Translated document
AFRICAN DEVELOPMENT FUND
PROGRAMME : INCLUSIVE GROWTH AND ECONOMIC
COMPETITIVENESS SUPPORT PROGRAMME (PACICE)
COUNTRY : SENEGAL
APPRAISAL REPORT
Appraisal Team
Team Leader: Ahmed Ismail MAHDI, Chief Financial Analyst, OSGE.1/SNFO
Sector Director: Regional Director: Division Manager: Resident Representative:
Isaac LOBE NDOUMBE, Director, OSGE Franck PERRAULT, Director, ORWB Jean-Luc BERNASCONI, Division Manager, OSGE.1 Leila MOKADEM, Regional Resident Representative, SNFO
OSGE DEPARTMENT
June 2013
TABLE OF CONTENTS
I. THE PROPOSAL ......................................................................................................... 1
II. COUNTRY AND PROGRAMME CONTEXT ......................................................... 2 2.1. Recent Political and Socio-economic Developments, Perspectives, Constraints and
Challenges .................................................................................................................. 2
2.2. Bank Group Portfolio Status ...................................................................................... 5
2.3. Government’s Overall Development Strategy and Medium-term Reform Priorities 5
III. RATIONALE, KEY DESIGN ELEMENTS AND SUSTAINABILITY ............. 6 3.1. Links with the CSP, Analytical Underpinnings and Country Readiness Assessment 6
3.2. Collaboration and Coordination with Other Donors .................................................. 7
3.3. Outcomes of Past and On-going Similar Operations and Lessons ............................. 8
3.4. Relationship to On-going Bank Operations ............................................................... 8
3.5. Bank’s Comparative Advantage and Value-added .................................................... 9
3.6. Application of Good Practice Principles on Conditionality ....................................... 9
3.7. Application of the Bank Group policy on Non-concessional Loans .......................... 9
IV. THE PROPOSED PROGRAMME ........................................................................ 9 4.1. Programme Goal and Objectives ................................................................................ 9
4.2. Programme Components, Operational Objectives and Expected Results .................. 9
4.3. Financing Needs and Arrangements ........................................................................ 14
4.4. Programme Beneficiaries ......................................................................................... 14
4.5. Impact on Gender ..................................................................................................... 14
4.6. Impact on the Environment ...................................................................................... 15
V. IMPLEMENTATION, MONITORING AND EVALUATION ............................ 15
5.1. Implementation Arrangements ................................................................................. 15
5.2 Monitoring and Evaluation Arrangements ............................................................... 16
VI. LEGAL DOCUMENTATION AND AUTHORITY ........................................... 16
6.1. Legal Documentation ............................................................................................... 16
6.2. Conditions Precedent to Bank Group Intervention .................................................. 16
6.3. Compliance with Bank Group Policies .................................................................... 16
VII. RISK MANAGEMENT ......................................................................................... 17
VIII. RECOMMENDATION ......................................................................................... 17
i
Tables
Table 1: Macroeconomic Indicators
Table 2: Status of the Portfolio as of end-April 2013
Table 3: Eligibility Conditions for Programmatic Support Operations
Table 4: Financial Requirements
Table 5: Risks and Mitigation Measures
Annexes
Annex 1: Government’s Policy Letter
Annex 2: Matrix of PACICE Measures Extracted from the Matrix
of ACAB TFP Members
Annex 3: Statement on Country Relations with the IMF
Annex 4: Key Macroeconomic Indicators
Currency Equivalents
April 2013
Currency Unit CFAF
UA 1 USD 1.5
UA 1 EUR 1.17
UA 1 CFAF 767.38
Fiscal Year
1 January – 31 December
ii
Acronyms and Abbreviations
ACAB Budget Support Framework Arrangement
ADEPME Small- and Medium-sized Enterprises Development Agency
ADF African Development Fund
AfDB African Development Bank
ANSD National Agency for Statistics and Demography
APR Annual Performance Report
BCEAO Central Bank of West African States
BNDE National Bank for Economic Development
CCHS Joint Committee for the Harmonisation and Monitoring of Reforms
CNRF National Land Reform Commission
CODE Committee on Operations and Development Effectiveness
CPI Presidential Investment Council
CPIA Country Policy and Institutional Assessment
CSP Country Strategy Paper
DASP Private Sector Support Directorate
DEEG Equity and Gender Equality Directorate
DGD General Directorate of Customs
DGID General Directorate of Taxation and Lands
DMC Money and Credit Directorate
DPEE Forecasting and Economic Studies Directorate
DREAT Delegation for State Reform and Technical Assistance
EITI Extractive Industries Transparency Initiative
EPSI Economic Policy Support Instrument
ERSP Economic Reform Support Programme
ESPS Poverty Monitoring Survey in Senegal
FONGIP Guarantee Fund for Priority Investments
GDP Gross Domestic Product
GII Gender Inequality Index
HDI Human Development Index
IMF International Monetary Fund
ISA Senegalese Institute of Administrators
MCA Millenium Challenge Account
MEF
MINEFI
Ministry of Economy and Finance
Ministry of Economy and Finance
MSE Micro- and small-scale enterprises
OECD Organisation for Economic Cooperation and Development
ONP National Parity Observatory
PACICE Inclusive Growth and Economic Competitiveness Support Programme
PAMOCA Cadastral Survey Modernization Support Project
PAP Priority Action Plan
PAPSP Private Sector Promotion Support Project
PCRBF Budget and Financial Reforms Coordination Project
PEFA Public Expenditure and Financial Accountability
PPP Public-Private Partnerships
PRBF Budget and Financial Reform Plan
iii
PRSP Poverty Reduction Strategy Paper
PTIP Triennal Public Investment Programme
REP Regional Economic Programme
SME Small- and Medium-sized Enterprises
SMTEF Sector Medium-Term Expenditure Framework
SNDES National Strategy for Economic and Social Development
SNEEG National Strategy for Equity and Gender Equality
SNFO Bank’s Regional Office in Dakar
TFP Technical and Financial Partners
UA Unit of Account
UNDP United Nations Development Program
WAEMU West African Economic and Monetary Union
iv
Loan Information
Client Information
BORROWER : Republic of Senegal
EXECUTING AGENCY : Ministry of Economy and Finance
Financing Plan
Source Amount (UA million) Instrument
ADF loan 25.54 Budget support
IDA WB loan 19.93 Budget support
ADF Financing Information
Grant/loan currency
UA
Type of interest rate Not Applicable
Base rate Not Applicable
Interest rate margin Not Applicable
Financing margin Not Applicable
Commitment fee (loan) 0.50%
Servicing fee (loan) 0.75%
Loan maturity 50 years
Grace period (loan) 10 years
Indicative Schedule
Activities Date Concept Note approval (OpsCom) 14 March 2013 Appraisal mission 25 March -5April 2013 Negotiation of loan and grant agreements 16 May 2013 Board presentation June 2013 Effectiveness June 2013 Disbursement of the single tranche July 2013 Completion report December 2014
v
Programme Executive Summary
Programme
Overview Programme Title: Inclusive Growth and Economic Competitiveness Support Programme (PACICE) Geographical Scope: Senegal – Nationwide Program Objective: Create appropriate conditions that guarantee sustainable and inclusive economic
growth by mainstreaming the gender and job-creation dimensions through improvement of economic
and financial governance, and support to private sector development. Timeframe: 18 months (June 2013 – December 2014) Program Cost: UA 25.54 million (ADF loan)
Expected
Programme
Outcomes and
Beneficiaries
The programme seeks to contribute to sustainable and shared economic growth by promoting
efficiency, equity and transparency in public resource management, and creating conditions conducive
to inclusive private sector development. The main results expected from the Programme are: (i)
improved State efficiency, accountability, transparency and equity in public management; and (ii)
improvement of corporate governance and of the business climate to ensure inclusive private sector
development through an innovative approach that includes the gender and job-creation dimensions.
