Document of The World Bank FOR OFFICIAL USE ONLY Report No. 75774-BJ INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE INTERNATIONAL FINANCE CORPORATION AND THE MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY FY13-17 FOR THE REPUBLIC OF BENIN March 5, 2013 AFCF2 Western Africa Country Department 2 Africa Region The International Finance Corporation Africa Region The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The date of the last Country Assistance Strategy Progress Reportwas February 26, 2009 Currency Equivalence at Official Interbank Rate US$1.00 = CFAF496 (as of December 1, 2012) Government Fiscal Year January 1 to December 31 IDA IFC MIGA Vice President: Makhtar Diop Jean Philippe Michel Wormser Prosper Director: Madani M. Tall Yolande B. Duhem Ravi Vish Task Team Olivier Fremond & Marieme Travaly & Conor Healy Leader(s): Evelyn Kennedy Marie-Jean Moyo Main team members Katrina Sharkey Alain Traoré David Cal Mac William Mehita Silla Amadou Ibrahim Andrew Osei Asibey Sylvie Charlotte Ida do Rego Nathalie Ramanivosoa ii ACRONYMS AND ABBREVIATIONS A&A Auditing & Accounting AAA Analytical and Advisory Activity ACE Africa Coast to Europe AIC Inter-Professional Association AICD Africa Infrastructure Country Diagnostic APL Adaptable Program Lending BOAD Banque Ouest Africaine de Développement (West African Development Bank) BTP Bâtiments et Travaux Publics (Construction and Public Works) CAA Caisse Autonome d’Amortissement (Public Debt Management Department) CAS Country Assistance Strategy CEA Country Environmental Analysis CEB Communauté Electrique du Bénin (Benin Power Community) CDD Community Driven Development CESA Council of Economic and Social Affairs CIGOP Competitiveness and Integrated Growth Opportunity Project CSOs Civil Society Organizations CPI Corruption Perceptions Index CPS Country Partnership Strategy CPPR Country Portfolio Performance Review CSPR Centrale de Sécurisation des Paiements et de Recouvrement (Payments clearinghouse) DHS Demographic and Household Survey DSA Debt Sustainability Analysis DPO Development Policy Operation DRC Democratic republic of Congo DSL Digital Subscriber Line DPO Development Policy Operation DTIS Diagnostic Trade Integration Study EIF Enhanced Integrated Framework EFA-FTI Education For All-Fast Track Initiative ECF Extended Credit Facility ECOWAP Regional Agricultural Investment Program ENPLT Etude Nationale sur les Prospections de Long Terme (National Long Term Perspectives studies) ESW Economic and Sector Work EU European Union FADeC Fonds d’Appui au Développement des Communes FBOs Faith-Based Organisations FCFA Franc CFA (Franc de la Communauté Financière Africaine (Franc of the African Financial Community) FY Fiscal Year GAC Governance and Anti-Corruption GAVI Global Alliance for Vaccines and Immunization GEF Global Environment Fund GER Gross Enrollment Ratio GDP Gross Domestic Product GPE Global Partnership for Education GPESA Global Partnership for Social Accountability iii GPOBA Global Partnership for Output Based Aid GSPR Growth Strategy for Poverty Reduction HDN Human Development Network HIPC Highly-Indebted Poor Countries HNP Health, Nutrition and Population HIV/AIDS Human Immunodeficiency Virus /Acquired Immunodeficiency Syndrome IBRD International Bank for Reconstruction and Development ICAO International Civil Aviation Organization's ICT Information and Communication Technologies IDA International Development Association IFAC International Federation of Accountants IFC International Finance Corporation IMF International Monetary Fund INSAE Institut National de la Statistique et de l’Analyse Economique (National Institute of Statistics & Economic Analysis) IXP Internet Exchange Point JSDF Japanese Social Development Fund LEPI Liste Electorale Permanente Informatisée (Permanent Electoral Roll) MCC Millennium Challenge Corporation MCA Millennium Challenge Account MDAEP Ministère du Développement, de l’Analyse Economique et de la Prospective (Ministry of Development, Economic Analysis and Prospective) MDGs Millennium Development Goals MDRI Multilateral Debt Relief Initiative MIGA Multilateral Investment Guarantee Agency NSME Micro, Small and Medium Enterprises MTEF Medium Term Expenditure Framework NBFI Non-Bank Financial Institution NEAP National Environment Action Plan NLTPS National Long Term Perspectives studies ODA Official Development Assistance OHADA Organisation pour l'Harmonisation en Afrique du Droit des Affaires (Organization for the Harmonization of Business Law in Africa) OSD Strategic Development Orientations PADA Projet d’Appui à la Diversification Agricole (Agricultural Productivity and Diversification Project) PAP Priority Action Plan PCR Primary Completion Rates PDC Plan Communal de Développement (Communal Development Plan) PDGs Communal Development Plans PEFA Public Expenditure and Financial Accountability PER Public Expenditures Review PIC Presidential Investors Council PIP Public Investment Program PFM Public Financial Management PNIA National Plan for Agricultural Investment PONADEC Politique Nationale de Décentralisation et de Déconcentration (Decentralization National Policy) PNDCC National Community Driven Development Support Project PPD Public Private Dialogue iv PPP Public Private Partnerships PRG Partial Risk Guarantee PRSC Poverty Reduction Support Credit PSD Private Sector Development PSDCC Decentralized Community Driven Services Project PSRSA Strategic Plan of Agriculture Sector Recovery RAMU Régime d’Assurance Maladie Universelle (Universal Health Insurance Coverage) RBF Result-Based Financing ROSC Report on the Observance of Standards and Codes SAT South Atlantic Three Cable SBEE Société Béninoise d’Energie Electrique (National Energy Company) SDI Service Delivery Indicators SDR Special Drawing Rights SECO Switzerland State Secretary of Economic affairs SEZ Special Economic Zone SCRP Stratégie de Croissance pour la Réduction de la Pauvreté (Growth Strategy for Poverty Reduction) SSA Sub Saharan Africa STRs Suspicious Transaction Reports SONAPRA Société Nationale pour la Promotion Agricole (National Cotton Company) TA Technical Assistance TF Trust Fund UNICEF United Nations Children’s Fund UNDP United Nations Development Program USD United States Dollars USAID United States Agency for International Development WA West African WAGP West African Gas Pipeline WASC West African Submarine Cable WAEMU West African Economic and Monetary Union WAPP West African Power Pool WAAPP West Africa Agricultural Productivity Program WARCIP Regional West Africa Communication Infrastructure Program WB World Bank WBG World Bank Group WBI World Bank Institute WSP Water and Sanitation Program v FY13-17 Country Partnership Strategy for The Republic of Benin TABLE OF CONTENTS Executive Summary ......................................................................................................................................... viii I. Country Context and Development Agenda ...............................................................................................1 A. Political Context .....................................................................................................................................1 B. Economic Developments and Prospects .................................................................................................1 C. Social Context .........................................................................................................................................6 Health Sector ...................................................................................................................................................7 Environment and Quality of Life.....................................................................................................................7 Education sector ..............................................................................................................................................8 Poverty incidence ............................................................................................................................................8 Gender .............................................................................................................................................................9 D. Development Challenges and Opportunities.........................................................................................10 The agriculture sector and other potential growth opportunities ...................................................................11 Improving Governance to achieve inclusive growth .....................................................................................11 The Business Environment and Public Private Partnerships .........................................................................12 Youth Unemployment ...................................................................................................................................13 Underinvestment in Transport Infrastructure and the Port of Cotonou .........................................................14 Electricity ......................................................................................................................................................14 Information and Communication Technologies (ICT) ..................................................................................14 Environment and climate change...................................................................................................................15 II. Government Strategic Priorities ................................................................................................................15 III. The Country Partnership Strategy (FY13-17) ...........................................................................................16 A. Lessons Learned from Previous CAS and Stakeholder Feedback ........................................................16 Conclusions drawn from the FY09-12 CAS:.................................................................................................16 Findings from the Client Survey and Stakeholder Feedback ........................................................................17 CPS Consultations with Country Stakeholders .............................................................................................17 B. Proposed World Bank Group Country Partnership Strategy ................................................................18 Guiding Principles .........................................................................................................................................18 Mainstreaming gender in the Bank portfolio .................................................................................................19 C. Partnerships and Donor Coordination ...................................................................................................22 A. Governance and Public Sector Capacity: the Foundation .....................................................................27 Core Governance ...........................................................................................................................................27 Strengthening Sector Governance through Capacity Building and Technical Assistance (TA), and Improved Demand Side Governance .............................................................................................................28 Demand Side Governance .............................................................................................................................29 B. Pillar I: Increasing Sustainable Growth, Competitiveness and Employment .......................................29 Increase access to and quality of infrastructure services ...............................................................................29 Improved Agriculture Productivity and Diversification and sustainable management of natural resources.32 vi Develop High Potential Value Chains and Improve Business Climate/Public Private Partnerships.............32 C. Pillar 2: Improving Service Delivery and Social Inclusion ..................................................................34 Improved Education, Health and Nutrition Services .....................................................................................35 Poverty and Gender Analysis ........................................................................................................................36 D. Results Monitoring ...............................................................................................................................36 IV. Risks and Mitigation .................................................................................................................................37 Annex 1 - CPS FY13-17 Results Matrix ...........................................................................................................40 Annex 2: Benin: Proposed IDA and Other Financing FY13-17 ........................................................................50 Annex 3: CAS Completion Report ....................................................................................................................51 Annex 4: Benin Social Indicators ......................................................................................................................95 Annex 5: Benin – Key Economic Indicators .....................................................................................................96 Annex 6: Benin – Key Exposure Indicators......................................................................................................99 Annex 7: Benin– IFC Investment Operations Program ..................................................................................100 Annex 8: Benin at a glance .............................................................................................................................101 Annex 9: Benin - Selected Indicators of Bank Portfolio Performance and Management ...............................102 Annex 10: Benin Operations Portfolio (IBRD/IDA and Grants) .....................................................................103 Annex 11: Donor Areas of Focus ....................................................................................................................104 Annex 12: ODA Coordination in Benin ..........................................................................................................105 Box 1: The population factor: demographic dividend or youth bulge? ...............................................................2 Box 2: Benin Cotton – A patched history of restructuring ..................................................................................3 Box 3: The Nigerian Factor .................................................................................................................................4 Box 4 : Opportunities - Regional Integration and Trade....................................................................................31 Table 1: Sectors’ Contribution to Real Growth in Benin (Percentage Points).....................................................4 Table 2: Key Economic Indicators, 2009-2017 ...................................................................................................5 Table 3: Benin's Progress toward the MDGs .......................................................................................................6 Table 4: PEFA Ratings 2007 versus 2012 .........................................................................................................12 Table 5: Benin: Proposed IDA and Other Financing, FY13-17.........................................................................20 Table 6: Portfolio Trends ...................................................................................................................................21 Table 7: Outcomes and alignment of instruments..............................................................................................24 Figure 1: Sluggish Growth Performance in recent years .....................................................................................2 Figure 2: Poverty Incidence by Areas and Gender (2006-2011) .........................................................................9 vii Executive Summary i. Benin is a low income country of nearly ten million people with a per capita income of US$800 in 2011. Economic output has been driven by agriculture and services, particularly import/export activities through the Port of Cotonou. Agriculture accounts for over 30 percent of GDP and provides 70 percent of the country's employment. Cotton is the primary export commodity. The informal sector contributes up to three-fourths of GDP. Re-export trade with Nigeria, mostly informal, accounts for 20 percent of GDP and 25 percent of government revenue. ii. GDP growth averaged 3.9 percent over the last decade, a rate insufficient to curb high poverty rates. Sustained economic growth of at least seven percent per year is needed to alleviate poverty as the population increases at a very high rate of 3.2 percent per annum. In 2011, poverty was estimated at 36.2 percent. Benin is unlikely to meet most of the Millennium Development Goals (MDGs) by 2015. The agenda for reducing vulnerability and improving resilience remains largely unfinished. iii. However, Benin has three comparative advantages. (1) It borders Nigeria, the largest market in Africa; (2) the Port of Cotonou offers the nearest access to the sea for several hinterland countries; and (3) it is endowed with fertile soils and plentiful water resources. iv. The strategic vision of this Country partnership Strategy (CPS) is to harness Benin’s comparative advantages to spur sustainable, shared economic growth. To date, Benin has not been unable to capitalize on its advantages primarily because of a weak governance environment, with relatively high levels of corruption, entrenched interests/rents, lack of transparency and accountability, “clientelism�, ineffective civil service recruitment and promotion procedures, limited implementation capacity, limited budget execution capabilities, ineffective and lengthy procurement procedures, a weak investment climate, and an ineffective judicial system. v. The CPS is designed to strengthen governance so that Benin can capitalize on its comparative advantages. It is organized along three pillars. The foundation pillar focuses upon “Governance and public sector capacity", the other two pillars address "Sustainable growth, competitiveness and employment", and "Access to basic social services and social inclusion". Thirteen broad outcomes are associated with these pillars. vi. Building on Benin’s comparative advantage in agriculture will require public investment in rural transportation and water management and irrigation, together with institutional reforms that foster private investment and facilitate increased productivity and effective input distribution and marketing of crops. There are also many opportunities to increase value-added in cotton and food processing. vii. In the trade/commerce and services sectors, increasing productivity and fostering market growth will necessitate investments in road, rail and telecommunications services, and reforms to improve the efficiency of transport systems; strengthen customs administration; and create an investment climate more conducive to private investment. viii. The CPS design is informed by the lessons of the previous CAS, a recent client survey, and broad consultations with stakeholders. It is aligned with the 2011 World Bank Strategy for Africa and its 2012 update. It was prepared on the basis of the following guiding viii principles: selectivity and focus on results; ownership of the reform agenda by the Government; fewer, larger operations; complementarily with other donors’ programs; and leverage of other donor financing and trust funds. The CPS also builds on the Government’s request for a strong knowledge-based relationship with the Bank and flexible, on-demand service. ix. While on-going Bank operations are quite diverse and will continue to influence the composition of the overall portfolio, this CPS does not propose to invest new IDA resources in agriculture, judicial reform, national transport, education, water, or HIV/AIDS. However, the Bank Group may participate in the policy dialogue in these sectors by contributing some ESW/AAA or in an advisory capacity. Investments and TA in these sectors through trust funds (TF) managed by the Bank are also options. x. In addition to mainstreaming gender throughout Bank operations, the CPS will support the development of a system of information gathering to support the implementation of the Government’s policy on gender equality. At present, the lack of disaggregated data limits the sphere of intervention in this domain. xi. The total IDA indicative envelope for Benin during the five year CPS period (FY13- FY17) is SDR 328.6 million, or US$493.7 million. Investment projects and budget support operations reinforce each other. This is a joint exercise with IFC and MIGA. In particular, IFC support will complement IDA interventions to improve the business environment and to develop PPPs in social and economic infrastructure. xii. Endogenous economic risks are mitigated in the CPS by a series of programmatic DPLs designed to keep the macro framework in good order, support the fight against corruption, and strengthen public finance management and procurement. Potential external shocks, such as the loss of trade revenue should Nigeria undertake broad trade liberalization reforms, or the occurrence of external price shocks, are mitigated through measures to improve the competitiveness of the Port of Cotonou; develop the manufacturing sector; broaden the economic base; diversify agriculture production and improve productivity. External political risks such as the extension of the armed conflict in Mali to the rest of the region are addressed by other development partners. xiii. This CPS introduces a series of new approaches to strengthen the outcome of the Bank’s intervention in Benin. Specifically, (i) the DPO series will be supported by a Capacity Building operation that will address the Government’s implementation constraints; (ii) Bank intervention will be more focused, leaving other donors and global Funds to take the lead in some key sectors; (iii) Output-Based-Aid mechanisms are introduced in PPPs in the health and water sectors, together with Results Based Financing (RBF) mechanisms in the Capacity Building operation; (iv) emphasis is placed on regional approaches in infrastructure, in particular hydropower, transport, and in the regulatory sector, with a focus on OHADA regulation; and (vi) a new approach will be followed on the design of DPOs with triggers going more in depth into the reforms of key sectors. In addition, portfolio management will be strengthened through regular exchanges with counterparts and closer oversight by the Bank. ix I. Country Context and Development Agenda 1. Benin has significant growth potential in trade/commerce, and in agriculture and related industries. Benin is bordered to the East by Nigeria, home to a fast growing middle class of 60 million people; the country is endowed with a viable port and is a natural trade corridor for hinterland countries. In addition, the country’s favorable meteorology, fertile land and abundant water resources remain largely untapped. These comparative advantages offer opportunities to spur higher growth, a necessity in the effort to reduce poverty given the country’s persistently high population growth rate. 2. Governance problems have hindered the country in taking advantage of its comparative advantages. Benin's public administration faces efficiency challenges and has limited capacity to implement reform. Corruption is considered endemic as shown by the ratings of international governance indicators. The business climate is perceived as unattractive by many investors. Reforms to curb practices which distort resource allocation, erode the business and investment climate, reduce economic growth, and slow the pace of poverty reduction are needed to change this situation. A. Political Context 3. Benin abandoned Marxism in 1990 to embrace democracy. Presidential elections since the National Conference of 1990 were generally considered to be free and fair and transfers of power have been peaceful. An independent National Assembly, the largely unimpaired expression of fundamental civil liberties, and a certain restraint and maturity shown by the political leadership, have transformed Benin into a buoyant democracy. However, the judiciary needs to be fundamentally reformed, modernized and strengthened, together with the legislature and the civil service. 4. In March 2011, Dr. Boni Yayi was re-elected to a second and final five-year Presidential term and his alliance won a comfortable majority in the National Assembly. With a new mandate and a cooperative and supportive legislature, the Executive Office has pressed on with an ambitious reform program. B. Economic Developments and Prospects 5. GDP growth over the last two decades averaged four percent annually, below the Sub-Saharan Africa (SSA) average of 4.6 percent. Benin was a strong economic growth performer up to earlier 2000. But growth declined over the recent years as shown in Figure 1. Such performance generated only modest increases in per capita incomes as the population grew by 3.2 percent per annum over the same period. This demographic pressure poses immense challenges to the Government, particularly as it struggles to keep up with the demand for public services(See Box 1 for more details). About 45 percent of the population is urbanized. 1 Figure 1: Sluggish Growth Performance in recent years 10.0 5.0 0.0 -5.0 Real GDP Growth Per Capita GDP Pop. Growth SSA Real GDP Growth Source: World Bank Staff calculation 6. Economic output has been driven by agriculture and services, while industry has remained under-developed. The primary sector accounts for over 30 percent of GDP and provides nearly 70 percent of the country's employment. Cotton is the primary export commodity representing 25 to 40 percent of exports. The sector faces several constraints, including climatic volatility, a lack of water management, weaknesses in input procurement and distribution, and under-developed rural roads and market infrastructure. The performance of cotton is undermined by organizational difficulties and subject to political economy events (see Box 2). Box 1: The population factor: demographic dividend or youth bulge? Population growth is the result of several factors: (i) a high and steady level of fertility (4.9 children per woman in 2011) due to early marriages, low contraceptive usage (7.9percent in 2011), unmet family planning needs (32.6 percent in 2011 compared with 27 percent in 2001), and high fertility levels among adolescents (15-19 years); (ii) gradually declining mortality, and (iii) significant migratory flows. The population is expected to continue to grow and remain young in the coming decades as shown in the population pyramids below, in contrast to South Asia. High population growth creates challenges in terms of the demand for social infrastructure and services (e.g., education, health, nutrition, employment, housing and urban management) and the availability of factors of production. For instance, the country will need to hire about 1,450 new teachers every year between 2013 and 2020 at the primary level, and build and equip 31 to 37 health centers every year between 2006 and 2030. For the demographic transition and to be able to take advantage of the demographic dividend, it would be important for Benin to make faster progress in reducing child mortality (and morbidity), expand reproductive health services and promote modern contraceptive usage, in addition to high level support for population policy and nationwide advocacy and communication efforts. Promoting gender equality, better access to health and education services, women's labor force participation and urbanization are longer term factors to reduce the fertility rate. 2 Benin Population Pyramid 2015, 2035 South Asia Population 2015, 2035 80+ 90-94 80-84 70-74 70-74 60-64 60-64 50-54 50-54 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 -1500 -1000 -500 0 500 1000 1500 -100-80 -60 -40 -20 0 20 40 60 80 100 Population (‘000) Population in millions Female 2015 Male 2015 Male 2015 Female 2015 Female 2035 Male 2035 Male 2035 Female 2035 Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). Box 2: Benin Cotton – A patched history of restructuring Reform context and sector policy since 2006 In April 2006, the Government restructured the cotton sector by privatizing SONAPRA and closing down the inter-professional cotton association (AIC). In September 2007, the Government announced the transfer of control of SONAPRA to the private sector, but then almost immediately (October 2007) annulled the transaction due to purported irregularities in how the mixed ownership company had been set up and state assets transferred onto its balance sheet. Earlier in 2007, the Government unilaterally abrogated the Accord Cadre defining the respective roles of the Government and the AIC; and attempted to reintegrate sector management back into the public sphere. Strong resistance from AIC stakeholders led eventually to a negotiated agreement in the form of a new Accord Cadre by end-2008. Meanwhile, by mid-2008, the Government hastily re-launched a privatization process and by October 2008 announced the transfer of SONAPRA assets to SODECO, a mixed ownership company, in which the state retained 49 percent with 51 percent owned by a private investor. The privatization transaction was conducted under a tight schedule and modalities that resulted in limited bids and a private ginner securing a dominant industry position. The Government and AIC also undertook consultations that resulted in a draft medium-term strategy in late 2008. Over this period, though the Bank’s cotton project closed in mid-2008, ad hoc on demand advice was provided by the Bank to the Government on sector policy and institutional reforms. 3 Suspension of the cotton sector agreement in early 2012 In April 2012, after allegations of mismanagement by AIC, the Government once again annulled the Accord Cadre and took over the management of the entire value chain. Government assumed responsibility for the assistance of SONAPRA and the Office National de Soutien des Revenus (ONS) the 2012/13 crop season which was the most productive in several years. Looking forward, the State is considering moving to a zoned concession system like some neighboring countries. The Government has requested support from the World Bank in restructuring the cotton sector. In December 2012, the Bank presented to Cabinet the lessons of experience from zonal systems elsewhere in the region. Given the timeframe needed to either pursue this restructuring path or return to an improved form of the prior system, Government will most likely remain in charge of the 2013/14 crop season. Source: World Bank Staff 7. The secondary sector, accounting for 15 percent of GDP, remains embryonic and dominated by small-scale agro-food units. The business environment, coupled with restrictive trade policies in Nigeria, create incentives to engage in trading with Nigeria. 8. The tertiary sector is poorly structured and dominated by informal activities in which women play a large role. Trade and re-export activities with Nigeria and other neighboring landlocked countries represent the bulk of the tertiary sector. Re-export trade with Nigeria, largely informal, accounts for 20 percent of formal GDP and 25 percent of government revenue. Table 1 illustrates sectoral contributions to real growth over the past nine years. Table 1: Sectors’ Contribution to Real Growth in Benin (Percentage Points) 2003 2004 2005 2006 2007 2008 2009 2010 2011 Average GDP growth 3.9 3.1 2.9 3.8 4.6 5.0 2.7 2.6 3.5 3.6 Primary 0.9 2.4 -0.3 2.1 1.6 1.4 1.0 0.5 2.1 1.0 Agriculture 0.6 2.0 -0.9 1.9 1.2 1.0 0.5 0.2 1.9 0.6 Livestock 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Fishing, Forest 0.0 0.2 0.3 0.0 0.2 0.1 0.2 0.1 0.0 0.2 Secondary 0.4 -0.1 0.8 -0.1 0.5 0.6 0.4 0.5 0.5 0.6 Mining 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Manufacturing 0.0 -0.2 0.5 -0.3 0.2 0.3 0.2 0.4 0.2 0.2 Utilities 0.1 0.0 0.1 0.0 0.0 0.0 0.1 0.1 0.0 0.1 Construction & Public Works 0.2 0.1 0.2 0.2 0.3 0.3 0.1 0.0 0.2 0.3 Tertiary 2.1 0.3 2.2 1.6 2.2 2.8 1.3 1.1 1.0 1.7 Trade 0.6 -0.1 0.9 0.4 0.8 1.2 0.0 0.2 0.1 0.4 Source: Benin authorities and World Bank Staff Calculation 9. The global economic crisis and internal shocks have slowed growth in recent years. Between 2009 and 2012, growth averaged 3.1 percent per year, well below the Sub Saharan Africa (SSA) average of 4.6 percent. This modest performance is largely due to a drop in cotton production, the global economic crisis and severe floods in 2010. In 2011, growth rebounded to 3.5 percent. Projections for 2012 (see Table 2) were scaled down following the partial removal of fuel subsidies by the Nigerian government and growth is estimated to remain at 3.5 percent. 10. The Beninese economy is deeply interconnected with that of Nigeria (Box 3). Nigeria’s restrictive trade policies, including import bans on certain goods and high tariff rates on some commodities generate significant business opportunities and custom revenue for Benin, but the country is also highly vulnerable to fiscal reforms and trade liberalization in Nigeria; the reduction of fuel subsidies on January 1, 2012increased fuel prices in Benin by 50 percent. Box 3: The Nigerian Factor 4 Nigeria is Benin’s main trade partner. Exports to Nigeria accounted for 43.2 percent of total exports in 2011 and Nigeria was the second origin of imports with 5.3 percent of total official imports. The real level of trade is much higher as most informal trade is not recorded. For instance, about 90 percent of Benin’s fuel supply is provided through informal channels from Nigeria and sold along the road in small bottles by informal retailers under the name “Kpayo�. Large quantities of products including, among others, rice, tobacco and alcohol, used cars, animal fats, vegetable oil, iron, and steel are re-exported to Nigeria by Beninese importers. Recently, transit trade to neighboring Sahel countries and re-export trade to Nigeria have slowed down. The reduction in some tariffs and the removal of certain quotas and bans in Nigeria appears to be the main factor. The reduction in trade is estimated to have negatively impacted Benin's GDP growth by approximately two percentage points and significantly affected fiscal revenues (about CFAF 60 billion in 2011). Pursuit of trade liberalization in Nigeria will continue to affect transit and re-export trade and fiscal revenue in Benin. Trade policy changes in Nigeria could have severe consequences on economic activity in Benin, through the following channels: (i) a reduction in re-export trade; (ii) fiscal revenue losses; and (iii) adverse social impact as large numbers of people make their living trading with Nigeria. Source: World Bank 11. The medium term outlook predicts modest incremental real per capita growth of about one percentage point per annum on average. Key factors behind this forecast are: (i) the implementation of the Government’s Strategic Plan for Agriculture Sector Recovery (PSRSA); (ii) reform at the Port of Cotonou; and (iii) a gradual resumption of global economic activity after 2013. Real GDP growth is projected to average about 4.2 percent over the CPS period. Private investment is forecast to remain stable at around 12.7 percent of GDP, reflecting the relatively poor business environment. Additional concessional and non-concessional foreign resources will be required to finance the Government's ambitious investment program. Inflation is expected to remain below the three percent WAEMU convergence criterion. 12. Benin has a low risk of debt distress according to the 2012 Debt Sustainability Analysis (DSA). Highly Indebted Poor Countries(HIPC) and Multilateral Debt Relief Initiative (MDRI) debt relief has reduced Benin’s external debt stock from 47 percent of GDP in 2002 to 17.7 percent in 2011. The baseline and stress test scenarios showed that total debt levels present low vulnerabilities to external shocks, though lack of progress on the policy front could weaken debt sustainability. Debt indicators have deteriorated slightly in 2012 compared to 2011. Central government debt increased by 1.3 percent of GDP; debt service to exports ratio increased from 5.0 to 5.6 percent. Table 2: Key Economic Indicators, 2009-2017 ------Actual------- -----------Projections-------------------------- 2009 2010 2011 2012 2013 2014 2015 2016 2017 Population growth (%) 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 Real GDP Growth (%) 2.7 2.6 3.5 3.5 3.8 4.1 4.3 4.5 4.5 Real GDP per capita growth (%) -0.5 -0.6 0.3 0.3 0.6 0.9 1.1 1.3 1.3 Inflation (CPI, average, %) 2.2 2.1 2.7 6.9 3.3 3.1 3.0 2.8 2.8 Gross investment (% of GDP) 20.8 17.6 18.7 19.1 19.2 19.2 19.2 19.4 19.7 Gross private investment (% of GDP) 12.1 12.1 12.1 12.2 12.4 12.5 12.7 12.8 13.0 Gross domestic savings (% of GDP) 7.5 7.0 6.0 6.8 7.0 7.8 8.2 8.3 8.7 Revenue (% of GDP) 18.5 18.6 17.6 18.9 19.1 19.7 19.9 19.9 20.0 Expenditures and net lending (% of GDP) 26.0 21.6 21.9 22.5 22.5 22.2 22.0 21.8 22.0 5 Wage bill (% of GDP) 7.3 7.3 7.4 7.4 7.4 7.3 7.2 7.1 7.1 Overall fiscal balance (% of GDP) -7.5 -3.1 -4.3 -3.6 -3.4 -2.4 -2.1 -2.0 -2.0 Basic Primary Balance -4.0 0.5 -0.1 0.2 0.4 1.3 1.6 1.7 1.7 Overall balance of payments (% of GDP) -1.6 0.8 -4.9 -1.8 -0.9 0.1 0.8 1.3 1.54 Current account (excl. grants, % of GDP) -11.2 -8.2 -10.3 -10.3 -10.1 -9.3 -8.7 -8.3 -8.1 Export growth (US$ terms, %) -1.5 30.5 -22.8 9.7 8.9 10.4 7.3 7.5 7.0 Share of cotton exports (% of exports) 19.1 13.7 17.4 16.8 16.2 17.0 15.1 13.3 13.3 External Debt to GDP (%) 15.7 17.9 17.7 17.3 18.0 18.3 18.6 18.9 19.4 Debt service to exports ratio (%) 3.4 3.6 5.0 5.6 5.7 6.0 6.1 5.9 5.6 Source: Beninese authorities, IMF and Bank staff estimates and projections. C. Social Context 13. While Benin is unlikely to meet most of the MDGs by 2015, progress has been accomplished. Three out of eight MDGs are attainable, namely: (i) halting and reversing the spread of HIV/AIDS, (ii) reducing under-5 mortality by two thirds; and (iii) reducing by half the proportion of individuals without access to safe water. Child mortality has decreased from 184 deaths per 100,000 live births in 1990 to 70 in 2011, (target 61). This is a notable achievement, not only because of the magnitude of the reduction 1, but also because it was attained mainly through the distribution of bed nets which were supported by the recently closed Bank’s Malaria Control Booster Project. Conversely, the objectives concerning universal primary education, gender equality, maternal health and global partnership for development are unlikely to be met. Table 3: Benin's Progress toward the MDGs MDG 1990 Current Status Likelihood of (year) achievement 1. Poverty - Population below US$1 a day 57% (estimated) 51.6% (2011) Unlikely - Reduce hunger by one half 35% (estimated) 25.2% (2008) Possible - Reduce malnutrition by half 22% (2000) 21% (2011) Unlikely 2. Universal Primary Education 71.6% (2012) - 100% completion rate 31% (estimated) (Girls 65.8%) Unlikely 3. Gender equality - Girls/boys ratio of 100% in primary school 49.5% (1990) 98 (2012) Unlikely 4. Child Mortality - Reduce under-5 mortality by two-thirds 184 deaths/1000 live 70 (2011) Likely births (1990) 5. Maternal Health 547 deaths/ 100,000 - Reduce maternal mortality by three-fourths births (estimated) 397 (2010) Unlikely 6. HIV/AIDS, malaria & other diseases 3.8% 1.2% (2011) Likely - halt and reverse HIV/AIDS 1.4% (women) 0.9%(men) 7. Environmental Sustainability – Proportion of individuals with access to safe water 37% (estimated) 61% (2011) Likely (reduce non-access by one half) 1 Child mortality has almost been cut by half in five years (2006-2011). 6 8. Global Partnership for development - Develop an open, rule-based, predictable, non- No data No data Unlikely discriminatory trading and financial system. This includes a commitment to good governance, development and poverty reduction both nationally and internationally - In cooperation with the private sector, make available the benefits of new technology, especially information and No data No data Unlikely communication Source: Beninese authorities and World Bank Staff estimates Health Sector 14. Benin has succeeded in stabilizing its HIV-AIDS epidemic. Since 2002, HIV prevalence has remained below two percent; it was estimated at 1.2 percent in 2011, with a slight disparity between women (1.4 percent) and men (0.9 percent). 15. It is unclear whether maternal mortality has been reduced significantly since 2006. The current estimate (2011) is 397 deaths per one hundred thousand births, which is roughly similar to 2006. Benin’s maternal mortality ratio is thus similar to the ones observed in comparable countries, such as Zambia, Kenya or Cote d’Ivoire. 16. On issues related to reproductive health and population growth, the Government has not been able to alter the state of affairs significantly. The National Policy on Population has not been revised since 2006 and no action plan or budget for its implementation have been produced. As a result, Benin has no policy in place for improving reproductive health. This issue requires a more concerted effort, greater attention and awareness. 17. As for child health, as mentioned earlier, malaria-related mortality has decreased most likely thanks to the massive distribution of bed nets. Indeed, the proportion of children sleeping under a bed net increased from 20 percent in 2006 to 76 percent in 2011 (DHS 2011). But other problems faced by children such as pneumonia and malnutrition have not been effectively addressed. However, with the nationwide introduction of RBF in the health sector, governance and accountability within health care centers should quickly improve and thus enhance the overall quality and efficiency of health care delivery systems. 18. The Government’s food and nutrition reform program has suffered from weak institutional arrangements. Various disjointed, small-scale sectoral components housed in the Agriculture, Health and Family Affairs ministries have not been able to halt the deterioration in nutrition indicators. Malnutrition of children under five remains high and has worsened over the past ten years. Benin’s malnutrition rates (45 percent for stunting and 16 percent for wasting according to the 2011 DHS) are above the average of West and Central Africa. Stunting and wasting are of greater concern in rural areas, though prevalence is marginally lower among female children compared to males. Improving governance and accountability of multiple and multi-sectoral stakeholders will go a long way toward improving health and nutrition outcomes. Environment and Quality of Life 19. Benin is facing serious environmental problems in urban and semi-urban areas leading to degradation in the quality of life. Cotonou, Porto Novo and Parakou currently host most of the urban population and contribute approximately 58 percent of GDP. These ratios are expected to continue to increase as the country urbanizes. All urban and peri-urban areas face significant environmental challenges related to inadequate and insufficient water supply, 7 sanitation and waste collection systems, in addition to air pollution. The situation is aggravated further by recurrent floods. Education sector 20. Tangible progress has been achieved in access to basic education. The gross pre- school enrollment rate (GER) rose from 4.5 percent in 2005/06 to 12.5 percent in 2011/12, exceeding the target of 10 percent; and the enrollment rate for primary education increased from 93 percent to 119.7 percent, against a target of 112 percent in 2011/12. Girls' participation experienced the same trend: GER increased from 86 percent in 2005/06 to 116.8 percent in 2011/12 versus a target of 112 percent, thus reducing the gender gap. 21. Benin is not on track to meet universal primary education completion targets. Primary education completion rates (PRC) improved from 65 percent in 2005/06 to 71.6 percent in 2011/12, while girls’ PRC increased from 54.3 percent in 2005/06 to 65.8 percent in 2011/12. This modest improvement could be explained by rapid expansion in access but also by the low quality and persistently high repetition and dropout rates. In 2011 the literacy rate was estimated at 41 percent (29 percent among women, 54 percent among men). Benin ranked respectively 132nd and 126th out of 135 countries on the literacy rate and Enrolment in Primary Education Gender Gap sub-indexes 2. 22. Learning outcomes in primary education show no significant improvements since 2005. An assessment carried out in 2011 on a sample of 167 public primary schools and 35 private primary schools showed that: 3 (i) only 28 percent of second grade students (CP) from public schools and 43 percent from private schools were literate; and 18 percent and 47 percent respectively had mastered the curriculum in mathematics; and (ii) only 12 percent of fifth grade (CM1) students from public schools and 42 percent from private schools were literate, and 11 percent and 38 percent respectively had mastered the curriculum in mathematics. 23. At the post-primary level, pressure is rising for increased access and better quality and relevance. Increasing numbers of students exiting from basic education exert pressure for higher enrollments in secondary, vocational and tertiary education. However, the gender gap widens as students move through the education system, with girls’ enrollment consistently lagging that of boys. Rapid expansion puts pressure on resource availability and has a significant impact on quality and the relevance of the curriculum, particularly in tertiary education. The system must be reformed to mitigate further decline in quality. Moreover, since Benin does not benefit from extractive resources like many of its neighbors, its development must be more knowledge intensive. Higher investment in human capital will enable the country to move up the technological ladder and diversify into higher value, knowledge- and research-intensive activities which promise better returns and are less subject to competitive pressures when compared to the raw agricultural products on which Benin has been largely relying to date. Poverty incidence 24. Poverty levels have remained high over the last few years. With a Human Development Index of 0.427 Benin was ranked 167th out of 187 countries in the 2011 Human Development Report. Poverty is mostly a rural phenomenon. Interestingly, households headed by males are more affected by monetary poverty than households headed by females (see Figure 2 below). The incidence of poverty at the national level is estimated to be 36.2 percent in 2011, 2 Global Gender Gap Report 2011 – World Economic Forum 3 Rapport sur l’évaluation des apprentissages Garnier April, 2012 8 compared to 35.2 percent in 2009 and 37 percent in 2006. This aggregate figure masks important urban-rural and regional differences. Figure 2: Poverty Incidence by Areas and Gender (2006-2011) 50 40 Urban 30 Rural 20 Total Male 10 Total Female 0 Total 2006 2007 2009 2011 Source: National Statistical and Economic Analysis Institute (INSAE) 25. Rural poverty in 2011 was 39.7 percent versus 31.4 percent in urban areas. Regionally, there was a 21 point spread between the poorest and the least poor Departments. Differences were even starker at the commune level where the difference between the poorest and least poor commune was 43 percentage points. The Government’s PRS targets a poverty incidence of 25 percent by 2015. Given current and projected real economic growth and poverty trends, this 2015 targeted poverty rate is unlikely to be met. 26. Benin does not have well-established safety net systems that can be rapidly activated in times of crisis. In recent years, Benin was hit by global shocks, such as the food, fuel and financial crises that began in 2008, and by domestic shocks, such as the floods of 2010 and 2012. These crises have revealed shortcomings in Benin’s safety net systems. Spending on safety nets amounted to 0.3 percent of GDP between 2005 and 2009, well below the sub-Saharan Africa average of 2.3 percent. Strengthening Benin’s safety net system is essential to break the cycle of chronic poverty and to allow for a more effective, targeted, and timely response to future shocks. 27. The Government’s 2011 Social Safety Net Review recommended a new safety net program combining two windows: cash transfers for the chronic poor, particularly those households unable to work, together with labor-intensive public works for households with available labor. A pilot phase of this program will begin in 2013 with IDA support under the Decentralized Community Driven Services Project (PSDCC). Gender 28. Gender equality has been a priority of the Government over the past decade and was restated in its current poverty reduction strategy. The Persons and Family Code was enacted in 2004, and in 2009 a National Gender Promotion Policy and Action Plan were released. In addition, several institutions were created, including ministries dedicated to family affairs and employment of women and youth, and the Institute of Women, and the Observatory of Family, Women and Children. Abiding by his promise of including 30 percent of women in his Cabinet, in June 2012, President Yayi appointed eight women out of 26 ministerial postings. This was a first in the country's history. There have been two women sitting on the Constitutional Court since 1998 and this institution has been chaired by a woman for the last 20 years. There are no discriminatory laws constraining legal emancipation of women. 9 29. Economic empowerment of women has improved over the past five years thanks to the Government’s targeted microfinance program, of which 98 percent of clients are women. Benin was ranked 67th out of 134 countries on the gender gap index in the 2011 Overall Economic Empowerment index. Women’s labor force participation was estimated at 69 percent in 2011, compared to 78 percent for men. Women are primarily active in low value-added, low income generating and informal activities. The gender gap in literacy remains high and significant progress on maternal health has yet to be achieved. In 2011, only seven percent of legislators, senior officials or corporate manages were women. The number of women elected to the National Assembly increased from five out of 64 elected representatives in 1995 (7.8 percent) to only seven of 83 (8.4 percent) after the 2011 elections. Benin was ranked 104th on the Political Empowerment Gender Gap sub-index in 2011 with a score of 0.066 compared to an average of 0.185 for the 135 countries assessed. Finally, the lack of institutional capacity for gender budgeting within the public administration requires attention. 30. Some impediments to gender equality remain: (a) the gender gap is still high in education leading to early marriage for girls and high fertility rates and mortality rates, especially in the North; (b) while women are very active in commerce and trade, they have limited access to financial services, hampering their ability to scale up their economic activities; and (c) limited access to land, fertilizers and other inputs in the agriculture sector, although women represent an important share of the workforce. 31. Lack of disaggregated gender data hampers the Government’s capacity to address gender inequality effectively. The Bank is assisting the National Statistics Bureau (INSAE) to set up a comprehensive baseline of gender disaggregated data which will facilitate the formulation of a national gender equality program. Technical assistance to upgrade INSAE skills in collecting and analyzing gender disaggregated data will be provided through a statistical capacity trust fund. 32. The Bank will continue to support the authorities in their effort to promote gender equality. During the CPS implementation period, IDA financed operations in the private sector, energy and health sectors, together with the GPE financed education project will be designed to foster gender equality. D. Development Challenges and Opportunities 33. Benin’s central challenge is to stimulate robust growth through higher value-added activities. Improving shared prosperity will require accelerated growth through private sector development, good governance and enhanced institutional efficiency. The business climate is undermined by discretionary public sector practices and insufficient transparency, particularly within the Customs administration, the Port of Cotonou, and the judicial system. Competitiveness also suffers from underinvestment in infrastructure. 34. The Country Economic Memorandum of 2009 attributed the lack of growth to four primary constraints which continue to be critical bottlenecks today: (i). A distortionary and poorly administered tax system; and complex and lengthy customs and trade procedures; (ii). Poor government effectiveness, including contract enforcement, weak institutions and corruption; (iii). Costly and unreliable infrastructure services, especially electricity, domestic rail and road transport and communication; and 10 (iv). Firms’ failure to adapt technologies available internationally and innovation to produce at low enough cost to be profitable and competitive in foreign markets. 35. The 2006 Diagnostic Trade Integration Study(DTIS) noted three main challenges for Benin which also remain relevant today: (i). Maximizing income from the cotton sector; (ii). Rationalizing transit and re-export trade; and (iii). Diversifying the country’s export base. The agriculture sector and other potential growth opportunities 36. The agriculture sector could potentially be a strong contributor to growth and poverty reduction, and a large source of job creation. However, public resources are largely concentrated on a single crop (cotton), and farm productivity is low. In addition, access to improved technologies and sources of finance are limited. Farmers cannot sell their products easily due to a lack of adequate transport infrastructure and market facilities. Low productivity and labor intensive farming also contributes to large family size and continuing population pressure. Improving agricultural technology and productivity could have important demographic benefits. 37. The 2008- 2015 Strategic Plan to Revitalize the Agriculture Sector (PSRSA)sets out the Government’s vision to transform the country into "an agricultural power" by 2015, with "a competitive, environmentally friendly, and wealth-creating agriculture sector, responding to the economic and social development needs of the Beninese population". The strategy has two main objectives: (i) fostering efficient and sustainable agriculture production; and (ii) improving agricultural diversification and competitiveness to facilitate access to markets, boost agriculture exports and reduce imports. 38. Other potential long term sources of growth identified in Benin Alafia4 2025 include agro-business, tourism, artisanal handicraft, and the construction sectors. The global economic crisis has slowed the growth of these sectors. However, in 2012, the Government, launched the construction of six new processing plants for pineapple, cashew, mangoes, tomatoes, rice and yams; and the BOAD announced that it would finance the construction of the “Fishing road� along the coast between Cotonou and Ouidah, spurring the interest which Chinese investors have expressed in hotel construction. Improving Governance to achieve inclusive growth 39. Governance remains hampered by a poorly trained civil service with limited capacity, weak fiduciary practices and relatively high levels of corruption. 80 percent of civil servants 5only have a High School Diploma. Recruitment is not conducted on objective criteria and promotion is based principally on seniority and patronage. 40. A comprehensive action plan to strengthen PFM was prepared based on the findings of the previous 2007 PEFA. The Public Procurement Code has been revised. A new law on corruption has been ratified and a study on public remuneration has been completed, paving the way for a more ambitious civil service reform effort. The 2012 PEFA auto-evaluation (with support from AFRITAC) conducted by the Ministry of Economy and Finance and the 2010 4 National Long term strategic vision developed Benin authorities in June 2000. 5 There are approximately 66,000 civil servants in total, including close to 9,000 non-permanent and excluding military and paramilitary staffs 11 Public Expenditure Review indicate that PFM in Benin has improved, though substantial room for further progress remains. Table 4 notes changes in ratings between the two assessments. Table 4: PEFA Ratings 2007 versus 2012 2007 2012 Number of indicators rated A 0 0 Number of indicators rated B 4 7 Number of indicators rated C 15 14 Number of indicators rated D 12 10 Total number of indicators 31 31 Number of sub-indicators rated A 4 9 Number of sub-indicators rated B 15 19 Number of sub-indicators rated C 32 26 Number of sub-indicators rated D 23 22 Total number of sub-indicators 74 76 41. Improvements in Public Financial Management (PFM) are still needed to streamline budget execution procedures, enhance public procurement, and ensure regular internal and external auditing. The 2012 PEFA indicated that improvements are needed to raise the quality and timeliness of the Government’s annual financial statements; strengthen treasury management and the supervision of public firms and decentralized spending authorities; improve the effectiveness of external audit and the legislative scrutiny of budget laws and their execution. Delays in the approval of state accounts, bribery and collusion in public procurement have been recurrent issues. Improving PFM will be at the core of future PRSCs. 42. The 2012 Transparency International Corruption Perception Index ranked Benin in 94th position out of 183 countries -- from 100thin 2011. This comes after a series of high- profile financial scandals in 2010. Benin was also ranked 11thout of 53 African countries in the 2011 Mo Ibrahim Index of Governance, although with diverging trends. Whereas the sub- indicators on “Sustainable Economic Opportunity� and “Human Development� improved in recent years, the scores on “Safety & Rule of Law� and “Participation and Human Rights� registered noticeable declines. 6 Overall, Benin scored higher than both the West Africa regional average and the continental average. Despite the relatively favorable rankings, corruption remains high in customs, tax departments, justice, the police, and at the port of Cotonou. 43. Access to information on public affairs by civil society has improved, although CSOs continue to express frustration with the Government. Most government decisions and documents are still not published. Difficulties persist in obtaining timely information on budget execution; delays in national audits limit public scrutiny. On the other hand, CSOs’ limited capacity to use modern social accountability tools and insufficient coordination between themselves, limit their leverage. In addition, the media sector would have to be reformed to promote greater business ethics, independence and professionalism. The Business Environment and Public Private Partnerships 44. Benin’s investment climate is weak. Recent studies of investment climate have ranked Benin amongst countries with the poorest business enabling environment. . 6 See Mo Ibrahim Index country profile for Benin: http://www.moibrahimfoundation.org/benin/. 12 45. According to a recent Africa Infrastructure Country Diagnostic (AICD, 2011) 7 study , the Cotonou-Niamey corridor is the most expensive gateway in West Africa and transaction costs in the Port of Cotonou account for the bulk of the costs of importing goods through this corridor. Private sector activity is also hampered by the poor state of the country’s energy, road and ICT sectors 8. Efforts by the Government to develop a PPP program have yet to be supported by a coherent strategic vision and an appropriate institutional set up. 46. Private sector participation is hindered by the lack of an effective and coordinated dialogue mechanism between the public and private sectors. The High Commission for Collaborative Governance and the Millennium Challenge Account (MCA)have organized consultations with civil society, but efforts to encourage public-private sector dialogue have been less successful. The Presidential Investment Council (PIC) was set up as a Public-Private Dialogue (PPD) platform to coordinate the implementation of private sector related reforms, though with limited success so far. 47. A series of reforms are planned for 2013 and 2014 including new PPP and Competition laws, a revised Labor Code and implementation of the Government’s recent plan for strengthening the investment and business climate. The Government wishes to encourage greater private sector involvement in the implementation of the SCRP-3, and counts on the development of public-private partnerships to finance an ambitious infrastructure development plan. A Round- Table is planned in Paris in the first half of 2013 which will also try to mobilize the diaspora. The Bank will also provide advisory assistance to the Republic of Benin in the mining and oil sector. This assistance will cover: (i) production of share contracts; (ii) bidding of exploration blocks; and (iii) efficient use of mining and oil revenue, based on best practices worldwide, such as in Sao Tome and Principe and Norway. Youth Unemployment 48. The job market is characterized by underemployment, particularly among youth. Formal unemployment is very low at 0.3 percent for all working age adults and 0.5 percent for youth. However, especially for youth, employment comes in low productivity jobs in the informal sector, where they may not work as many hours as desired, earn incomes that are below the minimum wage/poverty line, and perform work that does not match their education or training. The informal sector represents almost 95 percent of the working population with a predominance of women. The key challenge is raising productivity in family farms and non-farm household enterprises, while also growing the modern wage sector where productivity is currently the highest. In this regard, the quality of education is important for youth (and women) to effectively participate in higher productivity agricultural activities and household enterprises, as well as to engage in a modern skills- and knowledge-based wage sector. Similarly, lack of access to credit and land, constrain aspiring entrepreneurs from opening up a (informal) business. 49. The National Employment Policy of 2011 puts a strong emphasis on improving youth employability and access to employment. Existing programs focused on youth include entrepreneurship initiatives combining business skills training with access to microcredit; internship programs to provide youth with professional experience; apprenticeship programs matching youth with experienced artisans; access to microcredit for existing small and medium 7 http://www.ppiaf.org/sites/ppiaf.org/files/publication/AICD-Benin-Country-Report.pdf 8 Electricity tariffs are extremely high compared to the regional average. Business users have to pay US$160 per mbit per month for fixed broadband Internet access, while consumers in Senegal and Ghana pay only US$29 and US$64 respectively 13 enterprises (SMEs); and technical and financial support for youth engaged in agriculture. While there are some promising models, the results of most initiatives have so far have been mixed. Underinvestment in Transport Infrastructure and the Port of Cotonou 50. In the Transport sector, tariffs remain punitively high; domestic and regional regulatory reforms, coupled with public and private investment in roads and railways, are necessary. High transport prices reduce competitiveness, and indirectly, negatively impact growth and the job market. Poorly designed market regulation has resulted in the provision of low quality transport services, insufficiently capitalized trucking companies and obsolete trucking fleets. Existing regional and bilateral arrangements discourage the provision of efficient road transport services. Regulatory reforms including regional freight sharing agreements, national carrier restrictions, truck registration and technical inspections, drivers' training, insurance requirements, and enforcement of axle load controls need to be coordinated at the regional level to be effective. 51. In the port, underperformance is largely due to governance problems and managerial deficiencies. Cooperation between the principal port actors is limited; ownership of the reforms initiated by the Government is lacking; corruption is often entrenched in business practices; and management responsibilities and accountabilities for port operations need to be clarified and strengthened. These weaknesses generate long dwell times in the port, high transaction costs, unmanageable truck congestion inside the port and in Cotonou, and serious revenue leakages with macroeconomic consequences. In 2011, the loss to GDP growth resulting from poor port performance was estimated at 0.6 percentage point. Important port reforms were implemented in 2012 and performance has improved. However the momentum must be maintained and the reform agenda completed to further enhance port performance. Electricity 52. There is a gap between supply and demand in the electricity sector; rural coverage is limited and distribution infrastructure is outdated. Demand growth is estimated at about eight percent per year. CEB is the single buyer of electricity in Benin and Togo. CEB imports over 70 percent of its electricity from Nigeria and Ghana. The rest of the generation is provided by the hydroelectric dam of Nangbéto in Togo and some gas supplied by the West African Gas Pipeline (WAGP). CEB has been unable to meet domestic demand. Distribution over the national territory is carried out by SBEE which partially addresses the supply gap by reverting to thermal generation. SBEE's distribution infrastructure is outdated and cannot ensure quality services to its customers who are subject to high voltage drops and long blackouts. There is potential for clean energy production in Benin in the form of wind, tidal power and solar energy, but these potential sources will require considerable investment and appropriate legal and regulatory frameworks. 53. The Government has concentrated its action on reducing the supply gap by financing an 80MW thermal generation plant running on jet fuel and gas. However, the gas contract is still not in place and gas supply in the sub region remains erratic. Jet fuel is extremely expensive. A large hydropower project located at Adjarala, on the border between Benin and Togo, is planned and will be supported by the WBG (FY15). Information and Communication Technologies (ICT) 54. Access to telephony has increased exponentially since the introduction of mobile phones in 2000 but access to other ICT products remains very low. Growth in the internet 14 industry is constrained by costs, availability, and low penetration of fixed lines. The increase in density in the mobile segment masks a wide discrepancy between urban and rural areas, access being concentrated in cities, leaving a large percentage of the population without access to modern communications tools. Fixed line penetration has languished at around 0.26 percent penetration; and internet penetration is one of the lowest in the world at about 1.8 percent of the population. Broadband Internet DSL remains a service used by industry, government, and a few privileged households (less than 0.25 percent in 2010). The cost of international bandwidth is high; an Internet Exchange Point (IXP) that would reduce the cost of local Internet traffic, is missing; theft of fiber access is frequent; and regulation to ensure competition and fair and equitable access to bandwidth is incomplete. 55. The Government has liberalized the mobile segment and attempted to privatize the fixed grid. However, bids received were below expectation and the privatization of Benin telecom was cancelled. An interim regulatory body was set up to oversee private sector participation in the sector. Environment and climate change 56. Benin’s natural environment is deteriorating steadily. Rapid population growth coupled with a mismatch between natural resource use and the rate of resource renewal are at the root of the problems. Growing urban and semi-urban centers are facing major environmental challenges related to inadequate infrastructure and basic services, which translates into poor sanitary conditions and poor quality of life. The 2010 Country Environmental Analysis (CEA) prepared by the Bank made a number of recommendations, among which the establishment of effective policies and institutions, and the mobilization of financing for environmental protection and natural resource management. Global climate change, especially the rise in temperatures and rainfall, and recurrent floods, will compound the challenges faced in agriculture (water management), forestry (deforestation), and health (spread of infectious diseases), while the coastal fringe will likely experience a rise in sea level. Priority actions envisioned in the SCRP-3 to address the environmental challenges include: (i) the long-term promotion of good environmental practices; (ii) the promotion of healthy environmental practices by households; and (iii) the rational management of forests and natural resources. 57. Management of climate change issues is coordinated by the National Committee on Climate Change. Benin prepared its National Action Plan for Adaptation to Climate Change (NAPA) in 2008. The NAPA has five priorities: (i) establishing a model for forecasting climate risk and an early warning system for food security in four vulnerable agro-ecological zones; (ii) the promotion renewable energy; (iii) the collection of surface water in municipalities and vulnerable departments in the center and the north; (iv) the protection of children under five and pregnant women against malaria in areas most vulnerable to climate change; and (v) the protection of coastal areas against a rise in sea level. II. Government Strategic Priorities 58. The SCRP-3 (2011-2015) is consistent with the long term national visions contained in the National Study of Long Term Perspectives (ENPLT) and Benin Alafia 2025.It builds on the Strategic Development Orientations (OSD) of 2006. The SCRP-3 operationalizes the OSD through the Priority Action Plan (PAP) and the Medium-Term Expenditure Framework (MTEF). Broad consultations with stakeholders highlighted cross-cutting themes such as governance, gender, HIV/AIDS, demographics, environmental protection and human rights. 15 59. The pillars of the SCRP-3 do not fundamentally differ from those of the previous poverty reduction strategy. These pillars are: (i) acceleration of economic growth; (ii) development of infrastructure; (iii) strengthening of human capital; (iv) promotion of good governance; and (v) balanced and sustainable regional development. However, the SCRP-3’s pillars include new challenges such as youth and female employment; the opening up of new agricultural production zones and activities; the promotion of rural economic growth; the reduction of gender inequalities; and social protection needs. Furthermore, themes such as rural organization, agricultural diversification, demographic challenges and adaptation to climate change have been better defined. 60. The overarching objective of Benin’s poverty reduction strategy is to accelerate growth. The base case in the SCRP-3 assumes 7.5 percent growth by 2015, from a starting point of 2.6 percent in 2010. This is two percentage points higher than the goal stated in SCRP-2 which was not attained. While growth approaching 7.5 percent is undoubtedly necessary to achieve the MDGs, such a growth rate has no historical precedence in Benin. The alternative scenario in the SCRP-3 assumes a 5.2 percent average growth rate. While more realistic, it still exceeds the target growth rates of the Enhanced Credit Facility program with the IMF. 61. The level of resources needed to implement the PAP is also ambitious and optimistic. The PAP is updated annually and is coherent with the Public Investment Program (PIP). It is the link between the SCRP, the sector-based program budgets developed by line ministries, the national budget and the MTEF, which is also updated annually on a three year rolling basis. The PAP, while providing the details necessary to render the SCRP actionable, is insufficiently prioritized to inform allocation decisions in the context of limited resources. III. The Country Partnership Strategy (FY13-17) A. Lessons Learned from Previous CAS and Stakeholder Feedback Conclusions drawn from the FY09-12 CAS: 62. The CAS Completion Report (CASCR) concluded that the overall performance of the FY09-12 CAS was moderately satisfactory (see Annex 2). While Benin achieved positive growth during the CAS period despite the global economic downturn and the 2010 floods, progress in poverty reduction was limited. Positive outcomes included: the maintenance of macroeconomic stability; progress in public financial management and decentralization; and improvements in the social sectors, particularly access to safe water for rural populations. However, CAS achievements fell short of what was envisaged with respect to private sector growth; structural reforms in agriculture and energy; and public sector governance reforms and institutional reinforcement. 63. The CASCR pointed out the following lessons: • IDA should concentrate its assistance. Benin has many development needs. IDA should focus on areas where it can present an effective mix of interventions, and where it has comparative advantage and solid expertise. • Broad-based political support and an understanding of the political economy are critical for successful country strategy implementation. Over the past decade, political conflicts have slowed by the approval and implementation of structural reforms. Greater recognition 16 of the political standoffs which can develop as alliances shift over time should be taken into account in the CPS. • Policy reforms require technical support. Investment/TA projects that complement PRSC actions are essential. • Coordination of donor programs increases efficiency of assistance. The reform agenda in the PRSCs was supported by other donors and helped bring about reforms. • Make CPS periods longer, allow flexibility in programming and define adequate indicators: Three years is too short a period to show meaningful results; a longer CPS period of five years would permit a mid-term evaluation and potential adjustments. Performance indicators and targets should be measurable, available, realistic and attributable to Bank intervention. Findings from the Client Survey and Stakeholder Feedback 64. Client Survey: According to the FY12 Country Survey, the public at large generally welcomed the actions of the World Bank Group in Benin. Governance, political rivalries and inadequate levels of citizen participation were perceived as the greatest obstacles to successful reform. The Bank was encouraged to reduce the complexity of its financing, be more adaptive to changing circumstances. The Bank was also invited to engage more with stakeholders and encourage greater citizen participation. Whereas in FY07, growth and governance were identified as the top development priorities, in FY 12 education, followed by agriculture and rural development were the main priorities. CPS Consultations with Country Stakeholders 65. Consultations were held with CSOs, academic institutions, the private sector, Parliament, Government, faith-based organizations (FBOs) and donors. More than 250 participants attended the meetings and suggested that the Bank pay particular attention to the following: • Donor coordination and selectivity in areas where the Bank has a comparative advantage: The Bank should focus on designing and implementing large scale projects in selected priority areas, in particular infrastructure and human development, instead of spreading its IDA envelop across all sectors. This was suggested by the Government, academic institutions and donors alike. It was also suggested that donor actions, including the Bank’s, would be more effective if they were more closely coordinated between donors. • Strengthening the knowledge base: Stakeholders recognized the Bank's comparative advantage to generate and disseminate knowledge. The Bank was encouraged to undertake more ESW to deepen the understanding of the country’s sources of growth and government reforms. • Capacity Building: Stakeholders encouraged the Bank to finance a training program for Parliamentarians, and to support the work program of the Council of Economic and Social Affairs (CESA). The objective should be to enhance the capacity of these institutions to monitor and assess government activities, in particular the provision of basic social services. Civil society and FBOs also requested that they be consulted at the design stage of Bank operations and during supervision. • Governance and the fight against corruption was a unanimous concern. The private sector encouraged the Bank to support Government efforts to improve governance, in particular in the judiciary and fiduciary systems, starting with public procurement and public financial management. The private sector also called for Bank involvement in the design of 17 the public-private dialogue and business climate reforms. Civil society and FBOs requested the Bank’s deeper engagement in the fight against corruption, as this was considered a major impediment to economic and social development. 66. Six areas (infrastructure, human development, agriculture, decentralization, private sector development, and public sector reform) and two cross-cutting themes (governance and capacity building) were identified as priorities by participants during the consultative meetings. B. Proposed World Bank Group Country Partnership Strategy 67. The CPS spans a period of five years. Its design is informed by the lessons of the previous CAS, the 2012 client survey and consultations with Government and stakeholders. It supports implementation of the SCRP-3 and the Government’s medium and long-term visions set out in “Benin Alafia 2025�, and the OSD. It is aligned with the World Bank Strategy for Africa. To ensure flexibility and full responsiveness to country needs, a Progress Report will be carried following 18-24 months of CPS implementation to address adjustments which may be required to better respond to strategic re-orientation or emerging needs. Guiding Principles • Reinforcement of governance in the focus areas, especially through capacity building to complement policy reforms supported by yearly Development Policy Operations. • Realism and selectivity are important given the country’s governance challenges and its capacity constraints. The Bank will define measurable outcomes and focus on its areas of comparative advantage in infrastructure (energy, telecom), Private sector Development (PSD), youth employment, and governance. It will also selectively engage in the health sector (focus on health and nutrition systems strengthening) and in basic education through the Global Partnership for Education program. Additional Financing or new phases of successful existing operations will be supported (Urban, agriculture and CDD operations). No new IDA operational project resources will be invested in agriculture, judicial reform, national transport, education, water, and HIV/Aids. However, the Bank Group may contribute to the policy dialogue in these sectors through ESW/AAA or advisory work. Investments and TA in these sectors through TF managed by the Bank are also an option. • Improvement of quality at entry by ensuring ownership and encouraging the integral participation of relevant government institutions in project preparation. Knowledge in the form of policy notes, diagnostic instruments and sector studies will support the design of Bank operations. Consultations with stakeholders will be organized with the help of the Bank’s communication professionals from the design phase of the operation onward. • The Bank will proactively manage its portfolio by encouraging project restructuring where necessary, and monitoring work programs and procurement procedures, particularly in infrastructure projects. Poor performers will be closed and the funds reallocated to better performing projects. • World Bank Group resources will leverage other donor financing and trust funds and be a catalyst for mobilizing financing by the State and private investors The Bank will use the extensive analytical work underway and in the pipeline to nurture policy dialogue in key sectors of the economy. The knowledge generated is expected to attract the participation of other partners. Hence, in higher education or civil service reform, the Bank will selectively accompany efforts of other donors through targeted technical assistance or ESW. The Bank will help leverage trust funds particularly in the governance, social, environmental protection and water sectors. 18 • Regional Integration can be a catalyst for growth. Benin is strategically located next to Nigeria and is serving as a transit corridor for landlocked Niger, Burkina Faso, Mali and Chad. The Government plans to transform Benin from a transit country to a logistical and export services hub. The WBG has already committed to support the Government’s efforts through the Regional Trade Facilitation Project designed to foster trade flows and private sector investments. Consideration is also being given to a regional development policy operation to support the reform of regional road transport regulations, conventions and institutions that reduce regional competitiveness. Mainstreaming gender in the Bank portfolio 68. A review of 20 IDA projects and 10 AAA/ESW over the 2004-2012 period showed that: (i). Only one project in apiculture had a thematic code of 25 percent attributed to gender; (ii). 50 percent of projects included gender in their design; (iii). 45 percent of projects designed activities distinctly, targeting men or women;45 percent of projects used sex-disaggregated indicators in the result framework; (iv). 35 percent of projects used participatory processes including gender in their design; (v). 50 percent of projects included activities promoting economic empowerment of women; (vi). DPOs lacked adequate focus on gender issues. 69. The review found that AAA and ESW were more gender sensitive. Six out of the ten analytical works performed during the period included gender in their design; one of which was specifically gender-coded (the Gender & Energy Study). Governance and transport sector activities were less focused on gender. Taking stock of the upcoming Poverty and Gender Assessment, future Bank projects will have a sound framework for integrating gender issues. 70. Financing Envelope: The total indicative IDA envelope for Benin over the FY13-FY17 period is SDR 328.6 million, or approximately US$493.7 million. This includes the outstanding IDA16 envelope for FY13/14 of SDR 136.8 million (the amount of SDR 62.1 million for FY14 is indicative) and an indicative projection of SDR 191.9 million for the three years of IDA-17 (FY15-17) which assumes a similar level of resources as for IDA-16 9. Better portfolio performance and a more favorable CPIA score over the course of the CPS period absolutely and relative to other countries, would help increase the IDA allocation. In addition to the ongoing trust funds, the CPS will emphasize the mobilization of additional resources, be they either from trust or global funds – see Table 5 on proposed financing. 71. Mix of policy-based and investment operations. PRSC series will be redesigned to go deeper into the reform programs of strategic sectors. PRSC series will be complemented by capacity building, TA and ESW to ensure effective implementation of reforms. There will be fewer, larger investment lending operations and in selective cases, multi-sector projects will be used as in the case of the Multi-sector Health and Nutrition project (FY14) where there is strong 9 Among others, the actual allocations for FY14 onwards will depend on: (i) the country’s own performance; (ii) its performance relative to that of other IDA recipients; (iii) the amount of overall resources available to IDA; (iv) changes in the list of active IDA-eligible countries; and (v) the terms of financial assistance provided (grants or loans). Also, IDA allocations are determined in SDRs, the US dollar equivalent is based on an exchange rate of US$1.5/SDR (the rate applicable to each operation will be determined at the time of approval). Finally, the indicative figures for the FY15-17 will be revised based on the outcome of the IDA17 replenishment negotiations. 19 intra-sectoral collaboration within the Bank and where Benin has built a foundation from the recently closed Nutrition operation. Table 5: Benin: Proposed IDA and Other Financing, FY13-17 Operations according to Fiscal Year Source of Operations according to Fiscal Year Source of (FY) Financing (US$ (FY) Financing (US$ million) million) IDA TF IDA TF FY13 FY16 PRSC-8 30 PRSC-11 20 Cities Support Program 60 AF Urban Environment 30 AF Forest & Adjacent Land Mgt 2 5.56 Regional Transport DPO TBD (GEF/IDA) Regional WA Communication 12 Total FY16 50-70 Infrastructure Global Partnership for Education 42.3 FY17 Total FY13 103.7 47.86 PRSC new series 20-30 FY14 Energy Services or PRSC-9 (new series) 30 Environment/Climate Change TBD Youth Employment 35 Community Driven Decentralized TBD Services 2 Multi-Sectoral Food/Health & Nutrition 30 WAAPP -1C Phase 2 10 TBD Africa Centers of Excellence 5 Total FY14 100 Total FY17 90-100 FY15 PRSC-10 20 Capacity Building Operation (multi- 25 sector) Cross-Border SEZ 50 Regional Adjarala Hydropower 20 Total FY15 115 72. The CPS will build on the Government’s request for a strong knowledge-based relationship with the Bank and flexible, on-demand services. The CPS proposes an enhanced focus on analytical work, including through a capacity building operation providing flexible on- demand AAA work. This will allow the CPS program to be better aligned with the Government’s priorities and increasingly flexible to address key policy and sector issues as they arise 73. The CPS will build upon the existing portfolio. As of the end of January 2013, the portfolio consisted of 10 operations totaling US$286.62 million in net commitments, of which US$261.86 million remained undisbursed. There is an additional commitment of US$158.30 million under six regional projects. The portfolio is supplemented by eleven recipient-executed Trust Funds totaling US$38.80 million in commitments (with US$24.43 million undisbursed). 10 The West Africa Agricultural Productivity Program (WAAPP) is an APL with two phases. The ongoing first phase will end by June 2016. 20 Table 6: Portfolio Trends Year FY07 FY08 FY09 FY10 FY11 FY12 FY13 Projects (#) 9 9 11 14 16 11 10 Net Commitments (US$ million) 290 354 435 502.4 593.3 340.8 288.8 Problem projects (#) 2 0 3 1 1 0 0 Potential problem projects (#) 0 1 1 3 3 2 2 % at risk (of not meeting objectives) 22 11 36 27.5 31.1 10.4 12.5 Proactivity index (%) 0 100 0 100 0 100 -- Undisbursed balance (US$ million) 177 216 297 297.5 323.2 272.2 253 Disbursement ratio 23.7 24.3 22.7 23.8 22.5 18.8 8.5 74. Two projects are currently at risk in the portfolio. These are the Increased Access to Energy Project (three years old with only about US$1 million disbursed due to lack of advance procurement planning), and the GEF Community-Based Coastal Marine Biodiversity Project (management, procurement and counterpart funding problems). In addition, the Integrated Growth and Competitiveness Project is in the process of being restructured. 75. The low disbursement ratio is due to: (i) long delays in effectiveness and procurement processes; (ii) counterpart funding problems; (iii) lack of ownership of implementing structures at project commencement; and (iv) the often belated constitution of project teams. Following the 2011 CPPR, a joint WB-Government Steering Committee was set up to monitor portfolio performance and overcome systemic procurement issues, including through targeted training supported by the Bank. In addition, the E-signature disbursement procedures are being extended to the entire active portfolio. Consequently, all projects have now a realistic monthly disbursement plan; and (ii) Government implemented an effective portfolio overall performance and disbursement ratio monitoring mechanism. 76. Most ISRs are rated satisfactory with a moderate FM risk rating. Interim financial reports (IFR) are submitted to the Bank on time and of acceptable quality. Over the last three years, Benin achieved 100 percent fiduciary compliance of audited reports submitted within the fiscal year. Most of the opinions of the last audit reports were unqualified. Some challenges remain with state owned enterprises some of which continue to submit their audited financial statements after the Bank deadline and qualified opinions. FM capacity building sessions are planned to address cross-cutting issues and speed up disbursement rates during the CPS period. IFC &MIGA 77. IFC’s current investment portfolio consists of two investments in the financial sector totalingUS$8.4 million, as set out in Annex 6. Additional leads in the financial and agribusiness sectors are currently under consideration. In addition, IFC is providing advisory services to the Government on the reform of the business environment in partnership with the FPD department of the Bank; capacity building to financial intermediaries to improve access to finance for Micro, Small and Medium Enterprises (MSMEs); and capacity building to financial institutions. 78. IFC is also working jointly with the Bank to advise the Government on the legal, institutional and regulatory framework for public-private partnerships (PPPs) and is advising the Government on the set up of PPPs in the rural water sector in partnership with the Bank’s Water and Sanitation Program (WSP). It is also currently assisting the Government as lead advisor in structuring and implementing a PPP in the health sector. 21 79. Going forward, IFC will continue to provide advisory services and TA, and look for investment opportunities. It will co-lead the advisory work on business climate reform, focusing on the harmonization of the domestic legal framework with OHADA uniform Acts. It will look for synergies and complementarily with WBG entities, and seek investment opportunities in sectors where the Bank is engaged in policy dialogue and where reforms are being implemented to improve the legal and regulatory framework necessary for private sector interventions. 80. MIGA’s current exposure in Benin consists of three projects in the tourism, services and infrastructure sectors, for a total of US$8.7m in both gross and net terms. MIGA is open for business in Benin across all of its political risk insurance product lines, including Transfer Restriction, Expropriation, Breach of Contract and War and Civil Disturbance, as well as, under certain conditions, the Non-Honoring of Sovereign Obligations. MIGA's Small Investment Product (SIP) may also be appropriate for Benin. Greater engagement in Benin fits closely with MIGA’s strategic goals of supporting IDA countries, and MIGA’s strategic commitment to lever its product for complex projects also fits closely with Benin’s needs especially in infrastructure. Mindful of the high priority attached to attracting foreign investment, MIGA will continue to seek opportunities in Benin, supporting private investors and the government to catalyze the investment which is needed to take development to the next stage. Moreover, MIGA will also look for opportunities to support private investors in the PPP projects, and use its product to complement existing or planned engagement by the Group. WBI 81. The Knowledge agenda. WBI’s main focus in Benin has been the promotion of South- South cooperation. WBI organized two workshops in 2012 in collaboration with NEPAD, UNDP and the Association of African Development Learning Centers (AADLC). The workshop was attended by Regional Economic Communities (RECs) representatives and focused on regional integration. The second workshop was organized for development and academic partners and dealt with capacity development and implementation challenges. The WBI and the Bank’s country office in Benin will continue to take advantage of the presence of a Global Distance Learning Center in Cotonou to foster the exchange of experience and tested implementation approaches from peer countries in the South. 82. Other initiatives related to the Knowledge agenda include a program to generate and disseminate agriculture technology on a sub-regional basis, and the Africa Centers of Excellence Regional (ACER) Project. Benin has traditionally excelled in mathematics and science within the sub-continent. It is therefore well positioned to participate in these programs. The ACER Project is motivated by the rise in demand for specialized human capital within rapidly growing development sectors such as extractive industries, energy, water, environment, infrastructure, and in service sectors such as hospitality, banking, tourism and ICT. A regional approach to higher education offers a cost effective mechanism to build responsiveness and excellence in higher education in Africa in priority areas such as Science Technology, Engineering and Mathematics (STEM), Agriculture and Health Sciences. C. Partnerships and Donor Coordination 83. The CPS, emphasizing strong partnerships, will be selective and focused. Under the last CAS, the Bank was present in many sectors. To maximize the impact of its financial and technical support, the Bank intends, under the new CPS, to focus its assistance on the 22 following strategic sectors: infrastructure (energy, transport excluding roads and railways, ICT, and urban development); PSD; and governance. Bank assistance will be coordinated with other donors (See Annex10). The Bank will use its AAA work to underpin the reform agenda and leverage additional resources from other donors. AAA/ESW activities will focus on cotton sector reform, port reform, PFM and public procurement, customs and tax administration. Trust funds will also be sought to complement the IDA envelope. GPOBA grants have been requested to provide subsidies in the health and water sectors. A donor conference to pledge funds for the Government’s growth strategy will be organized by the Bank in Paris in 2013. It will include a special session on private investment in high potential value chains and government priority PPP projects. 84. The Government and development partners are committed to harmonization and alignment. The Ministry of Development chairs the joint Government-Donors Steering Committee monitoring SCRP implementation. Regular meetings are held among donors to monitor key emerging issues pertaining to aid. A joint annual review is conducted each June to assess progress in the implementation of the Government’s poverty reduction strategy. Partners designate a chair for each of the thirteen sectoral thematic groups. Benin’s traditional development partners are the EU, the AfDB, the BOAD, Belgium, Denmark, France, Germany, the Netherlands, Switzerland, the US (USAID and MCC), the United Nations agencies and IDA. Furthermore, China, Brazil, India and South Africa are increasingly contributing to the country’s development agenda and about to participate in donors’ coordination efforts. 85. The Bank cooperates closely with the IMF and development partners on policy dialogue and structural reforms. The IMF leads the dialogue on budgetary, real sector and financial sector discussions, in collaboration with the Bank. Technical support on customs and tax administration is closely coordinated. The WBG leads the policy dialogue on structural reforms regarding the private sector, energy, port, and cotton sectors. The Bank also works closely with partners providing budget support and complements them in areas of public sector governance and private sector development, especially regarding the business environment. Objectives and Expected Results of the CPS 86. The CPS is designed to address the country's key development challenges: (a) a weak governance system; (b) insufficient growth to reduce poverty meaningfully; and (c) low access to basic social services. To address these challenges, the CPS is structured around three pillars. The first is cross-cutting, and forms the foundation pillar of the strategy, namely "Governance and public sector capacity". The other two pillars focus upon "Sustainable growth, competitiveness and employment", and "Access to basic social services and social inclusion". All pillars are mutually reinforcing. 87. Measurable outcomes have been identified for each pillar. In total, 13 outcomes will be monitored over time. A mixture of on-going operations, new lending, AAA and Trust Funds will be deployed to address each outcome, as per Table 7 below and Annex 2. 23 Table 7: Outcomes and alignment of instruments OUTCOME ACTIVE PIPELINE AAA TRUST FUNDS Foundation Pillar: Strengthening Governance and Public Sector Capacity Improved Transparency and PRSC-8 (FY13) PRSC Series 9-12 (FY14-7) Policy Note on Strengthening IDF grant for Benin Efficiency in Public Financial E-benin project FY10 FM and Procurement Capacity Public Investment(FY13) professional accountancy Management Building TA Project (FY15) Social Capital Study (FY13) body (FY14) Broadening the Tax Base (FY13) IDF grant for Benin Use of Country Systems (FY13) procurement profession Customs Service/Civil Service (FY14) Reform/Wage Bill TA (FY14) Country Integrated Fiduciary Assessment(FY15) Regional ESW to identify FM& Procurement bottlenecks in key sectors (FY13) CEM (FY16/17 Improved Decentralized Decentralized Community Decentralized CDD Project Social Capital Study (FY13) Service Delivery, Driven Services project Phase 2 (FY17) Transparency and (FY12) Accountability and Demand - Side Governance and Participation Pillar I: Increasing Sustainable Growth, Competitiveness and Employment Increased Access to and WAPP APL 1 2nd Phase- Regional Adjarala Hydro Energy Sector Review (FY15) Quality of Infrastructure Coastal Transmission Power Project (FY15) Services Backbone (FY06) Electricity Access Project Energy Services Delivery (FY17) (FY08) Increased Access to Modern Energy Services (FY09) Improved Transport Abidjan-Lagos Trade and PRSC 9-12 Customs Assessment Toolkit ECOWAS One Stop Border Infrastructure and Services Transport Facilitation Project Regional Transport DPO (FY13) Posts (FY10) (FY16) Port of Cotonou Operations MIGA Guarantee (FY 12) to Policy Note (FY13) Bureau VERITAS of the Infrastructure Competiveness 24 Netherlands Review (FY16-17) Improved ICT and E- Benin Project FY10 Telecommunication Services West Africa Communications Infrastructure Program (WARCIP) FY13 Improved Investment Climate Competitiveness and PRSC 9-12 (FY14-17) IFC TA GPOBA grant for water Integrated Growth Public Private Partnerships GPOBA grant for health Opportunity Project (FY13/14) Regional WA Communication Tertiary Education Capacity & Infrastructure (FY13) Training Assessment (FY13) PRSC8 (FY13) Access to Finance Policy Notes (FY14/15) Enabling Environment for Formal sector and SME Development (FY16-17) Improved Diversification of Agricultural Productivity and Cross-border SEZ along Agriculture Sector TA(FY13) the Economy through Diversification Project (FY11) Nigeria-Benin border (FY15) Cross-Border Special Economic Investments in Targeted Value West Africa Agricultural PRSC 9-12 (FY14-17) Zones (FY14) Chains Productivity Program Integrating climate change (WAAPP) (FY11) considerations into agriculture (FY15) Improved Natural Resource Forests and Adjacent Land Management Management (FY07) and Additional Financing (FY13) Support to Protected Areas Management Project (FY11) Community-Based Coastal Marine Biodiversity Project (FY09) Improved Youth Employment Youth Employment Project Youth Employment/Skills Note and Labor Skills Development (FY14) (FY13) Tertiary Education and Capacity and Training Assessment Study (FY13) Pillar II: Improving Service Delivery and Social Inclusion Leveraging Environmental and Benin Emergency Urban Additional Financing for National Urban Development Urban Sanitation Environment Project (FY11) Urban Environment (FY16) Strategy(FY14) Improvements Benin Cities Support TA Hazardous and Healthcare 25 Program(FY13) waste management (FY14) Small Towns Water Initiative TA Air Quality Management in Project (IFC PPP) urban and semi-urban zones (FY15) Improved Social Safety Net Community Driven Community Driven Poverty/Gender Assessment Decentralized Services (FY12) Decentralized Services Phase (FY13) 2 (FY17) TA Social Safety Nets (FY13) Roadmap for MDG-2 in the social sectors (FY16-17) Improved Quality Education, Health System Performance Multi-Sector Food/Health and Global Partnership for Health and Nutrition Services (FY10) Nutrition project (FY14) Education program (FY13) Hospital PPP (FY13-14) IFC+ GPOBA grant 26 88. Bank operations will be designed with particular attention to quality at entry and gender will be a cross-cutting issue. Public sector reforms are expected to improve transparency, accountability and the overall efficiency of expenditures. These reforms will in turn contribute to better access to basic social services, improved social inclusion, and greater trust between the Government and the citizenry. Investments in infrastructure and investment climate reforms are expected to foster more vigorous and sustainable growth; improve private sector competitiveness, and generate jobs, particularly for youth and women. A. Governance and Public Sector Capacity: the Foundation Core Governance 89. The main objective of the Bank’s governance program is to help Benin better manage its financial resources, so that fiscal policy can enable and foster inclusive growth. Weaknesses in budgeting and planning, FM and procurement processes, and oversight mechanisms, need to be addressed to strengthen the delivery of essential social services, increase value and efficiency in government expenditures, and meet the challenging targets and ambitions stated in Benin’s Poverty Reduction Strategy. Increasing low budget execution rates in key ministries, particularly execution rates on priority social expenditures, is a key measure in this regard. This includes supporting efforts both on the revenue side to generate the resources necessary to effectively fund and scale-up government programs, and on the expenditure management side to increase the effectiveness and efficiency of government expenditure. Efforts to improve transparency and reduce corruption must be also pursued with stronger commitment in order to reduce misallocation and to ensure scarce resources are effectively employed in the pursuit of desired outcomes. 90. Programmatic Poverty Reduction Support Credits (PRSCs) have been the main instrument to support economic governance and strengthen public sector capacity. Benin has had seven PRSCs to date. PRSC-8 (FY13) will support public financial management, procurement and governance reforms; and enhanced competitiveness. A particular focus will be on implementation of anti-corruption legislation. In addition, PRSC-8 and the next DPO series (PRSCs 9-11) will ensure that prior actions and triggers support a deeper and more fundamental reform effort in the areas of focus than in the previous series. As a complement to a redesigned series of DPO, a multi-sector Capacity Building operation (FY15) will assist the authorities in strengthening reform implementation (see below).The PRSC operations and the planned capacity building operation are integral to creating the increased fiscal space necessary to support more effective delivery of social services, including in priority social sectors such as health and education. 91. A number of discreet TA activities and studies are planned or underway to support the Government’s public sector reform effort. A policy note on strengthening public investment (FY13)will help the Government frame and prioritize its public investment choices, together with a policy note on broadening the tax base. These follow a policy note on port operations delivered in Q2 FY13. Through an IDF grant, the Bank is supporting the Ministry of Planning and the Prime Minister’s Office with a capacity building program to strengthen human resources and coordination of government action. This is underpinned by the Central Finance Agencies (CFA) project funded by the WB/Netherlands Partnership Program, which undertook a detailed diagnosis of the institutions responsible for budget planning and execution; and a political economy/change management study (2011) focused on the implementation of the PFM reforms contained in the June 2009 WAEMU PFM directives, co-financed by a Governance 27 Partnership Facility grant. An IDF grant (FY11) also finances anti-money laundering and terrorism financing efforts in Benin. 92. Support will be sought in FY13 from the Statistical Capacity Building Trust Fund to assist the National Institute of Statistics & Economic Analysis (INSAE).The assistance will initially focus on updating the national statistical development plan and may be followed by discreet capacity building activities. Strengthening Sector Governance through Capacity Building and Technical Assistance (TA), and Improved Demand Side Governance 93. A capacity building program will contribute to swifter and more effective reform implementation. The CASCR suggested that poverty reduction objectives, particularly in areas supported by PRSCs, would benefit from technical assistance to support timely, effective and sustainable reform implementation. An FY15 Capacity Building Operation will provide TA focused on the implementation of policies supported by the Bank program as well as on-demand high-priority requests. The design will introduce a proportion of results-based disbursement to strengthen incentives for swift implementation. The operation will support the implementation of the new WAEMU PFM and procurement directives. 94. Two recent studies have provided an understanding of the strengths and weaknesses of the central PFM system, and the challenges associated with the implementation of the reforms contained in the WAEMU directives 11. A more in-depth understanding of how this affects service delivery will be obtained by including Benin in a regional ESW to identify PFM and procurement bottlenecks to the execution of the capital budget in key sectors such as infrastructure, health and education(FY13), in response to a request for support by the WAEMU Commission. The lessons learned from this study will feed into the financial management and procurement capacity-building technical assistance operation (FY15). In addition, the Bank’s assessment of the fiduciary impact of FM and procurement weaknesses will be updated through a Country Integrated Fiduciary Assessment which will include FM, procurement, and governance aspects (FY15). Finally, in support of sector based PFM work, additional political economy work may be needed. 95. The CPS will support the development of the accounting and procurement professions. Following the completion of the A&A ROSC, the Benin Professional Accountancy Board was invited to become an associate member of IFAC. A successor IDF grant (FY14) will take the Benin Accountancy Board from associate to full membership. A second IDF will provide capacity building to procurement specialists within the civil service. 96. The Regional Centers for Evaluation and Results (CLEAR) Initiative will support the development and strengthening of Benin’s M&E system. In 2000, the Government began setting up M&E units in all ministries thanks to the Public Reform Adjustment Credit provided by the Bank; and in 2007 the Government created the Bureau for the Evaluation of Public Policies (BEPP) at the level of the Prime Minister’s office which is responsible for coordinating evaluations of government flagship programs. The “Centre Africain d’Etudes Supérieures en Gestion� (CESAG) located in Dakar, will provide technical assistance and advisory services in M&E related matters to the Government and civil society. 11 See Economie politique des finances publiques au Bénin, ibid, and Bénin: Country Systems review for project Financial Management, AFTFM, Washington, DC, August 2012. 28 Demand Side Governance 97. The Capacity Building operation will address the demand side of PFM and will support the engagement of a range of stakeholders in the roll-out of PFM reforms to foster greater transparency, accountability and strengthen trust between the Government and the citizenry. 98. Efforts will be made to strengthen the Bank’s relationship with civil society. The June 2012 World Bank Global Partnership for Social Accountability (GPESA) provides the framework for deepening and sustaining engagement with CSOs and promote governance reforms, improve service delivery, and build support for and ownership of World Bank operations. The country team will work with the GPESA Trust Fund Administration to explore funding mechanisms to support specific civil society activities aimed at strengthening social accountability in the country and foster citizen oversight. This will complement ongoing arrangements under the Francophone West Africa Contract Watch Coalition - led by the GAC- in-Operations team, and for which Benin is a pilot country. The country team will also work towards promoting public debate around development programs. The Decentralized Service Delivery project will support a roll-out of community scorecards to measure citizens' perception of service delivery by local governments and to facilitate a dialogue on ways to improve these services. 99. In partnership with other donors, the Bank will undertake a study to better understand the causes of the deficit of social capital in Benin and derive some recommendations for the reform agenda. The WBG will build on results already available on social capital in Benin to launch the study (FY13) which will focus on two areas: (a) the lack of trust between politicians and citizens, and in the state and its institutions; and (b) the lack of trust between economic agents, with a particular attention to measuring and documenting the impact of this lack of trust on economic growth. 100. Cross-cutting issues pertaining to the economic situation in Benin, and service delivery and growth issues will be analyzed in a CEM to be finalized in FY17. This document is seen as an input to the macro dialogue with the Government and will be an important input to the next CPS. B. Pillar I: Increasing Sustainable Growth, Competitiveness and Employment 101. The Bank Group will play a leading role in: business climate reforms; infrastructure modernization (energy, transport, ICT); agriculture diversification (through identification of new markets and value chains); the promotion of regional integration and trade; and the sustainable use of natural resources. Increase access to and quality of infrastructure services 102. Energy: Bank support will focus on boosting electricity generation through the construction of the Adjarala power plant that straddles the Benin-Togo border. An important offshoot of the construction of the dam will be the development of irrigation for agriculture. The Bank will also participate in the rehabilitation and expansion of the distribution network. Building on recent successes in biomass energy, similar projects will be rolled out to reduce the country’s carbon footprint and reduce pressure on forests. Current Bank engagement in the sector includes two ongoing projects, Energy Services Delivery and Increased Access to Modern Energy Services. The Bank is also engaged in policy dialogue in the petroleum sector as exploration activities are expected to begin in Benin’s territorial waters in FY13. The situation in 29 the energy sector will be assessed in an energy sector review (FY15) for which cofinancing may be requested from PPIAF. MIGA is also willing to consider supporting sustainable renewables and IPP projects sponsored by private investors and part of WAPP initiatives for the region. 103. Transport: Important reforms are being implemented at the port including the "single window", under the support of the IDA-financed regional ALTTFP project and the MCA. In FY12 MIGA issued a US$7.1 million guarantee to Bureau Veritas of the Netherlands covering its equity investment in “Société d’Exploitation du Guichet Unique du Bénin� which manages the port’s single window under a 10-year concession contract. In response to the difficulties with the import verification program and the deterioration in port performance, a series of diagnostic and policy notes have been undertaken or are underway to address customs and port reforms. The EU has completed a forensic audit of customs processes. In FY13, the Bank completed a note on port operations and will complete a Customs Assessment to measure Customs performance against regional and international benchmarks. Given its impact on growth and private sector competitiveness, the Bank will deepen the dialogue with the Government aimed at strengthening port governance and performance. An updated DTIS with funding from the EIF is also ongoing. Additional targeted analytical work to show opportunity costs from inefficient practices (e.g. with regard to transit or customs) may be undertaken as a way of building commitment to the reform agenda. A potential regional transport DPO dealing with WAEMU regulations governing the trucking industry is under discussion. 104. Telecommunications: The Government’s vision in the ICT sector is to transform Benin into the “digital capital of Africa,� taking advantage of the country’s location and its access to international connectivity. Important reforms have been engaged in the sector through the e-Benin project, and complemented by an investment in international connectivity through the WARCIP project. This investment will provide additional bandwidth and international connectivity by connecting Benin to the Africa Coast to Europe (ACE) cable. This operation will likely have a strong regional impact since Benin offers the shortest route to the coast for Burkina Faso and Niger. Benin is therefore in a strategic position to supply international capacity to both countries, as well as terrestrial transit facilities from Nigeria to the rest of West Africa. By the end of 2013, Benin should be connected to the ACE cable. This connection will end SAT-3’s current monopoly on international bandwidth, and should trigger significant price reductions, like in East Africa with the introduction of multiple fiber cables. 105. By the end of 2013, Benin will have put in place the building blocks for e- government applications through the e-Benin project. It is expected that the development and promotion of relevant content and applications in strategic sectors including, health, education and agriculture and m-payment systems/framework to ease business transactions will further support the country’s agenda to develop a knowledge based economy and decentralize access to basic services. 106. Cross-cutting issues pertaining to infrastructure competitiveness in Benin will be analyzed in a sector review to be finalized in FY17. This document is seen as an input to the sector dialogue with the Government and will be an important input to the next CPS. 30 Box 4 : Opportunities - Regional Integration and Trade Benin’s geographic location provides special opportunities and challenges for regional integration with countries of the West African Economic and Monetary Union (WAEMU) and the Economic Community of West African States (ECOWAS). The country is a natural transportation hub and is well-placed to benefit from renewed growth in Nigeria and Sahelian countries. However, the country must compete with neighboring Cote d’Ivoire, Ghana, and Togo to be a key port of entry for trade. To take advantage of its comparative advantages, Benin has tapped into the various opportunities provided by the Bank’s Regional Integration Assistance Strategy (RIAS). Infrastructure Benin is an implementing partner of the Abidjan-Lagos Trade and Transport Facilitation project(ALTTFP) geared to facilitate trade and improve the coastal corridor’s road infrastructure. The project involves: customs modernization and harmonization of procedures; the establishment of joint border posts (in cooperation with the EU); technical support to improve the efficiency of the port; rehabilitation/construction of critical road infrastructure segments; and HIV/AIDS treatment and prevention along the corridor. Under the West and Central Africa Air Transport Safety and Security project, Benin is strengthening its Civil Aviation Authorities’ safety and security oversight capacities. The country’s efforts to improve energy services are bolstered by participation in the implementation of the West African Gas Pipeline project (WAGP), and the West African Power Pool Program (WAPP) which will pool energy resources within the region and make them available to member countries. To promote further growth in telecommunications, the country Benin is participating in the Regional WA Communication Infrastructure Program (WARCIP) that will connect Benin to a submarine cable providing more than 16,000 kilometers of international connectivity between Africa and Europe Institutional cooperation Benin benefits directly and indirectly from World Bank projects aimed at mobilizing financing for infrastructure investments, and promoting trade and investments. The country participates in the WAEMU Capital Markets Development project which is geared to strengthen capital markets in West Africa and mobilize public and private financing for infrastructure development. The Regional Trade and Facilitation project provided equity financing to Benin so that it could join the Africa Trade Insurance Agency. In addition, the Bank is preparing a One Stop Border Posts project which aims to strengthen the business environment in West Africa through the establishment of functional border crossings by supporting the implementation of modern harmonized procedures and documentation to ease border-crossing movements for persons, vehicles, goods and services. Regional Public Goods In the area of trans-boundary water resource management, efforts are made through the Niger Basin Water Resources project to develop the institutional capacity and enabling framework for regional collaboration in the Senegal and Niger basins. As a result of these programs, approximately 4,400 ha of previous arid land have already been developed for irrigated agriculture and the production of fresh water fish has increased by 12 percent in the Senegal River Basin. Source: World Bank 31 Improved Agriculture Productivity and Diversification and sustainable management of natural resources 107. The on-going Agricultural Productivity and Diversification Project (PADA) and the West Africa Agricultural Productivity Program (WAAPP) support improvements in productivity and value transformation of selected commodities. The next PRSC series will support the reform of the agricultural sector and the implementation of the PSRSA. The Bank will continue to provide just in time cotton sector TA in FY13.In addition to the two on-going operations, linkages with other sector swill be established. For this purpose, the Bank will collaborate with the Government to identify new promising value chains in the agro-industry area, and the binding constraints to growth in these sectors. It will also focus on (i) strengthening the cooperation between PADA, CIGOP and IFC to channel more private investments into cashew and pineapple value chains, and other new products; and (ii) the design of an agricultural-based youth employment component into the Youth Employment project planned in FY14. Furthermore, primary sector activities typically engage more males than females in rural areas and analysis is being undertaken by the Bank on the changing role of women in non- traditional and cash-crop agriculture. Findings will be integrated into on-going agricultural operations. 108. The Bank will continue to be involved in environmental management reforms. There are currently three ongoing GEF projects in the pipeline, one of which was approved in FY11 (Support to Protected Areas Management), and two which have been ongoing for several years, (Community Based Coastal and Marine Biodiversity Project and Forests, and Adjacent Land Management). An Additional IDA Financing of the Forests and Adjacent Land Management Project is under preparation (US$2 million, FY13). It benefits from a US$6 million GEF Grant from the Sahel and West Africa Program which supports of the Great Green Wall Initiative. The additional financing will contribute to the capitalization of, a conservation trust fund, the “Fondation des Savanes Ouest-Africaines (FSOA)� set up by the Government. Develop High Potential Value Chains and Improve Business Climate/Public Private Partnerships 109. Fostering transformative investment through Special Economic Zones: The Bank will undertake ESW in FY13/14 on Cross-border competitiveness platforms along the Benin- Nigeria border, in the form of special economic zones capable of attracting a critical mass of private investment in targeted value chains in agri-business, construction and the ICT sector. The ESW could be followed by an investment operation in FY15 on a Cross-border SEZ on the Nigeria-Benin border (US$50-70 million).The ongoing IDA/IFC CIGOP Project (US$25 million, 2008) is in the process of being restructured to support Benin’s economic transformation and job creation agenda, and to respond better to emerging priorities. Through the restructuring of the CIGOP and the SEZ operation, opportunities will also be sought to integrate private sector development approaches to support SME development, innovation, job creation and the commercial trading relationship between Benin and Nigeria. 110. Strengthening the enabling environment for private sector development, including PPPs: The restructured CIGOP will continue to support the legal, institutional and regulatory reforms that will enhance the business environment. Particular attention will also be dedicated to sustaining the WBG dialogue on public private partnerships, including the institutional and legal/regulatory framework, and the identification of a pipeline of priority projects. 32 111. IFC will continue to support the improvement of Benin’s investment climate and the implementation of the OHADA new entrepreneur status. Reforms aimed at improving the investment climate have been undertaken in the following four areas: starting a business, dealing with construction permits, trading across borders and enforcing contracts. To maintain this momentum, a two-year TA program funded by SECO will support: (i) additional investment climate reforms; and (ii) the implementation of the OHADA “new entrepreneur status� which has been designed with a light legal regime to facilitate the entrance of small entrepreneurs into the formal economy. The joint WB/IFC Investment Climate department (CIC) will test the effectiveness of the set of incentives offered to these new entrepreneurs through an impact evaluation. The Group will work in cooperation with UNCTAD, to provide support to the Government in identifying the most effective package of incentives to encourage firm’s formalization and performance. 112. Benin’s trade is handicapped with long delays at border posts, which have been estimated at around 15 days and 20 days for export and import, respectively. This ranking spurred the Government’s request for technical assistance from the WBG to identify key issues and constraints in the trade logistics sector. IFC will assist the Government in this regard and support the implementation of agreed solutions to improve trade logistics chains, focusing on the application of valuation principles and risk-based approaches for goods clearance. 113. In addition, IFC will continue to: (i) partner with financial intermediaries to improve access to finance for MSMEs; and (ii) provide capacity-building to financial institutions to strengthen the financial sector and promote business growth. IFC will offer: (i) trade finance facilities to banks supporting the trading activities of their MSMEs clients; (ii) risk sharing facilities to banks supporting the growth of their SME portfolios; (iii) long-term local currency facilities to banks and NBFIs (especially microfinance and leasing institutions) aimed at shoring up their deposit or capital base and enabling them to provide their clients with medium to long term financing with improved protection against losses; and (iv) equity investments or long term credit facilities to microfinance institutions to allow them to provide long term facilities to micro entrepreneurs while strengthening their capital base. Specific advisory services such as SME management training (Business Edge) are being discussed with commercial banks as part of their non-financial services for SMEs. Funding from the multi-donor trust fund FIRST will also be requested to update the FSAP (FY14) and convert the recommendations into a comprehensive Financial Sector Development Strategy and detailed action plan. 114. IFC will also follow up on selective PPP opportunities in the health and water sectors, in particular a PPP project to develop a green-field hospital in the Abomey-Calavi area, to be designed, financed, built, and operated by a private operator; and a rural water PPP program, in conjunction with WSP, to tender a series of small-scale concessions in various locations across the country, as discussed in pillar 2. Regarding the hospital project, the Global Partnership for Output Based Aid (GPOBA) has agreed to provide a grant of US$ million to support the training of health professionals and their provision of primary care services at the clinics and hospital. This project is expected to enter the formal procurement process in the second half of 2013. Regarding the PPP water program, an additional GPOBA grant of US$3m has been requested for providing Output-Based Aid (OBA) subsidies to private operators to improve the service provision in small towns. 115. World Bank Group support (including through WBI, the CIGOP project and IFC) will be extended to the Presidential Investors Council to strengthen the public-private 33 dialogue (PPD) platform. The PIC was established to identify constraints to growth and to formulate policy recommendations to encourage domestic and foreign investments. So far, the PIC has been mainly active in addressing shortcomings in the investment climate. However, in April 2012the Government requested assistance from the WBI to transform the PIC into an open, effective public-private dialogue instrument. Technical assistance from WBI will take place in FY13 to implement this vision and accompany the PIC staff with capacity building activities. CIGOP funding is available to support this exercise. 116. Cross-cutting issues pertaining stimulating the enabling environment for formal sector and SME development will be analyzed in a sector report to be finalized in FY17. This document is seen as an input to the dialogue with the Government on accelerating shared-growth and will be an important input to the next CPS. 117. Youth Unemployment: In response to Government request, and building on an analysis of current and past youth employment programs (FY13 AAA), household level statistics, and international experience, the planned Youth Employment Project (FY14) will aim to improve access of youth to employment and self-employment, and improve their skills so that they become employable. Gender considerations and the different needs of young women and young men will be integral to project design and implementation. C. Pillar 2: Improving Service Delivery and Social Inclusion 118. WBG support provided under this pillar will focus on two principal outcomes: (i); increased access to basic social and local services, including flood protection and social safety nets; and (ii) improved quality of and access to basic education, health and nutrition services. Gender inclusion is a cross-cutting objective. 119. Improved Access to Basic Services and Social Safety Nets. In May 2012 a new CDD operation was approved by the Bank to support the Government’s decentralization reform program. The Community Driven Decentralized Services Project (the first of a three-phased APL) will improve access to decentralized basic services, and help mainstream the CDD approach in all the ministries involved in the delivery of basic services. It contains a pilot social safety net component, involving labor intensive public works and cash transfers, in line with the recommendations of the Government’s 2011 Social Safety Net Review. 120. Urban Development: The Benin Cities Support Program (FY13) will build on the Second Decentralized City Management Project that closed in June 2012 and established a solid basis for improved municipal management and service delivery. This new project will scale up access to infrastructure and basic services in urban municipalities to improve their effectiveness as economic growth poles and further support the Government’s decentralization efforts. 121. The on-going Benin Emergency Urban Environment Project (BEUEP) (FY11) was prepared in response to the 2010 floods that affected more than 680,000 people. It focuses on sanitation, waste water, drainage, municipal solid wastes, and floods and disaster risk management. An Additional Financing (FY 14) for the ongoing project will be considered to address drainage networks, and communities under constant threat of flooding not covered by the parent project. The additional financing could also cover the preparation of a sanitation master plan for the Abomey-Calavi area and the construction of two mini waste water treatment plants in Porto-Novo and Abomey-Calavi. It would also pave the way for private sector participation through PPP arrangements in the water and sanitation sector, with the involvement of IFC and possibly MIGA. It will also include hygiene promotion as the existing project only cover onsite 34 sanitation systems comprising mainly of latrines and septic tanks; and the acquisition of equipment and tool kits for sanitary control at the laboratory of public hygiene at the Ministry of Health. 122. Quality of Urban Environment: The two proposed TAs on hazardous waste management and air quality management, in conjunction with the Urban Development Project and the BEUEP, will help identifying specific interventions to reduce the negative environmental impacts associated with poor environmental governance and improve the quality of the urban environment. 123. Water and Sanitation Program is using a range of instruments to deepen private sector engagement in water and sanitation: In FY12, WSP and IFC were engaged by the Government to advise the Ministry of Water on a PPP project in the small towns' water sector. Private participation will be complemented by OBA incentives to ensure that poor households truly benefit from the project. Technical assistance is being provided to develop the regulatory and institutional framework for the sector. Improved Education, Health and Nutrition Services 124. Service Delivery: Benin has made significant progress in the coverage of key social services. For instance, the percentage of pregnant women benefiting from assisted delivery is now close to 81 percent. Similarly, for education, the enrollment rate for primary education has increased to 120 percent. However, it is unlikely that these “quantitative� improvements have come with comparable progress in quality of services. Indeed, to take only the example of maternal health, there is a “Benin paradox�;while the rate of assisted deliveries is one of the best in Sub-Saharan Africa, maternal mortality remains very high. This suggests an unfinished quality agenda and sub-optimal use of public spending. Quality in education and health are strongly driven by what providers know and what providers do, and Service Delivery Indicators (SDI) surveys will yield information to policy-makers and communities alike, to track performance and improve accountability for the efficient use of public resources. Such a survey could be carried out in Benin in FY15. 125. Education: One of the key challenges facing Benin is to provide quality and relevant education, and reduce the disconnection between what is taught in the education and professional training systems, and the skills needed in the economy. The Education for All Fast-Track Initiative (now called Global Partnership for Education, or GPE) project which closed in June 2012 contributed to the fulfillment of the universal access and equity objectives in preschool and primary education. 126. The Bank has been requested to manage a new FY13 US$45 million GPE program in Benin. The new grant will focus on improving equitable access and quality of classroom instruction in basic education, particularly in deprived districts. This will be achieved by improving the quality of teaching, the quantity of teaching resources and the quality of the school learning environment. Higher completion rates will reflect qualitative improvements in educational outcomes. 127. The gaps in service delivery in primary education must be identified to improve the quality of education. To this end, a Service Delivery Indicators (SDI) survey is planned for FY14. The survey will enable policy makers and service providers to focus of filling the gaps and track progress over time, and will contribute to raising the awareness of donors and other stakeholders of the need for action to improve learning outcomes. 35 128. Benin is well positioned thanks to its tradition of academic excellence in science and mathematics to participate in the Africa Centers of Excellence(ACE) regional project discussed under the Foundation Pillar. The project will concentrate on building capacity in competitively selected institutions in order to produce in-demand high skilled labor and applied research. It will also facilitate talent and labor mobility at the regional level. The ACE initiative will also be integrated within the knowledge agenda and human capital development narrative. 129. Health and Nutrition. Two operations for control of Malaria and HIV-AIDS closed respectively in 2011 and 2012. An Additional Financing of the FY10 Health System Performance project was approved by the Bank in FY12 to support the Government’s national Free Malaria Care Initiative for pregnant women and children under-five (2011). The Health System Performance Project will continue to play a catalytic role in the health sector, in leveraging additional financing for the Result-Based Financing (RBF) mechanism. So far, the Global Alliance for Vaccines and Immunization (GAVI) and the Global Fund have agreed to join the RBF joint basket fund. Belgium and UNICEF have already expressed their desire to do so later on. In addition to the nationwide rolling out of RBF and still with the objective of improving accessibility, quality and efficiency of health care delivery, the Bank will continue working with IFC for launching the Hospital PPP project. This new hospital will provide tertiary care through a Government contract with a private operator. This arrangement is supported by a US$4 million GPOBA grant. To speed up improvements in child nutrition, the Bank and UNICEF, UNFPA and Japan have been supporting the policy dialogue on nutrition since 2007 with a pilot Community Nutrition Project and a TA project (FY12). Through an IDF grant (FY13), the Bank will provide technical assistance to the newly created Food and Nutrition Council, to strengthen its capacity to formulate and implement multi-sectoral nutrition policy reforms. The Bank will also use its convening power to mobilize additional donor resources behind the Government’s Scaling-Up-Nutrition ambitions as articulated in the SCPR-3. A new multi-sectoral Food/ Health and Nutrition operation (FY14) is under preparation to enhance household food security and maternal and child health and nutrition outcomes through community mobilization and community-based service delivery. Poverty and Gender Analysis 130. A poverty and gender assessment is nearing completion. This assessment will inform ongoing and future ESW/AAA work and guide the incorporation of gender considerations in investment operations. As noted, female-headed households tend to be less poor on average than male-headed households, though the reasons behind this outcome are not fully understood. The assessment should allow for a greater understanding of this finding. The analysis will also review government spending, disaggregated by sex, and will help inform the policy dialogue on the benefits of targeted spending. The results of the assessment will be widely disseminated and workshops and information sessions will be held with a broad cross-section of Benin’s civil society and donor community, fostering greater public awareness of gender issues and increased public, civil society and donor pressure for actions towards increased gender equality in Benin. 131. A cross-cutting AAA is also planned to study service delivery in social sectors and enhancements to the safety nets. This study, to be finalized in FY17, will also provide a roadmap for meeting the new/revised MDGs that are expected to be adopted in 2015. D. Results Monitoring 132. The Results Matrix found at Annex 1 presents the results chain for the Bank’s support program, using Benin’s SCRP-3 as its starting point and narrowing down the range of 36 outcomes to those that the Bank can demonstrably influence over the CPS period. CPS outcomes will be monitored jointly by the Bank and the Government over the CPS period, in the spirit of the Paris and Accra Declarations, and in coordination with other donors. Since most of the operations foreseen in this CPS will likely not finish implementation until after 2017, results during this CPS period will come mainly from existing operations. 133. The country team will monitor the portfolio in real time by convening portfolio reviews chaired by the Minister of Planning at least once every quarter. The Bank will prepare a CPS progress report in 2015 or earlier if needed, to evaluate progress towards CPS outcomes and adjust the strategy and program. Systemic issues in the portfolio will be addressed as follows: (1) to avoid effectiveness delays, efforts will be made to complete most effectiveness conditions prior to Board approval; (2) implementation periods will be set realistically, in light of past performance; (3) procurement delays will be reduced by shortening the period of time taken by the National Directorate for the Monitoring of Public Procurement to review procurement documents and the time taken by the Minister of Economy and Finance to approve contracts; (4) efforts will be made to use Project Preparation Advance to improve project implementation readiness; and (5) MTRs will take place on schedule and restructurings will be undertaken within six months of mission completion. IV. Risks and Mitigation 134. The risks to implementation of the World Bank Group FY13-17 program during the CPS period are both internal and external in nature. Internal risks include the potential deterioration of the macroeconomic framework due to recurrent wage bill increases and weak administrative capacity which may slow Bank program implementation. Failure to curb corruption, or the mere perception by the citizenry that corruption is not being addressed effectively, could jeopardize the Government’s reform agenda; vested interests among politicians, civil servants, trade unionists and private sector operators may hamper the implementation and effectiveness of reforms, and prevent removing critical constraints to economic growth and service delivery. In response to these risks, the annual PRSC operations will support effective implementation of the Government’s anti-corruption legislation, including the establishment of the national anti-corruption authority, the enactment of whistleblower protections, and the introduction of asset and conflict of interest disclosure mechanisms. Further delays to improve the port’s competitiveness through a transparent partnership with private sector, would slow economic activity and reduce growth. Lack of progress on judicial reform could negatively impact private investment and attract money laundering and drug trafficking activities. Limited capacity in the public administration jeopardizes the implementation of the Government's reform program. These governance-related risks could impact CPS implementation will be addressed through a number of measures, including the provision of technical assistance and advisory support on port operations, ongoing strengthening of country systems, capacity building support for the public service, and dedicated support to resolve financial management and procurement bottlenecks. On the environmental front, the country is prone to floods; their frequency and intensity is expected to increase in the years to come. Thus, there are potential natural disaster and climate change risks. In addition to the environment- sensitive activities embedded in current and proposed lending operations, the CPS envisages AAA and TA activities designed to address, for example, climate change in agriculture, support on hazardous wastes, and measures to improve air quality. 37 135. Potential external shocks include the loss of trade and fiscal revenues should Nigeria undertake broad trade liberalization reforms. Given that 20 percent of Benin’s GDP is dependent on trade with Nigeria, policy decisions in Nigeria, particularly trade liberalization, could significantly impact Benin. This would directly and meaningfully affect the level of transit and re-export trade, with consequent impact on the level of economic activity, employment and fiscal revenues. In addition, the reduction of fuel subsidies in Nigeria and its impact on inflation and economic activity in Benin in 2012 through the illegal fuel trade has further highlighted Benin’s exposure to developments in Nigeria. This risk could also undermine implementation of the CPS, and to address it, the Bank will support Government’s efforts to strengthen the business environment, reduce dependence on Nigeria by scaling up economic diversification, and facilitate the establishment of special economic zones designed to formally service the Nigerian market. 136. External risks also include a continuation of piracy in Benin's territorial waters which would likely trigger increases in insurance premiums and result in lower trade revenue. Unfavorable regional developments, such as the expansion of the conflict in Northern Mali, the return of civil war in Côte d'Ivoire, or increased insecurity in Nigeria, could have severe consequences on Benin’s political stability, economic performance and level of foreign direct investments. A worsening of the Euro crisis, or a sharp contraction of the US economy, or further contagion of the global crisis to emerging markets, would have a negative impact on the current account balance, generate lower remittances from abroad, reduce foreign direct investments and reduce development assistance to the country. Energy price hikes as a result of disruptions on the international markets would also severely impact Benin. To mitigate the potential for such risks to undermine CPS implementation, the Bank Group, in close cooperation with the IMF, will continue to work with the authorities to sustain macroeconomic stability, and to respond flexibly to emerging external developments. 137. Endogenous economic risks to CPS implementation are mitigated by a series of programmatic DPLs designed to keep the macro framework in good order, support the fight against corruption, and strengthen public financial management and procurement. The DPL series will be supported by AAA/ESW work and complemented by a capacity building operation designed to enhance the skills in public administration; and by investment operations that are expected to improve the business environment and competitiveness, and help mitigate the risk of natural disasters. Civil service reform 12is being addressed by other development partners (Netherlands, Denmark), paving the way for a more ambitious reform program once consensus has been reached within the Government. In addition, IDA is proposing to support a series of engagements with domestic stakeholders, including the National Assembly and civil society, in order to build and reinforce consensus around key reforms. The broad dissemination of AAA and ESW work will also contribute to increase public understanding of structural reforms. Public awareness of necessary reforms and an appreciation of the challenges are important for building consensus and garnering broad support for reforms. 138. Portfolio risks to CPS implementation will be addressed through pro-active implementation support and structured dialogue with stakeholders. The CPS includes specific mitigation for known risks and incorporates sufficient flexibility to address emerging issues, with regular periodic exchange with decision makers built into its design. Major known 12 The wage bill to tax revenue ratio reached 46.8 percent in 2011; meaning that 0.7 percent of Beninese captured 7.4 percent of GDP. 38 risks relate to late effectiveness and fiduciary issues, notably procurement. These are addressed by paying attention to the readiness for implementation of projects, including a good understanding by counterparts and regular monitoring of steps needed for project effectiveness. Improving national fiduciary systems is a key objective of the CPS, supported through PRSCs, the proposed TA operation, and AAA and Trust Fund activities. These interventions provide stakeholders with the tools needed to address issues as they come up. Furthermore, slippages during project implementation will be addressed through proactive portfolio management, which includes timely identification and resolution of issues, as well as project restructuring or exit where needed. There is also scope to incorporate critical policy issues into the PRSC program. Finally, close coordination with donors through the various sectoral committees will help ensure that systemic issues affecting the portfolio and programs are addressed in a coherent and coordinated way, and reduce risks that may not have been anticipated. 139. Risks of a political nature are mostly mitigated by other development partners, in particular the EU, France, Germany and the US who are leading the efforts to support the reform of the justice sector, the fight against terrorism and transnational organized crime, and who are also providing logistical reinforcement to Government’s efforts to fight piracy. France and UNICEF are also involved in human rights enhancement and child protection activities. An IDF grant (FY11) finances the implementation of anti-money laundering and combating the financing of terrorism in Benin. 39 Annex 1 - CPS FY13-17 Results Matrix Foundation Pillar: Strengthening Governance and Public Sector Capacity Long Term Development Issues CPS Outcomes Milestones Products/Instruments Growth Strategy for Poverty Key challenges Reduction Goals (GSPR-3) Results Area 1.1 Improved Transparency and Efficiency in Public Financial Management Promote public sector Public services lack access to 1.1.1Improved governance Operationalization of the new Active: governance and e-application and e-business and public sector capacity anti-corruption legislation PRSC Series (8) accountability E-Benin project Revised public sector Pipeline Wage bill as a % of Tax remuneration scheme Planned PRSC Series (9-11) revenues FY 14-16 Weak public revenue Baseline (2011): 46.8 Improve public revenue collection capacity ,both in Target:(2016): < 40 AAA: generation and management terms of revenues generation Policy Note on Strengthening and efficiency of revenue Execution Rate of Social Public Investment(FY13) collection Priority Expenditures (%): Social Capital Study (FY 13) Baseline: (2011): 75 Use of Country Systems (FY Target: (2016): > 90 13) Customs Service/Civil Services Reform/Wage Bill TA (FY 14) CEM (FY16-17) Pipeline: FM and Procurement Capacity Building TA Project (FY 15) 40 Enhance performance across Weak PFM performance 1.1.2 Improved public Guidelines for procurement AAA: public sector institutions to across public sector financial management of goods and services are Country Integrated Fiduciary improve service delivery institutions adhered to by all MDAs Assessment (FY 15) Number of PEFA Indicators IDF grant for Benin rated B or better. Annual audit of procurement professional accountancy Baseline: (2012): 7 contracts body (FY14) Target (2016): 15 IDF grant for Benin Measures to strengthen procurement profession Number of PEFA sub- budget preparation, execution (FY14 indicators rated B or better. and controls are fully Baseline (2012): 28 implemented Other Partners: Target (2016): 40 IMF Passage of the new LOLF by European Union Parliament Netherlands Canada Creation of the Court of Accounts Results Area 1.2Improved Decentralized Service Delivery, Transparency and Accountability and Demand Side Participation Enhanced resource Unpredictable transfer to 1.2.1 Improved resource Resources transferred Active: availability for decentralized communes for service availability for service through Fonds d’Appui au Decentralized Community service delivery and delivery delivery at decentralized Developpement des Driven Services project improved capacity in levels Communes (FADeC) to be (FY12) financial management at Weak participation by non- executed by communities for decentralized levels state actors in budget and FADeC transfers to basic social infrastructure AAA: other governance processes. communes are made with no though delegation of Social Capital Study (FY13) more than 15 days delay from responsibility the published timetable Other Partners: Baseline (2012): 39 IMF Target (2016): 15 AfDB European Union % of communes having France completed financial audits and published action plans to correct any revealed deficiencies Baseline (2011): 0 Target (2016): 90 % 41 Pillar I: Increasing Sustainable Growth, Competitiveness and Employment Long Term Development Issues CPS Outcomes Milestones Products/Instruments Growth Strategy for Poverty Key challenges Reduction Goals (GSPR-3) Results Area 2.1 Increased Access to and Quality of Energy Services Improve power generation Poor network services; poor 2.1.1 Strengthened capacity Construction of T-Lines and Active: and distribution power supply and quality of to deliver power substations completed WAPP APL 1 (2nd Phase- service; and high cost of Coastal Transmission electricity Backbone-FY 06) Reduction in power losses in Energy Services Delivery Benin’s transmission and (FY 08) distribution networks (% Increased Access to Modern loss) Energy Services (FY 09) Baseline (2012): 22 Target (2016): 17 Pipeline: Regional Adjarala Hydro Completion of transmission Power Project (FY 15) Electricity bill collection and distribution lines, Electricity access Project rates (%) including rural electrification (FY16) Baseline (2012): 60 components Target (2016): 90 AAA: Energy Sector Review (FY 15) Other Partners: European Union Denmark KfW EIB BOAD WAEMU Results Area 2.2 Improved Transport Infrastructure and Services Streamline ports processes Long port dwell time, 2.2.1 Improved services in Improved cooperation among Active: and procedures processes and procedures transport, port and trade participating countries and Abidjan-Lagos Trade and with Abidjan-Lagos Corridor Transport Facilitation Project Reduced port dwell time in Organization (ALCO) in the (FY 10) Cotonou from 21.6 days in monitoring of the corridor 2012 to less than 10 days in performance AAA: 2016 Customs Assessment Toolkit 42 (FY13) Port of Cotonou Operations Policy Note (FY 13) Improve the road Roadblocks per 100 Improved enforcement and MIGA Guarantee (FY 12) to infrastructure network to kilometers along the Abidjan- awareness activities aimed at Bureau VERITAS of the support economic Lagos corridor are reduced reducing the unofficial check Netherlands development and social from 7 to 3 by 2016 along the points/road blocks welfare Benin segment Pipeline: PRSC 9-11 Regional Transport DPO (FY14/15) Other Partners: MCC EU Netherlands Results Area 2.3: Improved ICT and Telecommunication Services Increase access to ICT Low access to ICT services 2.3.1 Increased access to ICT Adoption of a broadband Active services services strategy E- Benin Project West Africa Communications Retail price of internet Infrastructure Program services (per Mbit/s per (WARCIP) month, in US$) Baseline (2010): US$125 Target (2016): US$80 Improve access to internet Inadequate access to internet Access to internet services Submarine connection and telephone services and telephone services (number of subscribers per between Cotonou to Europe 100 people completed Baseline(2011): 1.80 Target (2016): 4.20 Results Area 2.4: Improved Investment Climate Promote private sector Regulatory and 2.4. 1. Enhanced business Improved Investment Climate Active: growth and competitiveness administrative constraints environment for private and the adoption of the Competitiveness and impede start up and sector development OHADA Reform Program Integrated Growth enterprise development, Opportunity Project especially formalization of Number of new SMEs Preparation of a code of (GEF/IDA) 43 SMEs Registered investment favorable to Reg. WA Communication Baseline (2012): 0 investment promotion Infrastructure Target (2016): 3,000 Passage of a PPP law Regional Adjarala Promote public-private Passage of a new labor code Hydropower (FY 15) partnership Lack of access to finance Number of days to enforce a Passage of Competition Law PRSC8 (FY 13) contract (and cost as % of PRSC 9-11 (FY 14-16) claim) IFC Baseline (2012): 825 Strengthened coalitions. Promote inclusive and (64.7%) Improved consensus and new Pipeline: sustainable growth by Target (2016): 650 (50%) implementation know how TA provided by (PSGG leveraging the private sector through CIGOP Number of IFC supported GPOBA grant for water PPP investments approved GPOBA grant for health Lack public-private dialogue Baseline: (2012): 0 Target (2016): 2 AAA: Public Private Partnerships (FY13/14) Tertiary Education Capacity & Training Assessment (FY 13) Access to Finance Policy Notes (FY14/15) Infrastructure and Competitiveness Review (FY16-17) Private Sector Enabling Environment and SME Growth (FY16-17) Results Area 2.5: Improved Diversification of the Economy through Investments in Targeted Value Chains Improve agriculture Low agricultural 2.5.1 Improved agriculture Active: productivity and productivity; weak productivity and Agricultural Productivity and diversification technological capacity to diversification Diversification Project process farm produce; and (FY11) tradition of cotton mono- Increase in average yield West Africa Agricultural culture. (tons/ha) of food crops (rice, Productivity Program maize) (WAAPP) (FY11) Baseline (2011) : 4.0 and 1.2 Pipeline (rice, maize) tons/ha Cross-border SEZ along Target (2016): 15% increase Nigeria-Benin border (FY15) 44 PRSC 9-11 (FY 14-16) Increase in average yield (tons/ha) of cash crops ( AAA: pineapple and cashew) Agriculture Sector TA(FY13) Cross-Border Special Baseline (2011) : 50and 0.45 Economic Zones (FY14) tons/ha (pineapple and Improved resilience to cashew) climate change shocks AAA: Target (2016): 15% increase Integrating climate change considerations into agriculture (FY15) Increase in quantity exported of cashew and pineapples (project area) 25,000 and 20,000 tons( pineapple and cashew)Target (2016): 20% increase Results Area 2.6: Improved Natural Resource Management Improve natural resource Poor natural resource 2.6.1 Improved natural The FSOA Articles of Active: management management practices resource management Association, By-Laws, Forests and Adjacent Land practices Operating Manual, Management Project (FY13) Investment Policy, Support to Protected Areas Scores from PA-METT for communication and fund Management Project (FY11) Pendjari National Park raising strategies are finalized Community-Based Coastal Baseline (2011): 85 Marine Biodiversity Project Target (2016): 93 The ESMF and Process (FY08) Framework are fully Communal marine and implemented coastal biodiversity sites, including wetlands areas are demarcated and protected Baseline (2011): 0 Target (2016): 3 Number of threatened species Mechanisms or arrangements identified in the baseline for discussing conservation of study of biodiversity which marine and coastal resources, benefits from conservation including mangrove measures conservation at the communal 45 Baseline (2011): 5 and inter communal level are Target (2016): 20 established Baseline study of biodiversity conservation measures completed Results Area 2.7: Improved Youth Employment and Labor Skills Development Employability of youth is Official unemployment is 2.7.1. Youth Eligible youth have received Pipeline: improved low, but youth employment/labor skills on the job, technical, Youth Employment Project underemployment and non- development entrepreneurship, and life (FY14) participation in the labor skills training force is high AAA: Number of youth employed Youth Employment/Skills in their area of training Note ( FY13) following support from the Tertiary Education and project Capacity and Training Baseline (2013) 0 Assessment Study (FY13) Target (2016) 3000 Pillar II: Improving Service Delivery and Social Inclusion Long Term Development Issues CPS Outcomes Milestones Products/Instruments Growth Strategy for Poverty Key challenges Reduction Goals Results Area 3.1: Leveraging Environmental and Urban Sanitation Improvements Reduce urban flooding Lack of adequate drainage 3.1.1Improvedflood Mitigation strategy to reduce Active: infrastructure to mitigate the protection in urban areas negative environmental Benin Emergency Urban negative environmental impacts of flooding Environment Project (FY11) impacts of floods % reduction of households implemented in urban areas vulnerable to flooding in the Pipeline: targeted municipalities as a Additional Financing for the result of improved ongoing project infrastructure Improved Urban Baseline (2011): 70 % Environment (FY16) Target (2016): 30 % AAA: Number of alerts on flood risks per year using the Flood Training tools on integrated TA Hazardous and Early Warning System on the ecosystem management Healthcare waste Oueme River put in place by prepared management (FY14) Improve access to urban Weak management and lack the Benin Emergency Urban TA Air Quality Management 46 services of access to urban services Environment Project (BEUEP) in urban and semi-urban Baseline (2011): 0 zones (FY15) Target (2015): 20 alerts Results Area 3.2: Improved Access to Social Safety Net Enhance safety net through Households do not have 3.2.1 Increased access to Active: improved access to basic access to safety nets safety nets Community Driven social services Decentralized Services Temporary employment (FY12) created in labor-intensive public works safety nets Pipeline: projects Benin Cities Support Baseline (2012): 0 Program(FY13) Target (2016): 1.3 million Small Towns Water Initiative person days Project (IFC PPP) AAA: Poverty/Gender Assessment (FY13) National Urban Development Strategy(FY14) TA Social Safety Nets (FY 13) Roadmap for MDG2 in the social sectors (FY16-17) Other Partners Swiss EU Results Area 3.3: Improved Quality Education,Health and Nutrition Services Improve access and quality of Access to and completion of 3.3.1Improved access to Greater access to primary Active: basic education basic education , particularly education education and lower Health System Performance in deprived districts is a secondary education (FY10) challenge Percentage of female students particularly in deprived in primary school (gender districts Pipeline ratio) Global Partnership for Baseline (2011/12): 47% Education program (FY13) Target (2016/17): 50% AAA: Primary completion rate (%) Tertiary Education and 47 disaggregated by gender Capacity Assessment Study Baseline (2011/12): Total (FY13) 71.5, Girls 65.8 Target (2016/17): Overall 85, Girls 81 Improve access and quality of Poor quality of maternal and 3.3.2 Improved access to Mitigation measures to Social Safety Nets (FY13) health services neonatal health services health services strengthen maternal and child IDF-Institutionalizing health implemented Nutrition ( FY13) Rate of assisted deliveries Poverty/Gender Assessment among all pregnant women (FY 13) Baseline (2011): 84% (DHS) Target (2016: 92% Hospital PPP (FY13-14) IFC + GPOBA grant Number of children completely immunized Baseline (2011): 170,000 Target (2016): 230,000 Improve food and nutrition Fragmented policies and 3.3.3 Improved access to and Consolidated National Food IDF-Institutionalizing security outcomes programs utilization of consolidated and Nutrition Security Policy Nutrition ( FY13) Ineffective sector-specific and harmonized food and services and interventions, nutrition security services and Pipeline: notably, but not exclusively interventions Multi-Sector Food/Health at community level and Nutrition project (FY14) Number of communes engaged in scaling up community health, food and Coordination mechanism of nutrition security multi sectoral nutritional interventions for women and policy and programs at children under five central and communal levels Baseline: (2012): 0 Target (2016): 7 Inclusion of food and 48 nutrition security priorities in Number of community Communal Development workers (% of whom are Plan female) trained in community health and nutrition Baseline (2012): 0 Target (2016): 2,000 (at least 50% women) 49 Annex 2: Benin: Proposed IDA and Other Financing FY13-17 Strengthening Governance Sustainable Growth, Competitiveness and Improving Access to Basic Social and Public Sector Capacity Employment Service Delivery and Social Inclusion Energy service Delivery (to FY13) Emergency Urban (to FY16) Increased Access to Energy (to FY14) CDD (to FY16) Agriculture Diversification (to FY15) Health Systems (to FY15) Competitiveness and Growth (to FY14) Support to Protected Area (to Portfolio E-Benin project (to FY15) FY17) IFC MSME (to FY14) Regional Trade Facilitation (to FY17) W-Africa Agricultural Productivity (to FY16) Niger Basin Water Resources (to FY15) WAAPP –Phase 2 (to FY13) Abidjan-Lagos Trade facilitation (to FY17) DPOs (annual FY13-17) DPOs (FY13-17) DPO (FY13) Capacity Building Operation Forest and Land management (FY13) Cities Support Program (FY13) (FY15) Regional WA Communication (FY13) Global Partnership for Education Youth Employment (FY14) (FY13) Cross-Border SEZ (FY15) Africa Centers of Excellence Lending Regional Adjarala Hydropower (FY15) (FY13) Regional Transport DPO (FY16) Multi-Sectoral Food/Health & Energy Services (FY17) Nutrition (FY14) WARCIP (FY17) Urban Environment (FY16) Environment/Climate Change (FY17) PSCDD Phase 2 (FY17) IDF Professional accountancy PPIAF cofinancing of infrastructure AAA IDF Institutionalizing Nutrition (FY14) FIRST TF (FY13) IDF Procurement profession IFC Advisory Services (demand-driven) IFC Advisory Services on PPPs in (FY14) IFC OHADA new Entreprenant status and Indicator- Health and Water based Advisory (FY03) GPOBA Grant in Health TF & Grants GPOBA Grant in Water Climate Change TF GP Education (FY13) Ongoing: Ongoing: Ongoing: IDF Ministry of Development Forest and Land Management (GEF to FY13) Social Biofuels (ESMAP to FY14) (to FY14) IDF Institutional Strengthening of the Ministry of Health System Performance (to Development (FY15) FY15) IDF AML/CFT (ongoing to FY14) Community Nutrition (to FY16) Access Modern Energy (GEF&ESMAP to FY15) Protected Areas Management (GEF Food Price Crisis Response (ongoing to FY15) to FY17) Public Investment/Tax Policy Tertiary Education Assessment (FY13) Poverty/Gender Assessment (FY13) Notes (FY13) Access to Finance Policy Note (FY13) TA Social Safety Nets/SP (FY13) Social Capital Study (FY13) Youth Employment Note (FY13) Education and health Service Use of Country Systems Agricultural Sector TA (FY13) Delivery Indicators (SDI) survey (FY13) Private Public Partnerships TA (FY13/14) (FY15) Customs Assessment Trade Cross-Border Special Economic Zones (FY14) TA Waste management (FY14) AAA Toolkit (FY13) FASP Update (FY14) TA Air Quality (FY15) Integrated Fiduciary Port Operations TA (FY14/15) Roadmap for MDG2 in the social Assessment (FY14) Urban National Development Strategy (FY15) sectors (FY16-17) Civil Service Reform/Wage Energy Sector Review (FY15) Bill TA (FY15) Infrastructure and Competitiveness Review (FY16-17) CEM (FY16-17) Private Sector Enabling Environment and SME Growth (FY16-17) 50 Annex 3: CAS Completion Report BENIN- FY09-12 Country Assistance Strategy Completion Report February 12, 2013 51 CURRENCY EQUIVALENTS (Exchange Rate as of March 5, 2012) Current CFA Franc = Unit (CFAF) US$1 = 497 CFAF FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AAA Analytic and Advisory Activities ASTER Computer-based Accounting system CAS Country Assistance Strategy CDD Community-Driven Development CEB Communauté Electrique du Benin(Benin/Togo Generation and Transmission Power Company) CFAF Communauté Financière Africaine Franc (African Financial Community Franc) CPAR Country Procurement Assessment Report CR Completion Report DBI Doing Business Indicators DPL Development Policy Lending ESW Economic and Sector Work FADEC Fonds d’Appui pour le Développement des Communes (Communal Development Support Fund) GDP Gross Domestic Product GEF Global Environment Facility HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome ICA Investment Climate Assessment ICRR Implementation Completion Results Report IDA International Development Association IFC International Financial Corporation IMF International Monetary Fund LOLF Organic Law on Finance MCC Millennium Challenge Corporation MDGs Millennium Development Goals MOU Memorandum of Understanding MTEF Medium-Term Expenditure Framework PAF Performance Assessment Framework 52 PEFA Performance of public financial management PER Public Expenditure Review PFM Public Financial Management PPP Public-Private Partnership PRSC Poverty Reduction Support Credit PRSP Poverty Reduction Strategy Paper SBEE Société Béninoise d’Energie et d’Electricité(Energy and Electricity Company of Benin) SCRP Stratégie de Croissance pour la Réduction de la Pauvreté (Poverty Reduction Strategy SDR Special Drawing Rights SIGFIP Integrated Computer-based Budget Management System (Système Intégré de Gestion des Finances Publiques) SIGMAP Integrated Public Procurement Management System SONAPRA Société Nationale pour la Promotion Agricole (National Cotton Company) UNDP United Nations Development Program WAEMU West African Economic and Monetary Union WB World Bank This report was prepared by a team consisting of Evelyn Kennedy (Country Operations Officer), Cal MacWilliam, Senior Economist) and Herminia Martinez (consultant). Contributions were received from the following Country Team members: K. Amankwah-Ayeh, A. D’Almeida, A. Dumitrescu; H. Gbaye; F.Gbedey, B. Guermazi; A. Hinkati; A. Ibrahim,M. Queyranne, J. Van Dyck, S. Migan, E. Abiassi and F. Douamba (IFC). 53 BENIN – CAS COMPLETION REPORT (FY09-12) I. Introduction 1. This Country Assistance Strategy Completion Report assesses the IDA strategy for Benin for the period FY09-12 (Report No. 46485-BJ). It describes the support provided through an integrated package of financial and knowledge services and (i) reviews the progress made toward achieving the country level goals as defined by the Government; (ii) evaluates the program performance; (iii) reviews the Bank performance, and (iv) presents key lessons and suggestions for the new Country Partnership Strategy (CPS). A. Economic and Social Background 2. With a per capita income of US$ 800 in 2011, Benin ranks in the lower income group of countries. Following fundamental political change in 1989, the country has enjoyed relative political stability and democracy has been strengthened. Presidential elections were held in March 2011 and incumbent President Boni Yayi was elected in the first round of voting with some 53 percent of the vote. Legislative elections followed in April 2011 and the President’s party won 41 out of 83 seats in parliament which together with those won by coalition parties gives the President a working majority in Parliament, a majority which he did not have for most of the preceding period and which made reforms difficult. 3. A decade ago, Benin was seen as an ambitious performer and a model for other West African countries. Unfortunately, this level of performance was not maintained and a period of reform stagnation set in. This was largely due to difficulties in implementing ambitious Poverty Reduction Strategies in a contentious and divisive though democratic political environment. 4. Growth in 2009-2012 was moderate averaging around 3.2 percent annually. This is marginally below the regional average and contributed to modest increases in per capita incomes and some improvements in human development in spite of a relatively high population growth (3.2 percent p.a.). The economy relies heavily on the agricultural sector, cotton in particular, and on re-export and transit trade with Nigeria and other neighboring countries. The agricultural sector accounts for about 32 percent of GDP and provides nearly 70 percent of employment, while cotton is the major primary export commodity representing typically 25 to 40 percent of total exports. Re-export trade with Nigeria alone accounts for some 20 percent of GDP. B. World Bank Program of Support 5. The current CAS was discussed by the Board of Directors of the Bank in February 2009. The CAS strategic objectives were in line with the second Poverty Reduction Strategy of the Government (Stratégie de Croissance pour la Reduction de la Pauvreté-SCRP 2).The Bank’s strategic priorities were informed by the Government’s SCRP, the lessons learnt from the implementation of the previous CAS (FY04-FY06), and from the results of a Client Survey conducted in 2007. 55 6. The Bank followed essentially the overall thrust of the CAS while making adjustments in response to exogenous factors such as the international financial crisis, the food and fuel price increases and the devastating 2010 floods. All lending operations in the original program were approved by the end of FY12 except for a regional IT program where the region’s priority was to deal with post-conflict countries. The initial lending program was modified to include supplemental credits to the PRSC 6 and the Community Development Project, and the urban and agriculture projects approved in FY11 were expanded and reoriented to include emergency assistance. Emergency operations in food security and community nutrition financed with trust funds were also approved. C. Summary of CAS Program Performance 7. The CAS program performance is rated moderately satisfactory as the country made progress towards all major expected outcomes despite external shocks and internal political tensions between the executive and the legislative during the CAS implementation period. Program performance has to be viewed in the context of exogenous and unplanned factors that affected Benin during the period including the fuel and food price increases, the world economic downturn and devastating floods in 2010, the worst in 50 years. The floods caused estimated damages of some US$250 million or 3.4 percent of GDP, and over 680 thousand people were affected with 46 deaths and 150,000 left homeless. In spite of adverse conditions, the Government met its IMF targets and there was some growth although CAS indicators with respect to budget execution were only partially achieved. The decline in budget execution was linked to tighter expenditure management resulting from a shortfall in revenues but the Government concentrated expenditures in priority sectors such as education and health. Diversification was also affected by the 2010 floods. Reforms in the cotton sector proceeded, though these were substantially reversed in early 2012. Despite the backsliding on reforms in 2012, cotton production improved in 2012/13 to near record levels. Substantial progress was made in increasing access to telecommunications and electricity (CAS indicators). Important reforms were also introduced to port operations, trade and customs regulations, and the Port of Cotonou was expanded through a PPP which should lead to increased trade and reduced merchandise costs. Despite the policy reversal on the import verification program, again in early 2012, port performance improved markedly over 2012 and into 2013. 8. With respect to the provision of basic services, there has been substantial progress in increasing access to safe water in rural areas, which rose from 44 percent in 2006 to 61 percent in 2011. The programmatic approach and decentralization which led to these results were promoted by the PRSCs. The ongoing Community Development Project resulted in increased services, and this, along with work under the ongoing Second Decentralized City Management Project which also focused on local structures, point to the effectiveness of programs that focus on decentralization. There were improvements in the education sector and the Bank assessment is that progress under the Sector Development plan supported by donors is moderately satisfactory. Access has increased significantly, with enrolment rates rising from 98.5 percent to 56 110.6 in 2010, even though a gender imbalance remains. Completion rates declined in part because of the rapid increase in enrolments but also because there continue to be high repetition rates and high dropout rates, the latter the result of the deteriorating economy. In hindsight, it should be recognized that increases in completion rates in the context of Benin cannot be easily achieved in the short term. In health, all CAS objectives which could be measured at this time -- vaccination rates and improved services for pregnant women and HIV patients—were met. 9. A number of measures to improve public administration are being implemented, including measures in a financial management action plan prepared on the basis of the recommendations of the 2007 Public Expenditure and Financial Assessment (PEFA). Legislation which establishes the institutions and procedures to expedite and render transparent public procurement has been approved and six of the seven regulatory decrees have been passed. Anti-corruption legislation was approved by Parliament in 2011. The Government is also beginning to decentralize the provision of services and has included the community development approach as part of its decentralization process. A mechanism for the transfer of funds to the local communities, which had begun some years ago, was expanded in 2010. The 2012 PEFA shows modest improvement in overall- and sub-indicators, even though about 2/3 remain rated C or below. 10. World Bank performance is rated satisfactory. The CAS was relevant, aligned with the Government’s SCRP, and the design and implementation of the Bank program contributed to the achievement of CAS outcomes. The higher rating for bank performance than for CAS outcomes is justified because the Bank staff showed considerable flexibility and agility, as it increased and adjusted the Bank’s support to help address the new and unforeseen challenges, and delivered a package of services which helped mitigate external shocks. II. Progress towards Achieving SCRP Country Goals 11. The Government’s SCRP 2 assumed that effective poverty reduction could only be achieved in an environment of economic growth and this was made the focus of the strategy. SCRP 2 was built around strategic pillars aiming to (i) strengthen competitiveness and accelerating private sector development; (ii) infrastructure development; (iii) improving access to basic services; (iv) promoting better governance and strengthening institutional capacities; and (v) promoting balanced development. Country level goals associated to the CAS program are summarized in the first column of the CAS outcome Matrix. D. Pillar I: Economic Growth and Diversification Benin has made progress in consolidating macroeconomic stability and improving some social indicators and has achieved positive economic growth outcomes despite the global economic downturn and natural disasters during the period. However, progress in terms of poverty reduction has been limited. The incidence of poverty at the national level was estimated to be 36.2 percent in 2011, compared to 35 percent in 2009 and 37 percent in 2006; the aggregate 57 12. figure masks important urban-rural and regional differences as rural poverty was 39.7 percent in 2011 and the poverty rate was 61.2 percent in the poorest commune. 13. Progress was made towards achieving the SCRP objectives of aligning the budget to PRSP priorities, maintaining an acceptable GDP growth rate and stable inflation. Macroeconomic management has been broadly commendable and the Government has generally met objectives agreed with the IMF. 14. Key economic indicators during the CAS period are given in the table below. After several years of improving growth performance (increasing from 2.9 percent in 2005 to 5.0 percent in 2008) growth slowed to 2.7 percent in 2009 and 2.6 percent in 2010. Growth picked up to 3.5 percent in 2011 and is estimated at 3.9% in 2012. Aside from the effects of the fuel and food crisis and the floods, weaker performance in 2009 and 2010 was the result of a decrease in re-exports trade, partly because of trade liberalization in Nigeria; lower cotton production; and lower foreign direct investment, the result of the international financial crisis. Inflation, which peaked in 2008 at 8.0 percent during the food crisis and fuel price increases, fell to 2.2 percent in 2009 and2.7 percent in 2011, but rose to 6.8 percent following the partial removal of fuel subsidies in Nigeria (January 2012) and recent efforts by authorities to fight illegal fuel trade (November 2012). 15. Over the CAS period, the Government introduced tight budgetary controls to better match expenditures with receipts; the tight controls have affected service delivery and the implementation of the public investment program. To ensure that basic services are not compromised, the Government explicitly identified priority social expenditures in the 2011 budget and has put in place a tracking and monitoring system to ensure that identified expenditures are protected in the event of further revenue shortfalls. Execution of priority social expenditures exceeded 100 percent in 2012. 16. Benin has made progress in meeting the macroeconomic convergence criteria set by WAEMU. It has met four of the five primary criteria (relating to inflation; the accumulation of domestic and external arrears and debt to GDP) and the fifth objective relating to the basic fiscal balance to GDP has virtually been met. Benin also made progress in meeting secondary criteria (table at the end of Annex 1). However, the wage increases approved for civil service employees starting in August 2011 have put pressure on an already inflated public sector wage bill which at 45% of tax revenues exceeds the WAEMU convergence criteria of 35% though the Government is committed to remain within the wage bill ceiling agreed to in the IMF program. 17. Limited progress has been made in improving the business climate. Investment was affected by the global downturn and private investment remained stagnant during 2008-2012. There has been limited improvement in its Doing Business Indicators (DBI) with a slight improvement in ranking from 176 in 2011 (DB12) to 175 in 2012 (DB13). With the support of IFC, Benin implemented reforms in several areas of business regulation, namely: dealing with construction permits; enforcing contracts; starting a business; and trading across borders. However, apart from the starting a business and dealing with construction permit indicators, 58 where reforms impacted the rankings, effort is still required in order to deepen recent reforms and have more impact on the private sector enabling environment. Areas which are currently in need of significant improvements including: electricity access, registering property, protecting investors and paying taxes. IFC will continue to support the improvement of Benin’s investment climate and Doing Business Indicators and the adoption and implementation of the OHADA new “Entreprenant� status revised uniform acts. To maintain the momentum of ongoing reforms, a two-year TA program funded by SECO will focus on: (i) supporting additional Doing Business reforms; and (ii) the implementation of OHADA’s Uniform Acts at the national level supporting the implementation of the OHADA new “entreprenant status.� The presidential committee to prepare and introduce reforms was established in 2011 with delays. Also, changes in legislation needed to improve the DBIs were regarded as politically sensitive and not submitted to the parliament. Some progress was made in structural reforms related to private investment, including the award of the concession for operation of the container terminal at the Port of Cotonou in 2009 and the sale of the cotton ginning, cement and wood companies to strategic private investors. As discussed in the next paragraph, with regard to cotton reforms, these were substantially reversed in 2012 when the state took control over cotton production, ginning and marketing activities following nearly two decades of progressive Government disengagement from the sector. While the Government effectively managed cotton activities for the 2012/13 crop season, which resulted in a substantial increase in production, this involvement was costly and unsustainable. Looking forward, the State is considering moving to a zoned concession system which is successfully implemented in some neighboring countries. The Government has requested support from the World Bank in restructuring the cotton sector, to which the Bank has favorably responded through technical assistance to share best practices in cotton sector governance. It is unlikely that the new institutional framework will be effective prior to the2014/15 crop season. Key Economic Indicators- 2008-2012 2008 2009 2010 2011 2012 Real GDP Growth (%) 5.0 2.7 2.6 3.5 3.9 Real GDP per capita growth (%) 1.8 -0.5 -0.6 0.4 0.7 Inflation (CPI, average, %) 8.0 2.2 2.1 2.8 6.8 Gross investment (% of GDP) 18.1 20.8 17.6 18.7 19.1 Gross private investment (% of GDP) 12.3 11.1 12.1 12.2 12.4 Revenue (% of GDP) 19.6 18.5 18.6 17.6 18.9 Wage bill (% of GDP) 6.1 7.3 7.3 7.4 7.4 Basic Primary Balance 0.7 -4.0 0.5 -0.1 0.2 Balance of payments (% of GDP) 1.6 -1.6 -0.8 -1.1 -0.9 Export growth (% change) 20.0 20.3 30.5 -22.8 9.7 Share of cotton exports (% of exports) 27.2 19.1 13.8 17.4 16.8 External Debt to GDP (%) 16.8 15.7 17.9 17.7 17.3 ----------------------------------------------------- Source: Beninese authorities, IMF and Bank staff estimates. 2011 and 2012 projected 59 18. Progress towards meeting the Government objective of diversifying the economy has been slow, and cotton remains Benin’s largest single official export, representing some 22-24 percent of exports in 2010-11. Cotton production fell to about half the level of its recent high in 2004/05 of 417,000 tons with production for 2011 in the range of 200,000 tons. This trend can be partially attributed to an inefficient quasi-monopolistic sector management by the private sector and to the appreciation of the Euro to which the CFAF is pegged, which depressed domestic cotton prices. However, cotton prices began to rise over the CAS period so the dynamic going forward may be different. Reforms of the cotton and input markets and in the agriculture sector more broadly moved slower than anticipated and this also contributed to weak agricultural performance and falling cotton production. In April 2012, the government suspended the agreement (“Accord-cadre�) with the private sector Inter-professional Cotton (AIC) Association governing the sector and assumed full responsibility over the entire value-chain. While concerns were initially expressed (mostly by the private sector and donors) following this policy reversal, cotton production is projected to reach at least 350,000 tons in 2012 (a 75 percent increase over the previous campaign) due to exceptional government involvement and favorable rainfalls. . E. Pillar II: Infrastructure 19. There has been some progress in promoting growth-inducing infrastructure, through reforms in telecommunications and electricity, although key objectives have not been met. There has been impressive growth in broadband access and global teledensity which rose from 13 percent in 2007 to 80.6 percent in September 2012 due in large part due to the expansion of mobile operators. The privatization of Benin Telecom, a government objective, was launched but in 2011 the Government did not accept an offer received, which it regarded as low compared to those of neighboring countries. A new regional communications infrastructure project approved in FY13 will provide investments for additional bandwidths and international connectivity by connecting Benin to the Africa Coast to Europe cable. 20. With respect to electricity supply, access to electricity increased from 26 percent of the population to 30 percent in 2011. Supply reliability has improved and more capacity is available for new customers and rural electrification. The northern part of Benin, which was supplied with electricity from diesel generators is now connected to the national grid and is supplied with cheaper hydro and thermal generation (10,000 GWh). 21. Steps have been taken to improve governance in the power sector. The Benin Electricity Code, which establishes the regulatory agency, was approved in 2009. The code encourages private sector participation in the power sector. The financial situation of the SBEE, power distribution utility, has improved following the implementation of a financial recovery plan begun in 2010, which increased incomes and stabilized expenses. Net losses decreased from CFAF 17.4 billion in 2009 to CFAF 1.4 billion in 2010 and net income became positive in 2011 (CFAF 2.6 billion). A positive net income of 3.3 CFAF billion is expected for 2012. The financial health of SBEE, however, remains fragile and must continue to be consolidated. 60 22. Some progress was made in promoting trade and regional integration. Critical port reforms have advanced, which should improve service to the private sector, although the reforms are relatively recent and results remain to be seen. Costs in the port of Cotonou account for the bulk of the cost of importing goods using the Cotonou-Niamey corridor, the highest among alternative gateways in West Africa. Benin ranks better than all but one other DBI indicator (getting credit) in the trading across borders ranking, placing at 130 out of 183 countries (DB2013). Costs to import and export are low in comparison to African countries -- US$1,549 to import a container compared to the SSA average of U$2,567, and $1,079 to export a container compared to a SSA cost of US$1,990. However, the cost to export or import for Benin is higher than the costs of importing and exporting in the coastal neighbors of Togo (US$940 and US$1109, respectively) or Ghana (US$815 and US$1,315, respectively). Beninese time of trading across borders is above the average of other coastal countries in West Africa, with about 29 days’ time needed to comply with export procedures versus 22 days in regional coastal countries; and 30 days to import goods versus 28.2 days average for regional coastal countries 13. 23. With respect to regional trade in electricity, Benin is increasingly participating in the regional power pool, which should bring down costs and improve reliability. Supply of electricity has improved in the sub region since 2003 through the regional power system interconnection (West Africa Power Pool). The West African Gas Pipeline was completed in 2011 and compressed gas is available at the premises of CEB, the Togo-Benin Power Generating and Transmission Company. Generation from gas will reduce thermal generation costs in the country. F. Pillar III: Provision of Basic Services 24. The Government strategy called for improvements in urban sanitation by strengthening municipalities; developing safe water supply services; expanding sanitation works; ensuring primary education for all by the year 2015 and strengthening vocational and technical training development and improving the accessibility and quality of health services. Social indicators have been improving marginally in education and health while progress in the water sector has been notable. Between 2008 and 2010, primary school enrolment increased by more than four percentage points but primary school completion rates fell, pointing to difficulties in absorbing the increased enrolment but also indicating that the quality of education remains an issue. There are gender inequalities and females represent 46 percent of all students enrolled in primary school and female completion rates are 59 percent compared to the overall completion rate of 66 percent. These outcomes are below SCRP 2 targets of 77 percent for overall primary school completion and 70 percent for female primary school completion rate. 25. Health sector indicators have also improved, but less than expected. The utilization rate of basic health services by the general population improved slightly, from 45.6 percent in 2008 to 46.5 in 2010, while the utilization rate by children under-five increased from 76 percent to 13 Nigeria, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea Bissau, Senegal, The Gambia. Figures based on DB 2013 report. 61 nearly 85 percent in 2010. Limited progress was made in improving the performance of the health sector and health workers have spent many days on strike. Access to potable water in the rural areas increased from 36 percent in 2003 to 57.2 percent in 2010 (58.5 percent in urban areas), putting Benin on the path to achievement of the MDG in water. This is largely the result of using more programmatic approaches, greater decentralization in the water sector and measures to improve capacity. G. Pillars IV and V: Good Governance, Institutional Capacity and Balanced Development 26. Good governance and increased transparency remain challenging though a priority. The Government made progress in strengthening public financial management. A new procurement code was adopted by the National Assembly and the regulatory framework to implement the new code is almost in place with six out of the seven decrees required already approved. Progress in implementation of procurement reforms will be a test of government commitment to changes in governance. The Government prepared a comprehensive action plan to strengthen public finance management based on the findings of the 2007 PEFA and the 2012 PEFA self-assessment indicates some progress. Although considerable technical support was provided by the European Union and other donors, a constraint to the implementation of some of the planned measures in the action plan has been the absence of technical support. The use of exceptional procedures was reduced as was the backlog on external audits. Progress was also made in the areas of internal and external audits with the implementation of a "harmonized" program of audits by internal oversight structures. 27. The Government has begun the process of decentralization by devolving authority and budgets to the local communities. The water sector has been a success in this area; funds were transferred from the central government to local communities and were effectively utilized in the provision of potable water services to local populations. PPPs were fostered and there is now significant private sector participation in the delivery of water with over 30 percent of village water systems managed under PPP arrangements. The Government has begun testing the systems to channel more funds from the central government to the municipalities. III. CAS Program Performance H. Overview 28. The CAS program performance is rated moderately satisfactory as the country made progress towards all major expected outcomes. Program performance has to be viewed in the context of exogenous and unforeseen factors that affected Benin during the period including the fuel and food price increases, the world economic downturn and devastating floods in 2010, the worst in 50 years. The CAS program was adjusted to help Benin meet these challenges, and it is likely that economic performance and other indicators related to poverty would have deteriorated in the absence of the Bank program. 29. The CAS covered the period FY09-12. The CAS program sought to selectively support SCRP 2 which was under implementation at the time. The CAS was structured around three 62 strategic objectives which coincided with pillars of the SCRP: (i) strengthening competitiveness and accelerating private sector-led growth; (ii) improving access to basic services; and (iii) promoting better governance and strengthening institutional capacities, including decentralization in the provision of services. The CAS used a mix of instruments, including DPLs, programmatic approaches, and investment operations. The CAS was not a joint IDA/IFC assistance strategy, but it was prepared in close collaboration with IFC and it exploited the synergies within the World Bank Group and with other donors to deliver the assistance program. 30. As the program mirrored the SCRP, ownership, government leadership and better harmonization of donor efforts, which were objectives of the SCRP, were built into the CAS. Donor coordination was expanded. Capacity enhancement was done particularly through investment operations and trust fund financing which was executed by the Bank (e.g., institutional development grant for training of auditors). The program covered 13 areas/sectors and was not particularly selective. 31. During the FY09-FY12 CAS period, the Board approved 17 operations for Benin totaling US$398.3 million. These include four regional operations totaling US$27.5 million. This compares to the planned operations for US$312 million (including US$12.0 million in regional operations). Of this, policy-based lending will amount to US$112 million or about 28 percent of total financing with three Poverty Reduction Strategy Credits (PRSCs) and one supplemental credit. PRSG VII was approved in FY12. The number of PRSCs, including the supplemental credit, was the same as that proposed in the CAS. The program for FY09 and FY10 was supplemented with emergency operations to mitigate the effects of the food crisis including two food security projects and one nutrition project financed with trust funds for a total of US$21.4 million. The FY11 program was reoriented to include emergency relief following the economic downturn and floods. A PRSC VI supplemental credit focused on emergency relief, and additional financing was also provided for the Community Development Project. The Urban Environment project was increased by US$20 million and the Agriculture Diversification Project postponed and expanded to include emergency assistance. Analytical work and technical assistance during the CAS period focused on the areas of concentration, including public finance, health and education. A study on the impact of the 2010 floods was also carried out in cooperation with the United Nations. 32. Reforms associated with the PRSCs focused on measures to maintain a stable macroeconomic framework, establish a modern regulatory framework for electricity, cotton sector reform, reforms to improve the provision of social services and measures to improve governance, principally through improvements in the budgetary process and public procurement. Decentralization of services, especially water was also encouraged through policy based lending. Investment lending focused on the same areas. Two operations and a supplemental credit (for community development and urban infrastructure), for a total of US$102 million or some 26 percent of total financial assistance will use decentralized/deconcentrated structures. This was higher than originally planned and the structures proved effective in the provision of services at 63 the local level. The program based approach was used in education, to some extent in health and is being gradually introduced in the community development programs. The program based approach has not been introduced to the extent planned in the CAS because the institutional framework and fiduciary controls in some ministries such as agriculture does not yet permit it. 33. The Bank program was coordinated with that of other donors. Progress in the SCRP 2 is discussed at yearly donor meetings, and donors have agreed on a framework for budget support (a CAS indicator). Non-lending activities were also coordinated with other donors. The main areas of cooperation were in the public finance and macroeconomic areas. The European Union carried out the Public Expenditure Review in 2007 and is conducting a second one for 2011. Also providing support in public finance are the Governments of Denmark, France, Germany and the Netherlands. The analytical work done in health and in secondary education and skills development complements work supported by other donors. The financial assistance in health is closely coordinated with other donors and a program-based approach with pooled funds is used in education. There is also close coordination with other donors in the Decentralized Community Driven Services Development Project approved in FY12. Work of the IFC on the business environment and of the IFC and the MCC on the port of Cotonou made progress possible in meeting the CAS objectives in the business environment and trade areas. I. Progress by CAS Strategic Objectives Strengthening competitiveness and accelerating private sector-led growth (outcomes partly achieved). 34. The objective was to be accomplished by supporting a stable macroeconomic framework and improving public financial management; strengthening competiveness and revitalizing the private sector; diversifying the economy through increased contribution of the agricultural sector to growth and promoting growth inducing infrastructure (energy and telecommunications). 35. Support under this theme became crucial for the Bank’s engagement following the food and fuel crisis and the flood. Macroeconomic management has been broadly satisfactory. The Government met IMF targets but specific CAS objectives on budget execution were not achieved. This was due to the imposition of strict expenditure controls required to manage lower than expected revenues. The Government concentrated expenditures in priority social sectors. Support in this area included two PRSC’s and additional financing for PRSC VI for a total of US$82 million and a third PRSC for US$30 million approved by the Board in December 2011. 36. Achievements in the area of investment climate reform were less than planned. Reforms to improve the investment climate were viewed as politically sensitive, and the Presidential Committee charged with preparing and implementing reforms was appointed in 2011, with some delay. Changes in the tax system to strengthen the business environment were introduced and the company registration costs were reduced, but these modifications were not sufficient to bring about substantial changes in the Doing Business Indicators (CAS indicators). IFC and the EU supported the studies required to put in place an investment climate reform program but the 64 PRSC series did not focus on the regulatory environment as measured by the Doing Business Indicators. 37. Diversification was affected by exogenous factors such as the 2010 floods, but the slow pace of sector reforms also contributed to outcomes. While reform in the cotton sector proceeded, and the cotton ginning facilities were privatized, cotton production and export related outcome indicators were not met. Indicators focusing on cotton were probably not good measures of results in this area, as these had much to do with weather conditions and external market forces. Other agricultural reforms such as the establishment of a system to distribute agricultural inputs, a CAS indicator, are underway but have not been finalized. 38. Emergency IDA and trust fund financing contributed to mitigating the effect of the food crisis. The food security projects were to distribute 8,500 tons of fertilizer to some 50,000 rice and maize producers. By 2010, the project had distributed 9,100 tons of fertilizer which generated an additional supply of 10 thousand tons of rice (out of 125 thousand tons total output) and 65 thousand tons of maize (out of 1,012 thousand tons total output). The Agricultural Diversification Project approved in FY11 will expand the input programs initiated under the emergency projects. 39. Progress was made in improving telecommunications and electricity services. In the telecommunications sector, CAS targets in terms of coverage were met but the revenue target was not achieved. Substantial progress was made in increasing teledensity, which reached 80.6percent in September 2012 as mobile operators expanded and in broadband access (both CAS indicators). Support for the telecommunications divestiture was included in the CIGOP project (FY08), and the Bank approved a project (e-Benin) for improving electronic communications. The Regional project which was to include telecommunications hardware was approved in FY13. In electricity, the Bank approved one project for US$70 million. In addition, the implementation of the ongoing Energy Services Delivery Project continued. Progress was made in modernizing the regulatory framework for electricity and in improving the operations and financial condition of the electricity company. CAS targets in electricity, which dealt with efficiency, were partially achieved while the targets on new connections were met. In hindsight, the target on losses was probably unrealistic as it appears to have been linked to execution of a project which had not been approved at the time of the CAS. 40. With respect to the objective of reducing trade costs, important reforms are being introduced to port operations, and in trade and customs regulations. Measures taken include the establishment of a one stop shop for port transactions (“guichet unique�), the streamlining of import/export procedures, the subcontracting of key port operations to the private sector, reform of the import verification program, and consolidation of informatics systems. Reforms in the port sector were supported by the Millennium Challenge Corporation (MCC) and the IFC. The Port of Cotonou was expanded and a concession for the operations of the port and of the new facilities granted with support from IFC (a CAS indicator). The reforms should lead to increased trade and reduced merchandise costs although results cannot be seen yet. The most recent data on 65 cargo dwell time in the Port of Cotonou is 19 days, which is the average for West Africa although there is no reliable figure on the trend on cargo dwell time, the CAS indicator. There are also no figures on cost trends. Costs to import and export are low in comparison to African countries -- US$1,400 to import a container compared to the SSA average of nearly U$2,400 and $1,250 to export a container compared to a SSA cost of US$1,942. However, the cost to export or import to Benin is higher than the cost of importing and exporting from the coastal neighbors of Togo (US$963 and US$940, respectively) or Ghana (US$1,391 and US$855, respectively). 