Document of

The WVorld Bank

FOR OFFICIAL USE ONLY

Report No. 2223b-IVC

STAFF APPRAISAL REPORT

ARTISANS, SMALL AND MEDIUM SCALE ENTERPRISE PROJECT

CREDIT DE LA COTE D'IVOIRE (CCI)

IVORY COAST

February 12, 1979

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

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CURRENCY EQUIVALENTS(September, 1978)

The CFA (Communaute Financiere d'Afrique) Franc is fixed with respectto the French Franc (1 FF = CFAF 50) and floats with respect to theUS dollar. In this report the following conversion has been used:

US$1 = CFAF 220

ABBREVIATIONS

AFCOPA Association Francaise de Formation, Cooperation, Promotionet Animation d'Entreprises

BCEAO Banque Centrale des Etats d'Afrique de l'OuestBDI Bureau de Developpement IndustrielBIDI Banque Ivoirienne de Developpement IndustrielBNDA Banque Nationale de Developpement AgricoleBNEC Banque Nationale pour 1'Epargne et le CreditBOAD Banque Ouest Africaine de DeveloppementCAA Caisse Autonome d'AmortissementCCCE Caisse Centrale de Cooperation EconomiqueCCI Credit de la Cote d'IvoireCIFIM Compagnie Ivoirienne de Financement ImmobilierCSPPA Caisse de Stabilisation et de Soutien des Prix des Productions

AgricolesDDI Departement de Developpement IndustrielFAC Fonds d'Aide et de CooperationFGCEI Fonds de Garantie des Credits aux Entreprises IvoiriennesOPEI Office National pour la Promotion des Entreprises IvoirienesSONAFI Societe Nationale de FinancementSSE Small-Scale EnterpriseSME Small- and Medium-Scale EnterpriseUMOA Union Monetaire Ouest-AfricaineUNIDO UJnited Nations Industrial Development OrganizationUSAID US Agency for International Development

Fiscal Year

CCI: October 1 - September 30

FOR OFFICIAL USE ONLY

STAFF APPRAISAL REPORT

CREDIT DE LA COTE D'IVOIRE (CCI)

ARTISANS, SMALL AND MEDIUM SCALE ENTERPRISE PROJECT

IVORY COAST

TABLE OF CONTENTS

Page No.

I. THE SETTING ............... ................................... 1

The Economy ................................................ 1The Industrial Sector ...... . ....... 2The Financial Sector .. . . . ........ 7

II. THE INSTITUTION .................................. 11

Ownership .................................................. 11Organization, Management and Staff .... ..................... 11Operations and Financial Performance .... ................... 14

III. THE PROJECT .................................................. 16

Concept and Objectives ... .................................. 16Description and Main Features ................... .. ......... 17Financing Plan ............................................. 19Organization and Implementation ............................ 21Benefits and Justification ................................. 22

IV. RECOMMENDATIONS .............................................. 23

This report is based on the results of a mission to Ivory Coast in May 1978,consisting of Robert E. Hindle and Michel Beguery.

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

LIST OF ANNEXES

Annex I CCI - Assumpt'ions for Financial Forecasts

Annex II CCI - Income Statement

Annex III CCI - Balance Sheets

Annex IV CCI - Actual and Projected Financial Ratios

Annex V CCI - Arrears Position

Annex VI CCI - Organization Chart

Annex VII CCI - Extract:s of Policy Statement

Annex VIII Estimated Disbursement Schedule

Annex IX Selected Documents Available in Project File

IVORY COAST

Credit de la Cote d'Ivoire (CCI)

Basic Data

Exchange Rate (9/78): US$1 = CFAF 220

Year of Establishment: 1955

Authorized Capital: (As of September 30, 1978) CFAF 2 billion

Ownership:

Paid in CapitalCFAF Million %

Government of Ivory Coast 1,634 81.6BCEAO 183 9.2CCCE 183 9.2

2,000 100.0

Resource Position: (As of September 30, 1977)

CFAF MillionLocal Foreign Total

Paid in Share Capital 2,000 2,000Reserves 2,839 - 2,839

Subtotal 4,839 - 4,839

Borrowings OutstandingGovernment 9,264 - 9,264BCEAO 8,016 - 8,016

CCCE - 2,888 2,888

Other 1,266 402 1,66818,546 3,290 21,836

Total Resources 23,385 3,290 26.675

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CFAF MillionLocal Foreign Total

irivestments and Commitments

Net Fixed Assets 293 - 293Loans Outstanding 21,501 3,290 24,791Equity (Net) 287 - 287

Subtotal 22,081 3,290 25,371

Resource Surplus 1,304 - 1.304

Undisbursed Commitments 14,683

Covered by:Resource Surplus 1,304Available BCEAO Rediscount 10,760Other lines of credit 3,454

15,518Available for Commitment 835

(CFAF Million)Operations 1973 1974 1975 1976 1977

Loan/Equity Approvals 5,423 8,107 6,690 11,003 16,044

Earnings

Net Income 1/ 135 137 36 249 84As % of Average Networth 6.1 6.2 1.5 8.1 2.2

Financial Position

Net Worth 2,150 2,283 2,492 3,668 4,107Total Assets 10,780 13,680 16,524 22,149 27,597

Debt/Equity Ratio 3.9:1 4.9:1 5.6:1 5.1:1 5.1:1

Interest Rates and other Charges

Interest Rates: 8.5% to 12.5%Commitment Charge: 3/4 of 1% on undrawn balance

1/ Includes transfers to general reserves.

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Basic Data on Previous Bank Loans (as of January 24, 1979)

Loan1124-IVC 1162-IVC

Purpose Hotels SMEAmount $9.7 million $5.6 millionRate of Interest 8.5% 8.5%Date of Approval May 27, 1975 August 21, 1975Date of Effectiveness January 18, 1976 February 2, 1976Free Limit $500,000 $45,000Amount Committed $6.8 million $3.0 millionAmount Disbursed $2.7 million $1.0 million

*

I. THE SETTING

A. The Economy

1.01 Few countries can match I[vory Coast's economic performance overthe past twenty-five years. Real growth has averaged 7% per annum over theperiod, a unique record on the African continent. The performance is allthe more impressive as, until the recent discovery of offshore petroleumdeposits, there has been no mining activity to speak of and growth has beenfueled by extensive agricultural exports, particularly of coffee, cocoa andtimber, but also including fruits, vegetables, palm oil and rubber. Percapita income in the Ivory Coast rose from $145 at independence in 1960 to$710 in 1977. The current population of the Ivory Coast is estimated at7.3 million with an annual rate of growth (including immigration) of 4.0%.Recent economic developments are described in the Bank's latest economicreport for Ivory Coast, dated February, 1977. 1/

1.02 The Government of the Ivory Coast has followed a liberal and prag-matic policy toward foreign workers and capital and the economy remainsresolutely open. The positive results of this policy have been enhanced byhigh world prices for its agricultural commodities and the country's poli-tical stability. Certain constraints resulting from past policies are,however, now becoming apparent as questions of extensive reliance on expa-triate experts, inequitable income distribution and rapidly rising externaldebt are taking on increased importance. Despite these constraints thereremains an impressive potential for further growth in the Ivory Coast ifprudent decisions are taken on future diversification of agriculture andconcentration on immediately productive investment. In particular, in indus-try a shift of emphasis from import substitution to export oriented pro-cessing of locally produced raw materials is warranted, as is a policy ofemployment creation through concentration on small- and medium-scale indus-tries.

1.03 As illustrated in the following table, the economic structure ofthe Ivory Coast has not altered significantly from 1972 to 1978. Thebalance of agriculture vis-a-vis the rest of the sectors has remained re-markably stable, and the share of manufacturing constant since the beginningof the seventies.

1/ Ivory Coast: A Basic Economic Report, Main Report, Number 1147b-IVC,dated February, 1977.

Table 1.1: GDP AT CURRENT PRICES (%)

(Projected)1972 1974 1976 1978

Agriculture 26 26 25 22

Manufacturing and Construction /1 22 21 20 21(Manufacturing) (15) (15) (13) -

(Construction) (7) (5) (6) _

(Other) (-) (1) (1) -

Services /2 41 43 45 48(Transportation) (9) (9) (8) -

Government and Other 10 10 10 9100 100 100 100

/1 Includes artisanal firms.

/2 Includes profits of CSSPA.

B. The Industrial Sector

1.04 In the first 15 years after independence manufacturing developedrapidly at an annual rate in real terms of about 15%. Manufacturing indus-

try's share in GDP rose from 4% in 1960 to about 15% in 1974, and (based ona new statistical series of national accounts introduced in 1975) 13% in1976. Owing to the rapid rise in agricultural income between 1975 and 1978based on higher international prices for coffee and cocoa, the share of manu-

facturing in GDP has probably not expanded since 1976 and may even havedropped marginally. Moreover, it is clear that most of the apparent importsubstitution investment opportunities have been taken up, and it will benecessary in the future to shift increasingly to investment in export orientedfirms. Nevertheless, assuming global figures are not skewed by high agricul-tural prices, it is likely that over the next five years industry's relativeshare of GDP should grow according to past trends. Over the recent past themost dynamic industrial subsectors have been production of construction mate-rials (40% annual growth rate), textiles and shoes (30%) and metal, mechanicaland electrical industries (26%).

1.05 Ivory Coast's industrial sector includes three components: (1) arelatively small number of large, mostly foreign owned and managed firms;(2) a larger number of medium and small size modern sector firms which are

increasingly Ivorian owned; and (3) a large, but uncounted, number of infor-mal sector firms which are exclusively Ivorian or African owned. Availabledata for the sector reflect mostly developments among firms in the first

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category and to some extent in thet second category, although as a result ofa first IBRD-SME project and recent studies conducted by the government,knowledge of the latter two groups; is expanding.

1.06 Commonly agreed definitions distinguishing precisely Ivorian large,medium and small firms do not exist, nor is there a clear dividing linebetween modern sector firms and traditional artisans. The 1976 nationalaccounts cover 1,790 firms including a few artisanal units. Of the firmssurveyed about 85% have total assets under CFAF 75 million and fewer than50 employees. Moreover, among these firms the vast majority has assets underCFAF 10 million (65%) and fewer than 10 employees (62%). For purposes ofthis report the criterion of total. investment will be used to define firmsby type. Large firms will be considered those with total assets aboveCFAF 500 million, medium as those between CFAF 75 million and CFAF 499 mil-lion, small as those under CFAF 75 million. 1/ Informal sector artisansare those individuals working alone or in cooperatives, who produce tradi-tional goods for the local market and who are outside the national accountingsystem. As in most countries, the artisanal sector is characterized by easeof entry, reliance on indigenous resources, family ownership, labor intensivetechnologies and unregulated markets.

1.07 Small-Scale Enterprises. At the request of the Bank a study wascarried out in 1976 of the SME sector in Ivory Coast. Thirty-one firms weresurveyed in detail through on site visits and interviews, and data on anadditional 720 were reviewed. It was found that the typical modern sectorSME in Ivory Coast is in an urban area (probably Abidjan), employs fewerthan 10 persons, has been created in the last 10 years and has an annualturnover of about CFAF 50 million ($225,000). Small-scale firms are heavilyoriented to trade and commerce (72%) and only 18% is involved in manufac-turing. The remainder (10%) is occupied in the production of raw materials(logging, quarrying, etc.). In terms of the financial structure of SME,undercapitalization is common and indebtedness (especially to non-formallenders) is high. The study concluded that the important constraints facingSME include: (1) lack of financial resources; (2) competition from largeand small foreign-managed firms; and (3) inadequate government incentives tosmall African enterprises.

1.08 Artisans. Based on a 1976 study, it appears that 15% to 20% offirms incorporating themselves in the modern, small scale sector are artisanswhose businesses have prospered, and that roughly 15% of manufacturing outputis from artisans. Cost per job created in the artisanal sector appears tobe one tenth that of the large scale, modern sector. Thus, the impact ofthe artisanal sector is of considerable importance, both in terms of develop-ing new generations of African businessmen and generating employment at a lowcost per job. The important constraints facing artisans are lack of longand medium term finance, insufficient knowledge of markets, weak managementand competition from larger enterprises. Artisanal output in the Ivory Coast

1/ The Central Bank's definition of small scale industry, includes allAfrican-owned enterprises with total indebtedness below CFAF 20 million.

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is sold largely to meet local (African) market demand, although a growingnumber of cooperatives seek to ensure technical assistance to artisans to

ensure high quality output for sales abroad or to local expatriates.

1.09 Industrial Investment. Public investment in manufacturing and

industry is clearly secondary to private investment, and in 1976 represented

less than 30% of the capital of modern sector firms. During the last five

year plan (1971-1975) gross public investment in industry and mining amountedto CFAF 12 billion, or 10% of total industrial investment. Projected public

investment in industry from 1976 to 1980 is CFAF 60 billion, one tenth of

total anticipated industrial investment. Moreover, public resources are

planned to be concentrated in a small number of large enterprises such as apulp paper operation and agro-processing.

1.10 Industrial Location. About two-thirds of Ivorian industry is

concentrated in Abidjan, with another 10% in Ivory Coast's second largest

city, Bouake. Large modern sector firms are especially heavily concentratedin Abidjan, which, given Abidjan's attractions as a growth pole with good

transportation, public services and a large market, is unsurprising. Thereare factors, however, which favor some decentralization. These include the

need to locate raw material processing operations close to the source, the

ongoing investment in improved transportation links, Government's intentionto reach a better geographic distribution of investments by developing SanPedro as a growth pole and establishing regional industrial estates (para-graph 1.18). Nevertheless, industrial investment in Abidjan (especially

for export purposes) makes sense and the government has decided to approach

decentralization carefully and not to establish special fiscal incentivesfor regional industries.

1.11 Indigenization. At the beginning of 1975 foreign ownership com-

prised 60% of the equity in manufacturing firms; three quarters of the re-mainder represented Government equity and one quarter private Ivorian.

Government policy has been to encourage Ivorian participation in both capitaland employment, albeit within the context of a liberal and open economy. The

main vehicles for doing so have been the establishment of a stock exchangewhich is restricted to Ivorians, Government equity participation in firms andthe establishment of Societe Nationale de Financement (SONAFI), an equity par-ticipation fund. Nevertheless, the capital needs of large firms continue to

be met with external private resources and in 1978 over 50% of equity owner-ship remained foreign. A similar situation exists in management where,despite the efforts of government, a substantial proportion (75%) of senior

managers is expatriate.

1.12 Employment. 1/ Ivory Coast has traditionally been a large importer

of industrial workers, including skilled Europeans (estimated at almost 10,000in 1976, excluding externally funded technical assistance personnel) and un-

skilled workers from neighboring states (70,000 in 1976). Many additionalAfrican expatriates work in the agricultural sector; in 1976 non-Ivorian

1/ Ivory Coast Special Report on Employment. Report No. 229a-IVC, 3 volumes,

July 31, 1974.

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Africans were estimated to make up somewhat under 25% of the total population.Between 1973 and 1976 industrial employment expanded by an average of slightlyover 10% per year. Nevertheless, industrial employment as a portion of totalmodern sector non-agricultural employment remains modest (25%). Data on grossunemployment are scanty, although it appears that such unemployment as existsis concentrated in urban areas (particularly Abidjan) and especially among thesemi-skilled. 1/

1.13 As in most West African countries, capital investment per jobcreated in the modern sector has been high. According to estimates in 1976by the Government the cost of each new industrial jo' crEateud n tLhe modernsector from 1971 to 1975 was $26,000 while the similar figure for the sub-sequent ten years was projected to be $30,000. Wide variations by branch andsize were noted, however, with the greatest employment impact coming fromagriculture and small-scale enterprise investment. These conclusions areconsistent with the experience of the first line of credit for small- andmedium-scale firms which created employment at an average cost per job of$9,300 (considerably below the national average) and by the experience of theOffice National de Promotion des Entreprises Ivoriennes (OPEI) from 1968 to1977, which had an average cost per job for small firms it promoted (includingservices) of about $5,000 per job.

1.14 Industrial Organization. Policies in the industrial sector areimplemented by the Bureau de Developpement Industriel (BDI) of the Ministryof Finance, Budget and Plan for promotion, the Direction de DeveloppementIndustriel (DDI) of the same Ministry for planning, and the Office Nationalde Promotion des Entreprises Ivoriennes (OPEI) for technical assistance. Onthe financial side there is SONAFI, a credit Guarantee Fund, and, of course,two industrial development banks, Banque Ivorienne de Developpement Industriel(BIDI) and Credit de la Cote d'Ivoire (CCI), both of which have received WorldBank Group support. Specific incentives to small- and medium-scale investorsinclude the programs of OPEI, loan guarantees, and the BCEAO preferentialinterest rate structure (para. 1.22).

1.15 OPEI. OPEI was created in 1968 as a public enterprise designedto promote and develop small Ivorian enterprises. OPEI is under the responsi-bility of the Director of Industrial Development of the Ministry of Finance,Budget and Plan. Day to day management is handled by a Director General withthe advice of a Government Commissioner. OPEI's operations fall into twomajor categories: (1) promotion and follow up of individual enterprises; and(2) assistance to Ivorian entrepreneurs buying out small expatriate-ownedenterprises. It is, furthermore, intended to make OPEI the implementing orga-nization for the Industrial Estates Program (para. 1.18). OPEI's Directionof Operations handles the preparation of SME dossiers and is in charge orproject follow-up. It comprises seven units ("cellules") each specialized ina field of activity (food, commerce and services, mechanics and garages, wood

1/ A recent ILO study estimates unemployment at 5% in 1970, but makes nocomment on probable changes since then.

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industry, textiles and garments, building, and miscellaneous industries). Asof June 1978, OPEI's staff of 158 included 45 Ivorian professionals and 41expatriate technical assistants.

1.16 Extensive technical assistance has been provided to OPEI, in par-ticular by FAC (though AFCOPA, a private French organization specializedin technical and management assistance to small enterprises) and UNIDO, whichsince 1974 has financed a major program of technical assistance to the dif-ferent units of the OPEI's Direction of Operations. The cost of this externalassistance was estimated at CFAF 745 million ($3.3 million) in 1977, of whichabout 40% is being paid by French bilateral aid and UNIDO and the rest borneby the Ivorian Government.

1.17 According to OPEI, over the period 1968-1977 it assisted thecreation or the extension of 321 enterprises (mainly in the service and foodsectors), representing total investments of CFAF 4,677 billion ($19 million)and resulting in the creation of 3,681 new jobs at an average cost of about$5,000 per job. In view of the very high cost of operation of OPEI, theseresults are nonetheless disappointing. Following the efforts undertaken bythe World Bank in collaboration with UNIDO in the first Bank SME project,OPEI's recent performance has improved. Internal procedures have beenstreamlined, staffing of the operational units has been completed and theoutput of small scale projects for financing has increased dramatically.Efficiency, however, remains a serious problem and technical assistance costsremain high in relation to the number of small scale enterprises promoted.

1.18 Industrial Estates. In order to promote the regional developmentof small- and medium-scale enterprises, the Ivorian Government has decided tocreate eleven industrial estates in each of the major districts of the IvoryCoast. These estates will provide SME's with common infrastructure andservices and technical assistance which will be provided by OPEI. A regionaldevelopment bank, Banque Ouest Africaine de Developpement (BOAD) has agreedto provide a loan of CFAF 730 million ($3.3 million) for this program whichwill be managed by a special department to be created in OPEI. Regionaloffices of OPEI will be established in each industrial estate. The invest-ments of SMEs settling on the estates will be eligible for World Bank financingunder the second SME project.

