Page 1 PROGRAM INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB1662 Operation Name NATURAL RESOURCES MANAGEMENT DEVELOPMENT POLICY LOAN Region AFRICA Sector Forestry (60%); General agriculture, fishing and forestry sector (20%);Mining and other extractive (20%) Project ID P070196 Borrower(s) REPUBLIC OF GABON Implementing Agency Ministry of Forest, Fisheries & Environment Mr. Michel Mbomoh Gabon Tel: 241 76 61 83 Fax: 241 76 55 48 michel.mbomoh@caramail.com Planning & Monitoring Unit (CPSE) Mr. Jean Mboulou Gabon Tel: 241 06 14 76 Fax: 241 72 13 82 Date PID Prepared June 1, 2005 Date of Appraisal Authorization June 13, 2005 Date of Board Approval November 15, 2005 1. Country and Sector Background Gabon, with its 1.3 million inhabitants, is one of Africa’s most urbanized countries with approximately 75 percent of the population living in two major urban centers and about fifty smaller towns. The rural population is thinly scattered over the hinterland where access is difficult. Gabon is the fourth largest producer of oil in Africa. Since 1960, its economy is organized around the sharing of the oil rent: in 1996, oil accounted for 79% of exports and 58% of Government revenues. Gabon is also well-endowed with forest, fisheries, biodiversity and mineral resources. It is Africa’s second largest exporter of timber and it has the second largest deposit of manganese worldwide. In 2004, Gabon’s per capita income is $5,439, among the highest in Africa. However, the country has not been able to ensure equitable development and social welfare among the population. It is ranked 122 in the world according to the Human Development Index. During the oil boom years of 1973 to 1985, the Government promoted full employment policies in government agencies and public enterprises. Oil wealth brought benefits to the urban elite and public servants which were further shared through family networks but did not reach an important share of the population which remained poor until today. Inequalities plague the current social service delivery system, and access of the poor to services remains low. Many of Gabon’s social indicators are lagging behind other IBRD countries with similar GDP per capita. The general perception is that living conditions have been worsening over the past decade. 2. Operation Objectives The objective of the operation is to support the Government’s efforts to improve transparency and law enforcement for natural resource management. In synergy with other development partners, the DPL will support the implementation of Gabon’s PSFE program and EITI initiative. The DPL covers four policy areas: (1) forest; (2) biodiversity-environment; (3) fisheries; and (4) mining-oil. With regard to forest and biodiversity, the DPL will capitalize on the recent wave of reforms to ensure that they take hold and are deepened. With regard to fisheries, mining and oil, it will help pave the way for a similar reform process that is starting to emerge. This operation will help improve the investment climate by leveling the playing field and providing clear rules of the game in favor of more socially and environmentally responsible investors. By linking lending to the Page 2 implementation of reforms, this operation will strengthen the voice of reformers within government and civil society, and increase their capacity to overcome inertia and resistance from vested interests. Using the Government’s budget procedures, the proposed operation will also pilot reforms in financial management system. 3. Rationale for Bank Involvement The proposed operation is part of the Bank’s Country Assistance Strategy (CAS) approved by the Board on May 24, 2005. This operation supports Gabon’s Multi-donor Forest and Environment Sector Program (PSFE). It is complemented with a GEF grant of US$10 million equivalent for biodiversity conservation. The proposed DPL fits with the two pillars of the new CAS: (i) strengthening the management of public resources, both natural and financial, for improved social outcomes; and (ii) improving the investment climate to foster sustainable, private sector-led growth. In the context of Gabon’s economic diversification agenda, it aims to increase socio-economic benefits from natural resources while preserving the sustainability of the resource-base. It focuses on improving policies, law enforcement and accountability. This loan aims to support the Government’s economic diversification and poverty reduction agenda, of which improved management of forests, fisheries, biodiversity and mines is a major component. The loan aims to sustain the Government’s efforts to increase socio-economic benefits from natural resources while preserving the sustainability of the resource-base. It focuses on improving policies, law enforcement, transparency, and public participation. It is foreseen that this operation will be followed upon with subsequent DPL to consolidate and deepen Gabon’s natural resources reform agenda. 4. Financing The proposed operation will be financed by IBRD in the amount US$15 million. It will be complemented with a GEF grant of US$10 million. Other donors include the EU, AfDB, France and the US. 5. Institutional and Implementation Arrangements The Finance, Plan, Forest and Mining Ministries along with the National Agency for National Parks (ANPN) will be responsible for implementing this operation on behalf of the Government. Their functions will be in line with their normal institutional mandates. Applicable procedures will be those of the Government of Gabon. World Bank support will be channeled through the Ministry of Finance which will maintain overall responsibility for coordinating Government activities, and for commissioning external audits to assure ministerial compliance to financial management, administrative, and procurement procedures. The Forest and Mining Ministries as well as the ANPN, in turn, will be directly responsible for implementing the PSFE program and EITI initiative and for satisfying the conditions of tranche release. To this end, the line ministries’ and the ANPN’s will annually submit work programs and budgets for Parliament’s approval. Those work-programs and budgets will be consistent with the milestones agreed upon for the overall PSFE program, and with the DPL prior actions and conditions for tranche release. 6. Benefits and Risks In light of Gabon’s uneven and relatively recent track record in implementing reform programs, and in spite of recent encouraging signs, the proposed DPL is of high risk. The five main risks are: (i) political risk associated with to election campaign; (ii) lack of commitment within the line ministry in charge of forests; (iii) lack of law enforcement in the field; (iv) delays in budget allocations and weak financial management capacity; and (v) misperception of the Bank’s approach to using natural resources for economic diversification. The risk of shifting priorities after the upcoming presidential elections seems moderate. In light of Gabon’s history, it is expected that the elections will bring little change to the country’s leadership. In fact, even if the leadership were to change, diversifying the economy and improving natural resources governance are likely to remain top priorities for any government in Gabon. A more substantive risk stems from the fact that the first Page 3 tranche of the DPL is expected to be released soon before or after the elections when priorities for expenditures might be volatile. Budget resources are likely to come under pressure for encouraging or rewarding political allegiance. This risk would be mitigated by depositing the proceeds of the tranche on a dedicated account at the Central Bank to be used exclusively for the purpose of the PSFE program, rather than simply depositing the proceeds into the Treasury. 7. Poverty and Social Impacts and Environment Aspects The proposed DPL aims to improve the social and economic impact of the natural resources sectors through employment, community development, and fiscal revenues. The DPL will also give priority to participatory land use planning and securing user s’ rights, to the development of community-based management schemes and to the transfer of fiscal revenues directly to local entities. It will help put in place a level playing field to promote local entrepreneurs rather than rent-seeking behaviors. The proposed DPL is expected to have a positive impact on Gabon’s environmental sustainability. The DPL policy matrix contains measures that specifically target environmental outcomes, such as the adoption of sustainable forest management plans and the integrity of national parks. This DPL will also help Gabon improve field monitoring and law enforcement to fight illegal logging. In fact, since environmental regulations are likely to become more stringent and the cost of access to forest is likely to increase, it is also likely that a number of less responsible operators will find illegal logging more attractive than compliance. This runs the risk of unsustainable extraction and accelerated depletion of forest resources. For this reason, reinforcing the monitoring and law enforcement system in a transparent manner is essential. The same applies to fisheries where the proposed DPL will also help lay out a nation-wide framework for sustainable fisheries, and develop a surveillance system. 8. Contact point Contact: Laurent Debroux Title: Forestry Spec. Tel: (202) 473-3581 Fax: (202) 473 8229 Email: ldebroux@worldbank.org 9. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop