Page 29 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Complementary WBG financing and TA operations 71. Several WBG IPFs and TA projects were valuable complements to the DPF series. For example, a regional tax study covering also Cote d’Ivoire (P163693) provided analytical inputs to pillar 1. Pillar 1 reforms were also closely linked to activities supported by the Governance and Institutional Development Project (GIDP - P107355), particularly with respect to enhancing the transparency and efficiency of public finances. There was also TA to support the implementation of PFM action plan. A Governance and Service Delivery operation (P164302) supported the strengthening of the public procurement system. Pillar 2 of the series was supported by the Emergency Basic Education Support project (P119328), in the areas of increasing access to basic education, thus contributing to greater inclusion. The series was also aligned with the Global Partnership for Education project to help the Ministry of Education carry out learning assessments in reading and mathematics. In the electricity sector, the Electricity Transmission and Access Project (P157055, 2017-2022) supported improved efficiency and reliability of electricity supply and reduce losses and improve energy efficiency of public buildings. Also, in the energy sector, the CI-ENERGIES Guarantee Project (P164145) provided a critical guarantee to support the refinancing by commercial banks of CI-ENERGIES’ short term liabilities to improve the electricity sector’s financial performance and its ability to attract investments. This latter support was absolutely essential in achieving results in the electricity sector. The reforms in the cocoa aligned with the WBG priority to sustain the Government’s effort to strengthen agricultural development. 72. The series also benefited from other donor support in related areas of the program. AfDB provided TA support, while the EU provided budget support as well as TA in the area PFM. AFD provided TA support and budget support related to HIPC-CDD. WBG Management and Supervision 73. While each of the three operations in the series had a different TTL, the transitions between the operations were seamless and did not have adverse effects on the program, as is the case in some programmatic series. For DPF 2 and DPF 3 the successor TTL was already fully engaged in the program and the country dialogue. Perhaps a more important factor in achieving continuity of series management was the presence of the local economist who was on board from the early preparation of the series until its conclusion and through the ICR stage. 74. Supervision was regular and well-coordinated and risk assessment and mitigation were appropriate. For example, the WBG staff worked well with the IMF and consistently participated in IMF review missions, providing detailed inputs to the IMF team in all areas where the WBG was the primary agency (e.g., agricultural development, energy, public administrative reform). Similarly, the IMF team regularly shared its macroeconomic and financial analyses with its WBG counterparts. The WBG and the IMF also jointly carried out a PEFA exercise during the series. 75. The overall risk was considered moderate while ‘Institutional capacity’ and ‘Political environment’ risks were rated substantial, but remained manageable. Perhaps the biggest risk was the macro risk related to cocoa prices. The WBG responded to this risk with additional reforms as well as a third operation to allow for additional implementation and follow through. affecting their interests. Page 30 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) V. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES Most gains in the reform areas are sustainable, though there are some areas of concern which would benefit from follow-up. For example, the area of arrears in the electricity sector is likely to be sustained because payments are now codified in law and must be budgeted, though there is an uptick in arrears from public enterprises to CI-Energies in 2020 (possibly related to the impact of the COVID pandemic). Education reforms appear to be sustainable for the most part, particularly the requirement for bi-valent teachers and the mapping for poorer students. One area of concern for education is the regular student assessments which did not continue on an annual basis beyond the series as is needed for planning of school policies. There was good progress on improving tax compliance through improved technology, unique company identification numbers and e-filing. Efforts to end unjustified VAT exemptions need to continue. 77. E-procurement had some concerns, but there is further WBG support to advance this reform and it is back on track. While “e-contracts,” e-learning,” and “decision support” modules were successfully developed, the pilot project faced technical challenges that led to delays. The Government took measures to address the technical issues including through information and training sessions. At the same time of the development of the e-procurement system, the Government worked on several initiatives to further improve the public procurement system, including a new Code that has been drafted to modernize the legal framework (completed in 2019). Moreover, an effort is being made to build a new data base on prices that should allow benchmarking simple contracts. These initiatives demonstrated the Government’s commitment to improving public procurement and more broadly public financial management. In addition, the WBG supported P4R on Governance picked up the efforts in e-procurement and applied it to the transport sector which is highly significant because the sector represents an important share of public procurement. 