Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 25839

IMPLEMENTATION COMPLETION REPORT(PPFI-Q0390; TF-29423; IDA-30450)

ON A

CREDIT

IN THE AMOUNT OF SDR 22 MILLION (US$30 MILLION EQUIVALENT)

TO THE

REPUBLIC OF TOGO

FOR A

PUBLIC ENTERPRISE RESTRUCTURING AND

PRIVATIZATION SUPPORT PROJECT

May 5, 2003

Private Sector UnitAfrica Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective January 2003)

Currency Unit = CFA FRANC (CFAF) CFAF 603 = US$ 1

US$ 1 = SDR 0.733

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMSARTP Autorité de Régulation des Postes des Telecommunications (Regulatory Agency)BCEAO Banque Centrale des Etats d’Afrique de l’Ouest (Central Bank of West African States)BNP/PARIBAS Banque Nationale de Paris (Paris National Bank)BTCI Banque Togolaise pour le Commerce et l’Industrie (Commercial Bank)BTD Banque Togolaise de Développement (Development Bank of Togo)CARS Cellule d'Appui à la Reinsertion SocialeCAS Country Assistance StrategyCAS-IMEC Cellule d'Appui et de Suivi des Institutions Mutualistes d'Epargne et de CreditCEET Compagnie d'Energie Electrique du Togo (National Power Distribution)CET Caisse d’Epargne du Togo (Savings Bank)CIMA Conference Inter Africaine des Marchés d’Assurance (Text laws for Insurers)CNSS Caisse Nationale de Sécurité Sociale (National Social Security Board)CONSORTIUM ALAFIA Réseau des Institutions de Micro finance (Micro-finance Consortium)DIGA Direction de l’Informatique, de Gestion et d’AuditEDITOGO Editions du Togo (National Press)ERAC Economic Recovery Adjustment CreditFINSAC Financial Structural Adjustment CreditFUCEC Federations des Unions Cooperatives d'Epargne et de CreditGOT Government of TogoGTA Groupement Togolais d'Assurance (Insurance)HEB Hôtel Ecole le Benin (Hotel/School)IFG International Fertilizer GroupMEF Ministère de l'Economy et des Finances (Ministry of Economy & Finance)MEFP Ministère de l'Economie, des Finances et des Privatisations

(Ministry of Economy, Finance & Privatisation)LONATO Loterie Nationale Togo (National Lottery)MMETPT Ministry of Mines, Equipment, Transport, Post & TelecommunicationsMSE-EPZD Ministère des Sociétés d'Etat et du développement de la Zone Franche

(Ministry of State-owned Enteprises and Export Processing Zone Development)OHADA Organisation pour l’Harmonisation du Droit des Affaires en Afrique

(Organisation for the Harmonization of Business Law in Africa)ONAF Office National des Abbattoirs Frigorifiques (Slaughter House)OTP Office Togolais des Phosphates (Phosphate Company)PAL Port Autonome de Lomé (Port Authority)SIAB Société Inter Africaine de Banque (Lybian Bank)SNCT Société Nationale des Chemins de fer du Togo (Railway Company of Togo)SNI Société Nationale d’Investissement (National Investment Corporation)SOTOMA Société Togolaise de Marbre (National Marble Company)SOTONAM Société Togolaise de Navigation Maritime (National Shipping Company)SPT Société Des Postes du Togo (Post Office)UTB Union Togolaise des Banques (Commercial Bank)

Vice President: Callisto E. MadavoCountry Director: Antoinette M. SayehSector Manager: Demba Ba

Task Manager: Claude Sorel

TOGOPUBLIC ENTERPRISE RESTRUCTING AND PRIVATIZATION SUPPORT PROJECT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 85. Major Factors Affecting Implementation and Outcome 146. Sustainability 167. Bank and Borrower Performance 178. Lessons Learned 199. Partner Comments 2010. Additional Information 33Annex 1. Key Performance Indicators/Log Frame Matrix 34Annex 2. Project Costs and Financing 35Annex 3. Economic Costs and Benefits 37Annex 4. Bank Inputs 38Annex 5. Ratings for Achievement of Objectives/Outputs of Components 39Annex 6. Ratings of Bank and Borrower Performance 40Annex 7. List of Supporting Documents 41

Project ID: P041280 Project Name: PUBLIC ENTERPRISE RESTRUCTURING AND PRIVATIZATION SUPPORT PROJECT

Team Leader: Claude P. Sorel TL Unit: AFTPSICR Type: Core ICR Report Date: May 6, 2003

1. Project Data

Name: PUBLIC ENTERPRISE RESTRUCTURING AND PRIVATIZATION SUPPORT PROJECT

L/C/TF Number: PPFI-Q0390; TF-29423; IDA-30450

Country/Department: TOGO Region: Africa Regional OfficeSector/subsector: Central government administration (57%); General

information and communications sector (17%); Other social services (14%); General finance sector (10%); Law and justice (2%)

KEY DATESOriginal Revised/Actual

PCD: 01/14/1997 Effective: 07/01/1998 09/29/1998Appraisal: 06/30/1997 MTR: 11/26/2001Approval: 03/05/1998 Closing: 06/30/2002 06/30/2002

Borrower/Implementing Agency: GOVERNMENT OF TOGOOther Partners:

STAFF Current At AppraisalVice President: Callisto E. Madavo Jean-Louis SarbibCountry Manager: Antoinette M. Sayeh Theodore AhlersSector Manager: Demba Ba Thomas AllenTeam Leader at ICR: Hervé Assah Marie-Françoise Marie-NellyICR Primary Author: Hervé Assah; Aly B. Sy

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: U

Sustainability: UN

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: U

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time: Yes

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:In order to understand the project’s outcome, it is essential to recall developments in the public enterprise sector in Togo and related World Bank support prior to project preparation. In the early 1980s, after a decade of high growth and heavy external borrowing to finance an ambitious public investment program (creation of about 70 Public Enterprises totaling 20,000 new jobs), Togo failed to adjust to a sharp decline in the international prices of its main exports (phosphate, cotton, coffee and cocoa). In 1983, Togo initiated a reform program to reduce unsustainable public sector deficits and liberalize the economy, with support from three structural adjustment credits (SALs) approved in 1983, 1985 and 1988. The first two SALs were rated satisfactory, but the third one was rated unsatisfactory, mainly because of the lack of urgently-needed actions to reform the phosphate industry. A fourth SAL was approved in 1990 to support deepening of the reform process, particularly in the areas of public enterprise divestiture and public sector management. The political turmoil that affected the country from 1990 to 1993 was a major obstacle to program implementation, which resulted in SAL IV being rated unsatisfactory.

In 1994, after three years of political and social upheaval, the Government of Togo (GOT) initiated a comprehensive economic recovery program (supported by an Economic Recovery and Adjustment Credit (ERAC - Credit 28490-TOG), which aimed at restoring growth and achieving a viable external position. ERAC was a central element to the 1996-98 Country Assistance Strategy and aimed at:

(i) restoring macroeconomic stability through public finance measures and acceleration of the divestiture program; (ii) improving the environment for private sector development through changes in the regulatory framework; and (iii) re-establishing a capacity to deliver basic education, health and infrastructure services through targeted increases in public expenditures.

Following the realignment of the CFA franc in January 1994 and the implementation of structural reforms, real GDP grew by 14 and 8 percent in 1994 and 1995, respectively. Government revenues, that had declined to a record low 10 percent of GDP in 1993, rebounded to 15 percent in 1995, and the external position significantly improved. However, the country’s economic performance was mixed in 1996: economic recovery remained robust, but the programmed fiscal targets and improvements in expenditure management were not achieved and the external current account deficit deteriorated slightly. In the end, the outcome of the ERAC operation was unsatisfactory. Its sustainability was unlikely and the little institutional development that took place during its implementation was compromised by the demoralization of civil servants following the re-occurrence of political problems, discussed below (as reported in the 1999 ERAC ICR).

Despite the poor performance of ERAC, during 1996 and early 1997, the Government attempted to redress imbalances and improve economic management, while a new Policy Framework Paper was negotiated in April 1997. Presidential elections were scheduled for 1998. They were expected to address the political problems that had affected Togo since the early nineties, and to lead to a resumption of assistance from key donors. In this context, GOT decided to implement a reform program aimed at promoting an accelerated private sector-led development. The Public Enterprise Restructuring and Privatization Support Project (PERP), prepared in the late 90’s, sought to provide support to the Government at this critical time. Specifically, the PERP aimed at supporting GOT’s strategy and policy of divestiture from productive sectors and to promote accelerated private sector leadership in the development of economic activities. The project was designed to address the shortfalls of the privatization programs of the eighties (including ERAC) and to assist GOT in meeting the following project objectives, which were presented in the Project

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Appraisal Document (Report No. 17311-TG):

a) Downsize the public enterprise portfolio, which comprised 29 public enterprises. b) Reform the post and telecommunications sector in order to improve access, price and diversity of communications services, while developing an efficient (low cost and high quality) postal network in the country.c) Support institutional reform and capacity building in the financial sector. This objective applied mainly to the small component supporting regulatory framework and institutional capacity of the micro-finance sector, and the privatization of the largest banks. This component was designed as a companion to the Financial Sector Structural Adjustment Credit (FINSAC) under preparation at the time. Since no adjustment operation was possible after 1998, due to the absence of an IMF macro program, the FINSAC never materialized.

In light of the project history, the objectives and the scope of the reform program were clear and consistent with the strategies of the Government and IDA. In fact, the project was important for IDA’s support to PSD and infrastructure sectors in the country. Given the difficult overall political environment that preceded the project launching, these objectives were probably somewhat ambitious. However, given the changes in policies at the time of appraisal, it is understandable why the risks were considered manageable in light of the catalytic role that the project could have played in jumpstarting a new approach to privatization.

The Project Appraisal Document frankly discussed key risks, which were the deterioration of the political situation resulting from presidential elections scheduled for mid-1998, a decline in GOT commitment to reforms, vested interests that could derail the reform process, and weak private sector response to the liberalization and privatization process. Although the appraisal regarded the political risk as high, there were many reasons and facts, that encouraged the project team to rate the overall project risk as moderate, including:

The full political risk assessment completed by the preparation Team and DEC, which is fully 1.reflected in the PAD.A direct involvement of the Prime Minister, who met with all the preparation missions, insisted to 2.have a coordination team within his office (for close monitoring of activities), and attended the negotiations in person (as well as the Ministers in charge of each component). Key policy decisions were discussed upfront with these Government officials and it was anticipated that many actions would take place prior to the presidential elections.Togo's satisfactory track record in previous privatization and Public Enterprise (PE) reforms, 3.which was acknowledged by other countries and most donors. It is widely acknowledged that Togo implemented a very innovative privatization program in the 1980s, attracting investors in a number of difficult areas (e.g. transformation of the unprofitable oil refinery into a successful oil terminal competing favorably with the Port of Abidjan servicing the landlocked countries, innovative privatization of the steel factory, privatization of the textile factory with major Chinese investors from Hong Kong, etc.). Many countries in Central and West Africa came to visit the Government of Togo to review their approach. In addition, the Togo Public Enterprise Law of December 4, 1990 (L.90-26) was very often used as a reference in designing PE reform programs.The good performance of some critical reforms completed by GOT during 1995-1996 (including 4.the cotton and pharmaceutical sectors).

It turned out, however, that the political risks, changing commitment to the reform agenda and the lack of overall leadership in implementing the project, constituted the main difficulty experienced by the PERP.

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The political climate kept deteriorating during project implementation, starting with the elections of 1998 which were contested. In hindsight, given the political risk associated with the implementation of the project, the overall project risk was potentially high. There was an eighteen-month window (between the beginning of 1996 and the presidential elections scheduled for mid 1998) for the Bank to help accelerate the reform process in Togo under a specific privatization program. A strategic decision was made by the Bank to seize this opportunity. Bank staff clearly perceived these risks and used various tools to assess the political risk and tried to mitigate it as much as possible with identified exit strategies. A report was commissioned to DEC to that end. It was entitled “An analysis of the credibility of Government Commitment to Privatization and State Owned Enterprises Reform” and was based on a framework that examines the political desirability, political feasibility and political sustainability of the planned reform in Togo. It should be added that most privatization programs in transition economies carry similar high level of risk. Privatization programs are politically charged by nature, and tend to be associated with controversial issues: (a) job loss because of downsizing in the enterprises being privatized; (b) potential of closing enterprises which are not financially viable and for which no buyer can be found; (c) risk of having to recognize that the financial situation of certain enterprises is far worse than ever admitted by the authorities; and (d) sale of the "country jewels" to foreign investors at prices always perceived to be too low. In addition, the privatization programs imply considerable loss of power for the authorities.

The project implementation arrangements spelled out in the appraisal documents are not uncommon for this type of project. The project was to be implemented through three ministries, each of which would have a coordinating unit. Overall coordination of the project would be carried out by a small coordinating unit in the Prime Minister's Office. The Ministry of State Enterprises and Export Processing Zone Development (MSE-EPZD) was to implement the Privatization and Public Enterprise Restructuring Component. Within MSE-EPZD, the responsibility was to be shared between the Directorate of Portfolio (Direction du Portefeuille), which would be in charge of the Privatization sub-component and the DIGA (Direction de l’Information de Gestion et de l’Audit), which was in charge of monitoring Public Enterprises. The Ministry of Mines, Equipment, Transport, Post and Telecommunications (MMETPT) was to implement the Posts and Telecommunications component. The Ministry of Economy and Finance (MEF) was to implement the financial sector component. The coordinating unit in MEF was also to ensure the financial management of the legal and judiciary sub-component. The overall coordination unit was to monitor the (i) progress and supervise the accounting and organizational set up for the three components, (ii) budget preparation, and (iii) timely delivery of audits. In hindsight, locating the privatization activities in the Directorate of Portfolio, where it remained throughout the project implementation period, was probably not the best arrangement, since the Directorate had a vested interest in maintaining a large state enterprise portfolio. This problem would have been counteracted if the Prime Minister’s Office had retained its leadership role.

The implementation arrangements were modified after the elections of 1998, some six months after project effectiveness, because of changes in the government structure and composition. The main structural change was the disappearance of the MSE-EPZD and the relocation of all privatization-related activities into the Ministry of Economy, Finance and Privatization (MEFP). At that time, it did not appear necessary to amend the DCA to reflect such change. The change of the Prime Minister, who had been a major force behind the privatization process, was a severe blow to the project, and the Project Coordinating Unit (PCU) was moved out of his office to the MEFP following the change. This PCU, anchored at the Prime Minister's Office, was requested by the Prime Minister when the project was prepared. This reporting line was justified and would have been useful because of the priority given to the program and the authority of the Prime Minister. Things changed with the new Prime Minister who was unfamiliar with the Bank and IMF operations. The privatization unit was relocated within MEFP and two senior staff of the Ministry (respectively the Secretary General and the Cabinet Director) were designated to head the components

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dealing with privatization and enterprise restructuring. This organizational arrangement was more consistent with the laws governing the privatization, which entrust the MEFP with the implementation of the privatization program. There were four coordinating units, the first one in charge of the posts and telecommunications component (run by MMEPT), the second one in charge of the financial sector component (run by the MEFP), the third one in charge of the public enterprises component (previously run by MSE-EPZD, then moved to MEFP), and the fourth one is the Project Coordination Unit (in the MEFP). The three coordinating units, which eventually were located in the MEFP, were headed by the MEFP Chief of Staff. Whereas the fourth coordinating unit, in charge of the posts and telecommunications component, was headed by the MMEPT Chief of Staff. In addition, the accountant for the PCU was also the accountant for the posts and telecommunications component.

Chart 1 illustrates the set-up at Appraisal

Posts & Telecoms Component

MINISTRY OF POSTS &TELECOMMUNICATIONS

Financial Sector Component

MINISTRY OF FINANCE

Public Enterprise Component

MINISTRY OF STATE-OWNEDENTERPRISES

PRIME MINISTER'S OFFICEGlobal Coordination Unit

Chart 2 illustrates the set-up after Effectiveness

Posts & Telecoms Component

MINISTRY OF POSTS &TELECOMMUNICATIONS

Financial Sector Component Public Enterprise Component

Global Coordination Unit*

MINISTRY OF FINANCE &PRIVATIZATION

*The Global Coordination Unit was also in charge of the Posts & Telecoms Component.

In spite of the revision of the project implementation arrangements, in practice, the technical and political recommendations to the Government on privatization matters emanated from the Privatization Commission (created in June 1994), which was entrusted to advise the Government on privatization transactions. The powerful Head of this Commission had been involved with privatization transactions in Togo for many years, even before this project. Moreover, this Commission has continued to prepare transactions after the project closure as mentioned below (see section 10. Additional Information).

3.2 Revised Objective:The project development objective were not revised.

3.3 Original Components:The overall objective of the project was to support government policy of divestiture from productive sectors and promote private sector-led development of economic activities. Specifically, the project supported:

(a) the privatization of most of the PEs and restructuring of the few PEs remaining in the State portfolio; (b) implementation of a comprehensive reform in the post and telecommunications sector; and (c) implementation of policy reform in the financial sector.

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The following three project components were fully consistent with the project objectives: (i) privatization or restructuring of State-enterprises, (ii) reform of the post and telecommunications sector, and (iii) reform of the financial sector.

Public Enterprise Restructuring and Privatization: US$13.18 million. This component was designed to support the government policy of divestiture from productive sectors by assisting the GOT in the implementation of its privatization program and public enterprise reform. This component consisted of the following four sub-components:

A Privatization of Public Enterprise sub-component aimed at reducing the Government portfolio from 29 to five PE’s by the end of the project. This was to be achieved through provision of technical assistance to prepare, implement and monitor privatization strategies, and by providing equipment and training.

A Public Enterprise Restructuring sub-component aimed at supporting the actions required to restructure and monitor the few enterprises scheduled to remain in the Government portfolio. This was to be done through the provision of advisory services, equipment and training.

A Public Information Campaign sub-component aimed at informing potential investors on the opportunities offered, building general public support and investor confidence and ensuring transparency of the privatization procedures. This was to be achieved through financing a consultant to design the campaign.

Finally, a Staff Retrenchment Program was to address the social dimension of the PE reform. This program was to finance severance payments and also two specific schemes to facilitate the re-absorption of retrenched workers into the economy.

Reform of the Post and Telecommunications Sector: US$14.30 million. This component sought to support the Government’s postal and telecommunications sector reform. It consisted of the following seven sub-components:

Establishment of a Regulatory Framework, including support to institutional capacity development of the Regulatory Agency (Autorité de Regulation des Postes des Telecommunications, ARTP). This was to be done through financing consultants for the preparation of the new telecommunications and postal laws and their implementation decrees, supporting the initial establishment of the regulatory agency and providing on-site medium term assistance for the first 12 months and training for the agency staff.

Establishment of a Frequency Management System. This was to be done through financing technical assistance to design an up-to-date spectrum management system, and subsequently the purchase of spectrum management and control equipment. The system was to be managed by the regulatory agency (ARTP) whose revenues would originate from fees collected from operators.

Liberalization Implementation. This sub-component aimed at defining an adequate market structure and a regulatory framework allowing an effective competition in service provision. This was to be done through financing the technical assistance needed by the Government to elaborate the liberalization strategy and implement the regulatory framework.

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Rural Telephony Pilot Project. This sub-component was aimed at increasing access to telecommunications in rural and peri-urban areas. This was to be done through financing the financial assistance required to design and implement a new policy framework to improve rural connectivity thanks to an increased private sector participation.

Privatization of Togo Telecoms (Societé des Telecommunications du Togo). This was to be done through the financing of technical assistance required to prepare and implement the privatization strategy by an international investment banker.

National Information Strategy. This sub-component aimed at helping the Government of Togo and key stakeholders to identify opportunities for Togo to take advantage of the information revolution and telecommunications sector reform. This was to be done through the financing of the technical assistance required for this process and through supporting the implementation of initiatives identified in the strategy.

Postal Restructuring. This sub-component was aiming at the transformation of postal services into a private entity to run the Postal Service, SPT(Société des Postes du Togo), and which would be awarded a performance-based management contract by GOT. Although service coverage has not reached the target set up for 2002, performance targets for delivery have been reached both for Lomé and rural areas. The franchising program has not been tried as its validity in the Togolese environment is being questioned. Overall, only 2 outlets were open since the project became effective.

Financial Sector Institutional Support and Capacity Building: US$5.2 million. This component sought to support the government in its effort to implement reforms in the financial sector to be undertaken under an upcoming project, the FINSAC (Financial Sector Structural Adjustment Credit). This component consisted of the following three sub-components:

Support to Privatization, Restructuring or Liquidation of Seven Financial Institutions. This was to be achieved through financing advisory services, potential retrenchment expenses associated with this program and capacity building for the insurance sector.

Strengthening the Legal and Judiciary System. This was to be achieved through the financing of the following tasks: a round table on judiciary reforms, training sessions for magistrates, bankers and insurers, the distribution of applicable laws and cleaning up legal texts.

Finally, Promoting the Micro-finance Sector. This was to be achieved by providing support to the Micro-finance sector and the joint national strategy for Micro-finance. Support was also to be provided to the Monitoring unit in the MEF and to Fédération des Unions Cooperatives d'Epargne et de Crédit (FUCEC) in the form of capacity building and strategic support.

3.4 Revised Components:The components were not revised during project implementation. As discussed in subsection 5.2 below, the financing for one sub-component, the Port Authority (Port Autonome de Lomé, PAL), was cancelled by the Bank because of lack of transparency in the GOT selection of a private sector operator for the port.

3.5 Quality at Entry:Quality at entry was not assessed by the QAG at the time of project preparation. In retrospect, however, the quality at entry has been rated at least satisfactory, because of (i) its consistency with Government priorities and with the Country Assistance Strategy (CAS), (ii) the quality of the design and (iii) the project

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innovativeness. The project objectives were relevant to the priorities set forth by both the Government and the Bank in its country assistance strategy of promoting a broad-based private sector-led recovery of the economy. The CAS aimed at putting Togo's economy back on a sustained poverty-reducing growth path. The design of the project included a social dimension, which included innovative reintegration programs and meant to minimize resistance from workers and unions. To ensure that implementation would be successful, this retrenchment scheme was tested in a pilot program prior to project presentation to the Board (with financial support from a PHRD grant and a PPF). The political risks were identified and technical risks, which could be addressed, were tackled. For instance, in view of the absence of specialized privatization specialists in the country, foreign technical assistance was included in the project. Moreover, the appraisal team paid particular attention to the strengthening of all units implementing the project. Indeed, a lot of time was spent in agreeing on the appropriate framework and, subsequently, developing the capacity of the coordination units and the monitoring mechanisms. This included: (i) development of the implementation manual and financial procedures with support from a well-recognized accounting firm (with close monitoring of Bank's financial management staff), which managed the selection process of the three accountants, selected the project software and trained the relevant staff; and (ii) development of training in procurement procedures was done with AFTQK support. Overall preparation was done using a highly participatory approach and building on a number of pilots. The preparation team discussed the various approaches with the project teams and other key stakeholders in order to reach consensus on appropriate strategies, which included: (a) organizing workshop on telecoms reform, workshop on postal reform (in Lomé); (b) visit to New Zealand and Europe to assess the implementation of their reforms; (c) visit to Latin America on telecoms reform; and (d) workshop on the privatization programs with PE, employees, Unions, etc.

All these efforts explain why the Bank took a calculated risk in engaging in this project, after the difficulties experienced by previous privatization programs in the country. The assumptions about potential risks were accurate, but mitigation measures were not easy to implement. There had been considerable doubts about the transparency of some of the past sales of enterprises, which stressed the importance of complying with the privatization procedures. The Bank attempted to mitigate risks by agreeing to a “monitorable” and transparent procedure to ensure that the process was perceived as fair (relying on the Privatization Law, and a detailed Manual of Privatization Procedures), and sought international experience and professionalism through technical assistance. The political risk assessment on Togo, commissioned by the project team, recommended that, in the event of a violation of such procedures, there would be a strong and automatic (i.e. pre-defined) reaction by the Bank. This would stress the importance of transparency in a Bank-funded operation. It seems that the Bank tried to communicate these boundaries to GOT, but the unprecedented political tensions, in the aftermath of the 1998 elections, made the remedial actions difficult to implement.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:

The project development objectives would require two kind of outputs. The first is the number of privatization transactions completed (24 PEs were to be brought to a point of sale in order to downsize the public enterprise portfolio from 29 to 5 public enterprises at the end of the project). The second is the improvement of service delivery and access to post and telecommunications services and to credit for the poor. In order to understand the major factors affecting the project's outcome, one must differentiate the privatization project from the privatization program. The project aimed at providing technical assistance, that would allow the privatization transactions of PEs to be "technically processed" and brought to the point of sale. The Bank team made the assumption that once the company was put up for sale, potential

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investors would be interested and would participate in the bidding process until one preferred bidder was identified. For a company that has reached the point of sale to be fully privatized, political commitment, transparency, good governance, and enforcement of institutional arrangements (see section 5.2 below), which constitute a favorable policy environment are necessary. A financial sector adjustment credit was expected to follow the project. The credit would have made possible the implementation of the bank privatization component by providing financing for the restructuring of the banks prior to privatization, and would have provided a vehicle for dialogue with Government on policy issues, including transparency and enforcement of institutional arrangements. Because of the rapid deterioration of the political and economic policy environment that followed approval of the project, it was not possible to proceed with adjustment lending. As discussed below, the project provided considerable technical assistance, yet it could not reach most of its objectives due to a weak policy environment. In preparing this project, the Bank made the strategic decision to support the Government, which at the time was making important strides to accelerate the reform process. The shift in the political and economic environment explains the ratings not only for the output, which are summarized below, but also for the Bank's performance (see section 7.1).