Essentially, the programme seeks to: (i) promote reforms that ultimately lead to the institution of
gender-sensitive and results-based budgeting by mainstreaming the gender dimension into public
policies and factoring gender and employment indicators into public investment programmes; and (ii)
promote reforms that improve the business environment and develop the private sector, especially
SMEs, by specifically supporting women’s entrepreneurship and the initiatives of young entrepreneurs.
Although the entire Senegalese population stands to benefit from the programme, special emphasis will
be laid on women and the youth, who are both users of public services and entrepreneurs, with a view
to ensuring inclusiveness and sustainability.
Needs
Assessment and
Relevance
Despite Senegal’s strong economic and social performance in recent years, gender- or age-related
socio-economic disparities and inequalities that adversely affect certain segments of the population
(especially women and the youth) are still the major problems that undermine the attainment of more
inclusive growth. In this regard, PACICE objectives are consistent with the priorities of SNDES 2013-
2017 and CSP 2010-2015 according to the mid-term review. A financing request was submitted for the
programme in 2012 and needs were assessed in an effort to take stakeholder diversity into account.
Furthermore, from its design to its execution, the proposed programme seeks to ensure
complementarity with projects being prepared (such as the Youth and Women’s Employment
Promotion Project (PAPEJF)) or implemented (such as the Private Sector Promotion Project (PAPSP)).
Bank’s Value-
added The Bank is the key stakeholder for economic and financial governance reform in Senegal. It holds the
Vice-Chair of ACAB, which is a permanent and dynamic framework for coordinating technical and
financial partner operations and monitoring reforms through an evolutive common matrix. The Bank
successfully implemented the ERSP that enabled the country to initiate broad public management and
business environment improvement reforms. Although PACICE seeks to build on previous operations
by supporting the implementation of measures adopted under previous programmes, the current Bank
operation differs from conventional economic and financial governance approaches in that it targets a
series of key measures that include the gender and job-creation dimensions, especially for women and
the youth, in an effort to promote robust, inclusive and sustainable growth. While being a single-
tranche operation, PACICE is part of the medium-term policy dialogue between the Government and
the Bank on key issues.
Institutional
Development
and Knowledge
Building
The programme will have a clear impact in terms of institutional development and knowledge building
since: (i) it supports human and institutional capacity-building reforms; and (ii) its innovative approach
is justified by a number of studies and underlying analyses, including the Bank's report on a study of
gender-sensitive budgeting experiences in Senegal.
vi
Results-based Logical Framework
Country and Programme Title: Senegal – Inclusive Growth and Economic Competitiveness Support Programme (PACICE)
Programme Goal: Create the appropriate conditions that guarantee sustainable and inclusive economic growth by integrating the
gender and job-creation dimension through the improvement of economic and financial governance and support to private sector
development.