78. There is some risk to development outcome in increasing transparency in the cocoa sector . While the DPO series helped expose major governance issues in the cocoa sector and there was high level government support, there were significant delays in submitting the audits, and the management of the system was not significantly changed. Concerns also arose with the removal of private sector representation from the Board and the reintroduction of direct sales. Mitigation of these developments were achieved through carrying out of the cocoa census which is expected to lead to sanitizing cocoa cooperatives and establishment of the cocoa inter-professional body. In addition, further investments were made to benefit farmer communities through the Rural Investment Fund (Fonds d’Investissement en Milieu Rural-FIMR), though targeting and efficiency are still being questioned (see 2AC reports, 2020). Thus, while there is cause for concern in the short-term there are positive signs for the longer term. VI. LESSONS AND NEXT PHASE A. Lessons Learned pragmatic approach to changes in country context and pace of implementation is needed to take advantage of reform opportunities and may require that the reform program be broadened and extended. These changes are not possible to foresee at the design stage. Sometimes, a triggering event may be needed to reform a very sensitive sector like cocoa in CIV. In this case, the cocoa price drop helped expose the fact that Page 31 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) the supporting mechanisms did not function according to the law. Since this happened after DPF 1, the window of opportunity to address the lack of transparency opened after the series was originally designed. Most importantly, it presented a chance to require audits to increase transparency. With a pragmatic approach, this opportunity was seized. Similarly, the addition of the third operation made it possible to complete reforms that were either new or were taking longer as a result of political obstacles. 80. If tariff adjustment is too politically difficult and risks significant social unrest, then the reform focus is probably better spent on other determinants of utility performance. Although tariff adjustments were not part of the series, utility performance could still be improved through financial strengthening measures such as reducing arrears, debt restructuring and improved collections. Performance can also be improved by encouraging greater private sector participation and diversification of energy sources, notably towards solar renewables. This improved efficiency can at the same time improve incentives for private sector participation, which, in turn, can improve overall sector performance. Reducing electricity theft can also be achieved by reducing connections cost through a national program and by installing prepaid meters. 81. Sustained arrears reduction and elimination can be achieved through specifying responsibility for payment and prepaid meters. The program series helped the government stipulate specific responsibility for payment for electricity to CI-Energies, such as from the Central Administration and from the city of Abidjan. CIV has been able to this elimination of arrears through this approach. 82. Constructing a package of complementary support instruments can lead to success in improving electricity sector financial viability by creating leverage and through technical support. The series was strengthened by strong analytical work, the partnership with IFC, the guarantee operation, and the electricity IPF. Each played a key role in achieving planned results. The DPF resources combined with those of the IDA guarantee achieved a critical mass of leverage to implement the difficult reforms related to a more permanent solution to the settling of arrears in the sector. 83. In FCV countries like Cote d’Ivoire, the WBG team may need to be prepared to make rapid and frequent adjustments to the results framework and to program triggers. Cote d’Ivoire was an FCV country until FY20, more due to political challenges than to capacity constraints. The many adjustments to the results framework and the program triggers reflected the changing realities as the country moved beyond FCV status. These changes helped keep the program basically on track and record overall successful results. B. Next Phase The WBG has remained engaged in the key reform areas of the DPF series. Support through ongoing IPFs in governance and other areas ensures continued implementation support for reforms in education, electricity and revenue collection. In the cocoa sector, the follow-on DPF provides further support by promoting sustainable cocoa production by supporting the adoption of an inter-ministerial arrêté to establish a system of standards for sustainable cocoa production. The new DPF also has a trigger to require compliance with the new standards. . Page 32 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ANNEX 1. RESULTS FRAMEWORK A. RESULTS INDICATORS Pillar: Pillar 1 – Enhancing tax revenue collection and public procurement Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Percentage of new firms provided Percentage 0.00 90.00 100.00 with a unique electronic identification number. DPF 3 31-Dec-2015 31-Dec-2019 31-Dec-2020 Comments (achievements against targets): DPF 3 -The actual number of the firms provided with a unique identification number is 16,786 out of 16,786 (100%). Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Percentage of enterprises (with Percentage 0.00 75.00 72.80 turnover greater than CFAF 200 million) using the electronic 31-Dec-2015 31-Dec-2019 31-Dec-2020 platform to declare and pay their taxes. DPF3 Comments (achievements against targets): Actual: 72.8 percent-Almost Achieved. Page 33 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Decline in revenue losses Text 2.1 percent of GDP 1.9 percent of GDP 1.5 percent of GDP associated with exemptions. /b DPF (2 &) 3. 31-Dec-2015 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): Baseline revised for 2016 was 1.6 percent. Target also revised upward from 1.7 percent (less ambitious) Actual: 1.5 percent in 2019 – Not achieved (improvement 0.1 percent rather than 0.2 percent targeted). Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Number of days on average to Text 159 days Less than 100 days 95.4 days (2019), 94.7 days (2020) complete a public procurement from the preparation of tenders 31-Dec-2015 31-Dec-2019 31-Dec-2019 to approval. DPF (1, 2 &) 3 Comments (achievements against targets): Target reduced from 120 days (i.e., more ambitious) Achieved (both original and revised) e-procurement was implemented in 25 ministries through 2019. Page 34 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Pillar: Pillar 2 - Strengthening the efficiency and equity in the education sector Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Reduction in the repetition rate Text 15.6 percent Less than 10.5 percent 9.5 percent in primary school. DPF (1, 2 &) 3 31-Dec-2015 31-Dec-2019 31-Dec-2020 Comments (achievements against targets): Target changed from less than 10 percent in DPF 3 (less ambitious). Actual: 9.5 percent (2020)-Achieved (both original and revised targets). Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Number of new teachers Text Not applicable 5,000 9,898 recruited in primary schools with ratio of students/teacher above 31-Dec-2015 31-Dec-2019 31-Dec-2019 the national average. (added at DPF 2) Comments (achievements against targets): Achieved. The authorities prefer to refer to classrooms than schools arguing having data and policies with a focus only on classroom. Ratio of students to teacher above 50 is considered above the national average and regarded as crowded classrooms. Page 35 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Increase in the completion rate in Text Boys 25 percent. Boys: 33 percent. Boys (2019-2020): 63.6 percent- lower secondary, of children from Girls 13 percent Achieved families in the poorest families. Girls (2019-2020): 57.2 percent- DPF (1, 2 &) 3. Girls: 22 percent. Achieved. Revisions: Completion rate in lower secondary education-DPF 3, “poorest families” deleted. Baseline (2015): Boys-47 percent, Girls-35.2 percent. Target (2019): Boys: more than 60 percent; Girls: more than 49.5 percent. 31-Dec-2015 31-Dec-2019 31-Jan-2020 Comments (achievements against targets): Note: Completion targets were increased, but do not apply only to “poorest families.” Page 36 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Pillar: Pillar3-Improving performance of electricity sector (private sector participation/diversification) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Reduced commercial and Text 22 percent. Progress (2017): less than 16.92 percent technical losses on an annual 20 percent. Target (2019): basis. DPF (1, 2 &) 3 Less than 20 percent 31-Dec-2015 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): Achieved. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Improvement in the collection Text 85 percent. Progress (2017): 98 97 percent rate of electricity bills paid by percent. domestic customers. DPF (2 &) 3 Target (2019): 95 percent 31-Dec-2016 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): Achieved Page 37 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Reduction of all arrears Text CFAF80 billion Progress (2017): CFAF 32 CFAF9.9 billion accumulated by the public sector billion. on its electricity bills. DPF (2 &) 3 Target (2019): CFAF 20 billion or less. 31-Dec-2016 31-Dec-2019 31-Dec-2019 Comments (achievements against targets): Target revised upward from CFAF10 billion (less ambitious). Achieved. Pillar: Pillar 4- Consolidating transparency in the management of the cocoa sector Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Reduction in the proportion of Text 15 percent Less than 5 percent 0 percent defaulted contracts by buyers/exporters in total 31-Dec-2017 31-Dec-2019 31-Dec-2019 production. DPF (2 &) 3. Comments (achievements against targets): Page 38 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES A. TASK TEAM MEMBERS P163284 Andrea Coppola (Task Team Leader), Jacques Morisset (Task Team Leader), Maurice Adoni (Procurement Specialist), Maimouna Mbow Fam (Financial Management Specialist), Sunil W. Mathrani (Team Member), Jean-Philippe Tre (Team Member), Patrick Philippe Ramanantoanina (Team Member), Andrea E. Stumpf (Counsel), Andre Francis Ndem (Team Member), Yussuf Uwamahoro (Team Member), Akoua Gertrude Tah (Team Member), Samba Ba (Team Member), Alexandra Annabelle Niesslein (Social Specialist), Amina Coulibaly (Team Member) P166388 Andrea Coppola (Task Team Leader), Amina Coulibaly (Task Team Leader), Maurice Adoni (Procurement Specialist), Issa Thiam (Financial Management Specialist), Jacques Morisset (Team Member), Micky O. Ananth (Team Member), Theresa Adobea Bampoe (Team Member), Ofumilayo Fewo Olympio (Team Member), Alexa Tiemann (Team Member), Silvia G. Gulino Passera (Team Member), Alexandra