Overall project’s outcome is rated unsatisfactory. The project did not achieve most of its objectives and many of the risks identified in the PAD materialized during project implementation, although the initial objectives of the project are still consistent with the Bank’s CAS and the stated Government policies. The project failed to meet its objectives mainly because of: (a) Government’s unwillingness to comply with transparent procedures, and (b) the unsatisfactory institutional set-up and decision-making process, with the latter, being a consequence of the former, as discussed in paragraph 5.2 below. Disbursements for the project were suspended three times (January 1, 1999, November 14, 2000 and January 2, 2002). These were not project suspensions but rather portfolio level suspensions and represented close to 40 percent (18 out of 46 months) of the project implementation period. The project was closed on June 30, 2002, the original closing date, following the latest suspension of disbursements to the Republic of Togo by IDA. Suspensions were due to arrears. In the end, more than 75 percent of the planned investments were not realized. The project had performance indicators to help monitor its progress. These were revised and strengthened during project implementation to take into account the latest developments in the country. The disbursement suspensions undoubtedly contributed to problems in the dialogue with the Government on project issues.

Component Costs (US$ Millions) RatingPublic Enterprise Restructuring and Privatization

13.18 U

Posts and Telecommunications Reform 14.30 SFinancial Sector Institutional Support 5.20 UProject Coordination Unit 0.69 NA

The first objective "Downsize the Public Enterprise portfolio" is rated unsatisfactory. Despite partial success in downsizing the PE portfolio, only 14 percent of the portfolio has been privatized, whereas the original plan aimed at privatizing 86 percent of the PEs by the end of the project in 2002. The major PE, the Office Togolais des Phosphates (OTP), which has been part of the country dialogue and scheduled for partial privatization since 1993, still remains in the hands of the GOT although a rehabilitation scheme is under way (see subsection 4.2 below). OTP was not listed to be privatized under PERP, in part because the process appeared almost completed at the time of appraisal of the project. That privatization attempt, in fact, failed. The large OTP debt held by the banking sector was a major obstacle to the privatization of the largest banks scheduled under PERP (see section 10 for additional information). Although the objective

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was to reduce the role of the State in industrial output and service delivery, some PEs that were to be privatized were taken off the market as the Government decided to restructure them instead. This was despite the strong market response to various international biddings. The expectation that the private sector would become the leading growth instrument did not materialize and investors’ confidence still needs to be restored. Only the social aspect of the privatization program, the retrenchment program, has performed well. The social scheme was well designed, and proved effective in the few cases that it was used. However, given the few firms privatized, the instrument was not utilized to its full advantage.

The second objective "Reform the Post and Telecommunications sector" is rated satisfactory. The main achievements consist of the liberalization of the sector and in setting up the regulatory framework necessary to the delivery of efficient and accessible services in both the postal and telecommunication sub-sectors. This reform was rated as the best in the region by a recent ECOWAS review. By partially breaking the monopoly enjoyed by Togo Telecom, the reform has created the conditions for increased access, which has led to lower tariffs and doubled the sector contribution to GDP (from 2.1 percent in 1997 to 4.2 percent in 2001). Because of the introduction of mobile telephony, service penetration rates have already more than doubled, increasing from 0.6 lines per 100 inhabitants in 1997 to 2.66 lines in 2001. International tariffs for calls from fixed telephones have dropped by 50 percent, and the access cost to mobile telephone also dropped by 75 percent. Moreover, the telecommunications reform has generated the creation of a large number of jobs by telecenters and mobile operators. On the other hand, the service coverage objective set up for non-urban areas has not been reached, although the government awarded a rural telecommunications license to a private operator in 2002, which should result in improved services in rural areas. The license was granted through a competitive bidding process, which was organized with technical assistance from the project. The license was designed to cover two pilot zones including some 200 rural localities. With regard to postal services, using best practice in the Netherlands and New Zealand, the project supported the financial and organizational restructuring of SPT (Société des Postes du Togo), which helped the service achieve all performance indicators by 2001. However, the concession program for SPT was never finalized.

The third objective "Support Institutional Reform and Capacity Building in the Financial sector" is rated unsatisfactory. Only one institution, Groupement Togolais d'Assurances (GTA), the insurance company, had been privatized by end of 2002. Progress has been very slow and state ownership was still averaging 64 percent in banks and 70 percent in other financial institutions at the end of 2001. Therefore, the development objective has not been reached. However, progress was made in disseminating the regional business legislation, which is of importance to the banking sector. Although some of the initial performance indicators related to this development objective (i.e. the increase in the number of microfinance institutions (MFI) and in the number of customers) were not measured, there is indication that the sector has expanded; for instance, the portfolio of MFIs has more than tripled (from CFAF 6 to 20 billion from 1997 to 2002). However, as accounting standards are inadequate and supervision of the institutions is limited, it is difficult to assess the strength of these institutions. At the end of the project, 24.3 percent of their portfolio was at risk, whereas the target had been set at 10 percent.

4.2 Outputs by components:Public Enterprise Restructuring and Privatization (US$13.18 million). This component is rated unsatisfactory.

Privatization of Public Enterprises: Only five (Hôtel Sarakawa, Hôtel le Lac, GTA, CEET (Compagnie d'Energie Electrique du Togo) and SNCT (Société Nationale des Chemins de fer du Togo) of the PEs scheduled to be privatized were indeed privatized. The most significant sign of the ineffectiveness in the privatization process (if not the unwillingness to privatize) is the case of the Office Togolais des

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Phosphates (OTP), one of the largest employers among public enterprises in Togo. This PE, which was to be privatized under ERAC as mentioned above, was still on the list of PEs to be privatized until 2002, when the Government designed a new scheme without World Bank assistance. A 50-50 joint venture, International Fertilizer Group (IFG) was concluded in 2002 with a foreign investor to rehabilitate and manage OTP. Under the terms of this arrangement, IFG began to service OTP's debt to commercial banks, which amounts to CFA 23 billion. If IFG continues to fulfill these obligations, no more provisioning of OTP debts would be required by the Regional Banking Commission. Despite these encouraging results the overall scheme needs close monitoring. The Government has decided to restructure some of the PEs instead of privatizing them. This applies to LONATO (National lottery) and EDITOGO (National Publishing and Printing Company). In some instances, the inability of the state to attract serious investors led to the failure of potentially promising deals. This is the case for Hôtel Tropicana, and Nouvelle SOTOMA (marble and tile production) and was the case for Hôtel Ecole le Benin and Hôtel de la Paix before their final privatization in 2002. As a consequence, GOT had to relaunch some privatization processes several times. These developments might have affected investors' perception of Government’s credibility and commitment to privatization.

Public Enterprise Restructuring: The project was designed to assist the GOT in the restructuring of two public enterprises that would remain in the Government portfolio – CNSS (the Social Security Agency) and the Port Authority (PAL). The restructuring of the CNSS although not fully completed made substantial progress (the business plan was approved; the performance based management contract is ready but not finalized because of institutional and legal changes underway at CNSS, which will result in the creation of new management entities). On the other hand, the Bank cancelled its assistance in the restructuring of the other major PE, PAL. Support to PAL was to include the preparation of a business plan and privatization of the port concession; the assistance under the project was cancelled mainly because the preparation of the privatization and negotiations with the private investor did not satisfy the principle of transparency, which is part of the privatization policy agreed with the Bank and one of the principles set forth in the privatization law and decree of 1994.

Public Information Campaign: This campaign was needed to build consensus over the privatization program and to counteract the possible politically-motivated attacks on it. As of November 2001, no strategy had been adopted as the contract between the Government and the company hired to assess the communication needs was under dispute.

Retrenchment Program: This program was well prepared as it benefited from lessons drawn from a pilot program, which was financed by a PHRD grant and a PPF. The results were good, but limited because it depended on the success of the privatization sub-component. The retrenchment program provided severance payments to 549 retrenched workers (instead of the 1800 anticipated). The re-absorption rate for these workers (60 percent) was higher than the initial target.

Reform of the Post and Telecommunications Sector (US$14.30 million). This component is rated satisfactory.

Establishment of a Regulatory Agency. The Agency has been operational since 1999 and has succeeded in implementing its action plan. It has established interconnection and tariffs policies and has completed the regulatory framework by the end of the project.

Establishment of a Frequency Management System. A frequency management system was designed with the project support. However, as the cost of the proposed system exceeded the amount earmarked in the project budget, its procurement was not pursued.

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Pilot Experiment in Rural Areas. At the closing of the project, the rural telecommunications operator licensed by the Government had not yet started operations.

Privatization of Togo Telecom. After numerous delays, a consultant was hired in October 2001 to advise the Government on the privatization of Togo Telecom (including performing financial/accounting audit, technical due diligence, designing a strategy, preparing bidding packages, evaluating bids and assisting in negotiations). Although the privatization has not been finalized, improvements have occurred in the telecommunications sector as the market has been opened to the second mobile telephone provider. This has not only resulted in increased access, but it has also had a positive impact on tariffs as the unit rates have significantly dropped. The privatization transaction is scheduled to be completed by December 31, 2003, provided that the GOT continues: (a) to support the privatization transaction in spite of the very difficult sociopolitical context, and (b) to ensure payment of the Transaction Adviser despite the PERP closure and a tight public finance situation.

National Information Strategy. A national information strategy was prepared and submitted to government for approval. Similarly, a Corporate Communications Network Plan aiming at connecting the main government offices, was designed and submitted. At project closing, no specific action had been taken to launch the implementation of these two projects.

Postal Restructuring. In July 1999, a consultant was hired to help SPT improve management of the postal services. Although service coverage did not reach the target established for 2002, performance targets for delivery have been reached both for Lomé and rural areas. SPT has been re-organized and although it is not yet profitable, it has improved its financial situation. New services are being offered (fax, etc.). The program of franchising post offices, which was very promising, has not yet been launched, although two outlets (out of the 89 planned) were opened.

Financial Sector Institutional Support and Capacity Building (US$5.2 million). This component is rated unsatisfactory.

Support to Privatization, Restructuring or Liquidation of Selected Financial Institutions. The privatization and restructuring schedule was not followed by any of the institutions. Out of the seven institutions that were to be privatized, only the insurance company, GTA was privatized in November 2001. The project provided substantial input in the preparation and bid evaluation phases, but did not have a significant involvement in the final transaction agreement process. In addition, the project financed the evaluation of the banking sector. It is important to stress that the privatization of banks was to be supported by a financial sector adjustment program, which never materialized because of the deterioration of the economic policy framework after appraisal. The financial sector adjustment program would have addressed the problems of the large debt of OTP to the country's largest banks (like BTCI, Banque Togolaise pour le Commerce et l’Industrie), which was a major roadblock to the privatization process in the financial sector. The lack of a clear strategy before the launching of the privatization process created problems in a number of cases. For instance, in the case of UTB (Union Togolaise de Banques), despite its negative equity, the bank was put on the market without being restructured as recommended by advisors and the World Bank. Bank privatization has been hampered by the small size of some institutions that were put on the market. Two institutions were close to finalizing the privatization process (BTCI and SIAB (Société Interafricaine de Banque, a Togo-Libya partnership) at the end of the project, but the privatization transactions were done without any real input from the project. In the case of the BTCI, BNP/PARIBAS (Banque Nationale de Paris), after becoming the de facto majority shareholder due to a change in the capital structure, withdrew at the end of 2002 because of disagreement with Government over

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corporate management and governance issues. At the end of the project, talks were under way with Lybia (who already holds 50 percent of the shares) to increase this Lybia's share in SIAB. Two more financial institutions, BTD (Banque Togolaise de Développement) and SNI (Société Nationale d'Investissement), were negotiating with foreign banks. In 2000, SNI, which had been managing the country’s debt for many years, transferred this function to the Treasury Department to ease budget programming. This is an important achievement as it was an agreed objective for this project.

Strengthening the Legal and Judiciary System. The main achievements under this sub-component have been the creation in 1999 of a Business and Securities Registry (Registre du Commerce et Créances Mobilières) and the enforcement of the overall OHADA legislation (Organisation pour l'Harmonisation de Droit des Affaires en Afrique, Common Africa Business Law). The Registry will allow the recording of securities, and should assist in the development of capital markets. Some of the actions under the project that were designed to harmonize Togo's business laws with those practiced in the region under OHADA were carried out. Seven Seminars on OHADA were held and 330 copies of OHADA applicable laws were printed and distributed to magistrates and para-legal staff by the time the project ended (short of the 5000 planned before December 1998). Despite this shortage, Togo, as result of this limited initiative compared to what was anticipated, has become one of the few countries to implement a comprehensive program to ensure that OHADA legislation is enforced. However, the round table on judiciary reform was not held and no progress was recorded on the CIMA code (Conférence Inter-Africaine des Marchés d'Assurance, Africa-wide Insurance Chart) as none of the planned four seminars on CIMA took place and copies of the CIMA code were not disseminated.

Promoting the Micro-finance Sector. A special unit, the “Cellule d'Appui et de Suivi des Institutions Mutualistes d'Epargne et de Crédit”, CAS-IMEC, was created within MEFP to supervise micro-finance institutions. This unit has been operational since 1999 and is acting as the Secretariat for the National Micro-finance Committee that was created in 1999 to coordinate microfinance institutions. CAS-IMEC has a positive impact on the sector which has grown considerably over the past few years. The number of licensed MFIs has increased from 17 in 1998 to 127 at the end of 2002, and member savings increased from CFAF 10.1 billions in 1997 to 16 billion by the end of 2002. Let alone the number of MFIs clients, which has also increased by 17 percent between 1998 and 2002 to reach 179,819 today. A database of the MFIs operating in Togo was created within the BCEAO thanks to CAS-IMEC inputs. Further, a microfinance consortium grouping microfinance institutions, ALAFIA-TOGO, was also created in 1999 to provide technical support and knowledge dissemination among micro-finance institutions. ALAFIA-TOGO has contributed to significant advancement of the micro-finance sector in Togo. For instance, ALAFIA has organized trainings, national and regional workshops on micro-finance for its members. In addition, the National Strategy on MFIs, which was developed by the government in cooperation with microfinance institutions, was well advanced although not completed at the time of project closure. Although not fully reached, the transformation of the central apex of FUCEC-TOGO (Federation of Micro finance, Saving and Credit institutions) into a re-financing institution for Government approved MFIs, is taking shape with FUCEC's total loans to MFIs amounting to CFA 2.8 billion in 2002. However, if the numbers seem to indicate an increase in activity in this sector, in the long run, it would be necessary to undertake a qualitative analysis to confirm the sustainability of these institutions. Standards should be established soon and supervision mechanisms put in place to ensure the soundness of these institutions which tend to cater to the poorer segments of the population. For instance, the enforcement of performance and accounting standards for MFIs that have not yet been adopted will greatly help in that respect.

4.3 Net Present Value/Economic rate of return:This is not applicable because of the early project interruption, at a time when only 20 percent of the financial resources were disbursed and many project activities were not completed.

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4.4 Financial rate of return:Not applicable.

4.5 Institutional development impact:The project’s institutional development impact is modest, although some institutions were established and strengthened under the project. Institutions needed to regulate the business environment both in the telecommunications sector and the micro finance sub-sector have been created and are being strengthened. The creation of the “Registre du Commerce et Créances Mobilières” is another important achievement in institutional development. CAS-IMEC should have a significant impact on the soundness of microfinance institutions. On the privatization front, the creation of CARS, the institution set up to run the retrenchment program, has performed well and could have a significant impact if the privatization program is accelerated. CARS is well organized and its performance in providing support to retrenched personnel, under the privatization program, is satisfactory. The Privatization Unit was another potentially successful institution, although it was not fully utilized. As mentioned in section 4.1, the Post & Telecommunications Regulatory Agency was created and has been operational since 1999. A couple of other regulatory agencies focussing on the main infrastructure sectors will follow. For instance, the Electricity Regulatory Agency was created in 2001.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:The investors' perception of the country risk, which resulted from the political environment (including Government policies), was one external factor, if any, affecting the outcome of the project. However, although this factor could be viewed as being outside of the direct control of Government to some extent, it is undoubtedly a consequence of Government policies.

Country risk perception. Difficulties in completing some of the privatizations under the project resulted from discrepancy between the Government and potential investors over the impact of country risk on the valuation of assets to be privatized. Togo has always passed the market test during previous privatization transactions involving international bidding, even though there was a large number of privatizations underway in the region at project implementation. Togo did not have difficulty attracting international investors. The latter factored the country risk in their financial offers, which sometimes were much lower than expected by the Government. With such discrepancies over the perceived risk, some privatization negotiations failed.

5.2 Factors generally subject to government control:As mentioned in 4.1 above, mainly factors under Government control, as described below, derailed the outcome of a well designed project.

Political Environment. There was a dramatic shift in the political environment between the time of project preparation and its implementation. During preparation, the political environment was very receptive to privatization. The country was implementing a recovery program (ERAC) which contributed to improvements in the economy and annual growth rates averaging eight percent. On the political front, the new cabinet appointed in August 1996 led by a strong Prime Minister, gave priority to the reform program and particularly to privatization. Thus 1996-98 was a period of renewed hope in Togo because of the Government’s economic program, and the expectation that the results of the presidential elections of June 1998 would eventually lead to the lifting of sanctions by the European Union and key bilateral donors. Growth rates of the economy were satisfactory, although lower than during the years following the 1994 CFA Franc devaluation. Budget support was provided by IMF facilities and IDA structural adjustment

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programs. Dialogue with the international financial institutions was facilitated by an experienced Prime Minister (former Director of International Cooperation and Minister of Planning) familiar with the IMF and the Bank. The Public Enterprise Reform Project was perceived as part of the reform process which would help normalize relations with the international community and guarantee increased access to budget and project funding.

When project implementation started at the end of 1998, however, the political and economic context had changed. The period which started with the contested presidential elections of June 1998 was characterized by political uncertainty and economic downturn. The European Union did not recognize the elections as fair and transparent and did not lift its sanctions. Because of its economic policies, Togo has not been in a position to obtain support through an IMF Program or IDA structural adjustment credits since mid 1998. Disbursements of IDA projects were suspended three times between January 1999 and June 2002, the closing date of the project. The commitment to implement a transparent privatization program, as part of a broader reform program aimed at macro-economic stability and subsequent donor support, eroded while the opposition of vested interests to privatization increased. These developments can be considered as the most important factors impacting the outcome of the project.

The deterioration of the political situation, culminating in the contested presidential elections did not permit the resumption of external financial support from the European Union (mentioned above), which conditioned the resumption of its support to the restoration of a democratic system. Other bilateral donors gradually curtailed their own aid. At the same time, the Government did not sustain its economic reform program, a part of which would have been to introduce measures to maintain a budget in line with its resources, and started accumulating arrears with the World Bank, which suspended disbursements for ongoing projects. Government's economic policies and the resulting shortage of resources explain why, from the time the project reached effectiveness in September 1998 to its closure in June 2002 (approximately 46 months), disbursements were suspended 40 percent of the time. The real impact of these interruptions on the project was considerable, as it did not permit a sustained discussion on project issues with Government authorities.

Lack of transparency in privatization transactions. Togo was one of the first African countries to privatize in the 1980s and early 1990s. The transactions took place without an adequate institutional framework and often on a discretionary basis. The privatization program to be supported by the project was expected to follow a more transparent approach. However, due to the influence of vested interests, the Government resorted in numerous cases to direct negotiation instead of the standard (competitive) privatization procedures it had agreed to follow. Examples were the privatization of the Port Authority (PAL), OTP and CEET. The PAL privatization was fraught with problems and is discussed above. The CEET privatization went through three stages over a two year period with the Bank threatening not to finance the energy project under preparation, unless the agreed bidding process was strictly followed. This allowed the selection committee to focus on the financial offer and the process to be completed satisfactorily to the Bank.

Lack of Government commitment and inefficient institutional arrangements. The commitment to privatization shown by the government during project preparation was absent during implementation. In the specific case of this project, the reasons for the lack of Government commitment, are highlighted above. The inefficient institutional arrangements, which partially explain the difficulties experienced by the project, are not a separate factor, but a direct consequence of the fading commitment and the discrepancies within the Government between those fostering a professional approach to privatization, and those favoring a more discretionary and political approach to the task.

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The privatization law and decree state that the Privatization Commission advises the Minister in charge of privatization on the strategy, whereas the actual conduct of transactions is the responsibility of the Ministry. The Privatization Commission seems to have taken over the whole process, assisted by the Directorate of Portfolio acting as its Secretariat. This de facto set-up conflicted with the project institutional arrangements, which provided for coordinating units in the technical ministries and the general project coordination in the Ministry of Finance and staffed by senior civil servants (Secretary General and Chief of Staff). During project implementation, the negative impact of this arrangement in terms of delays and other inefficiencies was assessed and the creation of a Privatization Unit within the MEFP was decided. This unit would have been responsible for carrying out the transactions, with input from consultants and technical departments, and seeking advice from the Privatization Commission. The unit was created by decree, and did not become operational because of the inability to recruit competent staff. Additionally there was resistance of the Privatization Commission to the new institutional arrangement, which would have limited its power to its primary function of advising the Government as prescribed by Law. The Government did not clearly define the responsibilities of the numerous agencies involved in the project. This allowed some decisions to be taken outside the departments in charge. This seemed to be politically motivated and created a lot of confusion in the whole decision making process.

The Bank thought that by providing adequate technical assistance to the implementing agencies and by helping establish sound procedures the difficulties with the previous privatization programs could be overcome. No one at that time anticipated that the extreme political crisis would have led the Government to pursue policies that reinforced the discretionary and political approach to transactions, thereby weakening the project set up.

5.3 Factors generally subject to implementing agency control:Absence of a procurement specialist. The lack of a trained procurement officer in the implementing agencies contributed to delays.

5.4 Costs and financing:The amount of the credit was SDR 22 million (US$30 million) of which SDR 69,675 (US$95,012) was cancelled during project implementation because PAL privatization process did not satisfy the principle of transparency (see section 4.2 above). This cancelled amount represents 0.32 percent of the credit initial amount. Of the total credit, SDR 4.9 million (US$6.6 million) was disbursed and the remaining SDR 17 million has been cancelled. Overall, there have been significant delays in implementation and disbursements due to 18 months of portfolio level suspension during project implementation and due to arrears.

6. Sustainability

6.1 Rationale for sustainability rating:Overall, sustainability of the project is unlikely, given its limited accomplishments, although progress was made in some of the components. Completing the activities undertaken under the project would require that: (a) there is again a strong commitment by the Government to the objectives of the project; (b) a resumption of financial support to the Government in general by the donors' community; and (c) specific financial and technical assistance to support a resumption of the privatization program.

The privatization program supported by the project is not likely to achieve substantial and irreversible results. However, the privatization process is being pursued and has shown some success even after the end of the project. This success should be qualified however, as it is difficult to say if Togo is fully benefiting from these privatization transactions. Although not strictly planned by the project, CARS (Cellule d'Appui à la Réinsertion Sociale), the institution set up to run the retrenchment program, has demonstrated potential for sustainability. Most of CARS staff, thanks to the experience accumulated in dealing with

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retrenchment issues, have developed a private consulting firm on social issues. Such results would have been far more important if the privatization process had been completed.

Some achievements made by the project are likely to be sustained. For instance, the reform process under way in both the telecommunications sector and the legal and judiciary system will continue beyond the project closure and is already producing positive results in line with the project objectives. For instance, actions taken by the Regulatory Agency set up by the Posts and Telecommunications component have led to the opening of the telecommunications market to competition although the telecommunications company has not been fully privatized. The strengthening of the legal and judiciary system that was started by supporting the harmonization of Togo’s business laws with the Region-wide OHADA laws will not be lost and will be strengthened over time.

6.2 Transition arrangement to regular operations:Transition is not expected to be smooth as continuous assistance will be needed to finance the necessary technical assistance. Given the nature of the privatization activities, transitional arrangements would not have been needed had the privatization process been a success. Units charged with privatization are normally dissolved on completion of privatization programs, and most of its staff relocates in the private sector with consulting firms or industrial and service companies thanks to the skills developed and exposure gained during their privatization mission. Therefore, no transitional arrangements were planned for it. For the other two components of the project, the fact that activities were carried out by technical ministries has allowed these ministries to improve their technical skills and perform functions in line with their regular mandates. The implementation of the post and telecommunications component was the responsibility of the Ministry of Posts and Telecommunications, which continues to oversee the activities covered by this component. The financial sector component was under the responsibility of the Ministry of Economy and Finance which also continues to supervise the microfinance component of the project.

Dialogue on further Bank support has been on-going, but discussion of possible future Bank support is premature given the current non-accrual situation.

7. Bank and Borrower Performance

Bank7.1 Lending:Performance in identification, preparation and appraisal was satisfactory. In preparing this project, the Bank adopted a participatory approach as it tried to build a consensus and involve many segments of the society. It used a Japanese grant for preparatory work and to pilot test the retrenchment financing approach prior to Board presentation. In doing so, the Bank made this project one of the first to introduce a social dimension to the privatization process in the region. In addition, the project design drew from best practice for capacity building for the regulatory framework as well as the postal services. The bank decided to prepare a new project in Togo in spite of the difficulties encountered with earlier adjustment operations because of the potential impact of the project and the prospects for reform at the time. The risk is recognized in the appraisal report, although the extent of the deterioration of the political situation which followed the approval of the project would have been very difficult to anticipate. The project was expected to be accompanied by a financial sector adjustment program which did not materialize because of the deterioration of the economic policy environment. This, in turn, further affected the Bank's ability to influence the policy dialogue.

7.2 Supervision:Supervision was satisfactory. For the year 2000, a QSA (Quality of Supervision Assessment) rated this project highly satisfactory. The project was used as one of the main vehicles for dialogue with the

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Government in a very difficult period, and, thus, played a role in maintaining the channels of communication open with Government. There was continuity in the team as the turnover rate was very low during project implementation (two task managers only). There was a proper skills mix during supervision and follow up was done regularly even when the country was under disbursement suspension. The country office followed the project on a daily basis and played a key role in the supervision. The team showed flexibility in addressing issues relating to a changing environment. During supervision, they concentrated on deepening the dialogue with the GOT and the authorities to accelerate the pace of implementation of the project, and putting in place critical technical assistance, some elements of which were very effective. Project team interventions were carefully planned and linked to specific and important benchmarks or events in the implementation of the project (lack of transparency in the negotiations for the PAL, privatization of OTP, delay in privatizing Togo Telecom or the banks, etc).

7.3 Overall Bank performance:Overall performance was satisfactory. The project addressed key problems and was well prepared and supervised under very difficult country conditions which included the decision not to proceed with a planned financial sector adjustment operation. The political/policy performance however was almost impossible to influence effectively.

Borrower7.4 Preparation:Borrower performance during preparation was satisfactory. Cooperation with the Bank was very close as high level officials, especially the Prime Minister, were very much committed to privatization and their leadership was invaluable at this stage of the project. Before Board presentation, the Borrower carried out most of the actions required by the Bank and went even further. In the telecommunications sector, for instance, the Borrower took the initiative to organize a workshop on the proposed reform program before the project presentation to Board. The Borrower also took the initiative to set up a pilot retrenchment study aimed at reducing the social cost of privatizing 18 Public Enterprises. Results from this study were later used in the project.

7.5 Government implementation performance:During implementation, government performance was unsatisfactory. The Government was unable to build the needed consensus on the privatization program both within its own ranks and within the country at large. However, the Government was able to provide counterpart funds in a timely manner. The lack of Government commitment was rather reflected in the lack of transparency in privatization procedures. The numerous delays in setting up the Privatization Unit are also an example of this lack of commitment. Although the Bank repeatedly recommended Government to set up a Privatization Unit in the Ministry of Economy and Finance in order to provide technical advice to the Privatization Commission, this unit was not created until July 1999 and never became operational.

7.6 Implementing Agency:The performance of the implementing agencies was not satisfactory. It took a long time for the coordinating units in the implementing Ministries to become fully operational, and they were in general not effective in implementing their project components. This was largely because the Privatization Commission took over the decisions on key project activities, and the implementing units had little authority. The one exception is the unit in the Ministry of Posts and Telecommunications. The number and location of the coordination units were changed once during implementation. Weaknesses in management capacity, especially financial management led to delays in reporting and to improper documents being submitted by the project-coordinating unit. Lack of competencies in procurement also contributed to delays. Audits were done regularly and reports sent to the Bank before the deadline. Audit opinions were unqualified and no

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serious financial and accounting issue was raised. Some weaknesses related to the accounting software were mentioned in the internal control report. Project staff was unable to use efficiently the software to produce data consistent with the categories defined in the Credit Agreement.

7.7 Overall Borrower performance:Overall Borrower performance was unsatisfactory.

8. Lessons Learned

The main lessons that can be drawn from experience with the project are summarized below:

(i) Privatization technical assistance projects should be accompanied by a structural adjustment credit which would finance the fiscal cost of the reform and thereby help strengthen and sustain the Government's commitment and ownership. As mentioned in section 4.1, had this project been accompanied, as planned, by a financial structural adjustment credit, which would have helped the Bank influence GOT on these aspects, and had GOT been more committed, the project's outcome would have been different. But there was no such program because the policy environment was not favorable.

(ii) A retrenchment program with some innovative aspects drawing on best practice, is a key element in privatization programs and helps strengthen the whole process. As a testimony of its effectiveness, this example has already been replicated in other existing and potential projects.

(iii) The institutional arrangements for project implementation are important to the success of the project. During implementation, the Directorate of State-owned Enterprise was entrusted with the privatization component; this was not an effective arrangement for two reasons: (a) the staff of that ministry lacked the experience and competence of handling complex privatization transactions, and (b) there was a conflict of interest since the department was charged with overseeing the state-enterprises and it was in its interest that it remain as large as possible. The project team attempted to change the organization of the implementation arrangement to address that important weakness but a drastic change was not found to be politically feasible by the Government. The new arrangement called for the creation of an ad hoc privatization unit within the Ministry of Economy, Finance and Privatization, in charge of implementing the privatization program. This unit would have been staffed with a small number of the most qualified staff drawn from the Department for State Enterprises and from other departments in the Ministry of Finance, headed by the Chief of Staff of the Minister of Finance, and assisted by a senior international privatization consultant and a more junior national financial consultant. Even the implementation of this compromise did not take place because the Minister of Finance was replaced by a new minister, who saw this change as politically risky.

(iv) In high risk projects it is useful that the Bank define a clear exit strategy at the outset, and that this strategy be discussed with Government authorities in order to agree on triggers that would lead to suspension and cancellation of a project. This would greatly facilitate supervision.

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9. Partner Comments

(a) Borrower/implementing agency:

EXECUTIVE SUMMARY OF GOVERNMENT CONTRIBUTION TO THE ICR(Unofficial translation, see complete French version below)

I. INTRODUCTION AND PROJECT BACKGROUND

The contribution of Public Enterprises (PEs) into the Togolese economy was rather small until the early seventies, when it drastically increased thanks to the soaring of its main exports (phosphate, cotton, coffee and cocoa). The government used those exceptional proceeds to launch a vast investment program in various industries and services such as hotels. This policy was carried out until the 1980s, although the international prices of these commodities dropped as early as 1975. In 1982, the Government had created about 70 PEs operating in various industries from all sectors of the economy. Most of them were not profitable and were subsidized by Government, which also started experiencing its own financial hardships. With the World Bank support, the Government implemented several structural adjustment programs (SALs), which included specific components for public enterprise divestiture and public sector management (SAL I to SAL IV). This divestiture process was continued under new programs such as the Economic Recovery and Adjustment Credit (ERAC), which was then followed by the present Public Enterprise Restructuring and Privatization Support Project.

II. PROJECT OBJECTIVES, DESIGN, IMPLEMENTATION, LESSONS LEARNED

2.1 Project Objectives (describes the project objectives as mentioned in 3.3 of the ICR)2.2 Project Components (describes the project components as mentioned in 3.3 of the ICR)2.3 Implementation arrangements (describes the implementation arrangements as mentioned in 3.1 of the ICR)2.4 Comments on Project design

Building on previous experiences, the project included performance criteria by design. They were designed to help monitoring the main underlying assumptions made that would allow the operation success. The key assumption, which is the political stability and the pre-requisite for the operation success, did not materialize during project implementation. That is why, despite the Government commitment to complete these reforms, the program was considerably delayed. In addition, the following features negatively impacted project implementation:(i) ambitious objectives that did not factor in all the conditions necessary to their achievement;(ii) some performance criteria turned out to be unfitted and difficult to measure;(iii) the multiplicity of sectoral coordination units, endowed with management autonomy, allowed some components to bypass divestiture procedures. This in turn negatively impacted the quality of project implementation, all the more so that the implementation and functioning of the General coordination unit did not take place smoothly;(iv) the fact that temporary staff and arrears built up in the social security fund were not provided for;(v) the restrictions of the medical insurance coverage;(vi) the entrepreneurial abilities of the candidates, after graduating from a short training course, were overestimated;(vii) the lack of credit lines available to prospective entrepreneurs for their projects;

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(viii) marginalization of illiterate retrenched staff; and(ix) lack of provisions to ensure sustainability of project accomplishments and outputs.

2.5 Lessons learned through project implementation

The project implementation was considerably delayed because of unanticipated difficulties. Several changes of reporting line ministries (including change of ministers) and the difference in their respective approaches to privatization did not allow the normal implementation of the project, nor make it possible for the General Coordinating unit to have the means necessary to its full functioning. On the institutional front, the creation of the Privatization Unit, whose implementation turned out to be difficult, and which finally never became operational, ended up slowing down the divestiture process. The heavy involvement of the technical line ministries instead of facilitating and accelerating operations, paradoxically translated into additional delays. For example, most of the technical committees, created at the time, never really helped moving the project forward.

As far as the World Bank is concerned, the change of Task Team Leaders (TTL) also delayed the process since the new TTL had some difficulties appropriating the project as initially designed. Portfolio level disbursement suspensions, due to arrears in Togo’s payments to IDA, eventually added to an already difficult project implementation.

III. BORROWER’S PERFORMANCE

3.1 Main results

Out of a global budget of US$ 35,706,815, equivalent to CFA 21.4 billion (Exchange rate : US$1=CFA 600), the total disbursed amount is CFA 4.1 billions (19,22%). This very low disbursement rate is accounted for by several reasons developed in the French version (including incomplete work and suspensions) and varies from one component or category to the next one.

IV. IDA PERFORMANCE

4.1 Relationship between IDA and the Borrower

Relationships between IDA and the Government of Togo mainly consisted of project supervision and review missions. Such missions greatly contributed to the improvement of the overall project management, which included giving a larger role in the decision making process to the Country Office. The continuous dialogue between the Government and IDA has allowed to solve problems as they arose during project management, including the necessary adaptation to specific situations. Despite this continuous dialogue, the project experienced long disbursement suspensions periods due to arrears of Government to IDA payments over existing loans. These suspensions, Borrower’s delays in setting the counterpart funds mechanism and Bank’s delays in processing non-objections requests accounted for the low disbursement level. In addition, the project experienced the following hardships:- the time required to prepare request of non-objection by the component and the final beneficiary;- the content of the responses to non-objection requests which depends on the component or the final beneficiary;- the lack of realism in some of the advices given to Government;- the Bank positions on certain issues were often rigid and sometimes even contradictory. For example, the Bank recommended the Government to launch a competitive bidding for the concessioning of the Container Terminal of the Autonomous Port of Lomé and to enter a single-source arrangement for the

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concessioning of the National Railways Company (Société Nationale des Chemins de Fer).

Finally, several finance and micro-finance specialists who left the project at the Bank were not replaced. This also negatively impacted on this project component.

4.2.1 Lessons learned from the relationship between IDA and Borrower

One of the key success factor of a project is the ability for the stockholders to take into account as many factors (arising during project implementation) as possible and to adjust the reality of project objectives. This project could have been a success if only:(i) the number of PEs to be privatized during the project life (4 years) had been determined after factoring:- the reasons that led the preceding project, the ERAC, to perform poorly. Out of 25 PEs scheduled for privatization, only four were completed (or 16%) and 7 were liquidated, over four years, and- the market responsiveness.(ii) the relationship between the Borrower and IDA did not freeze at some point, which was detrimental to the accomplishment of the privatization process.

V. PREREQUISITE FOR AN IMPROVED WORKING RELATIONSHIP IN THE FUTURE

Many PEs, which were not scheduled to be privatized within the project, have been indeed spontaneously privatized. This shows that the privatization process, which was started within the project, has become now irreversible. The following could be the key success factors of a new IDA operation in Togo:

- use caution while designing project objectives,- take into account hardships experienced by preceding project while setting performance criteria,- try and maintain candid rapport during the entire project implementation,- identify the right level of involvement for the technical line ministries, and- avoid to frequently move around staff, which end up blocking project activity.

In order to ensure sustainability of the accomplishments made in the financial sector, including growth and level of savings, the program would still need to be supported by institutional and operational capacity building of CAS-IMEC in terms of annual review of financial policies and practices, accuracy of accounting and financial statements, reliability of auditing and review of policy and practices relative to cooperatives and Non-for-Profit organizations.

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RAPPORT D’ACHEVEMENT DU PROJET D’ASSISTANCE A LARESTRUCTURATION ET PRIVATISATION DES ENTREPRISES PUBLIQUES

I. INTRODUCTION

Les entreprises publiques qui jouaient un rôle modeste dans l’économie du Togo ont commencé à y prendre une part importante à partir du boom phosphatier de 1974. Grâce aux rentrées exceptionnelles de ressources dues à la hausse des cours mondiaux des produits de base (café, cacao, phosphates), le Gouvernement a entrepris un vaste programme d’investissements industriels et hôteliers. Cette politique a été poursuivie jusqu’en 1980 malgré la chute brutale des cours mondiaux dès 1975. En 1982, le portefeuille de l’Etat comptait plus de 70 entreprises dans tous les secteurs de l’économie. Celles-ci, pour la plupart, avaient des

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problèmes de rentabilité et recouraient aux subventions de l’Etat qui commençait lui-même à connaître des difficultés financières.

Des Programmes d’Ajustement Structurel (PAS) ont donc été mis en œuvre avec l’appui de la Banque mondiale et comportaient un volet désengagement des entreprises publiques (PAS I à PAS IV). Ce désengagement s’est poursuivi dans une deuxième phase avec le Programme d’Ajustement et de Relance de l’Economie (PARE) dont le Projet d’Appui à la Restructuration et à la Privatisation des Entreprises Publiques (PAREP) constitue une suite logique.

II. OBJECTIFS, CONCEPTION, MISE EN ŒUVRE, EXPERIENCES TIREES DE L’EXECUTION DU PROJET

2.1 Objectifs du projet

L’objectif général du projet est d’appuyer la politique de désengagement de l’Etat des secteurs productifs et de promouvoir un développement accéléré des activités économiques par le secteur privé.Le projet vise à appuyer principalement :

la restructuration et la privatisation des entreprises publiques ;1.la mise en œuvre d’une vaste réforme du secteur des postes et télécommunications en vue d’accélérer 2.de façon significative l’accès, le coût et la diversité des services postaux et de télécommunication par l’ouverture du secteur à la concurrence, etl’appui à la mise en œuvre de réformes structurelles dans le secteur financier, dans le cadre du 3.programme d’ajustement structurel sectoriel financier (PASFI), ainsi que la promotion d’un secteur de micro-finance dynamique.

2.2 Composantes du projet

Le Projet d’Appui à la Restructuration et à la Privatisation des Entreprises Publiques (PAREP) comporte trois composantes essentielles :

Composante Restructuration et Privatisation des Entreprises Publiques (EP)1.Composante Réforme du Secteur des Postes et Télécommunications (PT)2.Composante Appui au Renforcement du Secteur Financier (SF)3.