1.19 Prospects and Constraints in the Industrial Sector. The prospectsfor continued dynamism in the industrial sector are good, although there is aneed to focus on such subsectoral objectives as Ivorianization of capital andmanagement, employment generation and development of export oriented indus-tries. The constraint will be to make these adjustments smoothly, withoutloss of industrial efficiency and in the context of Ivory Coast's liberaleconomic philosophy. Certain steps are already being taken to accomplishthese goals. First, regarding indigenization, the government has restrictedthe stock exchange to Ivorian nationals and has reconstituted SONAFI to con-tinue direct participation in undertakings of national interest. It alsoseeks, without establishing explicit quotas, to ensure that private firmsrecruit Ivorian counterparts to expatriate managers. Second, the government

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promotes through OPEI and guarantee and participation funds, smaller enter-prises in an effort to stimulate employment creation and to support African

entrepreneurs. Finally, the government's direct investments in manufacturingare increasingly concentrated in those firms such as sugar mills, wood pro-cessing and canning, which give value added to locally produced raw materials.

C. The Financial Sector

1.20 Ivory Coast is a member of a regional monetary union, the UMIOA

(Union Monetaire Ouest Africaine) which was established in 1962 and which

includes five other francophone countries (Benin, Niger, Senegal, Togo and

Upper Volta). The union shares a common currency (the CFA franc) which bears

a fixed relationship to the French franc, a common central bank (the Banque

Centrale des Etats d'Afrique de l'Ouest in Dakar) and common credit and mone-

tary po'licies.

1.21 BCEAO Credit Regulations. Credit policies affecting banks in UMOA

countries were extensively revised in 1975. The objective of these reforms

included, inter alia, a greater national input into credit allocation, greater

incentives to lending for development and a more efficient use of domestic

savings. Control of credit in the Union is exercised by the discounting

mechanism of the BCEAO. All banks (commercial and development) can rediscount

up to 35% of their outstanding portfolio with the Central Bank. In addition,

commercial banks have (under pressure from BCEAO) begun to lend more exten-

sively than heretofore for capital investment in industry. These developments

have put development banks at a competitive disadvantage to commercial banks,

as the latter can attract borrowers by providing a full range of banking

services as well as term credit. As a result, development banks are actively

redefining their strategies to broaden their operations and in the short term

to locate co-financing opportunities with commercial banks.

1.22 Interest Rate Structure. Consistent with the rigorously controlled

credit allocation system, interest rates are tightly controlled as well.Rates on loans to borrowers (no matter what the cost or source of resources)

may in no case be higher than 13%, and in the case of certain preferred non-

agricultural borrowers no higher than 8.5%. Preferred borrowers include

majority African owned small-scale enterprises (those with outstanding credit

under CFAF 20 million), short term agricultural borrowers, and African home-

owners borrowing less than CFAF 10 million to construct their principal

residence.

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Table 2.1: BCEAO INTEREST RATES

AllowableType of Borrower Discount Rate (%) Allowable Spread Final Rate

PreferentialAgricultural 5.5 1.0 - 2.0 6.5 - 7.5SSE 5.5 1.0 - 3.0 6.5 - 8.5

Housing 5.5 1.0 - 3.0 6.5 - 8.5

Normal 8.0 5.0 13.0

In the case of loans to small scale enterprises the central bank in conjunc-tion with the Government has established an additional interest subsidy fundwhich is available to subsidize the cost of high priced international re-sources flowing to SSEs. Interest paid on saving deposits varies widely from5.5% to 8.5%. Interest on fixed term, large deposits and on funds obtainedin the money market in Ivory Coast ranges up to 10%.

1.23 Inflation. Although inflation has not historically been a majorproblem within member states of BCEAO, there have been recent sharp increasesin prices in Ivory Coast, owing to reduced output of local foodstuffs andhigher cost imports. For 1977 the BCEAO estimates that the consumer priceindex for Ivorian families rose by about 30%, although the global inflationrate was considerably lower at 13%. For the previous two years inflationwas 8.3% and 9.5% respectively. Based on its policy of constraint of creditexpansion, and the government's decision to reduce the pace of public invest-ment, the central bank anticipates the rate of inflation to reduce markedlyin 1978 to about 20% for Ivorian families and even lower taking account ofimported goods. Moreover, the long term inflation rate for Ivory Coast isexpected to be comparable to what it was for the last 5 years. The Bankprojects annual inflation rates of 11.0%, 9.0% and 7.0% for the years 1978 to1980.

1.24 The Banking System. Banking and credit institutions in Ivory Coastinclude four commercial banks, four development banks, branches of foreignbanks and various other institutions operating as leasing corporations, in-surance companies, etc. In addition there is a public institution, CaisseAutonome d'Amortissement (CAA) which manages the public debt, holds andmanages public deposits and mobilizes local resources through tax free bondissues. The Caisse de Stabilisation et de Soutien des Prix des ProductionsAgricoles (CSPPA) is the Government agricultural price stabilization fund.Another public institution, Societe Nationale de Financement (SONAFI) was setup in 1962 to take direct equity participation in undertakings of nationalinterest. In 1972 the Government established within SONAFI an additionalparticipation fund to make equity available to small-scale Ivorian enterprises.The Government also established in 1968 a guarantee fund, Fonds de Garantie,to provide guarantees for credits granted to small Ivorian enterprises.Finally a stock exchange was established in April 1976. Ivorianization of

-. 9 -

the financial sector is progressing steadily: the Government has a 100%interest in Banque Nationale pour l'Epargne et le Credit (BNEC), 21% inBanque Ivoirienne de Developpement Industriel (BIDI), 82% of Credit de laCote d'Ivoire (CCI) and 67% in Banque Nationale de Developpement Agricole(BNDA). It has participation of between 10% and 33% in three commercialbanks which are largely owned by French banks associated with American,German and Italian institutions. These banks have either an Ivorian asGeneral Manager or Deputy and IvoriaLnization of their professional staff isincreasing rapidly. At the end of 1975 local participation in the equity ofcommercial and development banks was 54.5%, about one-fifth of it in privateIvorian hands.

1.25 Specialized Banking. Ivory Coast has four specialized developmentbanks, BIDI, BNDA, BNEC and CCI. BIDI, created in 1965 is majority foreignowned and specializes in financing large scale industrial enterprises. Itreceived an IBRD loan in 1975 and haLs an IFC participation. BNDA was estab-lished in 1969 as the agricultural dLevelopment bank in Ivory Coast to provideagricultural credit and technical assistance to its clients, and to mobilizerural savings. BNEC, created in 1975, has combined the activities of previousGovernment services related to housing, savings and loans and subsidizationof low income housing. BNEC is the intermediary for the low income housingcomponent of the ongoing IBRD AbidjaLn Urban Development Project. Finally,CCI is a majority Government owned mtultipurpose development bank which wascreated in 1955. CCI is the main provider of long term resources to small-scale enterprises and is in this respect an important instrument of theGovernment Ivorianization policy.

1.26 Guarantee Fund. A Fonds de Garantie des Credits aux EntreprisesIvoiriennes (FGCEI) was established in 1968 by the Government to promote thedevelopment of Ivorian enterprises by guaranteeing loans to such enterprises.The Fund guarantees up to 80% of loaLns to majority Ivorian owned enterprisesin the secondary and tertiary sector although the preponderate amount ofguarantees is in the tertiary sector (70%). Since inception the Fund hasgranted 145 guarantees; its resources come primarily from budgetary allo-cations, and amount to CFAF 400 million. Since the Fund can guarantee up tofive times its total resoruces its total guarantee capacity is CFAF 2 billionof which more than three fourths has been used. Approximately 15% of theportfolio has been written off or is in litigation.

1.27 Prospects in the Financial Sector. Financial institutions in theWest African Monetary Union are in aL state of transition as adjustments aremade to the 1975 sectoral policy changes. In Ivory Coast, in particular,financial instituions are moving quickly to respond to increased local com-petitiveness and the period of adjustment should be smooth. On its part theBank is involved in a detailed study of financial flows in Ivory Coast inorder to understand fully the sources and uses of financial resources in theIvory Coast. In a similar fashion the Bank has sought to intensify itsrelationship with BCEAO with a view to discussing interest rate policy andjoint review of local development banks.

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1.28 Performance under Previous Loans. In July 1975, the Bank made aloan of $5.6 million to CCI to finance Ivorian small- and medium-scale enter-prises. At about the same time CCI, which is the designated financier ofhotels, received a Bank loan of $9.7 million for hotel construction. Thlcfirst SME project was designed to strengthen CCI as a financial intermediary,to develop links with local commercial banks, and, of course, to make avail-able term resources for small Ivorian businessmen. CCI would finance, withIBRD resources, up to 60% of total investment with an investment ceiling ofCFAF 40 million ($181,000), of Ivorian owned enterprises in preidentifiedbranches (baking, tailoring, woodworking, garages) with flexibility tofinance viable projects outside these branches. The financing plan was com-pleted by Ivory Coast's commercial banks which financed 30% of total invest-ment (for working capital) the balance (10%) being provided by the promoterhimself. Project promotion and follow-up was provided by OPEI whose activi-ties were funded by direct budgetary allocations, UNIDO and French bilateralaid.