Annabelle Niesslein (Social Specialist), Tiangboho Sanogo (Team Member), Djedje Hermann Yohou (Team Member) P158463 Samba Ba (Task Team Leader), Maurice Adoni (Procurement Specialist), Maimouna Mbow Fam (Financial Management Specialist), Jacques Morisset (Team Member), Robert A. Yungu (Team Member), Andrea E. Stumpf (Counsel), Godwill Kan Tange (Team Member), Yussuf Uwamahoro (Team Member), Akoua Gertrude Tah (Team Member) B. STAFF TIME AND COST P163284 Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation 11.245 76,439.81 FY17 9.891 48,089.73 FY18 Total 21.14 124,529.54 Supervision/ICR Page 39 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) 1.540 11,183.42 FY18 Total 1.54 11,183.42 P166388 Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation 11.245 76,439.81 FY17 31.151 168,590.31 FY18 21.168 111,822.30 FY19 Total 63.56 356,852.42 Supervision/ICR 1.540 11,183.42 FY18 Total 1.54 11,183.42 P158463 Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation 33.270 201,281.51 FY17 31.151 168,590.31 FY18 21.168 111,822.30 FY19 Total 85.59 481,694.12 Page 40 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Supervision/ICR 0 12,600.00 FY17 1.540 11,183.42 FY18 Total 1.54 23,783.42 Page 41 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ANNEX 3. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERS’/STAKEHOLDERS’ COMMENTS The authorities concurred with the content and the conclusions of the report. They commended the World Bank for its support and the quality of the report. The authorities recommended several minor changes that were incorporated into the ICR and suggested updates to the macroeconomic data, which were also incorporated. Page 42 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ANNEX 4. SECTORS AND THEMES . SECTORS AND THEMES P163284 Sectors Mitigation Co- Adaptation Co- Major Sector/Sector (%) benefits (%) benefits (%) SECTOR_TBL Public Administration 25 0.00 0.00 Central Government (Central Agencies) 25 0 0 SECTOR_TBL Information and Communications Technologies 5 0.00 0.00 ICT Services 5 0 0 SECTOR_TBL Education 30 0.00 0.00 Primary Education 25 0 0 Secondary Education 5 0 0 SECTOR_TBL Energy and Extractives 20 10.00 0.00 Other Energy and Extractives 20 50 0 SECTOR_TBL Industry, Trade and Services 20 0.00 0.00 Agricultural markets, commercialization and agri- 20 0 0 business Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Public Sector Management 20 Public Finance Management 20 Domestic Revenue Administration 20 Public Administration 10 E-Government, incl. e-services 10 Page 43 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Human Development and Gender 30 Education 30 Teachers 15 Student Assessment 10 Education Governance, School-Based Management 5 Urban and Rural Development 20 Rural Development 20 Rural Markets 20 Environment and Natural Resource Management 20 Climate change 10 Mitigation 10 Energy 20 Energy Policies & Reform 20 P166388 Sectors Mitigation Co- Adaptation Co- Major Sector/Sector (%) benefits (%) benefits (%) SECTOR_TBL Public Administration 34 0.00 0.00 Central Government (Central Agencies) 34 0 0 SECTOR_TBL Education 22 0.00 0.00 Primary Education 11 0 0 Secondary Education 11 0 0 SECTOR_TBL Energy and Extractives 22 5.50 0.00 Other Energy and Extractives 22 25 0 SECTOR_TBL Page 44 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Industry, Trade and Services 22 0.00 0.00 Agricultural markets, commercialization and agri- 22 0 0 business Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 22 Trade 22 Trade Policy 22 Public Sector Management 33 Public Finance Management 33 Public Expenditure Management 22 Domestic Revenue Administration 11 Public Administration 33 Transparency, Accountability and Good Governance 11 E-Government, incl. e-services 22 Human Development and Gender 22 Education 22 Teachers 11 Private Sector Delivery of Education 11 Environment and Natural Resource Management 22 Climate change 6 Mitigation 6 Energy 22 Energy Policies & Reform 22 P158463 Page 45 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Sectors Mitigation Co- Adaptation Co- Major Sector/Sector (%) benefits (%) benefits (%) SECTOR_TBL Public Administration 50 0.00 0.00 Central Government (Central Agencies) 50 0 0 SECTOR_TBL Education 33 0.00 0.00 Primary Education 33 0 0 SECTOR_TBL Energy and Extractives 17 17.00 0.00 Other Energy and Extractives 17 100 0 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 17 Public Private Partnerships 17 Public Sector Management 50 Public Finance Management 50 Public Expenditure Management 17 Domestic Revenue Administration 33 Public Administration 33 E-Government, incl. e-services 33 Human Development and Gender 33 Education 33 Access to Education 33 Teachers 17 . Page 46 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ANNEX 5. SUPPORTING DOCUMENTS Plan National de Developpement, 2016-2020, COMITE DE PILOTAGE DU GC, COMITE TECHNIQUE DU GC, SECRETARIAT TECHNIQUE DU GC REPUBLIQUE DE COTE D’IVOIRE PROGRAM DOCUMENT FOR A PROPOSED CREDIT IN THE AMOUNT OF EUROXX MILLION (US$75 MILLION EQUIVALENT) TO THE REPUBLIC OF CÔTE D’IVOIRE FOR THE FIRST DEVELOPMENT POLICY OPERATION ON FISCAL MANAGEMENT October 13, 2016 PROGRAM DOCUMENT FOR A PROPOSED CREDIT IN THE AMOUNT OF EURO 105.9 MILLION (US$125 MILLION EQUIVALENT) TO THE REPUBLIC OF CÔTE D’IVOIRE FOR THE SECOND FISCAL MANAGEMENT, EDUCATION, ENERGY, AND COCOA REFORMS DEVELOPMENT POLICY FINANCING November 6, 2017 PROGRAM DOCUMENT FOR A PROPOSED CREDIT IN THE AMOUNT OF EURO 86.4 MILLION (US$100 MILLION EQUIVALENT) TO THE REPUBLIC OF CÔTE D’IVOIRE FOR THE THIRD FISCAL MANAGEMENT, EDUCATION, ENERGY, AND