La composante EP a trois sous-composantes, à savoir :(i) la sous-composante Restructuration,(ii) la sous-composante Appui au Programme de Privatisation, et(iii) la sous-composante Programme de Réinsertion.

Elle a pour objet d’assister le Gouvernement dans la mise en œuvre de la politique de désengagement de l’Etat des secteurs productifs et dans la restructuration des entreprises publiques devant être maintenues dans le portefeuille de l’Etat.

La sous-composante « Appui au Programme de Privatisation » dont les objectifs concernent le désengagement de l’Etat d’une liste de 15 entreprises en plus des 16 entreprises dont le processus de privatisation n’a pas été bouclé dans le cadre du Programme d’Appui à la Relance de l’Economie (PARE) du Togo, compte en son sein un volet « Campagne de Communication » en vue d’informer les investisseurs potentiels, favoriser l’adhésion de la société civile et la confiance des investisseurs et veiller à une large diffusion des procédures de privatisation, des résultats de chaque transaction et de l’impact du programme.

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La sous-composante «Programme de Réinsertion» qui est chargée de la mise en œuvre des mesures d’accompagnement visant à atténuer les conséquences sociales négatives du désengagement de l’Etat des entreprises publiques intervient essentiellement à cinq (5) niveaux : a) information préalable des agents des entreprises concernées (communication) ; b) liquidation des droits légaux et arriérés de salaires, gestion du régime de la pré-retraite (finances) ; c) couverture médicale des agents licenciés et octroi d’un fonds d’aide pour les plus démunis (social) ; d) aide à la réinsertion (réinsertion); et e) création de la Cellule d’appui à la réinsertion sociale pour tous les déflatés (accompagnement).

La composante « Réforme du Secteur des Postes et Télécommunications » vise à mettre en œuvre une réforme de grande envergure dans le secteur des télécommunications, notamment la mise en place d’un nouveau cadre réglementaire, la mise en place de l’Autorité de Régulation des Postes et Télécommunications, la libéralisation progressive des services et la privatisation de l’opérateur principal, la restructuration des activités postales en vue d’une amélioration significative de leur couverture, de la qualité de service et de leur rentabilité.

La composante « Appui au Renforcement du Secteur Financier » vise à réaliser la restructuration, la privatisation ou la liquidation des institutions financières. Cette composante comporte un volet « Appui au Système Judiciaire » et un volet « Promotion du Secteur du Microfinancement ».

Le volet « Appui au Système Judiciaire » consiste en un appui d’urgence visant l’amélioration de la capacité de traitement des dossiers du secteur privé y compris le secteur financier par le système judiciaire et la préparation d’une réforme substantielle dans le domaine juridique et judiciaire dans le cadre de la formulation de la stratégie de développement du secteur privé.

Le volet « Promotion du Secteur du Microfinancement » apporte un appui au secteur à travers la Cellule d’Appui et de Suivi des Institutions Mutualistes d’Epargne et de Crédit (CAS-IMEC), organe de contrôle du secteur, le Consortium Alafia-Togo, la Fédération des Unions Coopératives d’Epargne et de Crédit du Togo (FUCEC-TOGO) et le Comité National de Concertation devenu Comité National de Microfinance (CNM).

Le Projet dispose de lignes budgétaires pour les travaux, les équipements, les consultants, la formation, les missions et voyages d’études, les droits de licenciement et le fonctionnement pour un montant global de 35.706.815 dollars US, soit 13.180.227 dollars US pour la composante EP, 14.300.228 dollars US pour la composante PT, 5.208.000 dollars US pour la composante SF, 682.400 dollars US pour la coordination générale et 2.335.960 dollars US au titre des imprévus.

2.3 Cadre institutionnel

A l’origine, trois Ministères géraient séparément chacune des composantes (le Ministère chargé des Sociétés d’Etat pour la composante EP, le Ministère chargé des Postes et Télécommunications pour la composante PT et le Ministère chargé des Finances pour la composante Appui au Secteur Financier). Trois coordinateurs avaient donc été nommés. Chaque coordonnateur était assisté d’un coordonnateur-adjoint. Avec la disparition du Ministère chargé des Entreprises Publiques et l’intégration de ses activités à celles du Ministère chargé des Finances, fut réalisée l’unification de la coordination des deux composantes EP et SF.

La réalisation des transactions est confiée à une Commission de Privatisation créée par l’ordonnance n° 94-002 du 10 juin 1994 et son décret d’application n° 94-038 du même jour. Ce décret fut modifié par décret n° 99-090/PR du 27 octobre 1999 pour permettre la création d’une Cellule de Privatisation le 29 octobre 1999 par arrêté n° 183/MEFP/CAB du Ministre chargé des Privatisations. Cette Cellule composée d’un expert international et d’experts nationaux était chargée d’assister et de conseiller le Ministre dans

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l’instruction des dossiers de privatisation.

Afin de faire un suivi global du programme, d’assurer la cohérence des interventions et la liaison avec les programmes sectoriels, une coordination générale du Projet a été installée au Cabinet du Premier Ministre. Par la suite cette coordination générale fut confiée au coordonnateur des composantes EP et SF. En-dehors des coordonnateurs, chaque composante du PAREP compte un comptable gestionnaire chargé de la gestion financière et comptable, un assistant administratif chargé de la gestion de la correspondance et des experts nationaux chargés de :

- l’élaboration des termes de référence des études, la préparation des appels d’offres, l’évaluation des offres techniques et financières et le suivi des études et des contrats ;- l’étude des dossiers techniques qui leur sont confiés.

La gestion financière et comptable de la Coordination générale était confiée au comptable-gestionnaire de la composante PT.

2.4 Evaluation de la conception du projet

Tenant compte des expériences passées, le PAREP, dès sa conception, a prévu des indicateurs de performance, des moyens de suivi et les principales hypothèses de réalisation de ces indicateurs. La plus déterminante de ces hypothèses, c’est-à-dire la stabilité de la situation politique, gage de succès des opérations, a fait défaut sur toute la période de réalisation du projet. C’est ce qui explique que malgré la détermination du Gouvernement à finaliser les opérations, des retards importants ont été enregistrés. Par ailleurs, on peut citer les éléments suivants qui ont également influé négativement sur les réalisations :

(i) des objectifs très ambitieux n’ayant pas tenu compte de tous les facteurs intervenant dans leurs réalisations ; (ii) le caractère difficilement mesurable et non approprié de certains indicateurs de performance retenus ;(iii) la multiplicité de coordinations sectorielles avec autonomie de gestion qui a permis à certaines composantes de ne plus respecter les procédures en matière de désengagement portant ainsi atteinte à la qualité de l’exécution du projet, la mise en place et le bon fonctionnement de la coordination générale n’ayant pas été facilités;(iv) l’absence de prise en compte des agents temporaires et des arriérés de cotisations sociales;(v) la limitation de la couverture médicale;(vi) la surestimation des aptitudes des candidats entrepreneurs après une formation de courte durée;(vii) l’absence de ligne de crédit pour le financement des projets des candidats entrepreneurs;(viii) la marginalisation des déflatés analphabètes; et(ix) l’inexistence de dispositions visant à pérenniser les acquis du projet.

2.5 Expériences tirées de l’exécution du projet

L’exécution du Projet a été confrontée à des difficultés imprévues qui l’ont ralentie considérablement. En effet, les nombreux changements de ministres et les approches différentes faites par chacun de ces ministres ont rendu difficile l’exécution normale du Projet et n’ont pas permis à la Coordination générale de disposer des moyens nécessaires pour fonctionner correctement. Sur le plan institutionnel, la création de la Cellule de privatisation dont la mise en place a été rendue difficile et qui n’a finalement pas été opérationnelle a ralenti les opérations de désengagement. Le niveau d’implication des ministères de tutelle technique, au lieu de favoriser l’accélération des opérations, n’a fait que contribuer à leur ralentissement. A titre d’exemple, la plupart des comités techniques mis en place n’ont pas contribué efficacement à l’avancement du Projet.

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Au niveau de la Banque, le changement de Chef de Projet a entraîné un temps mort de passage, le nouveau Chef de Projet s’étant difficilement approprié le Projet dans sa conception initiale. Les différentes suspensions de décaissement par la Banque suite aux arriérés de paiement envers l’IDA sont venus compliquer l’exécution du Projet qui était déjà difficile.

III. PERFORMANCES DE L’EMPRUNTEUR

3.1 Principaux résultats obtenus

Sur un budget global de 35.706.815 dollars US, soit 21,4 milliards de F CFA (à un taux moyen de 600 FCFA pour un dollar US), le niveau général de consommation se chiffre à 4,1 milliards de FCFA, soit 19,22%. Ce taux de réalisation très faible s’explique par plusieurs raisons exposées plus bas. Il diffère d’une composante à l’autre et d’une catégorie à l’autre.

3.1.1 Volet travaux

Ce volet concernait exclusivement la sous-composante Postale ( achats d’équipements, rénovation du centre de tri et des principaux bureaux de poste, construction de boîtes aux lettres), dans le cadre d’une mise en gestion privée qui ne s’est pas réalisée. Il n’a donc pas connu de réalisation de dépenses. L’objectif de ce volet est d’améliorer les services aux clients par une meilleure accessibilité et une meilleure qualité de service.

L’accessibilité aux services postaux s’est dégradé, la densité de bureaux de poste n’ayant pu atteindre l’indicateur de 1 bureau pour 38 000 habitants prévu, le développement des franchises ne s’étant pas réalisé pas plus que la mise en gestion privée. Par contre, le plan de redressement mis en œuvre a permis d’améliorer la qualité de service et, par ricochet, les résultats financiers.

3.1.2 Volet Consultants

Sur un budget global de 15.715.100 dollars US (9,4 milliards de FCFA) les dépenses réalisées se sont chiffrées à 2,5 milliards de FCFA, soit 27,48%.

3.1.2.1 Composante Entreprises Publiques

Le taux de réalisation de cette composante ressort à 19,08% de son budget et s’analyse comme ci-après.

Sous–composante « Appui au Programme de Privatisation »: Les frais de consultants se sont élevés à 195,5 millions de francs CFA sur un budget de 2,6 milliards FCFA, soit seulement 7,39% de l’enveloppe prévue du fait que très peu de transactions ont abouti. Sur les 35 entreprises, 9 ont été privatisées (Hôtel Sarakawa, Hôtel le Lac, Hôtel-Ecole le Bénin, Hôtel de la Paix, SATAL, GTA, CEET , SNCT et SIAB), soit un taux de 25,71%. Ce faible niveau de réalisation s’explique par des facteurs dont les plus marquants sont :

- L’absence de communication sur le processus de privatisation entraînant une faible adhésion des opérateurs économiques nationaux ; l’étude sur la campagne de communication n’ayant pu être menée à terme à cause de la non-compréhension de sa mission par le consultant chargé d’assister le Gouvernement dans ce domaine.- Le manque de repreneurs : le peu d’opérateurs économiques internationaux intéressés par les privatisations étaient dans un marché sous-régional où l’offre dépassait la demande. En effet, au même moment, plusieurs pays de la sous-région sont en programme avec l’IDA et sont appelés à se

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désengager presque des mêmes secteurs de production.

Sous–composante «Restructuration»: Les frais de consultants qui ressortent à 193,2 millions concernent essentiellement les deux (2) contrats d’études prévus (plan d’entreprise de la CNSS; plan d’entreprise et révision tarifaire du PAL) qui ont été réalisés pour un montant total de 188,9 millions de francs CFA sur un budget de 438 millions, soit 86,42% des montants contractuels et 43,13% du budget initial.

Toutefois, il faut remarquer que le plan d’entreprise du PAL n’a pu aller à son terme en raison de divergences survenues entre le Gouvernement et la Banque Mondiale à propos des options prises en ce qui concerne la restructuration de cette unité, entraînant la suppression en 2000 du reste de la ligne de crédit prévue à cet effet. Sous–composante «Programme de Réinsertion»: Les frais de consultants engagés par la sous-composante se montent à 317,0 millions de francs CFA sur un budget de 861,1 millions, soit un taux de 36,81%. Ce faible taux de prise en compte sociale s’explique par le retard dans les opérations de privatisation.

Unité de coordination: Elle a engagé des frais de consultants d’un montant de 47,2 millions de francs CFA contre une prévision de 36,7 millions de francs CFA, soit 128,47% du budget disponible. Ces frais correspondent aux salaires du comptable et de l’assistant administratif (26,6 millions, soit 72,48% du budget) et aux honoraires d’audit des comptes du Projet ( 20,6 millions ) qui devraient être comptabilisés au titre de la Coordination Générale.

3.1.2.2 Composante «Poste et Télécommunications»

Les frais de consultants ressortent à 1,3 milliards de FCFA sur un budget de 3,6 milliards de FCFA, soit un taux de 58,43%. Toutes les études prévues ont été attribuées à l’exception notable des études relatives à la privatisation de Togo-Télécom. Le projet pilote de téléphonie rurale a été réalisé à 100% tandis que le renforcement du système de gestion et de contrôle des fréquences a été réalisé à 65%, le Gouvernement ayant finalement opté pour une gestion en régie des fréquences au sein de l’Autorité de Régulation des Postes et Télécommunications qui s’efforce de se doter des équipements fiables pour ce faire.