RESULTS CHAIN PERFORMANCE INDICATORS
MEANS OF
VERIFICATION
RISKS/
MITIGATION
MEASURES Indicator (including
ISCs) Baseline Situation Target
IMP
AC
T
Public management and
private sector
development contribute
to sustainable and
inclusive growth that
include the gender and
job-creation dimensions
Average GDP
growth rate 3.5% in 2012 4.5% on average
over the 2013-
2015 period
Reports of the
Ministry of Economy
and Finance
Share of women in
GDP Share of women
in GDP: 22.8% in
2006-2010
Share of women
in GDP: 25% in
2015
ESAM I & II surveys,
ANSD, Women’s
Entrepreneurship and
Microfinance
Directorate Inequality-adjusted
HDI 0,315: 2012 value
0,320: 2014 target
value UNDP Human
Development Report
EF
EC
TS
Effect 1: Public resource
management is more
efficient and gender-
sensitive
1.1 Improvement of
the country’s
Gender Inequality
Index (GII)
0,540: 2012 value
0,520: 2014 target
value UNDP Human
Development Report Risk 1: An
unfavourable
macroeconomic
situation and
exogenous shocks
likely to affect
expected programme
outcomes
Mitigation Measure
1:
This risk is mitigated
by the support of
development partners
to Government efforts
aimed at maintaining
productive
investments to
consolidate economic
recovery and boost the
resilience of the
population
1.2 Criterion 16 (a)
of CPIA
“Accountability of
the executive to
oversight
institutions”
Score of 4 in 2010 Score of 5 in 2014 Senegal CPIA Report
Effect 2: The private
sector development
framework is conducive
to inclusive and
sustainable growth
Contribution of
SMEs to job
creation
40 % in 2011
45% in 2014 Reports of the
Ministry of Youth,
Employment and the
Promotion of Civic
Values and of
ADEPME
2.2 Contribution of
women
entrepreneurs to
GDP
5.54 % in 2010 6.5 % in 2014 ESAM I & II surveys,
ANSD, Women’s
Entrepreneurship and
Microfinance
Directorate
OU
TC
OM
ES
Component 1. Improvement of State efficiency, accountability, transparency and equity in public management 1.1 Public management
is results-based and
gender-sensitive
1.1.1 Updating of
SNEEG and
adoption of an
action plan for
mainstreaming
gender into public
policy
The SNEEG
prepared in 2005
is no longer up to
date
SNEEG is
updated and an
action plan for
mainstreaming
gender into public
policy is adopted
before end 2013
New SNEEG
document and its
corresponding action
plan
1.1.2 Design of a
project assessment
framework to be
incorporated into
the Triennial Public
Investment
Programme (PTIP)
that includes job-
and gender-related
indicators
Lack of a project
assessment
framework for the
PTIP that includes
job- and gender-
related indicators
A project
assessment
framework for the
PTIP that includes
job- and gender-
related indicators
is designed before
end 2013
The project
assessment
framework for the
PTIP that includes
job- and gender-
related indicators is
available
Risk 2: The
governance of external
oversight and
procurement oversight
institutions may also
affect the
implementation of
certain measures
Mitigation Measure
2:
This risk will be
mitigated through
revision of texts
governing the Audit
Bench, capacity-
1.2 Oversight of
government action is
strengthened in an effort
to ensure accountability
and transparency
1.2.1 Adoption of
the enabling decree
on the organic law
on the Audit Bench
Enabling decree
of the former
organic law on the
Audit Bench
Signature of the
new enabling
decree on the
organic law on the
Audit Bench
before 30 June
2013
Enabling decree
signed
vii
1.2.2 Council of
Ministers adopts a
bill on the
declaration of
ministers’ assets
No law on the
declaration of
ministers’ assets
Tabling of the bill
on declaration of
ministers' assets in
the National
Assembly before
end 2013
Law on the
declaration of
ministers’ assets
building for the
Directorate of Public
Procurement and the
independence of
ARMP
OU
TC
OM
ES
Component 2. Improvement of corporate governance and the business climate to ensure inclusive private
sector development Risk 3: Central and
territorial services are
resistant to change
and/or have limited
capacity to implement
and monitor reforms
from the technical
standpoint
Mitigation Measure
3:
Complementarity
between PACICE and
the Private Sector
Promotion Support
Project (PAPSP),
which essentially
includes a support
component on the
improvement of
services to SMEs and
SME guidance
structures. Capacity-
building actions
provided for in the
implementation plan
for new WAEMU
directives
2.1. The business climate
is improved and support
mechanisms for
entrepreneurs are
harmonised to ensure
inclusive private sector
development
2.1.1 Application of
the new status of
“entreprenant”
(literarily “business
grower”) adopted
by OHADA
Inclusion of the
application of the
new status of
"entreprenant"
adopted by
OHADA among
the priority and
urgent reforms in
the matrix of CPI
recommendations
Tabling of the bill
on the application
of the new status
of "entreprenant"
adopted by
OHADA in the
National
Assembly before
30 June 2014
Law on the new
OHADA status of
“entreprenant”
adopted and enabling
decrees issued
2.1.2 Streamlining
of MSE and SME
support mechanisms
at the national and
local levels by
implementing
recommendations of
the study conducted
in that regard.