COCOA REFORMS DEVELOPMENT POLICY OPERATION November 7, 2018 Other documents from the program files including analytic work specified in the main text. Page 47 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) ANNEX 6. SUPPORTING DOCUMENTS TOC Test Annex 6 Table 1: Prior Actions, Triggers and Results Indicators for DPF 1, 2 and 3 Prior actions and triggers Results Indicators, Actuals and Prior Actions under DPF 1 Triggers/Prior Actions under DPF 2 Triggers/Prior Actions under DPF 3 Corresponding DPFs Pillar 1 – Enhancing tax revenue collection and public procurement Prior Action 1. With the objective of Trigger 1. The Ministry of Finance has Trigger 1: Trigger 1: The Recipient has DPF 1 & 2: Number of taxpaying firms broadening the tax base, the Tax implemented an electronic single implemented an electronic single and individuals recorded in the Administration has incorporated in taxpayer identification system that taxpayer identification system in order government’s taxpayer database. its tax database the results of its will streamline registration and to (i) streamline registration and Baseline (2015): 78,306. 2016 survey of potential taxpayers payment procedures as well as improve the identification as well as Target (2019): 100,000 in the two sizeable municipalities of improve the identification and monitoring of taxpayers and (ii) Baseline revised from 86,945, Target Abidjan (Yopougon and Cocody). monitoring of taxpayers. facilitate effective integration of all revised downward from 105,000 databases of the different public (less ambitious). Trigger 1 was repeated in DPF 2 as administrative bodies and so reduce Actual: 158,607 Achieved action was moved to DPF 3. tax evasion. No change, but Trigger 1 was moved DPF 3: Percentage of new firms from the DPF 2 to DPF 3 provided with a unique electronic identification number. Baseline (2015): 0% Target (2019): 90% Actual: 100% (16,786 firms) Achieved Prior Action 2. The Ministry in Trigger 2: The Ministry of Finance has Prior Action 1: To strengthen tax DPF 2: Number of online tax filling Charge of Budget has launched a tax established two centers with the administration, the Recipient has and payments for large and amnesty program for all firms and responsibility of identifying and implemented an electronic single medium-sized enterprises. Baseline individuals who voluntarily register monitoring tax payments by medium‐ taxpayer identification system for (2015): 0 to the Tax Administration before sized enterprises. enterprises. Target (2019): 60 percent of large April 30, 2016 pursuant to Loi No. sized enterprises; 50 percent of 2015-840 dated December 18, 2015 Trigger was included in the IMF medium-sized enterprises for the state budget of 2016. program, and was replaced by p.a. 1 Actual: 78.5% (59,853 out of 76,213 below. large enterprises) Achieved 81.8% (116,006 out of 141,809 Page 48 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Prior Action 1: The Recipient’s Ministry medium enterprises) - Achieved in charge of Budget has implemented a DPF 1: Increase in VAT revenue new electronic platform facilitating the collected by DGI (Tax filing and payment of taxes. Administration): Baseline 2015: 1.7 % of GDP. Target 2018: 2.0 % of GDP Actual: 2.0% (2019)-Achieved (All numbers are pre-rebasing of GDP) DPF 3: Percentage of enterprises (with turnover greater than CFAF 200 million) using the electronic platform to declare and pay their taxes. Baseline (2015): 0. Target (2019): 75 percent. Actual: 72.8%-Almost Achieved Prior Action 2: In line with the Trigger 2: The Recipient has revised DPF 2 & 3: Decline in revenue losses WAEMU Regulation n.2/2009/CM/ tax exemptions granted under the associated with exemptions/b: UEMOA, the Recipient has Investment Code. submitted to Parliament for Adjusted to reflect additional details. Baseline (2015): 2.1 percent of GDP adoption the draft 2018 Budget Law Target (2019): 1.9 percent of GDP that eliminates VAT exemptions on Prior Action 2: The Recipient has Baseline revised for 2016 was 1.6%. (i) equipment and materials adopted a new Investment Code on Target also revised upward from necessary for investments and spare August 1, 2018 by replacing VAT 1.7% (less ambitious) material for agro-industrial exemptions on imports of equipment Actual: 1.5% in 2019 – Not achieved companies, (ii) on seeds and grains, goods and materials with a VAT (improvement 0.1% rather than 0.2% (iii) investments made by sports deferred payment system as detailed in targeted). associations and (iv) fish freezing Arrêté n° 1091 dated October 30, 2018. operations. Page 49 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Prior Action 3. The Government has Trigger 3: The Government has put in Trigger 3: The Recipient has extended DPF 1, 2 & 3: Number of days on operationalized (i) public place and used an electronic system the electronic system for public average to complete a public procurement units in four high- for new public procurement procurement to all Ministries. procurement from the preparation of spending sectoral ministries contracts in selected agencies and Revised to add details needed for legal tenders to approval. pursuant to Arrêté No. 325 dated ministries. framework and to target 10 rather May 23, 2014 and Arrêté No. 275 Minor changes (added details) in than all ministries. Baseline (2015): 159 days. dated April 22, 2015; and (ii) the Trigger 3 for p.a. 3. Target (2019): less than 100 days coordinating unit within the Target reduced from 120 days (i.e., Ministry of Finance to monitor Prior Action 3: In application of the Prior Action 