La définition de la stratégie nationale de l’information est réalisée entièrement. Il reste à procéder à la mise en œuvre du projet. Le Réseau Gouvernemental a atteint son taux de réalisation maximal, le consultant ayant déposé son rapport final.

L’exécution du programme de libéralisation des secteurs des Postes et Télécommunications est concrétisée par la mise en place de l’Autorité de Régulation, l’octroi de licences de téléphonie mobile, la réforme des barèmes des tarifs et de l’interconnexion, la mise en place du nouveau code de numérotation, l’octroi des autorisations pour l’exploitation des stations VSAT et de la VoIP. Les travaux visant la mise en gestion privée de la Société des Postes du Togo (SPT) ont été réalisés à 18%.

3.1.2.3 Composante « Appui au Renforcement du Secteur Financier »

Globalement, les études réalisées se chiffrent à 319 millions de francs CFA, soit 20,08% des prévisions. Ce pourcentage de réalisation s’analyse en détail ci-après.

Sous-composante « Privatisation des institutions financières »: Les études en vue de la privatisation de la BTCI, de la BTD, de l’UTB, de la SNI ainsi que pour le transfert de la gestion de la dette publique au Trésor ont été réalisées pour un coût total de 157,8 millions contre un budget de 360,6 millions pour lesdites

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opérations. La privatisation du GTA a été réalisée sans frais pour le Projet.

Sous–composante « Appui au Système Juridique »: L’étude de mise en conformité de la législation nationale avec les actes uniformes de l’OHADA et la mise en place du registre du commerce et du crédit mobilier ont été réalisées pour un coût de 31,4 millions de francs CFA, soit 28,3% des prévisions.

Sous-composante « Promotion du secteur de la Microfinance »:

L’élaboration d’un manuel de procédures financières et comptables et l’audit complet de la Fédération ont été financés au profit de la FUCEC-TOGO pour un montant de 52,7 millions de francs CFA, soit 30,29% du crédit disponible. La formulation de la politique nationale de développement des SFD n’a pu être achevée pour être présentée à l’adoption.

3.1.3 Volet formation

Les dépenses effectuées au titre de ce volet ont atteint 298,2 millions de FCFA contre 1.2 milliards prévus, soit 23,28% des prévisions. Elles se répartissent diversement suivant les composantes.

Composante Entreprises Publiques

Elle n’a consommé que 27,1 millions de FCFA sur 276 millions prévus, soit 9,8% des prévisions. Ces dépenses de formation concernent : i) la sous–composante «Appui au Programme de Privatisation»: 23,8 millions engagés essentiellement par la Commission de Privatisation, ii) la sous–composante «Restructuration»: 1,9 million, et iii) la sous–composante «Programme de Réinsertion»: 1,4 million.

Composante « Poste et Télécommunications »

Cette composante a effectué des dépenses de formation d’un montant de 121,9 millions sur un budget de 381 millions, soit 32,00% du crédit disponible. Ces formations ont surtout bénéficié à l’équipe de coordination (27,6 millions et 28,74% des prévisions), à l’Autorité de Régulation (59,1 millions et 85,63% des prévisions) et à l’Opération pilote d’accès aux communications (31,6 millions et 105,41% des prévisions).

Composante « Appui au Renforcement du Secteur Financier »

La composante a engagé des dépenses de formation de 149,2 millions sur un budget de 588 millions, soit 25,38% des prévisions. Ces dépenses ont permis à la sous-composante «Renforcement du système judiciaire» d’ organiser des séminaires i) à l’intention des acteurs judiciaires et du secteur privé, et ii) sur les 5 premiers actes de l’OHADA, pour un montant global de 55,7 millions (32,01% du crédit disponible), au Réseau Alafia-Togo de réaliser trois (3) séminaires régionaux de sensibilisation des responsables des SFD sur l’importance de l’information financière et de la gestion prudentielle sur les six (6) prévus pour 21,8 millions (22,69% du budget) et à la coordination de la composante de former ses agents et d’organiser des ateliers pour 71,7 millions ( 22,55% du budget).

3.1.4 Volet équipements et fonctionnement

3.1.4.1 Equipements

Ce volet a été réalisé globalement à hauteur de 449,6 millions de FCFA sur un budget de 4,6 milliards, soit

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9,73% des prévisions. Ce montant se répartit diversement par composante comme ci-après.

Composante «Entreprises Publiques»

Les dépenses de la composante ont atteint 99,5 millions de Fcfa sur un budget de 241 millions, soit 41,24% du budget disponible. Elles concernent: i) la sous-composante «Appui à la Privatisation»: 13,0 millions, soit 30,99% du crédit, ii) la sous-composante «Restructuration»: 11,9 millions, soit 28,44% du crédit , et iii) la sous-composante «Programme de Réinsertion»: 47,9 millions, soit 56,2% du crédit.

Composante «Poste et Télécommunications»

Ses dépenses d’équipement ressortent à 117,5 millions contre 3,8 milliards de FCFA prévus, soit un taux de réalisation de 3,08%. La sous-composante «Télécommunications» a réalisé un taux de 12,55% seulement par suite essentiellement de la non-acquisition : i) de la station de monitoring pour la gestion des fréquences prévue pour 800 000 dollars US mais dont la valeur d’achat serait portée à 3 millions de dollars US et, ii) des équipements pour l’opération pilote d’accroissement de l’accès aux communications prévus pour 300 000 dollars US. La sous-composante «Poste» qui disposait d’un budget de 2,8 milliards n’a rien réalisé pour cause de non-mise en gestion privée de la SPT.

Composante «Appui au Renforcement du Secteur Financier»

Les dépenses d’équipement de la composante se sont chiffrées à 232,7 millions de FCFA contre un budget de 510 millions, soit 45,62% des prévisions et ont profité à la Caisse d’Epargne du Togo: 141,9 millions (78,81% des prévisions), à la sous-composante « Appui au Système judiciaire » : 24,5 millions de FCFA (102,28% du budget), au secteur Microfinance : 30,3 millions de FCFA (33,67% du budget), à la coordination de la composante : 22,4 millions de FCFA (62,33% ) et au Trésor : 13,5 millions de FCFA (7,5% du budget).

3.1.4.2 Coûts de fonctionnement

Ils ressortent globalement à 242,4 millions de FCFA contre un budget de 828 millions, soit 29,28% des prévisions. Ces dépenses de fonctionnement se répartissent ainsi par composante : i) Composante «EP» : 90,5 millions de FCFA contre 269,4 millions ( 33,59% des prévisions) avec 33,3 millions (36,79% du total) pour la sous-composante « Appui à la Réinsertion » et 36,9 millions (71,5% du budget et 40,77% du total) pour l’Unité de coordination; ii) Composante «Poste et Télécommunications» : 73,4 millions de FCFA sur un budget de 97,8 millions (75,07% des prévisions) ; iii) Composante «Appui au Secteur Financier» : 78,5 millions de FCFA sur un budget de 438 millions (17,92% des prévisions).

Les coûts de fonctionnement de la composante «Appui au Secteur Financier» incluent trois (3) sessions de formation en gestion administrative et financière de 111 élus des COOPECs et des dépenses pour la dissémination de la loi PARMEC pour un total de 59,5 millions de FCFA. Ils incluent par ailleurs les frais d’acquisition de 330 exemplaires du Code de l’OHADA commenté et annoté (15,6 millions de FCFA) distribués aux magistrats contre un objectif de 5 000 copies, soit un taux de 6,6%.

3.1.5 Volet droits de licenciements

Les droits de licenciement et autres versés aux 549 agents déflatés des entreprises publiques ressortent à 536 millions de FCFA contre un budget de 3 176,2 millions, soit 16,88 % seulement des prévisions. Le niveau des actions a été inférieur aux objectifs initiaux du fait du ralentissement du rythme des privatisations.

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Toutes les mesures d’accompagnement ont toutefois été mises en œuvre pour les opérations menées à terme. Ainsi, les agents licenciés des sociétés (OPAT, SITO, SOTED, SOTONAM, SONAPH, UPROMA, TOGOGRAIN, HOTEL SARAKAWA, HOTEL LE LAC) ont été pris en charge par la Cellule d’Appui à la Réinsertion Sociale (CARS). La pré-retraite et la liquidation des droits légaux ont été réalisées à 100% pour la population licenciée éligible.

Les mesures d’accompagnement ont connu des taux de réalisation suivants, par rapport aux objectifs du projet : i) arriérés de salaires : 9,26% (70,7 millions FCFA) ; droits légaux de licenciement : 18,97% ( 288,7 millions FCFA) ; pré-retraite : 27,36% ( 136,4 millions FCFA) ; autres mesures sociales : 10,24% (40,5 millions) ; consultants accueil et accompagnement chercheurs d’emplois: 33,3% (3,7 millions) ; appui à la création d’entreprises : 30,57% (155,0 millions).

3.2 Impact du projet dans la relance économique du Togo

Dans le cadre de la politique de désengagement de l’Etat, le PAREP a eu un impact décisif.

3.2.1 Composante Entreprise Publiques

Sous–composante « Appui à la Privatisation »: La mise en œuvre du projet a permis à l’emprunteur d’améliorer les performances des entreprises privatisées. En guise d’exemple, on peut citer le cas de l’hôtel SARAKAWA où :

les recettes fiscales sont passées de 114,6 millions FCFA en 1997 à en moyenne 435,8 millions lFCFA par an après privatisation soit un taux d’accroissement moyen de 280,27% jusqu’en décembre 2001;le chiffre d’affaires annuel moyen avant privatisation est passé de 992,7 millions FCFA à 2.300,4 lmillions FCFA après privatisation soit un taux d’accroissement moyen de 131,7% jusqu’en décembre 2001;la valeur ajoutée annuelle moyenne avant privatisation est passée de 43,7 millions FCFA à 904,5 lmillions FCFA après privatisation soit un taux d’accroissement moyen de 1969,8% jusqu’en décembre 2001 ;l’insuffisance brute d’exploitation annuelle moyenne avant privatisation est passée de 379,5 lmillions FCFA à un excédent brut d’exploitation annuel moyen de 391,4 millions FCFA après privatisation jusqu’en décembre 2001; etla perte d’exploitation annuelle moyenne avant privatisation de 432,8 millions FCFA a cédé la lplace à un bénéfice d’exploitation annuel moyen de 73,8 millions FCFA après privatisation jusqu’en décembre 2001.

Au vu des résultats ci-dessus, le développement économique de l’Emprunteur serait amorcé (au vu de l’accroissement de la valeur ajoutée qui mesure la richesse créée du pays) s’il y avait renouvellement de la coopération entre l’Emprunteur et l’IDA qui, tout en tenant compte des insuffisances du PAREP, permettrait d’accompagner dans de bonnes conditions la privatisation de plusieurs entreprises publiques.

Sous–composante «Restructuration»: Bien que l’étude de restructuration du Port Autonome de Lomé n’ait pas été à son terme, les recommandations du diagnostic stratégique ont été globalement mises en œuvre ou en cours d’application. Il en est de même de la CNSS qui est en pleine restructuration institutionnelle et juridique.

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Sous-composante «Programme de Réinsertion»: La mise en œuvre du volet social a été d’un grand secours aux agents déflatés qui ont pu disposer non seulement de leurs droits légaux mais également d’avantages spécifiques comme le Fonds social, la prise en charge médicale, la formation à l’entrepreneuriat, malgré la mise à la touche des analphabètes, et l’aide à l’obtention d’un financement bancaire pour les projets d’entreprises ou à la recherche d’un nouvel emploi. Tous ces avantages ont eu pour effet d’atténuer le poids du chômage et d’éviter des remous sociaux.

3.2.2 Composante «Appui au Secteur Financier»

Les appuis partiels réalisés ont permis à la CAS-IMEC de mener des actions qui ont eu des impacts positifs sur le secteur de la microfinance. Ainsi :

(i) le nombre de SFD ayant reçu une reconnaissance juridique est passé de 17 en 1998 à 127 au 30 juin 2002 ;(ii) l’encours des dépôts est passé de 10,1 milliards FCFA en 1997 à 16 milliards FCFA au 30 juin 2002 ;(iii) le nombre de bénéficiaires de services financiers est passé de 153 954 en 1998 à 179 819 au 30 juin 2002 ; et(iv) l’encours de crédit a atteint 12,1 milliards au 30 juin 2002 contre 8,7 milliards en 1997.