1.29 Project implementation suffered from a number of constraints. Proj-ect effectiveness was delayed for a year pending resolution of a discrepencyin interest rates between the BCEAO ceiling of 8.5% for small-scale enter-prises, as defined by the central bank (see para. 1.06), and the negotiatedrate of 12.5%. In the end, the difference between the two is made up by theGovernment interest subsidy fund which ensures CCI an adequate spread. Otherconstraints which have affected the project's performance have been the slowrate of project processing by OPEI (which averaged only three projects amonth) and cumbersome procedures to move projects through the stages ofpromotion, agreement by OPEI, CCI and commercial banks, and disbursement. Inaddition, the 1975 Central Bank reform which put commercial and developmentbanks on an equal footing has narrowed the scope for cooperation between CCIand commercial banks and loan processing by the latter has frequently beenslow. Nevertheless, under the first project progress has been made in ex-panding and strengthening CCI's industrial development role and in providingintegrated financial and technical assistance to Ivorian entrepreneurs.Coordination among CCI, commercial banks and promoters is now moving rela-tively smoothly.

1.30 Finally, although no specific target was established in the firstSME Project, the cost per job created is higher than expected at time ofapproval ($9,300 average, slightly above the $8,700 anticipated, includingan amount for technical assistance costs). As of January 15, 1979, 62projects have been accepted with average investments of $100,000 (rangingfrom $20,000 to $160,000). At the same date commitments stood at 54%,but given the projects in CCI and OPEI pipelines, they are expected to reach80% by February 1979, at which time new loan granting authority will berequired.

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II. THE INSTITUTION

A. Ownership

2.01 CCI is a multipurpose development bank established in 1955 withFrench assistance and headquartered in Abidjan. It finances housing, indus-try, trade, artisans, hotels, consumer durables and automobiles. It providesshort term (up to 2 years), medium term (2-10 years), and long term (over10 years) loans, equity participation and guarantees to private or publiccorporations and individuals.

2.02 Ownership. CCI's initial share capital of CFAF 200 million wasgradually increased to CFAF 2 billion by May 1975. All capital is fully paidin. The Government is the major shiareholder (82%). Caisse Centrale deCooperation Economique (CCCE), a public French aid agency, holds 9% and theBanque Centrale (BCEAO) the remaining 9%. CCI's capital structure has evolvedas follows:

Table 2.1: PAID-IN SHARE CAPITAL

Shareholder Original As of June 30, 1978CFAF Mil:Lion % CFAF Million %

Government 100.0 50 1,633.34 81.66CCCE 100.0 50 183.33 9.17BCEAO - - 183.33 9.17

200.0 100 2,000.00 100.00

2.03 Board of Directors. CCI's Board of Directors meets approximatelysix times a year and consists of twelve members, ten Government appointedofficials, one representative of CCCE and one from BCEAO who, since 1975, hasbeen the Vice Chairman. A loan approval committee, consisting of five members(the Board Chairman, one representative of BCEAO, one from the Caisse Autonomed'Amortissement (CAA) and two Government representatives) has been delegatedauthority to approve most routine loans and make day to day decisions. Inaddition, the Director General of CCI has the authority to approve housingloans up to CFAF 15 million and loans to enterprises up to CFAF 50 million.

B. Organization, Management and Staff

2.04 Organization. CCI's present organization comprises a General Direc-torate and three major departments (Investment, Finance and Administration).A Division for Organization and Computing Activities and a Division ofInternal Control are part of the Director General's office. Project promotion,appraisal and supervision are handled by the Investment Department which isalso in charge of arrears collection. CCI currently has five branch offices

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in Bouake, Korhogo, Abengourou, Daloa and Man. CCI's organization chartappears in Annex VI. Steps are underway to restructure CCI to make theorganization more responsive to its growing role. In particular, it hasbeen recommended that the internal control unit be strengthened and itsresponsibilities more clearly defined. In addition, the treasurer's func-tions are to be beefed up and a new operations manual is under preparation.

2.05 Management and Staff. The present Director General has been atCCI almost since its inception. He has spent the last eleven years in hispresent position and understands the institution well. He is assisted by aDeputy Director General. As of June 1978, the total staff of CCI, includingthe branch offices, amounted to 214 of which 33 are professionals. Theprofessional staff is generally well trained academically but with limitedexperience and thinly spread. Recruitment has not kept pace with the rapiddevelopment of CCI's activities. Of the three Director positions one iscurrently vacant and most of CCI's departments are understaffed. Staffeffectiveness is hampered by poor internal communication and lack of moti-vation. At present there are eight expatriates employed by CCI, includingthree working in computing activities. Among them, an advisor to the DirectorGeneral is financed by the World Bank under the Tourism line of credit. Hisresponsibilities include support for hotels and SME.

2.06 Training. Although the Administrative Department has a Divisionof Personnel and Training, there is presently no internal trainingprogram in CCI and external training takes place on an ad hoc basis. Thereis, moreover, a definite need in CCI for building up financial and managerialskills of its existing staff and for training new staff. This is particularlytrue as CCI intends to broaden the scope of its activities to compete moreeffectively with commercial banks. CCI has asked for Bank help in developingan internal training program and in arranging for outside training of juniorprofessionals in financial analysis, accounting and computing activities. Inaddition, it wishes to hire short term consultants to perform financial train-ing of its junior employees. Finally, CCI would like some of its analysts toattend the EDI industrial courses and to undergo on-the-job training infinancial institutions abroad. (See paragraph 3.10.)

2.07 Policies and Operating Guidelines. CCI's operating guidelines areset out in its by-laws which were revised in May 1975 to incorporate modi-fications regarding appraisal criteria, exposure limits, financial policyand staff development which were suggested during appraisal of the first SMEproject. Equity investments are limited to 25% of a company's share capitalor 25% of CCI's net worth whichever is lower. CCI's total exposure in asingle company cannot exceed 25% of CCI's net worth, or 80% of project cost.Exceptions can be made for loans guaranteed by the Government. These limitsare satisfactory. The by-laws also set terms and conditions of differentcategories of loans including maturities, minimum equity, spread, use ofloan proceeds and acceptable guarantees.

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2.08 Procedures. SME projects are handled by the Credit Division of theInvestment Department. A separate division is in charge of hotel projects.Appraisals of small personal loans consist of a routine check of the proposedpurchase and the security offered. Applications for larger projects are sub-ject to thorough appraisals which include calculations of rates of return.Appraisals of projects financed under the first SME project include detailedsectoral and market analysis for the first project in a series, followed bysimplified but complete appraisals of all subsequent projects of the sametype. Appraisals of projects are generally satisfactory and are completed bysite visits during project implementation. Rates of return on the SME proj-ects in CCI's portfolio range from 13% to 33%, and average 16%. Nevertheless,follow-up after disbursements is generally limited owing to staffing con-straints. Some of the burden of project follow-up is taken by OPEI, but CCIrecognizes the need to improve in this area and CCI's Investment Departmenthas recently recruited a professional currently being trained, who will be incharge of SME project supervision.

2.09 Procurement and Disbursement. CCI's procedures for procurement anddisbursement are generally adequate. For consumer durable Lending disburse-ments are made directly to the suppli-ers. For industrial loans CCI disbursesto the supplier or the construction contractor after verification of pricesand work performed. For larger loans, CCI reviews borrowers' procurement plansand ensures that proper goods are obtained at reasonable prices.

2.10 Audit. CCI's accounts are reviewed annually by the Government andan independent auditor. The audits have been provided on time and, after afew start-up problems owing to lack of familiarity with Bank requirements,their overall quality is good. The audit report for FY 1977 has been submit-ted to the Bank, as well as a complementary study recommending a number oforganizational changes.

2.11 Foreign Exchange Risk. According to its by-laws: "CCI shall takeadequate steps to protect itself against foreign exchange risks associatedwith its borrowings abroad." As in the case of its previous borrowings, in-cluding the two IBRD lines of credit, the Government, through CAA, assumes,the foreign exchange risk for a fee ofE' 1%.

2.12 Interest Rates. In accordance with BCEAO guidelines, CCI's interestrates on medium and long term loans now range from 6.5% to 13.0% and from8.5% to 13.0% on short term credits. Rates on existing portfolio range from5.5% to 13.0%. Deposit rates range from 2% to 9%. In keeping with BCEAOguidelines, loans to artisans and small enterprises (defined as those withoutstanding credit under CFAF 20 mill:ion ($90,000) carry an interest rate of8.5%.

2.13 Strategy. Following the 1975 BCEAO reform which abolished the dis-tinction between commercial and development banks, CCI, while consolidatingand developing its traditional activities, is studying the possibility ofentering the field of savings collection in order to procure additionalresources. A study is underway to determine what the opportunities are for

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CCI in that field and what should be CCI's strategy. However, CCI is con-

scious that, before making any decision, it will have to strengthen its

organization and improve the technical expertise of its staff. Mobilization

of additional local resources through an active savings program is a useful

objective for CCI, although it must be implemented prudently to avoid any

undue negative impact. CCI's management is aware of this and has kept the

Bank closely informed of studies undertaken so far and will continue these

consultations in the future. As for its traditional development activities,

CCI intends to take a number of steps. Housing lending is likely to be

stable, as a certain portion will flow to a new affiliate of CCI, Compagnie

Ivorienne de Financement Immobilier (CIFIM), and a correspondingly greater

emphasis will be put on industrial operations especially among small and

medium scale investments. To support these activities CCI envisages an

increase of its capital which could take place before the end of 1979 and

which, together with the proposed loan, will help CCI reinforce its resource

base to face the projected development of its activities.

C. Operations and Financial Performances

2.14 Resources and Operations. The bulk of CCI's resources have come

from BCEAO rediscount, term borrowings from CAA and CCCE and term deposits

from Caisse Nationale de Prevoyance Sociale (CNPS) and CAISTAB. CCI has

also received financing from USAID though the USAID/Conseil de l'Entente

African Enterprise Program and two lines of credit from IBRD, one for

Tourism ($9.7 million) and the other for SME ($5.6 million) both in 1975.