3: To strengthen the public more ambitious) public procurement contracts WAEMU Directive n.04/2005/CM/ procurement system, the Government Actual: 95.4 days (2019), 94.7 days pursuant to Arrêté No. 465 dated UEMOA on procedures, execution and has (1) renewed the members of the (2020) June 23, 2015 from the Ministry of regulation of procurement and public Board of the National Authority for the Achieved (both original and Finance. service delegation contracts, the Regulation of Public Procurement revised) Recipient has released a (ANRMP); (2) adopted an Arrêté which Note: e-procurement was communication by its Council of gives legal force to the contracts implemented in 25 ministries Ministers and a detailed roll-out report awarded by the electronic system; and through 2019. that implements an electronic (3) extended the electronic system to at procurement system that has been least 10 Ministries. piloted in five ministries. Pillar 2 – Strengthening the efficiency and equity in the education sector Prior Action 4. The Ministry of Trigger 4: The Government has set up DPF 1, 2 & 3: Reduction in the National Education has introduced a national standardized evaluation of repetition rate in primary school. transitional measures through learning outcomes at the end of each Circulaire No. 3387 dated August 12, sub‐cycle of primary education and Baseline (2015): 15.6 percent 2016 to reduce repetition in primary published the first set of national Target (2019): less than 10.5 education by (i) creating sub-cycles standardized evaluation by September percent in primary education; and (ii) 2017. Target changed from less than 10% defining conditions of transition No change in DPF 3 (less ambitious) between the sub-cycles. Prior Action 4: The Recipient’s Actual: 9.5% (2020)-Achieved (both Ministry of National Education has set original and revised targets) up an annual national standardized evaluation of learning outcomes at the end of each sub-cycle of primary Page 50 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) education and published the first set of national standardized evaluations. Prior Action 5. The Ministry of Trigger 5: The Ministry of Education Trigger 4: To increase access to DPF 2 & 3: Number of new teachers National Education has established has issued a decree to establish the secondary education for students from recruited primary schools with the criteria through Arrêté No. 143 dated criteria for assignment and poor families (with a focus on girls), the ratio of students/teacher above the October 11, 2016 for school redeployment of teachers to improve Recipient’s Ministry of National national average17. assignment of students in the teacher‐to‐student ratio in Education has systematized the secondary lower cycle that takes into underserved regions. recruitment of bivalent teachers in low Baseline (2015): not applicable consideration (i) socio-economic No change secondary schools in rural areas Target (2019): 5,000 conditions of the household, (including through Collèges de including income; (ii) distance to proximité). Actual (2019): school, and (iii) location of residence Adjusted to require that all teachers 9,898. Achieved. (urban/rural). are bivalent. Prior Action 5: To improve teacher-to- student ratios in underserved regions, Prior Action 4: To increase efficiency the Recipient’s Ministry of National and equity of the education system, the Education has established new criteria Recipient’s Ministry of National DPF 1, 2 & 3: Increase in the for the assignment and redeployment Education passed an arreté requiring completion rate in lower secondary, of teachers through Arrêté No that all new teachers recruited in lower of children from families in the 0074/MENET-FP-DRH dated secondary schools must be bivalent poorest families. September 28, 2017. teachers. Baseline in 2015: Boys 25 percent Girls 13 percent Trigger 6: To improve the allocation of Trigger 5: To improve the allocation of Target in 2018: Boys 33 percent students in low secondary schools, the students in low secondary schools, the Girls 22 percent Government has launched a program Recipient’s Ministry of National through which vouchers will be rolled Education has launched a pilot Revisions: Completion rate in lower out to poor families in selected program through which vouchers will secondary education-DPF 3, “poorest regions. be rolled out to poor families in families” deleted. 17The authorities prefer to refer to classrooms than schools arguing having data and policies with a focus only on classroom. Ratio of students to teacher above 50 is considered above the national average and regarded as crowded classrooms. Page 51 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Trigger 6 postponed to next operation selected regions. Baseline (2015): Boys-47 percent, (Trigger 5) Replaced with action more aligned girls-35.2 percent with the PDO. Target (2019): Boys: more than 60 percent; Girls: more than 49.5 Prior Action 6: To improve equity in Prior Action 5: To improve the percent. primary education remediation performance of private colleges and activities, the Recipient’s Minister of fiscal transparency in secondary Actuals: National Education has adopted a education, the Government has Boys (2019-2020): 63.6 percent- ministerial order that incorporates adopted and implemented a Achieved Wednesday morning in the official ministerial arreté that: (i) establishes Girls (2019-2020): 57.2 percent- calendar of primary schools and the criteria, including success rates in Achieved reorganizes the remediation activities national examinations, repetition