Launching of a
study on the
streamlining of
MSE and SME
guidance
mechanisms
Presentation of
the finalized study
report and
submission of the
corresponding
action plan by end
2013
Study on the
streamlining of MSE
and SME guidance
mechanisms
conducted and the
corresponding action
plan available
2.2 Guarantee and
financing mechanisms
are implemented
efficiently for women
and young
entrepreneurs
2.2.1 Adoption of
an action plan for
the institution of a
contracts fund based
on a corresponding
study
Launching of a
study on the
creation of a
contracts fund
An action plan for
the creation of the
fund is adopted
before end 2013
Action plan for the
creation of a contracts
fund resulting from a
specific study
2.2.2 Adoption of
an action plan to
streamline the
various support
funds for the
development of
initiatives
Launching of a
study on the
streamlining of
various support
funds for the
development of
initiatives
An action plan for
streamlining the
various support
funds for the
development of
initiatives is
adopted before
end 2013
Action plan on the
streamlining of
various support funds
for the development
of private initiatives
Resources
ADF loan: UA 25.54 million
World Bank loan: UA 19.93 million
1
REPORT AND RECOMMENDATION FROM THE MANAGEMENT TO THE BOARD
OF DIRECTORS CONCERNING A PROPOSAL TO GRANT A LOAN TO SENEGAL
TO FINANCE THE INCLUSIVE GROWTH AND ECONOMIC COMPETITIVENESS
SUPPORT PROGRAMME
(PACICE)
I THE PROPOSAL
1.1. This proposal submitted to the Board for approval concerns the granting of a loan of
UA 25.54 million, on African Development Fund resources, to the Republic of Senegal, for
financing an Inclusive Growth and Economic Competitiveness Support Programme (PACICE).
PACICE is a budget support programme that will be executed over an 18-month period. The
Programme seeks to contribute to sustainable and shared economic growth by developing efficiency,
equity and transparency in public resource management, and by creating conditions conducive to
inclusive private sector development. The main expected results of the programme are: (i)
improvement of State efficiency, accountability, transparency and equity in public management; and
(ii) improvement of corporate governance and the business environment to develop the private sector
through an innovative approach the includes the gender and job-creation dimensions. Hence, the
programme seeks to: (i) promote reforms that ultimately lead to the institution of gender-sensitive and
results-based budgeting by mainstreaming the gender dimension into public policies and factoring
gender and employment indicators into public investment programmes; (ii) promote reforms that
improve the business environment and develop the private sector, especially SMEs, by specifically
supporting women entrepreneurship and the initiatives of young entrepreneurs.
1.2. Despite Senegal’s economic and social performance in recent years, socio-economic
disparities and inequalities that adversely affect certain segments of the population (especially women
and the youth) are still the major problems that undermine the attainment of more sustainable and
inclusive growth. PACICE, which seeks to reduce such inequalities, is consistent with Senegal’s
National Economic and Social Development Strategy for 2013-2017, especially two of its priority
pillars, namely: (1) growth, productivity and wealth creation (employment, private sector
development, the rural economy); and (2) governance, institutions, peace and security (promotion of
equity and gender equality, State reform and strengthening of public administration, local
development and territorial management, economic and financial governance). It is also consistent
with the priorities of the 2010-2015 Country Strategy Paper (CSP) reviewed mid-term and approved
by the Boards on 24 April 2013, especially Pillar 1 which focuses on support to inclusive growth
through economic diversification and integration. Furthermore, PACICE falls under the Budget
Support Framework Arrangement (ACAB) concluded between the Government and technical and
financial partners in an effort to harmonise operations and ensure greater resource predictability.