41. With respect to trade in electricity, Benin is increasingly importing electricity from regional electricity grid facilitated by investments financed under the Coastal Transmission Backbone Project (FY06). The CAS objective of improving access through the West Africa Power Pool was met; imports of CEB from the region increased by 54 percent in the 2006-2010 period. Increased trade in electricity will improve power system reliability. Improving access to basic services(outcomes achieved) 42. The CAS called for improvements in urban sanitation and access to safe water; the promotion of development-oriented education and improving the accessibility of health and nutrition services. Financial assistance included investment operations in support of heath, urban development and a trust fund financed community nutrition project. An education project, approved in FY08 was under implementation during the CAS period. In addition, non-lending support included an environmental assessment, and a health sector review which have been completed and a tertiary education and training assessment which will completed in FY13. 43. There has been substantial progress in increasing access to safe water in rural areas, which increased from 44 percent in 2006 to 57.2 percent in 2010. The programmatic approach and decentralization which led to these results were promoted by the PRSCs. The ongoing Second Decentralized City Management Project focused on local structures and the level of priority expenditures in urban centers, a CAS indicator, increased substantially, rising in Cotonou from 20 percent in 2005 to 35 percent in 2011. Increases in smaller cities, which had limited allocation to social services initially was much higher. People with access to paved roads in the principal cities, also a CAS indicator, increased by some 57 percent in the same period. The Emergency Urban Environment Project was approved in FY11. 44. There were improvements in the education sector and the Bank assessment is that progress under the Sector Development plan supported by donors is moderately satisfactory. Access has increased significantly, with enrolment rates rising from 98.5 percent to 110.6 in 2010 and for girls from 92.0 percent in 2007 to 106 percent in 2010. Completion rates, the CAS target, declined in part because of the rapid increase in enrolments but also because there continue to be high repetition rates, reflecting the quality of education, and high dropout rates, partly the result of the deteriorating economy. Changes in completion rates are difficult to achieve in the short term in the context of Benin. The Government has begun putting in place a system to oversee private education and pilot programs designed to improve secondary education and training are being developed (CAS targets). The ongoing study on tertiary education and 66 training assessment will include recommendations for improving efficiency of the higher education and training sub-sector. 45. The Bank assistance in the health sector during the CAS period included two projects under implementation (Malaria Control Booster Program and HIV/AIDS Control). In addition, a project designed to improve health system performance was approved in FY10, and additional financing was approved in FY12 to finance a continuation of the malaria program. All CAS objectives which could be measured at this time (vaccination rates and improved services for pregnant women and HIV patients) were met. On structural reforms, the MOH has decided to extend the hygiene and basic sanitation marketing approach, supported on a pilot basis under the PRSC-6, to the twelve departments of the country; the ultimate goal is to help prevent the recurrent upsurge of diseases such as cholera and diarrhea that particularly effect children under five. Promoting better governance and strengthening capacities (outcomes partly achieved) 46. A number of measures to improve public administration are being implemented, including measures in a financial management action plan based on the recommendations of the 2007 PEFA (Public Expenditure and Financial Assessment). Legislation which establishes the institutions and procedures to expedite and render transparent public procurement has been approved and six of the seven regulatory decrees have been passed. Measures are being taken to reduce corruption. A public sector code of ethics was approved in 2010, and an anti- corruption law was approved by Parliament in 2011. Bank assistance included, in addition to the PRSPs, a Public Expenditure review focused on decentralization (FY11), a review of Standards and Norms, and training of private auditors on public sector audits, the last under an IDF grant. In FY11 IDF grants were approved to assist in the Legal and Judicial Reform and to strengthen the Ministry of Development. A Civil Service Reform TA, which was not programmed, was completed in the context of PRSC-7. A Customs Assessment study, also not programmed, will be completed in FY13. 47. The Government is also beginning to decentralize the provision of services and has included the community development approach as part of its decentralization process. A specific mechanism for the transfer of funds to the local communities, which had begun some years ago, was expanded in 2010. The program has been successful in providing health and education services at the local level. For example, by May 2011, over 121 thousand students were enrolled in schools constructed/rehabilitated through CDD approach. The Bank program included a supplemental financing in support of the successful Community Development Project in FY11 and a second Community Development Project was approved in FY12. IV. Review of Bank Performance 48. World Bank performance is rated satisfactory. The CAS was relevant, aligned with the Government’s SCRP, and the design and implementation of the Bank program contributed to the achievement of CAS outcomes. A higher rating for Bank performance than for outcomes is 67 justified given the efforts made by Bank staff to address the emergencies confronted by Benin during the period and which helped mitigate the effects of the problems resulting from the economic downturn and natural disasters. 49. The CAS period was characterized by a number of external shocks which greatly affected economic and social indicators. The Bank showed considerable flexibility and it increased and adjusted its support to help address the new challenges, and delivered a package of services which helped mitigate the external shocks. Policy based lending through PRSCs and their link to the investment operations in the program has helped strengthen the alignment of Bank’s program to the Government’s priorities and strategies as laid out in SCRP 2. The CAS program of assistance has contributed to the maintenance of macroeconomic stability and to improvements of public finance management. It also has brought to light the effectiveness of decentralization in providing services to the poor. Progress on structural reforms and overcoming institutional weaknesses has been more modest. This reflects the intractability and time required to address structural issues and institutional reform. J. CAS Design 50. The success achieved in some areas owes much to the fact that the CAS was aligned with the priorities of the Government and thus had local ownership. However, the depth of the political divisions within the country, the political ramifications of the proposed agenda, and the difficulties in building reform-oriented coalitions were not fully recognized in the CAS. An analysis of the political and institutional constraints to growth-oriented policies was included in a Country Economic Memorandum which was completed in 2009. The CAS included a combination of budget support and investment lending which in the past has shown to be an effective approach to addressing structural reforms. The CAS attempted to be selective but in fact covered 13 sectors and cross-cutting areas. The CAS preparation team has to be commended for including detailed indicators, many of which were directly linked to operations in the program. Reflecting the breath of the program, there were 42 key indicators to measure progress, a high number. Some of the indicators presented difficulties, highlighting the problems in establishing appropriate indicators: (i) there was not a direct relationship between the CAS activities and the outcome (cotton); (ii) indicators had no base year data (electricity); (iii) others were the outcome of projects which were in the program and could not realistically be achieved within the CAS period (agriculture and electricity); and (iv) some were undefined and not regularly monitored (access gap to basic social services). The target year of 2012 was not realistic, as this is the year when the follow-up CAS would have to be prepared. The CAS emphasized the importance of monitoring but a monitoring framework was not set up in part because of staffing issues, discussed below. K. Implementing the Strategy 51. The Bank followed essentially the overall thrust of the CAS while making adjustments in response to external shocks. All lending operations in the original program were approved except for a regional IT program where the region’s priority was given to post-conflict countries. The 68 planned assistance was expanded to include emergency operations in food security and community nutrition. Additional financing for PRSC VI was made available in FY11 to help mitigate the effect of external shocks on the budget and agriculture and urban projects also approved in FY11 were revised and expanded to cover emergency assistance. With respect to analytical and advisory services, most planned analytical work has been completed except for a tertiary education assessment which is underway and expected to be completed in 2013 and an Energy Sector Review which has been postponed to FY15. A planned National Governance and Anti-Corruption Strategy was not prepared, but IDF grants to support Legal and Judicial Reforms and the strengthening of the Ministry of Development were approved. 52. The risks identified in the CAS were well managed. The CAS anticipated that external shocks such as the effect of the world economic downturn and natural disasters materialized, and in response the Bank adjusted its assistance program. A mid-term review was not carried out. In reality, the external conditions changed frequently which made such a revision difficult. Also, a mid-term revision of activities would have been time-consuming and difficult to justify given the length of the CAS period. 53. Follow up of the program entailed regular supervisions with most of the staff working on Benin assigned to Bank offices in the sub-region. In the FY08-11 period, the number of projects in the portfolio increased from 9 to 16 in FY11 and the net commitments by 40 percent for a total of US$593 million. A number of projects closed in FY12 which brought commitments down to $340.8 million. The Benin portfolio risk is the same as that for Africa as a whole. Portfolio Trends Variable FY07 FY08 FY09 FY10 FY11 FY12 Projects (#) 9 9 11 15 16 11 Net Commitments (US$ million) 290 354 435 511 593 340.8 Problem projects (#) 2 0 3 1 1 0 Potential problem projects (#) 0 1 1 4 3 2 % at risk (of not meeting 22 11 36 33 25 10.4 objectives) Proactivity index (%) 0 100 0 100 100 100 Undisbursed balance (US$ million) 177 216 297 294 302 272.2 Disbursement ratio 23.7 24.3 22.7 23.8 22.5 18.8 54. The Bank met its lending and non-lending objectives in spite of staffing issues. There was no country manager for Benin for one out of the three years of CAS implementation, as it took considerable time to select a Country Manager to replace the previous Country Manager who retired. Also, there was no locally-based staff charged with following up on operations. It is likely that portfolio follow up could have been better if office in Cotonou had been fully staffed. A CPPR was conducted in November 2011. 55. Three budget support operations (PRSC V, VI and its additional financing as well as PRSG-7) were approved and disbursed in the FY09-12 period. Only two investment projects 69 exited the portfolio in the FY09-FY11 period, the Cotton Project and the Malaria Booster Program. However, in FY12, 3 operations exited (Second Multi-sectoral HIV/AIDS, Second Decentralized Management and National CDD Project). The Education for All Fast track Program also exited in FY12. The ICR review conducted by IEG for the Cotton Project rated the outcome as moderately unsatisfactory due to the Quality at Entry program design issues. While the project contributed to setting the institutional framework for the sector, the principal objective of privatizing the cotton sector was not accomplished. The Malaria Booster Program closed in June 2011 with a satisfactory rating in both the development outcome and implementation progress. IEG gave a satisfactory rating for the quality of the ICR of the PRSC (IV to VI) completed in FY12. However, it rated the outcome of the program as moderately unsatisfactory. V. Lessons Learned and Recommendations 56. The lessons drawn from the review of the FY09-12 CAS and recommendations for the future CAS are summarized below. 57. Broad-based political support is needed for successful CAS implementation. Over the past decade political conflicts in Benin have made the approval of structural reforms difficult. Greater recognition of the political standoffs which seem to develop given Benin’s vibrant democracy should be highlighted in the CAS. 58. An understanding of the political economy and dynamics of consensus-building and internal decision-making is important in formulating institutional reforms that affect governance. Difficulties with consensus building which were analyzed in the Country Economic Report issued in 2009 should help define future institutional reforms. 59. The mix of policy-based operations and investment operations is an effective approach to country programming. Investment/technical assistance operations and policy reforms operations should be complementary to strengthen their impact. 60. IDA should concentrate its assistance. Benin’s requirements are large. IDA should focus in the areas where it can present an effective package of support, where the Bank has a comparative advantage and has demonstrated its expertise in the past. 61. Policy reforms require considerable technical support. This should be explicitly discussed in the CAS. Investment operations had a component of technical support at the sectoral level. In spite of considerable technical support from the EU and other donors, the public financial management action plan might have moved more quickly if additional technical assistance to help design/implement the reforms had been available. 62. Coordination of donor programs increases efficiency of assistance. The reform agenda in the PRSCs was also supported by other donors. Donors coordinated their financial and non-financial assistance. The common donor approach to the SCRP helped bring about reforms. 70 63. Make CAS periods longer and allow flexibility in program. Three years is too short a period to show meaningful results; in fact, CAS results are generally observed sometime after its completion. Also, it is difficult to carry out mid-term reviews with a three year time frame; a longer CAS period (say five years) would permit a mid-term evaluation. Experience in Benin shows the importance of building flexibility in the program to permit adjustments when unpredictable situations which affect outcomes occur. 64. Define adequate indicators. Indicators for the CAS are an important element in judging the quality of the program, but their design and measurement continues to be difficult. The Benin CAS suggests the following: • Ensure that (i) the Government agrees with the indicators chosen; (ii) that these are made available by the sectoral ministries and (iii) are included in the SCRP monitoring tables. The monitoring system needs to be set up prior to approval of the CAS. • Use indicators that are already tracked at the time of the CAS; • Use indicators that are attributable to ongoing Bank-supported activities. 71 ANNEX 1 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome 1. Strengthening Competitiveness and Accelerating Private Sector-led Growth 1.1 Stabilization of the Macroeconomic Framework Partially achieved Support stable macroeconomic Macroeconomic management has been broadly satisfactory. While framework and improve public specific objectives were only partially achieved given exogenous factors financial management. such as world economic downturn and floods, the Government met its IMF targets; the decline in execution rates was linked to tighter expenditure management. Government concentrated expenditures in priority social sectors Not achieved • Overall budget execution rate was 60.7% in 2010 (against 65.3% in • PRSC V, VI & supplemental; PRSC 2009 and 69.3% in 2008); VII (FY12) • Execution rate for investment was 27.32% in 2010 and 24.2% in 2011 • "Renforcer la décentralisation pour Decline in part reflects tighter expenditure management to: i) respond to améliorer la fourniture de services • Overall budget execution rate is revenue shortfalls and ii) concentrate in priority expenditures. Social publics� (PER 2011). increased to 90 % in 2012 from 76.5% sectors (education; health; social dev.) increased as a % of total budget; in 2006 budget execution for social sectors was 71.9% (against an average of 75.6% in 2007-09). • Report on the Observance of Standards • Investment spending execution and Codes. increased to 70 % (2012) from 56.3% Low execution rate also reflects divergence between Parliament and (2006). Government on budget. Parliament has approved large budgets which • IDF Grant Strengthening the Capacity were not fully executed by Government to stay in line with macro of the Accounting Profession objectives agreed with the IMF. • Policy Dialogue • Post Disaster Needs Assessment 72 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • Increase the number of PEFA “B� Number of PEFA indicators in 2012 PEFA rated as “B�was 7 score indicators from 4 in 2007 to 8 in • Same as above 2012. • Spending by payment orders will Achieved remain below 6% of total spending in 2012. • Spending by payment orders was 4.9% of total spending in 2009, 4.8% in 2010 and 4.4% in 2011, reflecting increased budgetary discipline. • Other indicators Five of the six primary criteria fully met and fifth partly met. Progress WAEMU Convergence Criteria achieved in meeting secondary criteria (details in table at the end of the matrix.) 1.2 Strengthening Competitiveness and Revitalization of the Private Sector Not achieved. Improved investment climate and Government delayed in creating team to prepare and implement reforms. private sector attractiveness. Pace of reforms affected by political considerations; changes requiring parliamentary approval were not submitted. Improvements in tax system to support business environment introduced and company registration fee eliminated but these did not move DBIs. • Reduction in company registration fee Achieved by 10% in 2011. Fees at the one stop shop have been restructured and reduced from XOF • PRSC V; VI & and supplemental. 249.200 (DB12) to XOF139.300 (DB13), The main reduction relate to the Registration with RCCM (from XOF 77,900 to XOF 12,000). Also the payment of the cost (6.000 XOF) related to the registration of the articles • Competitiveness and Integrated Growth of incorporation with the Tax authorities is suspended Opportunity Project- CIGOP (FY08). Overall, Company registration cost ((% of income per capita)was reduced • Policy Dialogue from 155.5% (DB 2012) to 126.8% (DB 2013) GOB also recently made progress in 2 additional IC areas, namely with regard to construction permits (time to issue the permit decreased from 372 days to 282 days) and Enforcing contracts ( a new procedure introduced in April 2012 reduces the appeal period from 2 months to 1 month) 73 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome Partially achieved • 2010: 31 days; 2011: 29 days; 2012: 26 days. Some steps have been • Time to create company is reduced taken to simplify procedures but these have not yet significantly been from 31 days to 20 days in 2011. reflected in a reduced time to create a company. IFC-funded report on business climate submitted to Government in 2009. Business Reform and Investment Climate unit in Presidency being strengthened in expectation that reform program will be introduced. • Cost of formalization reduced from Achieved 195 percent of GNI pc in 2006 to 135 • Overall, company registration cost (% of income per capita) was • Same as above in 2011. reduced from 211% (DB 2007) to 157.3% (DB 2010) to 126.8% (DB 2013) Partially achieved. • Some steps taken but more needs to be done: - Individual Taxpayer Identification System extended and implemented: companies receive tax id number at time business is registered. -Exemption of all tax payments for new businesses registered during the first year of operation. • Development and implementation of - Tax centers opened in regions to inform and facilitate payments by business friendly taxation system. small companies. - Elimination of customs identification practices for small imports (generic code) which should reduce tax evasion. - Tax and customs systems computerized which enables tracking of payments due. • CIGOP project unit has changed and should contract analytical work for future reforms. • Rationalization and strengthening of Partially achieved the business development • Activities contemplated under CIGOP project (Minimum Integrated infrastructure. Trade Expansion Infrastructure-MITEP) to be implemented. 1.3 Diversification of the economy Partially achieved Enhanced contribution of the Diversification affected by exogenous factors such as global economic agriculture sector to growth. downturn, low cotton prices and the 2010 floods. Slow pace of 74 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome government reforms also contributed to outcomes Emergency IDA and trust fund financing contributed to mitigating effect of exogenous factors. • By 2012, 40% of producers receive Partially achieved extension services • Agricultural Productivity and The value of this indicator at the national level is not available. diversification Project • In the areas covered by the Emergency Food Security Support Project (FY09) and the Emergency Support to Enhance Food Security Project • PRSC V; VI; & VI supplemental; (FY 10), about 70% of the beneficiaries (rice and maize producers) have PRSC VII (FY12) access to extension services. • Emergency Food Security Support Partially achieved (special financing): Emergency Support to Enhance Food Security A Study commissioned under the Emergency Food Security Support (recipient executed) Project (completed July 2010)led to a concrete action plan under the Emergency Support to Enhance Food Security Project to support the • Community Nutrition Project (recipient design of innovative and market based mechanisms for the sustainable executed) delivery of agricultural inputs (fertilizers and others) to food crop farmers. The report is available (August 2011) and the pilot phase of the • West Africa Agricultural productivity implementation of the new mechanism under the Agricultural APL II Productivity and Diversification Project has reached an advanced stage. • A new system for input distribution Assets of cotton producing company, SONAPRA, transferred to new • Sustainable Options for Agricultural public-private cotton ginning company SODEC0. SODECO continues to Diversification (cotton & food crops) developed and arrange for input distribution for cotton. By October 2009, 51% of the put in place. new company’s assets were privately owned. But in April 2012, after • Post Disaster Needs Assessment allegations of mismanagement by AIC, the Government annulled the Accord Cadre defining respective Government and AIC roles in cotton sector and took over management of all activities for the ongoing 2012/2013 cropping season and probably also for the forthcoming 2013/2014 season. Looking forward, the State intends to move to a zoned concession system and requested the Bank support for a workshop on December 18, 2012 that would examine experiences with zonal systems elsewhere in the region. • Increase of cotton production by 30% Not achieved. during CAS period to about 360,000 • Indicator not a good measure of effect of Bank program because factors 75 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome tons. such as prices and weather have a strong influence on cotton production. • Cotton production declined (in ‘000 tons) but exceptional in 2012: 2008: 242.8; 2009:166.1; 2010:136.9. 2011: 174 2012: 350 Drop caused by low domestic prices resulting in part from the appreciation of the euro and from low international prices (until 2011) and the appreciation of the euro and a serious flood in 2010. Also contributing to decline are marketing arrangements which, though changed, have not yet had an impact on sector efficiency. • Increase in agricultural exports Achieved revenues (other than cotton) by 3% per • Available data on export revenues suggests an increase of more than 3% year. per annum (CFA F million): 2006 : 48.8 2007 : 51.8 2008 : 58.9 2009 : 100.7 (2009 and 2010 include re-exports) 2010 : 134.3 (Source: INSAE Benin) Achieved • By 2012, 5,000 additional ha are • Under the Emergency Support to Enhance Food Security Project, 5,000 irrigated and exploited (10,000 in additional ha were developed under small scale irrigation schemes, and 2008). about 5,000 producers were settled on these lands. Partially achieved The value of this indicator not available at national level As a result of increased access to improved seeds and fertilizers under the • Productivity increases by 15% for Emergency Food Security Support Project, productivity of food crops food crops by 2012. (namely maize and rice) in project areas has increased. For example the average yield for rice increased from 2.97 tons /ha to 4.22 tons/ha. For maize, the average yield increased from 1.2 tons per ha to about 2 tons per ha. 76 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • Other indicators • Additional supply generated by Food Security Program (trust fund Increased production of rice and FY09, FY10): Rice: 11 thousand tons (out of 125 thousand tons total maize to address food crisis output); Maize: 65 thousand tons (out of1,012 thousand tons total output) 1.4 Telecommunications: Promote growth-inducing infrastructure ICT’s stimulation of the economy Partially Achieved. fostered: Progress made in expansion of services although Government decision not to proceed with privatization of Telecommunications Company will affect revenues. • Increase direct fiscal contribution to Not achieved. the Government by 75% from 2008 to • Revenue increase expected to be derived from privatization of the Benin • E-Benin Project 2012. Telecommunications Company. International tender brought lower offer than in neighboring countries, largely a reflection of a changed • Competitiveness and Integrated Growth global environment. Process completed in April 2011 but Government Opportunity Project- CIGOP (FY08). did not accept offer. New regional communications infrastructure project approved in FY13. • Increase global teledensity (fixed & Achieved mobile subscribers) from 13% in 05/07 to 45% in 12/ 12. • Global teledensity reached80.6% in September 2012 • Increase Broadband access (Above Achieved 256 Kbytes) from 0.01% in 2007 to • Broadband access stood at 0.104% in 2010 and reached 0.3% in 0.2% in 2012. September 2012. • Reduce overall telecom basket cost by Information not available. 30% from 2007 to 2012. 1.5 Energy infrastructure : Promote growth-inducing infrastructure Partially achieved. Improved Distribution of Energy • Distribution services have improved in Northern Benin and Cotonou. Services Sector reforms have been slow, but a regulatory agency has been created. SBEE has outsourced activities (e.g. concrete pole • Increased Access to Modern Energy manufacturing) to private sector. (IAME) • Improved reliability of electricity Achieved • Energy Service Delivery APL(ESDP) provision in northern Benin to reduce • Completion of North Togo–North Benin transmission infrastructure has voltage punctuation in the major cities improved reliability of electricity in Northern Benin. 77 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome to within +/- 7% by 2012. • Voltage drop on transmission lines is within +/- 7% range. The ongoing IAME project (FY09) will achieve N-1 reliability. • Increased effective new connections Achieved increases from 18,000/year to 25,000/ year in 2012. • SBEE annual new connections were 21,000 in 2011 • The financial situation of the SBEE (power distribution utility) has improved following the implementation of the financial recovery plan. Net losses decreased from a CFAF 17.4 billion in 2009 to CFAF 1.4 billion in 2010 and net income became positive in 2011 (CFAF 2.6 billion ). A positive net income of 3.3 CFAF billion is expected for 2012. • Improved efficiency of electricity Not Achieved sector: losses reduced below 16% from 18% by 2012. • Losses of 21.76% in 2011. IDA project supporting efficiency improvements effective on 4/10. Other indicators 2007 2010 • Electrification rates (%) Total 24.1 27.4 • #towns/localities with electricity Rural 1.9 3.5 Total 966 1352 (RA 2010) 1.6 Benin Regional Integration. Partially achieved. Increased Competitiveness through a • Reforms being introduced to port operations, trade and customs \ reduction in trade costs. regulations, and Port of Cotonou expanded through a PPP all of which • PRSC V,VI ; & VI supplemental should lead to increased trade and reduced merchandise costs. Benin increasingly buying from regional electricity grid which should improve • Abidjan-Lagos Trade-Transport power reliability. Facilitation Program-ALTTFP • IFC finds a private operator to manage Achieved two new quays to be built 54%by • Policy Dialogue MCA. • Private operator (Bollere-SMTC) contracted in 2009 to operate two new wharfs and improved port management system. IFC work important in 78 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome bringing operator. • Reduction in cargo dwell time in the Not achieved port of Cotonou reduced from 15 to 12 • Most recent data on cargo dwell time, which is not likely to be days by 2012. consistent with that in the CAS is that dwell time in the port is 19 days, which is average for West Africa. • Transport and facilitation bottlenecks Achieved reduced. • Plan to improve port management procedures including installation of computerized systems (underway). • A one stop window to handle port transactions has been put in place (Guichet Unique pour le Commerce Extérieur).Import verification program was implemented including the installation of scanners and a GPS truck tracking system, though this was reversed in early 2012 • An electronic truck management system was implemented(With MCC assistance) • A single entry point for trucks was established • Port security and surveillance system was implemented • Improved access to regional energy Achieved. Second Phase of Coastal Transmission through WAPP (West Africa Power Backbone Project (FY06) Pool). • Benin is increasingly participating in the regional power pool, which should bring down costs and improve reliability. Annual imports by Compagnie Electrique du Benin from WAPP have increased by54% in 2006-2010 period. • The West African Gas Pipeline was completed in 2011 and compressed gas is available at CEB’s premises. Generation from gas will reduce thermal generation cost for the country. 2. Improving Access to Basic Services & Ensuring Greater Efficiency of Public Expenditures 2.1 Leveraging Environmental and Urban Sanitation Improvements Improved Environmental and Urban Sanitation • People with access to paved roads Achieved 79 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome inCotonou, Porto-Novo, ParakouAbomey-Calavi, Lokossa and Kandi increase from 483 000 in • 787,000 in April 2011. 2006 to 755 000 in 2011 • Activities supported under the Second Decentralized City Management • PRSC V; VI & and supplemental Project. • The access-gap to basic social services Information not available • Second Decentralized City between poorest and average • Indicator not monitored. Management Project; and additional communities reduced by 50% in 2011. financing. • Management procedures & quality Achieved expenditures of pilot cities (Cotonou, • Budget allocation for priority expenditures increased in key cities (% of • Emergency Urban Development Porto-Novo, ParakouAbomey-Calavi, total). Lokossa and Kandi) improved. 2005 2011 2005 2011 Cotonou: 20 35 Lakoosa 14 38 Porto Novo: 27 38 Kundi 5 25 Parakou 29 32 A-Calavi 17 40 • Increase the use of waste-water management system in urban/ peri- • 34% in 2008 (data beyond 2008 not available) urban areas from 33% in 2004 to 50% • Available information suggests that progress in CAS period modest. in 2012. Indicator monitored by WHO and UNICEF JMP on the basis of HDS data (last prepared in 2006). 