3.2.3 Composante « Postes et Télécommunications »

L’impact de la libéralisation du secteur des télécommunications peut se mesurer à travers :l’évolution du nombre d’opérateurs ( deux opérateurs cellulaires et négociation pour l’octroi de llicence à un troisième, 60 ISP, soit 36 fournisseurs d’accès internet et 14 intranet, près de 10 structures utilisant des liaisons sans fil) ; du nombre d’abonnés (plus de 49 325 lignes fixes au 30/06/2002 contre 25 100 en 1997 ; 122 552 labonnés du mobile ( 87 863 pour Togocel et 34 689 pour Télécel ) au 30/06/2002 contre seulement 6 307 en 1998) : la télédensité du fixe est passée de 0,58% en 1997 à 1,03% au 30 juin 2002.Celle du mobile a atteint 2,57 contre 0,14 en 1998. Le nombre de cabines téléphoniques a été multiplié par près de 3 de 1997 à juin 2001. Le nombre de comptes internet est passé de 2 500 en 1998 à 6 000 en 2000.des tarifs appliqués (téléphone fixe : pour la communication urbaine, l’impulsion est passée de 8 lminutes à 2,5 minutes pour 50 FCFA Hors taxes; pour l’interurbain, de 1 minute à 45 secondes pour 50 FCFA Hors taxes et pour l’international, les tarifs varient entre 400 et 900 FCFA par impulsion contre 700 à 4000 FCFA antérieurement ). des emplois générés: Togo-Télécom, Togocel et Télécel (téléphone fixe: + 46; téléphone mobile: 49 len 1998 et 185 au 30/6/2001). La masse salariale versée est passée de 2,1 milliards en 1997 à 3,3 milliards en 2000. des impôts et taxes et autres redevances payés par les principaux opérateurs (3,05 milliards FCFA len 1999 et 5,48 milliards FCFA en 2000); etde la contribution du secteur à la production intérieure brute ( 2,5% en 1997 et 4,1% à fin l2000).

IV. PERFORMANCES DE L’IDA

4.1 Relations IDA/Emprunteur

Les relations entre la Banque et le Gouvernement ont été concrétisées principalement à travers les missions

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de supervision et de revue du Projet. Ces missions ont contribué à améliorer la gestion du projet, notamment par l’attribution à la Mission Résidente d’un plus grand rôle dans la prise de certaines décisions. La concertation permanente entre la Banque et le Gouvernement a permis de résoudre au fur et à mesure les problèmes rencontrés dans la gestion du Projet, notamment par l’adaptation aux situations particulières. En dépit de cette concertation permanente, le Projet a souffert des longues suspensions de décaissements liées aux arriérés de paiement des crédits accordés au Gouvernement.

Ces longues périodes de suspensions et les retards accusés par l’Emprunteur dans la mise en place des fonds de contrepartie , par la Banque, au démarrage du Projet, dans l’accord des avis de non – objection, ont été parmi les principales causes qui ont entraîné un niveau de consommation peu élevé du crédit.Par ailleurs , le Projet a souffert de certaines difficultés, notamment :

- la durée d’étude des demandes d’avis de non objection qui a été fonction de la composante et du requérant et/ou du bénéficiaire ;- le contenu des réponses aux demandes d’avis de non objection qui est souvent fonction de la composante et/ou du bénéficiaire ;- le manque de réalisme dans certains conseils au gouvernement ;- la prise de positions figées parfois contradictoires . Il est ainsi arrivé que la Banque ait recommandé au Gouvernement la mise en concurrence (cas de la concession du terminal à conteneurs du Port autonome) et l’attribution directe (cas de la concession de la Société Nationale des Chemins de Fer).

Le départ de certains experts spécialisés dans le secteur financier et de la microfinance en général et leur non-remplacement ont eu un impact négatif sur cette composante.

4.2.1 Leçons à tirer de ces relations IDA – Emprunteur

La réussite d’un projet découle de la prise en compte, autant que faire se peut, de tous les facteurs intervenant dans sa mise en œuvre et du réalisme de ses objectifs. C’est ainsi que le PAREP aurait pu réussir si :

(i) le nombre d’entreprises à privatiser pendant la durée du projet, soit 4 ans, avait été arrêté en tenant compte :

- des causes des contre - performances du projet précédent, le PARE, qui prévoyait la privatisation de 25 entreprises publiques dont seules 4 l’ont été effectivement (soit un taux de réalisation de 16%) et 7 liquidées, ce, sur une période de 4 ans, et- des réalités du marché.

(ii) les rapports entre l’Emprunteur et l’IDA n’avaient pas connu des arrêts préjudiciables à la bonne exécution du processus de privatisation.

V. CADRE DE RELATIONS FUTURES

Certaines entreprises publiques ne figurant pas sur la liste des sociétés à privatiser l’ayant été spontanément, le processus de privatisation reste donc irréversible.

Pour la réussite d’une future opération avec l’IDA, il faudrait : - être plus prudent dans la conception des objectifs,- fixer les indicateurs de performance par rapport à l’expérience passée,- entretenir des rapports francs et objectifs durant toute la durée de mise en œuvre du Projet,- identifier le niveau adéquat d’implication des ministères de tutelle technique, et- éviter les changements fréquents d’interlocuteurs qui bloquent les actions.

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La préservation des acquis du secteur financier, notamment la croissance et le niveau de l’épargne collectée, impose la poursuite des appuis par le renforcement des capacités institutionnelles et opérationnelles de la CAS-IMEC en vue de l’évaluation annuelle des politiques et pratiques financières, de la fiabilité des comptes, de l’efficacité du contrôle interne et de la politique et pratique coopérative ou associative.

(b) Cofinanciers:N.A.

(c) Other partners (NGOs/private sector):

10. Additional Information

1. The privatization of OTP was a conditionality for second tranche release of the ERAC, the last adjustment operation. The second tranche was disbursed in May 1998, upon launching of the bidding process for OTP privatization. The first bidder defaulted and Government did not accept to start negotiations with the second bidder whose offer was considered too low. The Bank had informed the Government that no new adjustment operation could be presented to the Board unless OTP was privatized in a manner satisfactory to the Bank (among other conditions like satisfactory macro framework and IMF program). Subsequently, satisfactory privatization of OTP and the main commercial banks was introduced as a performance indicator in the three staff-monitored “interim programs” agreed between the Government and the IMF. The issue of privatization of OTP became therefore a major stumbling block in the macro-dialogue leading to a new adjustment operation, but was not listed to be privatized under the PERP.

2. Since the end of the project, four more public enterprises have been privatized: Hôtel Ecole le Bénin, Hôtel de la Paix, SATAL and SIAB (Libyan Bank). Since details of these transactions have not been disclosed, it is hard to assess the real benefit of these transactions to the country.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Output Indicators:Indicator/Matrix

Actual/Latest Estimate

EDITOGO/HEB/ONAF/ODEF brought to the point of sale or proposed for liquidation to GOT by end-1998.

UTB, BTCI and GTA brought to the point of sale by Dec 1998.

The target was not reached. ONAF and HEB were in the process of being privatized.

GTA was privatized in November 2001.HEB UTB were in the process of being privatized.

SOTOCO, SALT and LONATO brought to the point of sale by end-1999.

BTD and SIAB brought to the point of sale by Dec 1999.

SNI restructured or liquidated by Dec 1998. If restructured, State participation reduced to % by end 1999.

CET restructured or liquidated by end 1998.

The target was not reached.

At the end of the project, BTD was in the process of being privatized.

At the end of the project, SNI was in the process of being privatized.

The target was not reached.Establishment of a unit in MSE by mid-1998. MSE was merged to MEFP (Not applicable).Existence of an upgraded and operating MIS in MSE by March 1998 - Annual report provided by end-September (each year).

This was done but instead there is an MIS at the Central bank, the BCEAO.

Approved business plans for CNSS and PAL by 03/1999. The target was reached only for CNSS and a performance contract was being negotiated at project's end.

Increased positive perception on privatization program over the 1998-2000 period.

As the information campaign was not implemented, this indicator could not be assessed.

40% of people laid-off have a job or an income generating activity by end-2000.

More than 54% of laid-off people had an income generating activity at project's end.

New telecommunications regulatory framework adopted by end March 1998.

Done in 1999.

Implementation of adequate interconnection and tariff policies. Done partially.Establishment of a telecommunications regulatory agency. Done in 1999.TOGO TELECOM privatization completed by the end of 1999. This target has not been reached.Adoption of National Information Strategy by end 1998. The Strategy was adopted.SPT Management contract is awarded by end-1998. The management contract has not been signed;

however SPT was re-organized and is providing new services.

Break even level (after depreciation and interest charges) of SPT is reached in 2002. This target was achieved in 2000.Increase in performance targets for delivery:Within Lome: delivery target increases from 26.7% of mail to 90% of mail delivered in J+1.From Lome to the rest of the country: delivery target increases from 11.8% of mail to 90% of mail within J+3 by 1999.

This target was achieved in 2000.

Cost reduction of 15% per year through: (i) labor reduction; and (ii) conversation of owned-post offices to franchise outlets.

This indicator was not measured.

80% of existing MFIs supervised and visited each year. Although the target figure shown in the mid-term review was brought down to 50%, only 9% were actually visited.

Introduce FaxPost by 1999, and strengthen financial services through counter automation program in the main offices by year 2000.

This target has not been reached.

20% increase of FUCEC credit line to MFIs This target has not been reached. However FUCEC was re-organized after the Audit and is providing new services.

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionA. Public Enterprise Restructuring & Privatization 13.18 2.66 20.18B. Post & Telecommunication Reform 14.30 3.06 21.4C. Financial Sector Reform 5.20 1.36 26.15D. General Coordination 0.69 0.00 0

Total Baseline Cost 33.37 7.08 Physical Contingencies 2.34 0.00

Total Project Costs 35.71 7.08Total Financing Required 35.71 7.08

The amount shown for physical contingencies includes both price and physical contingencies. In the "Actual/Latest Estimate" figures shown here and provided by the Project Coordination Unit, Component D is included in the figure for Component B and this explains why Component D is equal to 0.

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 1.14 0.00 0.00 1.14(0.00) (1.00) (0.00) (0.00) (1.00)

2. Goods 2.30 0.50 1.20 3.70 7.70(2.30) (0.30) (1.10) (0.00) (3.70)

3. Services 0.00 0.00 17.86 0.00 17.86(0.00) (0.00) (17.86) (0.00) (17.86)

4. Retrenchment Benefits 0.00 0.00 5.29 0.00 5.29(0.00) (0.00) (4.20) (0.00) (4.20)

5. Operating Costs 0.00(0.00)

0.00(0.00)

1.38(1.05)

0.00(0.00)

1.38(1.05)

6. Others (unallocated) 0.00(0.00)

0.00(0.00)

2.34(2.19)

0.00(0.00)

2.34(2.19)

Total 2.30 1.64 28.07 3.70 35.71(2.30) (1.30) (26.40) (0.00) (30.00)

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 0.00 0.40 0.43 0.00 0.83(0.00) (0.36) (0.39) (0.00) (0.75)

3. Services 2.68 0.96 0.66 4.30(2.68) (0.96) (0.66) () (4.30)

4. Retrenchment Benefits 0.00 0.00 0.49 0.00 0.49(0.00) (0.00) (0.49) (0.00) (0.49)

5. Operating Costs 0.00(0.00)

0.00(0.00)

1.00(0.92)

0.00(0.00)

1.00(0.92)

6. Others (unallocated) 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 2.68 1.36 2.58 0.00 6.62(2.68) (1.32) (2.46) (0.00) (6.46)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.Public Enterprise Restructuring & Privatization

12.85 1.25 2.42 0.15 18.8 12.0

Post & Telecommunication Reform

11.08 4.18 2.92 0.04 26.4 1.0

Financial Sector Reform 5.27 0.27 1.24 0.06 23.5 22.2General Coordination 0.80 0.01 0.02 0.00 2.5 0.0

The figures shown above include contingencies. There is a discrepancy between Bank and Project produced figures when it comes to "Actual/Latest Estimate" of Bank financed expenditures. The Bank produced total is US$ 6.61 million while the Project Coordination Unit shows 6.84. This may have to do with the difference in the exchange rates used by each entity.

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Annex 3. Economic Costs and Benefits

N.A.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation07/11/1997 3 TTL (1); Privatization Specialist

(1); Financial Sector (1)

Appraisal/Negotiation09/29/1997 9 TTL (1); Financial Sector

(3); Postal Sector (1); Telecoms Specialist (2); Privatization Specialist (1); Financial Analyst (1)

Supervision11/29/1998 8 TTL (1); Public Enterprise

Sector (1); Financial Sector (1); Micro- finance (1); Telecoms Sector (1); Postal Sector (1); LEGAF (1); Financial Management (1)

S

07/16/1999 6 TTL (1); Telecoms Specialist (1); Financial Analyst (1); Commu- nication Sector (1); Microfinance Specialist (1); Economist (1)

S S

02/02/2001 2 Follows project in Lomé (1); TTL (1)

S S

11/07/2001 2 TTL (1); Social Development Specialist(1)

S U

12/05/2001 5 TTL (1); Social Development Specialist (1); FMS (1); Procurement (1); Financial Sector (1)

ICR11/21/2002 3 TTL (1); Program Assistant

(1); Social Development Specialist(1)

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 138.6 435.8Appraisal/Negotiation 18.6 52Supervision 193.03 562.6ICR 15 40.1Total 365.23 1,090.5

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

A. Project Appraisal Document.B. Project Status Reports (1 to 11)C. Aide-mémoiresD. Audit Reports (December 2001)E. Studies: 1. Rapport d'Evaluation des Actions et Opérations de Privatisation, Cabinet A.E.C. (October 2001) 2. Impact Economique de la Libéralisation du Secteur des Télécommunications au Togo (October 2001) 3. Etude d'Evaluation des Actions et des Opérations de Privatisation au niveau des Banques et des Institutions Financières prévues au PAREP -Secteur Financier.F. Borrower's Report.G. FY00 Quality of Supervision Assessment for the "Public Enterprise Restructuring and Privatization" Project.

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