2.15 The following table summarizes the growth of CCI's loan approvals

over the last five years:

Table 2.1: LOAN APPROVALS 1973-1977

1973 1977No. Amount No. Amount %

Short Term (Up to 2 Years) (CFAF million) (CFAF million)

Vehicles 592 534 10 1,166 2,094 13

Consumer durables 7,483 648 12 12,305 1,915 12

Commerce and Industry 66 22 - 53 165 1

Other 1 1 - - - -

8,142 1,205 22 13,524 4,174 26

Medium and Long Term /1

Housing 1,756 3,690 68 904 7,653 48

Industry 82 168 3 72 3,178 20

Other 2 360 7 4 1,039 61,840 4,218 78 980 11,870 74

9,982 5,423 100 14,504 16,044 100

/1 Through 1975 medium term loans up to 7 years, thereafter up to 10.

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The level of CCI's annual financing operations increased from CFAF 5.4 bil-lion in FY 1973 to CFAF 16.0 billion in FY 1977. Over the last ten yearslending for housing has been decreasing relatively while credits to indus-trial enterprises have increased significantly. Lending for consumer durableshas been irregular while vehicle financing has increased, including in par-ticular credit to small Ivorian truc'king firms. Despite an increasingly widegeographic spread, the distribution of CCI's loan portfolio reflects Abidjan'sdominant position. In FY 1977 CCI's operations outside of Abidjan representedapproximately 40% of the total, double the proportion outside Abidjan inFY73. CCI's equity investments are limited, amounting to CFAF 275 million in8 companies, the largest participation being in CAPRAL (CFAF 124.8 million),a coffee and cocoa processing company.

2.16 Arrears. Despite its relatively long history, CCI's accounting andcomputer systems need improvement, particularly regarding payments on loansoutstanding. CCI classifies its loans as normal, doubtful or contentiousbased on the borrower's repayment record and a review of its financialcondition. Borrowers six months in arrears automatically are classified asdoubtful, and those against whom legal proceedings have begun are classifiedcontentious. At the end of FY 1977, CFAF 2.1 billion of principal andinterest due was in arrears. Of this amount CFAF 1.2 billion or 4.8% of theoutstanding portfolio was doubtful or contentious. The largest part ofaccounts in arrears (80%) affects housing loans, for which security is good.There are no arrears on industrial loans, and very few on automobile andconsumer durable loans (see Annex V). It is clear, nevertheless, that CCI'srecord management system for arrears requires extensive improvement to dis-tinguish between principal and interest in arrears and by the age of arrears.CCI's management is well aware of this, as are CCI's auditors, and both agreeto work to implement a new system.

2.17 Provisions. Provisions against loans amounted to CFAF 730 millionat the end of FY 1977 and CFAF 7.0 million for equity investments. Specificprovisions covered 62% of doubtful loans and 67% of contentious loans. Inaddition, there are three separate internal guarantee funds totaling CFAF 911million which provide additional amounts to cover possible loan losses forautomobiles, consumer durables and small-scale enterprises. Finally, a pro-vision for general risks is made each year to reduce taxes (see para. 2.18).This account amounted to CFAF 921 million in 1977. Based on this, and areview of selected accounts outstanding, CCI's auditors concluded that thelevel of provisions is adequate. The Bank concurs with this view.

2.18 Financial Performance. CCI's financial position is sound. Assetsreached CFAF 25.7 billion as of September 30, 1977, over a two-fold increasesince 1973. The debt equity ratio stood at about 5.1:1 as of end 1977,well below the 8 1/3:1 ratio agreed to under the first SME line of credit.As shown in Annex II, CCI's profits in 1977 amounted to CFAF 9.4 million.As a public institution which is not expected to pay dividends, CCI is notconcerned to show a profit after provisions but tries to maintain a solidbalance sheet: thus gross profit in excess of a nominal level is transferredto a tax-free general reserve account. Taking account of these transfers

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CCI's profit should be restated as CFAF 84 million, or a return of 2.2% onaverage net worth. Such transfers are limited in any one year to 5% of loansoutstanding and cumulatively to 10% of loans outstanding. At present reservesare well below these limits. Balance sheets, income statements and financialratios in Annexes II to IV detail CCI's financial condition.

2.19 Prospects. Financial projections and the assumptions on which theyare based are presented in Annexes I to III. These projections assume theassistance of this loan and a concomitant expansion of CCI's industrial lend-ing. CCI's pipeline of medium-scale industrial projects consists of over 12projects requiring about $10 million in financing from CCI. Of these projects,six to eight for about $3 million in financing would qualify as medium-scaleinvestments under the project. The remaining $2 million allocated to medium-scale projects would be committed to projects to be identified. In orderto meet its projected operations, CCI will have to mobilize about CFAF 18billion ($81 million) in the next five years. The proposed loan will coverabout 15% of this. The balance will continue to be provided by advances fromBCEAO, CAA and CCCE, as well as a proposed increase in equity. Over theforecast period CCI's profits and debt equity ratio remain satisfactory.

III. THE PROJECT

A. Concept and Objectives

3.01 The first SME project was designed to support IBRD objectives inthe industrial sector in Ivory Coast. These objectives include reinforce-ment of the local industrial and financial intermediaries, integration offinancial and non-financial assistance to Ivorian enterprises, provision offinancial resources to productive Ivorian enterprises and creation of employ-ment at a cost per job considerably below the existing average for theindustrial sector.

3.02 As a continuation of the first SME project, the proposed projectwill pursue these objectives further, especially to improve the institutionalsetting catering to the needs of SMEs in Ivory Coast by strengthening CCI,the local development bank specialized in lending to SME. It will also drawlessons from the experience gathered in the first project and expand therange of beneficiaries. As a result of developments in Ivory Coast and thefirst operation, it is clear that commercial banks are increasingly aggressivein searching out SME borrowers and providing them short- and medium-term loans.This has reduced somewhat CCI's natural clientele, and forced it to broadenits purview to include larger industrial borrowers, and informal sectorartisans. The increased competition among banks is of distinct benefit toborrowers and is supported by the Bank. Nevertheless, it does impose onCCI (and BIDI) certain obligations to ensure a wide and efficient range ofservices. This project, which involves an important institution buildingeffort, as well as providing resources for artisans, small- and medium-scaleentrepreneurs would help CCI meet these obligations.

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B. Description and Main Features

3.03 The proposed IBRD loan of $12.6 million would provide for:

(i) credit for modern sector small-scale enterprises($6 million);

(ii) credit for modern sector medium-scale enterprises($5 million);

(iii) credit for artisan's cooperatives ($1.0 million);

(iv) technical assistance for CCI ($600,000).

All firms supported by the project would be majority Ivorian-owned. Theproject will be implemented over a three year period.

Small-Scale Component

3.04 The project would finance about 37 small industrial investments.Out of the proceeds of the IBRD loan, $6 million will provide medium- andlong-term financing for fixed investment and permanent working capital insmall-scale enterprises. For purposes of the project, small-scale enterpriseswill be defined as Ivorian-owned projects with total investments of CFAF 75.0million ($340,000) or less. These projects would have a cost per job nohigher than the average of the first project. As in the first line ofcredit, project promotion and follow-up will be generally provided by OPEI.Firms in the preidentified branches from the first line of credit (e.g.baking, woodworking and garages) would continue to be financed but theperspective of CCI would be extended to other sectors. Promotion in some ofthese branches, like baking, has been effective enough to attain a level ofmarket saturation while other new sectors require finance and assistance.Among the sectors showing promising market potential, CCI intends to be moreactive in civil works, transport and wood-processing. Projects of thesetypes are reflected in the project pipeline.

Medium-Scale Component

3.05 Given its need to become more compettive with the commercial banks,CCI asked the Bank that funds be provided for the financing of economicallysound medium-scale industrial projects. CCI's promotional effort in thisfield began only recently. Nevertheless, based on a preliminary pipelinereviewed during appraisal, CCI should be able to promote about ten medium-scale industrial projects in a three-year commitment period. These projectsare expected to average a total investment cost of CFAF 220 million ($1 mil-lion), and will be mainly oriented toward the transformation of local re-sources. Among the projects under consideration by CCI are a tannery, asoap factory, a saw mill, a piggery, a dairy and a label printing factory.Although no cost per job threshold will be established for the medium-scalecomponent, all projects will be economically sound.

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3.06 The involvement of CCI in medium-scale industrial projects, althoughjustified for institutional reasons, raises the question of its competitionwith BIDI, another Ivorian development bank which has also been supported bythe World Bank Group. In view of the size and vigor of Ivory Coast's privatesector, two DFCs are justified as long as their respective fields of inter-vention are reasonably clearly defined. BIDI and CCI have traditionallyconcentrated on different borrowers. BIDI's operations have been for mostlylarger-scale investments while those of CCI have been for small. In orderto preserve the integrity of these operational spheres and to avoid unduecompetition between CCI's growing medium-scale activities and BIDI, theproceeds of the credit to CCI would be used only for projects of firms withtotal investment under CFAF 300 million ($1.36 million).

Artisans Component

3.07 Support to artisans in the Ivory Coast is the responsibility of theMinistry of Tourism. Training of artisans began some years ago at variouscenters throughout the country. Recently the Ministry of Tourism has beenrestructured and strengthened so as to expand opportunities for graduates ofthese centers. As a result, over the next five years the Ministry of Tourismproposes to construct four new regional artisanal promotion centers linked toa sales hall in Abidjan and ten artisanal cooperatives linked to existing ornew training centers. The four promotion centers will be located in Aben-gourou, Man, Korhogo and Yamoussoukro and will provide training, raw materialsand marketing services. As for the cooperatives, the Ministry of Tourismwill work directly with artisans to help them establish themselves as coop-eratives and will ensure follow-up assistance. In line with this a detailedsurvey of the artisan sector and its potential is being carried out by anoutside consultant.