Note: Completion targets were provided during the week. rates and dropout rates, used by the increased, but do not apply only to Ministry of Education to identify “poorest families.” colleges eligible for Government subsidies; and (ii) establishes the annual publication of the performance of each college as measured by their success rate in national examinations, the repetition and dropout rates. Pillar 3 - Improving the performance of the electricity sector by enabling private sector participation and diversification Prior Action 6. The Government has Trigger 7. The Government and CI‐ Trigger 6: The Recipient and CI-ENERGIES DPF 1: Improved CI-Energie financial issued a set of decrees which (i) ENERGIES/CIE have signed a have signed and implemented a performance as measured by its net adopts a methodology for the performance‐based contract with performance-based contract with the incomes. determination of tariff rates that the objective to: (i) define the objective to improve the financial and Baseline 2014: - CFAF 63 billion enable recovery of costs of efficient respective roles to secure cost- commercial performance as well as the Target 2018: CFAF70 billion. service provision through Décret No. effective generation and other grid transparency of the sector. Actual: CFAF 68.6 billion (2018), 2016-783 dated October 12, 2016; infrastructure investments; (ii) No change. Almost Achieved and (ii) promotes private sector define electricity tariffs and DPF 1, 2 & 3: Reduced commercial participation and the use of subsidies allocated to CI‐Energies; Prior Action 7: The Recipient and CI- and technical losses on an annual renewable sources of energy through and (iii) reduce losses in ENERGIES have signed a performance- basis. Décret No. 2016-786 dated October transmission and distribution (iv) based contract with the objective to Baseline (2015): 22 percent 12, 2016. improve the billing‐collecting rate improve the financial and commercial Progress (2017): less than 20 percent Page 52 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) (v) establish clear procedures to performance as well as the transparency Target (2019): less than 20 percent measure the output/outcome, and of the sector. /a Actual: 16.92 (2019) - Achieved (v) incorporate a functional bonus‐ malus system. Trigger 7: The Recipient has paid in full DPF 1: The Government has signed at Trigger 7 postponed until the next the unpaid electricity bills accumulated least two power purchase operation Trigger 6. by the central administration as of agreements (PPA) with Independent December 2016; (ii) pay on time all the Power Producers (IPP) including one Trigger 8. The Government has current electricity bills of the central for renewable energy. adopted a regulation (i) outlining administration, and (iii) continued to modalities and procedures for implement the respective plans agreed Actual: 7 PPAs with IPPs (2019) - setting tariffs for power generated by the Recipient with the District of Achieved by IPPs through tendering process, Abidjan and SOEs and so reduce their including for renewable energy level of arrears. projects of installed capacities Revised to cover more SOEs and ensure greater than 5 MW; and (ii) setting electricity bills are validated before tariffs by technology type for being paid. renewable energy projects, below 5 MW. Prior Action 6: The Recipient: (i) has paid Simplified. Tariffs could not be set in full the unpaid validated electricity up in advance for renewable energy bills accumulated by the central due to rapid technical changes. administration as of December 2017 and paid on time all the current validated electricity bills of the central Prior Action 7: The Recipient’s administration; (ii) has paid in full Ministry of Oil, Energy and through securitization the unpaid Development of Renewable Energy, validated electricity bills accumulated by Ministry of Economy and Finance the District of Abidjan covering the and Ministry in charge of Budget period until December 2017 and paid on have adopted an interministerial time all its electricity bills related to Arrêté No 476/MPEDER/MEF/ public lighting, and (iii) has reduced the SEPMBPE dated October 10, 2017 level of state-owned enterprises’ defining modalities and procedures arrears. for the selection of Independent Power Producers (“IPPs”) and determining the price of electricity Page 53 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) produced by IPPs, including through a competitive selection process, for projects with installed capacities greater than 1 MW and renewable energy projects. Prior Action 8: In accordance with (a) DPF 2 & 3: Improvement in the the protocol for the clearance of the collection rate of electricity bills paid arrears in the electricity sector between Trigger 8: In order to enforce the by domestic customers. CI-Energies, CIE, RTI, CNRA and the Decree 2010-200 of December 15, 2010 District of Abidjan dated October 9, determining rules for the management. Baseline (2016): 85 percent 2017, (b) the communication by the of financial cash flows in the electricity Progress (2017): 98 percent Council of Ministers dated October 10, sector, the Government has updated Target (2019): 95 percent 2017, (c) the engagement letter to the the procedures manual, in particular on: Actual: 97 percent - Achieved Association by the Minister of Oil, (i) the planning, billing and payment for Energy and Development of Renewable the electricity sector expenditures; (ii) DPF 2 & 3: Reduction of all arrears Energy, the Minister of Economy and the reporting of financial information in