2.2 Rural and Urban Water Supply Improve access to safe and sustainable Achieved drinking water and sanitation services. Substantial improvements in the water sector resulting from programmatic approach and decentralization. 80 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • Access to safe water for the rural Achieved • PRSC V;VI ; &VIsupplemental. population from 44% in 2006 to 60% in 2012. • Access to safe water for rural population • National Community Driven 2009: 55.1% ; 2010: 57.2% Development Support Project & Success results from PRSC-supported programmatic approach; and Additional Financing decentralization (funds were transferred to communities and capacity building at the local level (MDG likely to be met). • Emergency Urban Development Project • 92% of the water systems functioning Achieved by 2012 compared to 87% in 2007. • 2010: 90.4. Trend suggests that target will be reached. Success results from PRSC-supported programmatic approach; and decentralization, as above (MDG likely to be met). 2.3 Promotion of development-oriented education Partially achieved. Improve quality education services to • Progress in CAS period modest. Increased enrollment but declines in better respond to development needs completion rates • The completion rate of primary Not achieved education rises from 66% in 2006/07 to 80% in 2012; • Despite an expansion of enrollment, completion rates were affected by • PRSC V; PRSC VI ; and VI • Completion rate for Girls rises from high repetition rates and dropouts especially among boys. Supplemental . 54% in 2005/06 to 72% in 2012. • Best estimate for 2011 are: primary education: 66%;girls: 59% • Education for All-Fast Track Initiative Program (FY08). • The instruments to pilot Partially achieved the higher education and vocational • Study on Tertiary Education and training systems are operational: • Delay in implementation. Training Assessment (to be completed -Information / orientation system for • Information /orientation system for students exists but is not fully in FY13). students; budget programming / operational because it has not been implemented at the regional/local contract-based financing; university level. management system. • A document has been prepared to inform students of fields available in 81 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome higher education a few weeks before the beginning of each academic year. • For other actions, significant improvement has not been achieved. The recommendations of the higher education ESW to be completed in 2013 should enable preparation of an action plan to address budget, programming financing and management issues. • New regulatory framework for private Partially Achieved. sector investment in education in • In higher education, National council (Conseil Consultatif National de place. l’Enseignement Supérieur) established to control the quality of private education. Decree passed to define degree requirements, but is not yet operational because regulations are not ready (Arrêtés d’application). • Other indicators 2007 2008 2009 2010 2011 School enrollment ratio 98.5 104.0 109.1 110.6 111.5 Textbook/student ratio 0.77 1.66 1.84 2.0 1.95 2.4. Improving Accessibility and Quality of Health, Nutrition services Increase access to health services and Partly achieved. treatments for HIV/Aids & Malaria Targets for which information is available have been met. for targeted segments of the population • Increased availability of health services for pregnant women: • PRSC V; PRSC VI ; and VI • Birth medical assistance increased from 78% in DHS 2006 to 84% in % of facilities with basic obstetrical Supplemental DHS 2011 and neonatal services from 23% in 2006 to 90% in 2012. • Malaria Booster Control Program (FY06) 82 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • Improved nutrition services: % of • From 23% in DHS 2006 to 50% in DHS 2011 children with diarrhea get oral re- • Second Multisectoral HIV/AIDS hydration therapyfrom 23% in 2006 to Control Project (FY07); 36% in 2012 • Health Nutrition and Population Analytical Report • Persons with advanced HIV infection Achieved. receiving ARV combination therapy increases from 0 in 2007 to 3,300 Adults: from 9,765 in 2007 to 16,450 in 2010; for children, from 238 in adults and 300 children in 2012. 2007 to 1,635 in 2010. (UNGASS Report for 2010) Success in health sector achieved in spite of problems with health personnel as a result of low salaries. Donor support and coordination may help explain progress. • By 2012, at least 60% of children < 5 Not achieved. years with fever are treated adequately within 24 hours from onset of 25.1% in 2010 symptoms. • 26.5% in 2011 (Malaria Indicator Survey, 2010, Demographic and Health Survey, 2011) • By 2012, at least 60% of children Achieved under 5 years and pregnant women sleep under an ITN/LLIN. • Children: 64.4% in 2010 ; pregnant women 71% in 2011 (Malaria Indicator Survey, 2010, DHS for 2011) • By 2012, at least 60% of pregnant Achieved women receive a prophylactic • 45.8% in 2010, 78.1% in 2011 treatment during the pregnancy (Malaria Indicator Survey, 2010, DHS for 2011) 83 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • Other Indicators Visit rate to health centers 2007 2010 children under 5 83 80 pregnant women 77 80 3. Promoting Better Governance & Strengthening Institutional Capacities 3.1 Performance-based public expenditure management and fight against corruption: partially achieved. Improved administration Partially Achieved VI. transparency and tackle corruption. Progress made in strengthening public financial management and public procurement and issues of corruption being addressed. Partially achieved. • PRSC V; VI & supplemental PRSG VII Full implementation of results-based (FY12) budgeting (GBAR) by 2011. • Program-based budgets are prepared at the ministerial/sectoral level but these budgets are not yet consolidated at the national level. • Public Expenditure Review 2011 Partially achieved. • Report on the Observance of Standards • Detailed PMF Action Plan completed in 2009. Key reforms being and Codes. introduced are: • IDF Grant for Strengthening the -Results-based budgeting applied at the ministry level. • Implementation of the Government’s Capacity of the Accounting Profession. PFM action plan prepared by the - Organic Law of Finance revised and consistent with WAEMU directive authorities to address the weaknesses approved by the National Assembly. • IDF grant for Legal and Judicial and key challenges identified by the - Broad lines of budget presented mid-year and approved in 2010. (RA10) Reform. 2007 PEFA diagnostic by 2012. - Satellite connection between central agencies and decentralized units being established to enable reporting of fiscal (SIGFIP) and accounting (ASTER) data. • IDF grant for Ministry of Development - MTEF approach used by sector ministries. • Customs Assessment 84 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome Partially achieved. • Study on Civil Service Reform(FY12). • Public Sector Code of Ethics adopted in 2009 (RA 09). Training in • Policy Dialogue. Developing and implementing country Cotonou and Porto Novo; planned for the rest of the country. action plans to reduce corruption and to • Law on Corruption and other Economic and Financial Crimes approved improve institutional capacity in by National Assembly in 2011 (RA 10) accounting and auditing • Institutional capacity in accounting. All members of the Order of Accountants were trained in public financial management practices and government audits. Auditors are auditing public enterprises but Government has not authorized audit of ministries and other central government departments. 3.2 Improving Budget Accounting, Implementation and Control Strengthen budget Partially achieved accounting/accelerate budget As in 3.1 execution • See PEFA plan above. • financial reports, measures to • Procurement code adopted in 2009. Six of the seven implementing accelerate budget execution, and decrees have been approved. Approved decrees include those internal control mechanisms under determining responsibilities of the agencies charged with procurement; implementation operational by 2010 establishing contracting thresholds and the code of ethics in public • Procurement code adopted and procurement. Remaining decree, setting maximum times for operational by 2010. government approvals, expected to be passed before the end of 2011 is still delayed to 2013. • Other Indicators • Delays in: 2007 2010 • -Payments (days) 24 17 -Public contract bidding process (mos.) 6 3 • Weekly publication of public procurement processes. 3.3 Supporting Decentralization through Community Development Use community-driven development Targets achieved. approachto improve access ofpoorest communities to basic social and Program successful financial services 85 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • By 2012, the CDD approach is part of Achieved a decentralization process supported • By 2011 some 20% of public capital expenditures on basic services by a SWAP. implemented by communities (Supp language) • National Community-Driven • The new Decentralized Community Driven Services Project (FY12) Development Support Project (FY04) will use the SWAP approach. and Additional Financing • By 2012, the flow of funds to local Achieved • Community Development Project governments & communes uses the • Process of transfer begun. In 2010 FCFA 4.5 billion were transferred to (FY12) country financial system. communes FADeC for health primary education, water and energy (RD 10). Proposed project will transition to use FADeC once modern accounting and auditing systems can be put in place for FADec. • By 2012, 80% of communities (in Achieved Bank project) have received grassroots • By 2009 all 1518 communities, higher than the targeted management training (GMT). • 1400 communities had received GMT training (of a total of some 3500 communities nation-wide Other Indicators • Increased enrollment in project Achieved schools • By May 2011, 121,450 students enrolled in schools constructed/rehabilitated through CDD approach (new target in project added at time of Additional Financing) Aid harmonization increased and transaction costs brought down. 86 SUMMARY OF CAS PROGRAM SELF-EVALUATION CAS Outcome and Outcome indicators Lending and Non-lending Activities that Status and Evaluation Summary (baselines and targets) Contributed to Outcome • Joint framework for budget support in Partly Achieved place and followed. • Program-based approaches: at least • A framework for budget support agreed to between the donors and the 66% of Bank portfolio. Government in a Memorandum of Understanding. The Memorandum • Coordinated ESW/ AAA: at least being modified to strengthen it. 66% of all Bank ESW/AAA • Project implementing agencies such as the Ministry of Agriculture not ready for programmatic approach • All ESW coordinated with other donors to ensure work complementary (e.g., Public Expenditure Reviews; Tertiary Education Study; Health Survey). 87 Lessons and Suggestions for the new CAS 1. Strengthening Competitiveness and Accelerating Private Sector-led Growth 1.1 Stabilization of the Macroeconomic Framework • PRSC-linked actions play catalytic role; PRSC to focus on a few priorities • CAS should continue to have investment/TA projects that complement PRSC actions 1.2 Strengthening Competitiveness and Revitalization of the Private Sector • Broad-based political support key for CAS implementation • PRSC actions critical to bring about change. PRSCs did not focus on investment climate reform; sector operation focused on building support infrastructure and telecommunications reform 1.3 Diversification of the economy • Project-related indicators should be linked to approved projects (programs) at time of CAS (approvals /effectiveness often delayed). • Indicator should be directly attributable to activities in Bank program 1.4 Telecommunications: Promote growth-inducing infrastructure • Broad support needed for difficult reforms to be carried out. 1.5 Energy infrastructure : Promote growth-inducing infrastructure • Indicators to be linked to ongoing projects at time of CAS. • Indicators should be readily available at time of CAS 1.6 • Regional program generally on target with objectives; consensus required helps in definition and execution of programs. • Donor collaboration helps expedite reforms. 2. Improving Access to Basic Services & Ensuring Greater Efficiency of Public Expenditures 2.1 Leveraging Environmental and Urban Sanitation Improvements • Decentralized activities effective • Indicator should be tracked at time of CAS 2.2 Rural and Urban Water Supply • Decentralization proved effective approach and should be pursued in next CAS 2.3 Promotion of development-oriented education • A robust link must exist in the progress of the completion rates (CR) and the actions taken to reduce high repetition rates and especially dropouts. • CR not an appropriate indicator as significant progress in the CR cannot be achieved in the short term in the context of Benin. • Indicators should be directly attributable to activities in Bank program or TF supervised by the Bank. 2.4 Improving Accessibility and Quality of Health, Nutrition services • Ensure donor coordination for success 88 3. Promoting Better Governance & Strengthening Institutional Capacities 3.1 Performance-based public expenditure management and fight against corruption. • PRSC actions important in bringing about change • Donor coordination important in encouraging change. • TA critical in introducing reforms. 3.2 Improving Budget Accounting, Implementation and Control • TA critical in introducing reforms. 3.3 Supporting Decentralization through Community Development • Decentralized approach efficient for providing services in rural areas and small communities. 89 BENIN – WAEMU Convergence Criteria , 2009-2011 (in % unless indicated) Criteria Objective 2009 2010 2011 Primary Criteria Basic fiscal balance/GDP >= 0 -4.0 0.5 -0.5 Inflation (annual average) < = 3 2.2 2.1 2.8 Total nominal debt/GDP < = 70 16.5 19.0 18.6 Domestic arrears accumulation (CFAF bi) < = 0 -0.9 -0.5 -0.5 External arrears (CFAF bi) < = 0 0.0 0.0 0.0 Secondary Criteria Wages/tax revenue < = 35 45.1 45.4 46.7 Domestically financed investment/fiscal > = 20 44.3 19.2 23.0 revenue Current account deficit less official <= 5 11.2 7.8 8.8 transfers/GDP Tax revenue/GDP > = 17 16.1 16.2 16.6 Sources: Beninese authorities; and IMF staff estimates for 2010 and projections for 2011. Sources: World Bank, Country Assistance Strategy, Staff Appraisal Reports and Program Documents for PRSCs; Implementation Status Reports and Project Completion Reports; AICD, Benin’s Infrastructure: a Continental Perspective European Union, PEFA, 2007 and PEFA Action Plan.Gouvernement du Benin “Rapport d’avancement de la Stratégie de Croissance pour la Réduction de la Pauvreté (RA), 2009, 2010. Other sources cited in table. Note: Indicators in italics added to better show developments during CAS period. 90 BENIN – FY09-12 - COUNTRY ASSISTANCE STRATEGY- COMPLETION REPORT ANNEX 2A PLANNED LENDING PROGRAM AND ACTUAL DELIVERIES (FY09-FY120) (US$ MILLION) FY CAS Plans (01/30/2009) IDA Status IDA 2009 Country Country PRSC V 30 PRSC V 30.0 Energy Services 45 Increased Access to Modern Energy 70.0 Subtotal 75 Subtotal 100.0 Regional Regional Regional Operation 3 Air Transport Phase II 3.0 Total 78 Total 103.0 2010 Country Country PRSC VI 20 PRSC VI 30.0 Agricultural Diversification 20 Telecomm and ITC 10 eBenin 15.0 Health Services 15 Health System Performance 22.8 Subtotal 65 Subtotal 67.8 Regional Regional Regional Operation 9 Abidjan Lagos 14.0 Total 74 Total 81.8 Country Country 2011 PRSC VII 20.0 PRSC VI Supplemental 22.0 Urban/Environment 30.0 Emergency Urban Environment 50.0 Community Development 30.0 National Community Development Supplemental 12.0 Support to Protected Areas Management 5.0 Agricultural Productivity and Diversification 31.0 Subtotal 80 Subtotal 120.0 Regional Regional Trade Facilitation II 2.5 West Africa Agricultural Productivity APL II 5.0 Subtotal 7.5 Total 80.0 Total 127.5 91 BENIN – FY09-12 - COUNTRY ASSISTANCE STRATEGY- COMPLETION REPORT ANNEX 2A PLANNED LENDING PROGRAM AND ACTUAL DELIVERIES (FY09-FY120) (US$ MILLION) FY CAS Plans (01/30/2009) IDA Status IDA 2012* PRSC VIII 20 PRSG VII 30.0 Energy Services 40 Decentralized Community Driven Services 46.0 Additional Financing Health 10.0 Subtotal 60 Subtotal 86.0 Regional Regional Regional Operation 20 Total 80 Total 86.0 TOTAL 2009-2012 312.0 398.3 * 2012 estimate 92 BENIN – FY09-12 -COUNTRY ASSISTANCE STRATEGY – COMPLETION REPORT ANNEX 2B Other Financing(FY09-FY11) FY Component (US$ million) Special Financing: Emergency Food Security Support 9.00 09 GEF: Energy Efficiency 1.82 Subtotal 10.82 Recipient Executed: Emergency Support to Enhance Food 9.61 Security 10 Recipient Executed: Promotion of Biofuels 0.09 Subtotal 9.70 Community Nutrition Project 2.8 11 GEF:Protected Areas Management 2.5 Subtotal 5.3 Total FY09-FY11 25.8 93 BENIN – FY09-12 - COUNTRY ASSISTANCE STRATEGY- COMPLETION ANNEX 3 REPORT Planned Non-lending Services and Actual Deliveries (FY 2009-2012) CAS Plans (FY09-FY12) STATUS 2009 Health Country Status Report Health Nutrition and Population Analytical Report (ReportAAA51, May 2009) Agriculture Diversification Completed in FY11 Country Environmental Assessment Completed in FY11 Accounting and Auditing Assessment Report on the Observance of Standards and Codes - Report ROSC (Report62546,March2009 ) Benin Investment Climate Assessment for Non-Farm Enterprises (Report P094122, May 2009) WB/IMF Debt Sustainability Analysis (Report51780, June2009) 2010 Tertiary Education and Training To be completed in FY13 Assessment Public Expenditure Review Completed in March 2011 Poverty Assessment To be completed by June 2012 Benin Country Environmental Assessment (August 2020) Benin Stepping Up Growth (Brief51974,August 2009) 2011 Investment Climate Assessment Doing Business in Benin 2011 (Report58333,January 2011) National Governance & Anti-Corruption Strategy not prepared, but instead Judicial and Legal Strategy Reform supported under IDF grant (P122775) Public Expenditure Review 2011. Revue des dépenses publiques: Renforcer la décentralisation pour améliorer la fourniture de services publics, (Report 58009, March 2011) Customs Assessment (FY13) Sustainable Options for Agricultural Diversification (June 2011) Post Disaster Needs Assessment (April 2011) 2012 Energy Sector Review Postponed to FY15 Decentralization and Local Development Combined with Public Expenditure Review (FY11) Tertiary Education and Training Assessment(FY13) Civil Service Reform (undertaken in context of PRSC- 7, June 2012) *2012 Projected 94 Annex 4: Benin Social Indicators Same region/income Latest single year group SSA Sub- LIC Saharan Low- 1980-85 1990-95 2005-11 Africa income POPULATION SP.POP.TOTL Total population, mid-year (millions) 4.1 5.7 9.1 853.4 796.3 SP.POP.TOTL.ZG Growth rate (% annual average for period) 2.9 3.5 2.4 2.5 2.1 SP.URB.TOTL.IN.ZS Urban population (% of population) 30.8 36.8 42.0 37.4 28.3 SP.DYN.TFRT.IN Total fertility rate (births per woman) 7.0 6.4 5.4 4.9 4.1 POVERTY (% of population) SI.POV.NAHC National headcount index .. .. .. SI.POV.URHC Urban headcount index .. .. .. SI.POV.RUHC Rural headcount index .. .. .. INCOME NY.GNP.PCAP.CD GNI per capita (US$) 270 340 2,210 1,176 528 FP.CPI.TOTL Consumer price index (2005=100) .. 83 144 147 151 INCOME/CONSUMPTION DISTRIBUTION SI.POV.GINI Gini index .. .. .. SI.DST.FRST.20 Lowest quintile (% of income or consumption) .. .. .. SI.DST.05TH.20 Highest quintile (% of income or consumption) .. .. .. SOCIAL INDICATORS Public expenditure SH.XPD.PUBL.ZS Health (% of GDP) .. 2.3 2.3 3.0 2.0 SE.XPD.TOTL.GN.ZS Education (% of GNI) .. .. .. 5.0 3.8 Net primary school enrollment rate (% of age group) SE.PRM.NENR Total 53 60 94 75 80 SE.PRM.NENR.MA Male 70 75 97 77 81 SE.PRM.NENR.FE Female 36 44 81 73 78 Access to an improved water source (% of population) SH.H2O.SAFE.ZS Total .. 61 75 61 65 SH.H2O.SAFE.UR.ZS Urban .. 75 84 83 86 SH.H2O.SAFE.RU.ZS Rural .. 53 69 49 57 Immunization rate (% of children ages 12-23 months) SH.IMM.MEAS Measles 23 65 69 75 78 SH.IMM.IDPT DPT 17 67 83 77 80 SH.STA.MALN.ZS Child malnutrition (% under 5 years) .. .. 20 22 23 Life expectancy at birth (years) SP.DYN.LE00.IN Total 47 51 55 54 59 SP.DYN.LE00.MA.IN Male 44 48 53 53 58 SP.DYN.LE00.FE.IN Female 50 54 57 55 60 Mortality SP.DYN.IMRT.IN Infant (per 1,000 live births) 118 98 73 76 70 SH.DYN.MORT Under 5 (per 1,000 live births) 197 160 115 121 108 Adult (15-59) SP.DYN.AMRT.MA Male (per 1,000 population) 486 447 336 379 297 SP.DYN.AMRT.FE Female (per 1,000 population) 397 369 280 346 260 SH.STA.MMRT Maternal (per 100,000 live births) .. 690 410 650 590 Births attended by skilled health staff (%) SH.STA.BRTC.ZS .. .. 74 46 44 CAS Annex B5. This table was produced from the CMU LDB system. 12/18/12 Note: 0 or 0.0 means zero or less than half the unit shown. Net enrollment rate: break in series between 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months who received vaccinations before one year of age or at any time before the survey. 95 Annex 5: Benin – Key Economic Indicators Benin - Key Economic Indicators Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) Gross domestic producta 100 100 100 100 100 100 100 100 100 Agriculture 31 32 32 32 32 .. .. .. .. Industry 13 13 13 13 13 .. .. .. .. Services 56 55 55 55 55 .. .. .. .. Total Consumption 94 94 90 89 93 92 .. .. .. Gross domestic fixed investment 21 18 21 16 18 18 19 19 19 Government investment 8 6 10 10 11 11 .. .. .. Private investment 14 12 11 6 7 7 .. .. .. Exports (GNFS)b 17 18 16 21 15 15 15 15 15 Imports (GNFS) 20 20 28 28 27 27 23 24 23 Gross domestic savings 6 6 10 11 7 8 .. .. .. c Gross national savings 17. 18 16 15 15 .. .. .. .. Memorandum items Gross domestic product 5546 6633 6585 6558 7295 .. .. .. .. (US$ million at current prices) GNI per capita (US$, Atlas method) 620 700 750 2210 780 .. .. .. .. Real annual growth rates (%, calculated from 85 prices) Gross domestic product at market prices 4.6 5.0 2.7 2.6 3.5 3.5 3.8 4.1 4.3 Gross Domestic Income 3.4.. 4.6 0.6 1.4 .. .. .. .. .. (Continued) 96 Benin - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Real annual per capita growth rates (%, calculated from 85 prices) Gross domestic product at market prices 1.5 2.0 -0.3 -0.3 0.7 -0.7 1.1 1.3 1.5 Total consumption -0.2 0.8 0.3 0.1 .. .. .. .. .. Private consumption -0.4 0.6 0.1 0.1 .. .. .. .. .. Balance of Payments (US$ millions) Exports (GNFS)b 934 1179 1084 1348 1093 1135 1237 1361 1454 Merchandise FOB 505 648 739 801 867 930 948 1016 1084 Imports (GNFS)b 1752 1937 1987 2044 2175 2312 .. .. .. Merchandise FOB 1295 1555 1482 1416 1558 1605 1694 1768 18797 Resource balance -818 -758 -903 -696 -1082 -1176 .. .. .. Net current transfers .. .. .. .. .. .. .. .. .. Current account balance -549 -551 -697 -696 -681 -678 .. .. .. Net private foreign direct investment 262 175 113 105 136 172 .. .. .. Long-term loans (net) 173 149 180 176 191 210 .. .. .. Official 140 127 125 163 156 150 86 37 -6 Private 33 22 55 13 34 60 .. .. .. Other capital (net, incl. errors & omissions) 294 332 322 366 327 328 .. .. .. Change in reservesd -180 -104 82 48 28 -32 .. .. .. Memorandum items Resource balance (% of GDP) -14.8 -11.4 -13.7 -10.6 .. .. .. .. .. Real annual growth rates ( YR85 prices) Merchandise exports (FOB) .. .. .. .. .. .. .. .. .. Primary .. .. .. .. .. .. .. .. .. Manufactures .. .. .. .. .. .. .. .. .. Merchandise imports (CIF) .. .. .. .. .. .. .. .. .. (Continued) 97 Benin - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Indicator Public finance (as % of GDP at market prices)e Current revenues 20.6 19.6 18.5 18.6 17.6 18.9 19.3 19.7 19.9 Current expenditures 15.9 15.7 15.9 15.5 15.0 15.6 15.6 15.5 15.4 Current account surplus (+) or deficit (-) 4.7 3.9 2.6 3.0 2.6 3.2 3.7 4.3 4.5 Capital expenditure 7.5 7.4 10.1 6.1 6.9 6.8 6.7 6.6 6.5 Foreign financing 4.3 2.3 2.6 2.3 3.5 3.2 3.2 3.2 3.1 Monetary indicators M2/GDP .. .. .. 44.5.. 45.1.. 45.8.. 45.1.. 45.1.. 45.1.. Growth of M2 (%) .. .. .. 11.6 9.0 7.4 7.0 7.2 7.3 Private sector credit growth / .. .. .. .. .. .. .. .. .. total credit growth (%) Price indices( YR85 =100) Merchandise export price index .. .. .. .. .. .. .. .. .. Merchandise import price index Merchandise terms of trade index .. .. .. .. .. .. .. .. .. f Real exchange rate (US$/LCU) 73.4 83.1 76.1 78.3 84.8 78.9 79.1 79.1 79.1 Real interest rates Consumer price index (% change) 1.3 8.0 4.0 2.8 2.8 6.8 3.3 3.1.. 3.0.. GDP deflator (% change) 2.6 6.4 2.0 -99.0 2.4 10458.8 4.3 3.7 3.4 a. GDP at market prices b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 98 Annex 6: Benin – Key Exposure Indicators Benin - Key Exposure Indicators Actual Estimated Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 764 917 1072 1221 1347 1494 1579 1610 1595 a disbursed (TDO) (US$m) Net disbursements (US$m)a 0 0 0 0 0 0 0 0 0 Total debt service (TDS) 11 42 12 13 15 17 18 18 17 a (US$m) Debt and debt service indicators (%) TDO/XGSb 63.7 64.9 91.4 83.4 110.2 TDO/GDP 13.8 13.8 16.3 18.6 .. .. .. .. .. TDS/XGS 1.0 2.9 1.0 0.9 1.0 Concessional/TDO 97.9 92.7 91.9 92.2 93.0 93.4 93.7 94.1 94.6 IBRD exposure indicators (%) IBRD DS/public DS .. .. .. .. .. .. .. .. .. Preferred creditor DS/public .. .. .. .. .. .. .. .. .. DS (%)c IBRD DS/XGS .. .. .. .. .. .. .. .. .. d IBRD TDO (US$m) 0 0 0 0 0 0 0 0 0 Of which present value of guarantees (US$m) Share of IBRD portfolio (%) 0 0 0 0 0 0 0 0 0 IDA TDO (US$m)d 176 255 309 383 435 476 505 522 526 IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 99 Annex 7: Benin– IFC Investment Operations Program IN US DOLLARS AS OF OCTOBER 2012 Undisbursed Balance - IFC Outstanding Balance - Committed - IFC IFC Diamond Bank Benin 34 110,389 110,423 Ecobank Benin 0 8,257,279 8,257,279 Total 34 8,367,668 8,367,702 100 Annex 8: Benin at a glance Benin at a glance 3/1/13 Sub- Key Development Indicators Saharan Low Age distribution, 2010 Benin Africa income (2011) Male Female Population, mid-year (millions) 9.1 853 796 75-79 Surface area (thousand sq. km) 113 24,243 15,551 60-64 Population growth (%) 2.8 2.5 2.1 45-49 Urban population (% of total population) 45 37 28 30-34 GNI (Atlas method, US$ billions) 7.1 1,004 421 15-19 GNI per capita (Atlas method, US$) 780 1,176 528 GNI per capita (PPP, international $) 1,590 2,148 1,307 0-4 10 5 0 5 10 GDP growth (%) 3.5 4.8 5.9 percent of total population GDP per capita growth (%) 0.7 2.3 3.7 (most recent estimate, 2005–2011) Poverty headcount ratio at $1.25 a day (PPP, %) 47 48 .. Under-5 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 75 69 .. Life expectancy at birth (years) 56 54 59 200 Infant mortality (per 1,000 live births) 68 76 70 180 Child malnutrition (% of children under 5) 20 22 23 160 140 120 Adult literacy, male (% of ages 15 and older) 54 71 69 100 Adult literacy, female (% of ages 15 and older) 29 54 54 80 Gross primary enrollment, male (% of age group) 135 104 108 60 Gross primary enrollment, female (% of age group) 117 95 101 40 20 0 Access to an improved water source (% of population) 75 61 65 1990 1995 2000 2010 Access to improved sanitation facilities (% of population) 13 31 37 Be ni n Su b- Sah a ran Africa a Net Aid Flows 1980 1990 2000 2011 (US$ millions) Net ODA and official aid 88 267 243 691 Growth of GDP and GDP per capita (%) Top 3 donors (in 2010): European Union Institutions 14 44 3 123 10 United States 1 5 30 99 8 France 17 67 74 49 6 4 Aid (% of GNI) 6.3 13.9 10.4 10.6 Aid per capita (US$) 24 56 37 78 2 0 Long-Term Economic Trends -2 95 05 Consumer prices (annual % change) .. 1.1 4.2 2.8 GDP implicit deflator (annual % change) 10.2 2.2 4.5 2.4 GD P GD P pe r ca pi ta Exchange rate (annual average, local per US$) 211.3 272.3 712.0 471.9 Terms of trade index (2000 = 100) .. .. 100 112 1980–90 1990–2000 2000–11 (average annual growth %) Population, mid-year (millions) 3.6 4.8 6.5 9.1 2.8 3.1 3.0 GDP (US$ millions) 1,405 1,960 2,359 7,295 2.7 4.6 3.8 (% of GDP) Agriculture 35.4 34.7 34.9 32.4 5.2 5.5 3.4 Industry 12.3 12.5 12.9 13.2 3.4 3.9 3.2 Manufacturing 8.0 7.4 8.2 7.7 5.1 5.6 2.0 Services 52.3 52.9 52.2 54.3 1.2 4.0 4.4 Household final consumption expenditure 97.7 75.7 73.1 76.6 1.5 4.0 3.1 General gov't final consumption expenditure 8.6 17.6 12.6 11.9 2.4 2.4 3.4 Gross capital formation 15.2 14.1 18.7 17.6 -5.8 5.3 5.2 Exports of goods and services 15.8 19.2 25.4 15.0 -1.9 7.3 4.0 Imports of goods and services 37.3 26.5 29.7 27.0 -6.1 5.0 2.8 Gross savings .. 14.0 20.6 8.3 Note: Figures in italics are for years other than those specified. 2011 data are preliminary. .. indicates data are not available. a. Aid data are for 2010. Development Economics, Development Data Group (DECDG). 101 Annex 9: Benin - Selected Indicators of Bank Portfolio Performance and Management Annex 9 - Benin Selected Indicators* of Bank Portfolio Performance and Management As Of Date 12/12/2012 Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 13 14 11 11 Average Implementation Period (years) b 2.8 3.1 3.5 4.0 Percent of Problem Projects by Number a, c 0.0 0.0 0.0 0.0 Percent of Problem Projects by Amount a, c 0.0 0.0 0.0 0.0 Percent of Projects at Risk by Number a, d 30.8 21.4 18.2 18.2 Percent of Projects at Risk by Amount a, d 16.7 21.3 10.4 10.4 Disbursement Ratio (%) e 27.3 24.5 12.4 3.1 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 55 1 Proj Eval by OED by Amt (US$ millions) 866.5 33.1 % of OED Projects Rated U or HU by Number 21.8 0.0 % of OED Projects Rated U or HU by Amt 16.8 0.0 a.As shown in the Annual Report on Portfolio Performance (except for current FY). b.Average age of projects in the Bank's country portfolio. c.Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d.As defined under the Portfolio Improvement Program. e.Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 102 Annex 10: Benin Operations Portfolio (IBRD/IDA and Grants) As Of Date 12/12/2012 Closed Projects 67 IBRD/IDA * Total Disbursed (Active) 66.49 of which has been repaid 0.00 Total Disbursed (Closed) 536.78 of which has been repaid 51.51 Total Disbursed (Active + Closed) 603.27 of which has been repaid 51.51 Total Undisbursed (Active) 261.68 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 261.68 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementation Project ID Project Name Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd Objectives Progress P113145 Benin Emergency Urban En S S 2011 50 43.02392 P115064 BJ- GEF Energy Efficiency PS MS 2009 1.818181 P117764 BJ-Decentralized Communit S S 2012 46 44.71376 P079633 BJ-Energy Srvc Delivery AP S S 2005 52 10.47396 0.7364892 7.736489 P071579 BJ-GEF Com.-Based Coasta S MS 2008 4.3 2.165655 2.1656527 P069896 BJ-GEF Forests & Adjcnt LnS S 2006 6 0.094687 0.094687 P113202 BJ-Health System Performa S MS 2010 32.8 30.62408 20.714375 P110075 BJ-Increased Access to EneS MS 2009 70 71.94399 45.806635 P122419 BJ-Support to Protected Are S S 2011 5 4.112828 -0.361841 P115886 BJ: Agricultural DiversificatioS S 2011 31 27.8319 -2.886738 P115963 BJ:Support to Protected Are S S 2011 1.9 1.556271 -0.116853 P104881 Compet & Integrated GrowthMS MS 2008 25 18.63097 12.962855 P113370 eBenin Project MS S 2010 15 10.32108 1.1070792 Overall Result 326.8 14.018181 265.4931 75.046145 7.736489 103 Annex 11: Donor Areas of Focus Areas of Focus Sector & Justice & human Peace & Security Environment/Cli Decentralization Governance 14 mate Change Development Development Development Employment Governance Agriculture HIV/AIDS Education Transport Economic Drainage ICT/Post Bud Political Gender Private Energy Health Urban Rights Water get/ Rural Development Sup Partners port European Union x x x x x x x x Netherlands x x x x x x x Germany x x x x x x x x France x x x x x x x Belgium x x x x Swiss x x x China x x x x x x x Brazil x x Nigeria x USA x x x x x UN Agencies x x x x x x x Japan x x x BOAD x x x x x x Global Fund x x AfDB x x x World Bank (CAS x x x x x x x x x x x x x x x x x 2009-2012) World Bank (CPS x x x x x x x x x x x x 2013-2017) Source: World bank Staff, 2012 14 Including support to CSOs 104 Annex 12: ODA Coordination in Benin Thematic Groups Lead Donor Coordination, M&E and Aid Efficiency UNDP Macroeconomic/Public Finance Management EU Gender & Social Protection Swiss Private Sector Netherlands Justice France Decentralization/Deconcentration and Local Governance UNDP Energy World Bank Water & Sanitation Germany Administrative Reform/Civil Service and Anti-Corruption UNDP Agriculture Belgium Health Belgium Education and Literacy Denmark Transport Infrastructure EU Environmental and Urban Management UNDP 105 IBRD 33372 0 1E 2E 3E 4E To To Dosso Sokoto N IG ER RI NIGER VE R 12N BURKINA u BENIN FASO ro Malanville Mék Pendjari Alibori s in ta Kandi To n Dapaong u Sota o ri 11N 11N nja M ALIBORI Pa u ro ék M ra o ATA K O R A k ta A Lake Kainji Natitingou Bembéréké é sin s Ta Koum ong ou 10N 10N Djougou O BORGOU ué mé To NIGERIA Kaiama ra pa To Ok Kabou DONGA Alpouro Parakou 9N 9N TOGO 0 20 40 60 80 100 Kilometers 0 20 40 60 Miles GHANA COLLINES This map was produced by the Map Design Unit of The World Bank. 8N The boundaries, colors, denominations and any other information 8N Savalou shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Zou Dassa- 1E Zoumé émé Ou PLATEAU BENIN Cou Z O U ffo Abomey Cové SELECTED CITIES AND TOWNS COUFFO Bohicon DEPARTMENT CAPITALS 7N Pobé 7N To Aplahoué NATIONAL CAPITAL Notsé Dogbo OUEME RIVERS Lake Volta Sakété To MAIN ROADS MONO Ibadan Lokossa ATLANTIQUE RAILROADS PORTO NOVO DEPARTMENT BOUNDARIES Mon o To Lomé Ouidah Cotonou INTERNATIONAL BOUNDARIES LITTORAL BIGHT OF BENIN 0 1E 2E Gulf of Guinea 3E DECEMBER 2005