3.08 Among the ten artisanal cooperatives to be developed, two have beenpreappraised. The two include a multi-purpose cooperative in Grand Bassam,which will produce wood, textile and metal handicrafts, largely for sale totourists. The second in Agboville will group together graduates of a train-ing center which concentrates on rattan furniture making. Output of thecooperative would be sold in the local market. Artisanal cooperatives havesignificant positive features not only in terms of generating employment ata relatively low cost per job, but doing so in smaller cities and for women.Based on detailed appraisals of the two prepared cooperatives, the cost perjob for them would be about $2,700, and the average investment cost percooperative about $250,000. The proposed investment cost for the coopera-tive program, not including the regional promotion centers or the expatriatetechnical assistance being secured from other lenders, would be $2.5 mil-lion. Under the project, a special fund for artisans of $1.0 million wouldbe channeled through CCI to finance the investment and working capital offour cooperatives. Grand Bassam and Agboville would be the first two ofthese. Katiola (pottery)--which is expected to employ exclusively women--and Waragnene (weaving) are likely to be the other two. All of the projectswould be prepared by the Ministry of Tourism in collaboration with CCI, andshould be replicable on a far wider scale in the future.

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Financing Plan

3.09 It is expected that CCI wi:Ll finance about 37 small-scale subproj-

ects, 10 medium-scale subprojects and 4 artisan subprojects. The financing

plan expected for subprojects under the line of credit is presented below:

Table 3.1: SUBPROJECT FINANCING PLAN

Small-Scale Medium-Scale Artisans

Investment Investment Subprojects

CFAF US$ % CFAF US$ % CFAF US$ %

(millions) ('000) (millions) ('000) (millions) ('000)

Average TotalInvestment 44.6 203 100 220 1,000 100 69 310 100

Average CCIFinancing 35.6 162 80 176 800 80 62 280 90

of which IBRD: 35.6 162 80 110 500 50 62 280 90

Contribution ofEntrepreneurs 9 41 20 44 200 20 7 30 10

Number of sub-projectsexpected 37 10 4

Total Cost ofSubprojecs 1,650 7,500 100 2,200 10,000 100 276 1,240 100

of whichIBRD: 1,320 6,000 80 1,100 5,000 50 250 1,100 90

Technical Assistance to CCI

3.10 In order to strengthen CCI's development operations, $600,000 would

be allocated to finance the foreign exchange cost of a technical assistance

program which would include two components. First, to upgrade CCI's financial

management and financial analysis capability, $300,000 would be provided to

finance various programs of advanced and specialized financial training for

CCI's staff. These programs will be run by external consultants over a two-

year period, and would require about 18 man-months of time, costing $150,000.

The Bank would also finance the cost of scholarships ($150,000) for some of

CCI's staff who will be sent for training abroad. Second, in line with CCI's

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intention to become more active in the industrial sector, and its need tosupervise more closely physical implementation of medium-scale projects, theBank would finance the foreign costs of an expatriate advisor experienced insmall- and medium-scale industry for three years ($300,000).

Terms and Conditions

3.11 Proposed terms and conditions are as follows:

(a) The proposed Bank loan of $12.6 million will be lent to CCIfor 15 years including three years of grace. The amortizationof the loan would be equal semi-annual payments of principaland interest. A fixed amortization schedule is justifiedto provide CCI with additional local resources. The Bank'sstandard commitment fee of 3/4 of 1% would apply.

(b) As in the first loan, the foreign exchange risk will be borneby the Government through CAA for a fee of 1%.

(c) The terms of CCI's subloans will be flexible with a maximumof 15 years and a minimum of 3 years; terms are expected toaverage 8 years including 2 years of grace.

(d) The free limit for subloans to be financed under the small-scale component would be CFAF 40 million ($180,000). Thiscorresponds to the free limit in the first project. Therewill be no free limit for artisans and medium-scale sub-projects which will have to be approved by the Bank.

(e) CCI's onlending rate for small- and medium-scale enterpriseswould be 12.5% including 1% to CAA to cover the foreignexchange risk. In accordance with BCEAO guidelines, loansto artisans and small-scale enterprises with outstandingcredit under CFAF 20 million will carry an interest rate of8.5%. This definition of small-scale enterprises has notbeen altered since 1975 to keep pace with inflation and is notlikely to be altered in the near future. Therefore, the numberof firms eligible for this low rate in the second project willbe reduced and is not likely to represent more than 15% of thetotal enterprise projects. CCI will therefore, have no diffi-culty in subsidizing interest rates internally without recourseto the subsidy fund used in the first project, but which hasbeen suspended for future obligations. Loans to artisanalcooperatives would be guaranteed by the Fonds de Garantie.

(f) Other customary covenants and conditions would be included inthe loan agreement. As in the first project CCI's debt/equityratio will be limited to 8 1/3:1.

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Special Features

3.12 To reinforce the project's institutional objectives, agreement wasreached with CCI on the following points:

(a) Economic Analysis. CCI agreed to calculate economicrates of return for all subprojects that it finances.

(b) Cost per Job. Although higher than expected, the averagecost of $9,300 per job created in the first SME projectis considerably below the estimated average cost per jobin the industrial sector, and roughly double the UPP levelfor Ivory Coast ($4,100). The proposed project would gofurther toward decreasing the cost of employment generationby: 1) using the average cost per job in the existingproject as a ceiling in the second; and 2) financing artisancooperatives at an average cost per job of $4,000 or lower.

(c) Training. CCI submitted to the Bank a detailed program ofinternal and external training of its staff in financialmanagement and financial analysis.

(d) Loan Recovery. CCI will undertake a review of subloans inarrears by more than six months to determine the reasons fornonrecovery and to propose adequate measures to resolverecovery difficulties. The conclusions of this study willbe reviewed by the Bank.

(e) OPEI. The Government of Ivory Coast will prepare a study onthe effectiveness and efficiency of OPEI.

3.13 Project Costs and Financing. Total project costs are estimated tobe CFAF 4.3 billion ($19.5 million) of which 65% or CFAF 2.8 billion ($12.7million) is foreign costs. The Bank's share in project financing would be$12.6 million (64%) or slightly less than the total foreign component. Forcredit to small scale enterprises, CCI's normal financing would comprise 80%of total project costs with the remainder representing owner's equity. TheIBRD would finance the full amount of CCI's credit. This is justified toprovide an incentive for CCI to concentrate its efforts on the small scalemodern sector. For credit to medium-scale enterprises the Bank would finance50% of total project cost (roughly 62% of CCI's loan), which is less thanthe estimated foreign exchange cost of the subprojects. Loans to artisanalcooperatives for infrastructure development would cover 90% of project cost.The remainder would be provided (sometimes in kind) by members of thecooperatives. For the technical assistance component the IBRD would meetforeign costs up to $600,000, the local costs being met by CCI.

Organization and Implementation

3.14 All subloans would be subject to appraisal by CCI. Technicalassistance from OPEI would be provided to subborrowers as and when needed.

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CCI could require a subborrower to obtain such assistance when deemedappropriate. The coordination committee set up under the first line ofcredit to review the subprojects and which consists of representatives fromCCI, OPET and the commercial banks, will be maintained.

Monitoring

3.15 CCI will be required to submit to the Bank regular operational andfinancial reports. For CCI these requirements cover normal DFC informationincluding quarterly financial statements, arrears and resource positions,operations (approvals, commitments and disbursements) and annual reports andaudit. Operational reports will also be required on recruitment and training.For OPEI reporting requirements would include annual reports.

Technical Assistance

3.16 The qualifications, terms and conditions of employment of theadvisor and short-term consultants financed under the project will be subjectto IBRD approval. Provision would be made to finance three man years ofadvisor and 18 manmonths of short-term consultant for training and special-ized advice at an average cost of $8,300 per month, of which 60% ($5,000)represents salary and the remainder overhead.

Procurement

3.17 The purchase of equipment and goods under the project is not suit-able to international competitive bidding given the nature and small size ofsubprojects to be financed and goods to be procured. CCI is expected tofollow local procurement procedures which are adequate to ensure that goodsand services are suitable and reasonably priced.

Disbursement

3.18 Disbursements would be made on the following basis:

(a) subloans to (i) small-scale enterprises and artisans, 100%of CCI's subloans; (ii) medium-scale enterprises 50% oftotal investment amounts; and

(b) technical assistance, 100% of foreign expenditures; stafftraining, 100% of expenditures.

Benefits and Justification

3.19 The project will provide for the continuation and the improvementof the actions in favor of small-scale Ivorian enterprises undertaken inthe first line of credit. It will also set up a scheme for the financingof artisans which is expected to be replicable on a larger scale in thenear future and will help CCI broaden its clientele toward medium size firms.The project will reinforce CCI's appraisal capability through technical adviceand staff training. By providing financing for medium-scale projects it will

- 23 -

allow CCI to diversify its activities and strengthen its position in thefinancial community.

3.20 In terms of investments the project is expected to support about 37small-scale projects representing investments of CFAF 1,650 billion ($7.5 mil-lion), about 10 medium-scale projects representing investments of CFAF 2,200billion ($10.0 million), and four artisan cooperatives representing investmentof CFAF 276 million ($1.2 million). These investments will generate directemployment for about 2,300 persons at a cost for small-scale enterprises andartisans far below the industrial average. An interesting feature of theproject will be the creation through the artisan component of approximately100 jobs for women potters at a cost of approximately $1,000 per job. Indirectemployment effects, while not measured, will also be important.

3.21 Among its unquantifiable benefits, the project will help reinforcelocal financial intermediaries and encourage the promotion of small Ivorianentrepreneurs by providing them with much needed technical assistance andfinancing.