accumulated by the public sector on Finance and the State Secretary in the electricity sector; and (iii) the its electricity bills. charge of the Budget dated of October control of management and reporting 14, 2017; and (d) the Memorandum procedures as well as the annual Baseline (2016) CFAF 80 billion between CI-Energies, CIE and the State external audit of the electricity sector Progress (2017): CFAF 32 billion Secretary in charge of the Budget dated financials. Target (2019): CFAF 20 billion or less. October 24, 2017, the Recipient has Dropped. More time needed for Target revised upward from CFAF10 taken the following actions aimed at stakeholder consultation related to the billion (less ambitious) reducing the amount of unpaid manual. Related results indicator also electricity bills: dropped. Actual: CFAF9.9 billion (2019) - (i) committed to eliminate all unpaid Achieved electricity bills accumulated by the central administration up to December 2016 by the end of April 2018; (ii) paid all the validated electricity bills of the central administration from January to June 2017 and committed to pay all its future validated bills in full and on time from July 2017 onwards; Page 54 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) (iii) agreed (a) with the District of Abidjan, for its unpaid electricity bills covering the period until December 2017, to clear the arrears through securitization and committed to the payment of all its electricity bills related to public lighting from 2018 onwards; (b) with CNRA for its respective unpaid electricity bills covering the period until December 2016 to clear the arrears through securitization; and (c) with RTI to pay 920,893,208 CFAF regarding its arrears up to December 2016 through securitization; and (iv) ensured that SPDC, RTI and SOTRA signed respective agreements with CIE in which these state-owned enterprises commit to pay their unpaid electricity bills accumulated up to June 2017 and commit to the payment of their future bills in full and on time. Pillar 4 : Consolidating transparency in the management of the cocoa sector. New sector for DPF 2, thus, no Triggers. Trigger 9: The Recipient has adopted and DPF 2 & 3: Reduction in the implemented all validated proportion of defaulted contracts Prior Action 9: In conformity with recommendations from the by buyers/exporters in total Décret No 2012-765 of August 1, 2012 independent audit of the PVAM and of production. related to the Reserve Fund for the the Reserve Fund. Coffee-Cacao sub-sector, the Recipient Revised to direct the p.a. 8 onto the Baseline (2017): 15 percent Target has launched an independent most important, rather than just (2019): <5 percent institutional, technical and financial validated actions. No change audit of the Programme de Ventes Anticipées à la Moyennes (PVAM) and Prior Action 8: The Recipient has Actual: 0% - Achieved of the Reserve Fund. implemented all main recommendations from the independent 2017 audit of the Page 55 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Prior Action 10: The Recipient’s PVAM and of the Reserve Fund. Ministry of Agriculture, Ministry of Economy and Finance and Ministry in Trigger 10: The Recipient has conducted charge of Budget has adopted an the annual independent audits adopted interministerial Arreté No in prior action 10 [from DPF 2]. 475/MEF/MINADER/SEPMBPE dated Revised to take into account the longer October 9, 2017 to institute a time needed to finalize the first audit systematic independent audit, six and the broader scope of the second months after the end of the harvest audit supported by this prior action. The season, in September. The auditor will prior action also added the publication be chosen by the Minister of Finance, of the first audit. following an independent and Prior Action 9: The Recipient has competitive tender for three years, published the non-sensitive renewable once. The audits will focus commercially results of the independent on: (i) marketing; (ii) stabilization 2017 audit of the PVAM and of the accounts, which harmonize the Reserve Fund and launched the new guaranteed export prices; (iii) the series of audits covering marketing, technical reserve fund held at the West stabilization accounts, technical reserve African States Central Bank (“BCEAO”); fund held at BCEAO, and other funds and (iv) other funds in the coffee-cocoa managed by CCC, in line with Arreté N. sector managed by CCC The PVAM and 475/MEF/MINADER/SEPMBPE. the technical reserve fund will be subject to an annual audit. The other elements will be audited at least twice over the three-year period, with the first audit carried out in 2018. /a Prior actions 6 and 7 for DPF 3 correspond to Triggers 7 and 6 respectively. They were reported out of order in the DPF 3 Program Document. /b For clarity, this indicator can also be expressed as Tax expenditures associated with tax exemptions as a percentage of GDP, or Tax losses associated with exemptions as a percentage of GDP. Page 56 of 57 The World Bank CDI Third Fiscal Management, Education, Energy, and Cocoa Reforms DPF (P166388) Annex 6 Table 2: Summary of Results Indicator Target Achievement by PDO for DPF 1, 2 and 3 PDO Achieved Almost Not Not Total Achieved Achieved Available Enhance tax revenue collection and public 5 1 1 0 7 procurement Strengthen efficiency and equity in the education 2 0 0 1 3 sector Improve the performance of the electricity sector by 4 1 0 0 5 enabling private sector participation and diversification Consolidate transparency in the management of the 1 0 0 0 1 cocoa sector Total 12 2 1 1 16 Page 57 of 57