Risks

3.22 In designing this project, full account has been taken of thelessons learned from the first project, thereby reducing the risk that projectbenefits may not be realized as expected. However, the project will stillface two risks. First, with respect to the artisan component, there is apossibility that the implementation of the proposed program will be slowerthan envisaged, owing to a lack of familiarity of artisans with the formalcircuits of credit and of CCI with this new type of operation. The groupingof artisans into cooperatives with the help of the Ministry of Tourismshould reduce this potential risk. Second, for the small-scale componentthe establishment of a target for cost of job creation will entail an addi-tional burden for OPEI and CCI in the promotion of these projects. However,OPEI and CCI recognize the importance of this feature and would agree to meetthe proposed target.

IV. RECOMMENDATIONS

4.01 A loan of $12.6 million to Credit de la Cote d'Ivoire (CCI), withthe guarantee of the Republic of Ivory Coast is recommended. An appropriateterm for the loan is 15 years with 3 years grace.

4.02 During negotiations agreement was obtained on the following points:

(a) on-lending terms to subborrowers at an interest rate of12.5% except for small borrowers (as defined by the BCEAO)which would pay 8.5% (para 3.11);

- 24 -

(b) the foreign exchange risk to be borne by CAA for a fee of1% (para 3.11);

(c) restriction of subloans to majority Ivorian owned enter-prises (para 3.03) and in the case of small scale firmto those with investment costs below CFAF 75.0 million(para 3.04);

(d) calculation of economic rates of return for all projects(para 3.12);

(e) promotion of small-scale projects which have a cost perjob of $9,300 or less (para 3.12);

(f) medium-scale loans would not finance investments aboveCFAF 300 million (para 3.06); and

(g) loans to artisanal cooperatives would be guaranteed by theFonds de Garantie (para 3.11).

4.03 With these conditions fulfilled the project would be suitable fora World Bank loan of $12.6 million.

ANNEX I

- 25 - Page 1 of 3

cci

Assumptions for Financial Forecasts

1. Forecast of Development Loans Approved (in CFAF 000's)

1977 1978 1979 1980 1981 1982 1983

-Short Term/-l

Automobile 2,094 2,408 2,769 3,184 3,662 4,211 4,643

Consumer Durable 1,915 2,106 2,317 2,549 2,804 3,084 3,392

4,009 4,514 5,086 5,733 6,466 7,295 8,035

-Medium Term /2

Housing 3,011 3,312 3,643 4,007 4,406 4,845 5,330

Commerce and Industry(including SSE's) 3,508 4,236 4,744 5,217 5,845 6,546 7,332

Public Enterprises 4,642 4,000 4,000 4,000 4,000 4,000 4,000

11,435 11,548 12,387 13,224 14,251 15,391 16,662

- Long Term/3

Hotels 1&039 1,000 800 600 600 600 600

16,044 17.062 18,273 19,557 21,317 23,286 25,297

- Equity Participations are expected to amount to 50 million francs CFA every year.

2. Commitments and Disbursements

- Approvals will be commLitted as follows:

. Automobile and Consumer durables: 100% of approved amountin year of approval;

. Other projects: 70% of approved amount in year of approval aand 30% in the nex;t year;

Equity participati-on: 100% in the year of approval.

1/ Up to 2 years.

2/ From 2 to 10 years according t:o the new BCEAO regulations.

3/ Over 10 years.

ANNEX I

- 26 - Page 2 of 3

- Commitments will be disbursed as follows:

. Short term: 100% in year committed:

. Medium term: 60% in year committed and 40% the next year;

. Hotels: 40% in year committed, 40% the second year and 20%the third year.

3. Terms

- Consumer durables: 1 year without grace;

- Automobile: 2 years without grace;

- Medium term: 7 years including one year of grace;

- Hotels: 12 years including 2 years of grace.

4. Revenues

Interest and commission received on development portfolio isexpected to average 11% per annum on medium term loans and 12% on longterm loans.

5. Resources

-Current liabilities are expected to grow at the rate of 15%per annum;

- Deposits are expected to grow at the rate of 10%;

- Rediscounting is to amount to 35% of the portfolio (BCEAO ceiling);

- Normal borrowings from CAA are projected to increase at the rateof 10%;

- The need for further resources is expected to be covered by thesecond IBRD SSE loan to the extent of approximately 45% and therest (shown as unidentified) by special loans from CAA to financethe high level of housing finance provided by CCI.

6. Financial Charges

Interest on old borrowings amounts to 7.5% of the average outstand-ing balance; interest on new borrowings averages 8%.

7. Personnel and Administrative Expenses

They will grow at 15% a year to reflect increased staffingtechnical assistance and development of CCI's activities.

8. Provisions are increased each year to remain at 2,5% of the out-standing portfolio.l/ 85% of the gross income is then allocated to reservesand general provisions so as to decrase income tax.

1/ 5% of the total loans portfolio is set aside as doubtful loans and provisions tocover losses on thiese loans are made at the rAte of 50%.

ANNEX I- 27 - Page 3 of 3

9. Fixed Assets remain constant until 1979 and increase by 50 milliona year thereafter.

10. Dividends. CCI does not distribute dividends.

11. Taxes. Income tax is 33% of net profit.

12. Capital. To maintain a sound debt equity ratio, the capital ofCCI is expected to double in 1979 by cash subscription.

IVORY COAST

CREDIT DE LA COTE D'IVOIRE

Income Statement(CFA million)

Actual Projected1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Revenues

From interest & commissions 68/: 871 1,099 1,659 2,052 3,003 3,645 4,392 5,101 5,667 6,073From investments 17 19 21 37 53 61 70 77 86 95 103Others 74 89 178 168 59 62 65 68 72 75 79

TOTAL 775 979 1,298 1,864 2,164 3,126 3,780 4,537 5,259 5,837 6,255

Expenses

Personnel 145 182 236 280 402 462 531 611 703 808 925Administrative 136 175 183 224 255 293 337 384 445 513 590Depreciation 19 30 39 60 65 65 70 75 80 51 30

Interest on borrowings 326 432 581 824 1,185 1,690 2,106 2,567 2,938 3,250 3,288Specific provisions 11 18 206 205 138 36 164 179 145 111 67General provisions 130 132 24 246 76 493 486 610 806 938 1,152

TOTAL 767 969 1,269 1,839 2,120 3,039 3,694 4,429 5,117 5,671 6,052

Gross income 8 10 29 26 44 87 86 108 142 166 203Extraordinary gains (or losses) (3) (5) - - (34) - - M -

Profits before income tax 5 5 29 26 10 87 86 108 142 166 203Income tax 1 1 17 22 1 29 29 36 47 55 68Net profit 4 4 12 3 9 58 57 72 95 111 135

a b A

- 29 - ASEX ',I

rV090Y COASr

Iredit de la Cote d'Ivoire

Balance Sheets(CPA million)

Actual Projected

1973 1974 1975 1976 1977 1978 1979 198C 19S1 1982 1998

Assets

.urrent:

Cash end Banks 221. 163 131 579 843 919 1,056 1,078 1,205 1,356 1,588Others 35 99 183 ss8 188 401. 461 530 609 701. 30E

2S6 262 317 837 1,031 1,320 1,517 i,6o 1,381 2,057 2,39L

Investments:

Short-term loans 1,20o4 1,494 1,365 3,359 4,717 s,463 6,16 6,942 7,835 e,8so 9,513

Medium-ter oans 35853 S,730 7,921 9,971 18,832 22,228 27,o60 52,4i6 36,552 39,408 40,726Long-term~ 4,960 5,6o3 6,191 7,179 163 66o 1,375 2,053 2.516 2,869 3,142

Sub-total 10,017 12,827 15,477 20,509 23,717 28,359 34,591 41,411 06,903 51.126 53,681

doubtful loans 647 741 948 993 1,185 1,400 1,728 2,087 2,376 2,598 2,732less provisions (358) (461) (561) (664) 730 (700) (864) (1,043) (1,188) (1,299) (1.366)

Net loans 1C,306 13,107 iS,864 20,837 24,142 29,059 35,45s 42.455 48,091 52,425 55,047

lnvestments 49 75 89 237 287 342 392 442 492 542 592

Fixed Assets (net) 169 234 287 300 226 206 lBl 151 150 170

TOTO, ASSETS 10,780 13,680 16,524 22,149 25,753 30,939 37,570 44.686 5o,s48 55,174 53,203

LIabiltties

Current:

Accounts payable 126 180 344 841 1,052 982 1,129 1,258 1,498 1,717 1,975Current sturities and borrowings 1493 16 602 1,092 1,600 1,800 1,900 2,300 2,800 3,200 3,500Deposits 214 135 160 - 233 4,779 5,060 5,566 6,123 6,735 7,408 8,145

833 1,031 1,106 2,166 7,431 7,842 8,595 9,681 11,028 12,305 13,620

3orrowings:

BCEAO 3,205 4,833 6,524 8,505 7 962 9,522 12,711 15,224 16,416 17,894 19,744CCOS 3,469 3,4514 3,356 3,381 2,88w 2,417 2,147 1,577 1,607 1,337 1,o67CAA. 1,123 2,005 2,8141 4,206 4,509 4,707 5,178 s,6s35 6,265 6,891 7,580uSAID 67 205 231 402 382 362 342 322 302 282IBRD SSE I - - - - 12 392 1,126 1.031 935 841

IBE0D/T - - - 54 572 1,325 2,039 2,175 1,995 1,815V3RD SB! II- - - - - 1,002 2,000 a,85o 2.64o

Unidentified - 2,300 1,097 1,549 2,946 3,05B8 1.73

7,797 10,367 12,926 16,326 15,815 19,912 23,212 28,812 32,762 35,262 35,812

less current maturities _-_ _ _ (1.600) (1.800) {l. 9M) (2.300) (2,B00). (5.20D) (3.500)

borrowings (oet) 7,797 10,367 12,926 16,326 14,215 18,112 21,312 26,512 29,962 32,062 32,312

Equity:

Guarantee Fund 605 687 768 917 1,112 1,351 1,486 1,634 1,798 1,978 2,175Share Capital 1,000 1,000 1,000 i,881 2,000 2,000 4,000 4,000 4,0oo 4,000 4,0D0

Reserves, retained profits and general provisions 548 596 724 870 9CS 1,634 2,177 2,85 3,760 46809 6

?_ 2.285 3O4q2 5.668 4,107 .85 7,66 9.558 10.78 12.271

TOTAL LIABILITIEl 10,780 13,680 16,524 22,149 2S,753 30,939 37,570 44,686 50,548 55,174 58,203

* j/ Unaudited for FY 1977.2 Consistent with changes in BCEAO definitions after 1976. Medium-term loans comprise aL loans between 2 and 10 years and long-tern loans comprise sll loans

over 10 years.

IVORY COAST

CREDIT DE LA COTE D'IVOIRE

Actual and Projected Financial Ratios

Actual Projected1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Income and expenses as_%of average total assets

Gross Income 7.4 8.0 8.6 9.6 8.7 11.1 10.8 11.0 11.1 11.1 11.0Financial Expenses 3.1 3.5 3.8 4.3 4.7 6.0 6.0 6.2 6.2 6.2 5.8Administrative Expenses 2.9 3.2 3.1 2.9 2.6 2.9 2.7 2.6 2.6 2.6 2.7 oProvisions and Others 1.0 0.8 1.3 1.3 1.3 1.9 1.8 1.9 2.0 2.0 2.2Taxes - - 0.1 0.1 - 0.1 0.1 0.1 0.1 0.1 0.1Net Profit 0.4 0.5 0.2 1.2 0.1 0.2 0.2 0.2 0.2 0.2 0.2

Profit as % of Share Capital 0.4 u.4 1.2 0.2 0.5 2.9 1.4 1.8 2.4 2.8 3.4Profit as % of average equity 0.2 0.2 0.5 ) I 0.2 1.3 0.9 0.9 1.1 1.1 1.2

Debt/Equity Ratios

Term debt/equity 3.6 4.5 5.1 4.5 3.3 3.7 2.8 3.2 3.2 3.1 2.8Total debt/equity 3.9 4.9 5.6 5.1 5.1 5.3 4.0 4.3 4.4 4.3 3.9

ANNEX V- 31 -

IVORY COAST

Credit de la Cost d'Ivoire

Arrears Position(as of September 30, 1977)

Percentage of Total arrears X of total % of totaloutstanding in % of sectoral arrearsportfolio outstanding outstanding

portfolio portfolio

Housing 44.27 3.68 8.31 79.1

Industries 16.77 -

Public Sector 14.74

Automobiles 10.97 0.11 0.10 2.3

Consumer Durables 8.00 0.13 0.16 3.1

Commerce and Artisans 2.68 0.39 14.55 8.6

Other 2.57 0.31 12.06 6.9

TOTAL 100.00 4.62 4.62 100.0

- 32 -ANNEX VI

ORGANIZATION CHART

CREDIT DE LA COTE D'IVOIRE

DirectorGeneral

Deputy

DirectorGeneral

Computing Inspector

Services General

Branches

Diretof r Director Directorof of ~~~~~~~~~~~~~~~~~of

Investments Administration Finance

Investments Loan ~~Personnel dnistrative Finance kccounting

Recovery and Support~~~~~~~~~~~~~~~~~~

- 33 - ANNEX VIIPage 1 of 3

IVORY COAST

CREDIT DE LA COTE D'IVOIRE

Extracts of Policy Statement

Article 2 - Duration of Loans

The duration of loans and guarantees granted by the Credit dela Cote d'Ivoire shall not exceed the duration of the resource used tofinance them.

Article 4, para. 4 - To every loan application submitted to theBoard the Managing Director shall attach a memorandum setting out conciseand complete information on the prospective borrower, his financial situ-ation, income, occupation, the purpose of the loan, the proposed debtservicing schedule, etc.

Article 7 - Commitments

As a general principle, the total sum taken up in loans grantedby the Credit de la Cote d'Ivoire to a single business enterprise (butexcluding those guaranteed by the State), together with participationstaken up and all other commitments of a financial nature entered intoin respect of that enterprise, shall not normally exceed 25% of Credit funds.

Article 8 - Foreign exchange risks

Credit de la Cote d'Ivoire shall take adequate steps to protectitself against foreign exchange risks associated with its borrowingsabroad.

Article 9 - Loan procedures, paras.l and 2 -

Credit de la C^te d'Ivoire shall demand that its borrowers adoptaccounting procedures consistent with good management practice. Under theterms of the loan agreements into which it enters, the Bank shall ensure itis in a position to exercise regular first hand supervision of the business

* firms and organizations that benefit from its assistance.

It shall be a general rule that loans granted by the Credit de laCo^te d'Ivoire shall not be disbursed directly to the borrowers but shallbe paid to contractors and suppliers to whom the borrower is indebted.

Article 10 - Organization, para. 1 -

Credit de la Cote d'Ivoire shall make all reasonable efforts tofoster and maintain a sound, well-balanced organizational system, and amanagement team qualified to judge the financing projects submitted to it,assist business firms with their project preparation and supervise projectexecution. To this end, the Bank shall pay particular attention to trainingits higher-level staff both locally and abroad.

- 34 - ANNEX VIIPage 2 of 3

Article 11 - Value of participations

Credit de la C8te d'Ivoire may take up participations in thecapital of public or private corporations, but they shall not normallyexceed 25% of the capital of such corporations.

Credit de la Cote d'Ivoire shall not normally take on themanagement of business enterprises to which it lends financial assistance.However, if the Board of Directors is in unanimous agreement, and providedthat the Minister of Economic Affairs and Finance approves, the Bank maytake up participations beyond the limit specified in the foregoing paragraphand may even assume managerial responsibility when the prevailing circumstancesand the nature of the venture warrant it.

Article 26 - Types of operation

Short, medium or long-term loans may be granted on the generalconditions specified in Title I of these By-laws to commercial, craftor manufacturing enterprises and to members of the professions.

The purpose of such loans shall be to finance equipment programs.They shall be designed to cover true investment and not the purchase ofcapital assets or existing property. Nevertheless, so as to foster thetransfer of production activities into the hands of Ivory Coast nationals,the Board of Directors may approve loans for the purchase of businessventures on such conditions and terms as it shall determine.

Article 27 - Amoulnt and duration of loans, paras. 1, 2 and 3

In fixing the amount and duration of a loan it proposes to grant,the Credit de la Co^te d'lvoire shall bear in mind the total financialrequirements of the project in question and the financial status of theborrowing enterprise.

In principle, the financial assistance lent by Credit de la Coted'Ivoire shall not exceed 50% of total project cost. However, the Bankmay go beyond this limit when special circumstances warrant it, althoughin no case shall Bank financial assistance be greater than 80% of the totalproject cost. The Bank shall ensure that the promoter of the projectfurnishes a reasonable stake in the form of self-financing or some priorcontribution to execution of the project.

As far as loans to craftsmen are concerned, the extent of thepersonal contribution shall be assessed as follows:

- From CFAF 500,000 to 1 million 5%

- From CFAF 1 million to 2 million 15%

- Over CFAF 2 million 20%

- 35 - ANNEX VIIPage 3 of 3

Article 30 - Loan procedures

Under normal circumstances, loans to business firms shall notentail disbursement direct to the beneficiary. Funds shall be disbursedto suppliers of materials and works contractors.

Article 31 - Guarantees, para. 1

A loan to any business firm shall. automatically call for anappropriate real or personal surety. Goodwill or equipment offered ascollateral, or fire or life insurance policies, shall be considered asno more than subsidiary guarantees.

ANNEX VIII

- 36 -

IVORY COAST

Estimated Disbursement Schedule

(US$'000)

Fiscal Year Quarterly Cummulative

1980: 1st quarter 252nd quarter 1503rd quarter 2254th quarter 325 725

1981: 1st quarter 3502nd quarter 3503rd quarter 3754th quarter 425 1,500

1982 1st quarter 6502nd quarter 7503rd quarter 9004th quarter 1,200 5,000

1983 1st quarter 1,4002nd quarter 1,5003rd quarter 1,5004th quarter 1,200 10,600

1984 1st quarter 1,0002nd quarter 7003rd quarter 2004th quarter 100 12,600

ANNEX IX- 37 -

I'ORY COAST

Selected Documents Available in Project File

A. Sector Reports and Studies

1. Abidjan: Urban Development and Employment in the Ivory Coast,1976, ILO.

2. Centrale de Bilans: 1976, Republic of Ivory Coast, Ministry ofEconomy, Finance and Plan, 1977.

3. Programme des Investissements Publics: 1977-1979, Republic ofIvory Coast, 1977.

4. Propositions des Mesures et d'Action en Faveur des P.M.E. Ivoirienne,1977, Department of Industry.

5. Review of Financial Institutions in Ivory Coast, IBRD.

B. Project Related Documents

1. CCI annual reports and audited accounts.

2. OPEI annual reports.

3. Subproject submissions.

4. Recommendations Relatives a l'Amelioration des ProceduresAdministratives et Comptables et au Renforcement duControle Interne, 1978, Arthur Anderson.

5. Pre-Etude sur la Collecte de l'Epargne en C^ote d'Ivoire, 1977,SEDES.

6. CCI - Statuts, Reglements Interieurs.

7. CCI - detailed data on staffing, internal procedures, operations.

8. CCI - detailed tables on arrears by sector and term.

9. CCI - list of medium-scale projects in the pipeline.