Programme appraisal was conducted based on consultations with Senegalese services and authorities,
private sector stakeholders and technical and financial partners. Although PACICE is a single tranche
programme, it focuses on the medium-term. It ensures the continuity of reforms supported by recent
Bank operations by taking account of the lessons learnt from such operations. It falls within a
Government medium-term programme by supporting innovative reforms aimed at reducing gender
disparities.
2
II COUNTRY AND PROGRAMME CONTEXT
2.1. Recent Political and Socio-economic Developments, Perspectives, Constraints and
Challenges
Political Context
2.1.1. From the political perspective, power changed hands at the helm of State after the free
and fair presidential elections of March 2012, which represented a successful example of
democratic regime change. The legislative elections of 1 July 2012 were conducted under the same
conditions and gave the new President a comfortable majority in the National Assembly. Thanks to
the parity law adopted in 2010, women’s representation has almost doubled from 22% in the former
legislature to approximately 43% in the new parliament. As regards security, the new authorities have
adopted a regional approach to resolving the Casamance conflict by ensuring that The Gambia and
Guinea-Bissau are more involved. Nevertheless, Mali’s socio-political instability has increase the
terrorist threat for Senegal.
Economic Context
2.1.2. Senegal’s macroeconomic reference framework is based on the agreement signed with
the IMF under the Economic Policy Support Instrument (EPSI), the fifth review of which was
conducted from 27 March to 10 April 2013. Despite the country’s political stability and efforts made
by successive governments, economic growth remains too slow to sustainably reduce poverty and
inequality. The 2012 growth rate, initially projected at 3.9% of GDP, was lowered to 3.5%1 mainly
due to the consequences of the public debt crisis in
Europe, the difficulties of the US economy, the Malian
crisis and stagnation in the major emerging economies.
For 2013, the projected growth rate is 4% despite a
sluggish economy and sociopolitical tension in the
region. Inflation which stood at 3.4% in 2011 was
reduced to 1.4% in 2012.
2.1.3. Public finance management is characterised by transposition of the six guidelines of
WAEMU’s harmonised framework for public finance management.2 In public finance, the
authorities strive to preserve their budgetary flexibility and contain deficits while improving
expenditure efficiency. The overall budget deficit in 2012, including grants, was estimated at CFAF
424 billion (5.9% of GDP) compared to CFAF 455 billion (67% of GDP) in 20113. The new
authorities intend to continue with budget reduction efforts by cutting recurrent expenditure,
postponing certain non-priority public investments and streamlining State structures and public
entities. They also made a special effort to institutionalize a culture of transparency and
accountability, notably through reform of the Audit Bench, the audit of public bodies, the creation of
the National Fraud and Corruption Control Authority and the adoption of the Public Finance
Management Transparency Code.
1 DPEE Data: Report on the Economic and Financial Situation for 2011 and Outlook for 2012. 2 These are Directive No. 01/2009: Public Finance Management Transparency Code; Directive No. 06/2009: Finance Laws; Directive No. 07/2009:
General Regulations of Public Accounting (RGCP); Directive No. 09/2009: State Accounting Plan (PCE); Directive No. 10/2009: Table of Financial
Operations of the State (TOFE); and Directive No. 08/2009: State Budget Nomenclature.
3 ANSD Data.
Table 1
Macroeconomic Indicators
2011 2012
(e) 2013
(p) 2014
(p) GDP growth 2.1 3.5 4.0 5.1 Inflation 3.4 1.4 1.6 1.8
Budget balance (%
of GDP) -6.6 -7.0 -7.9 -7.4
Current account
(% of GDP) -7.7 -8.6 -9.3 -10.0
Source: ADB
3
2.1.4. Senegal is not overly exposed to the risk of a debt overload. Its public debt is estimated at
42.5% of GDP in 2012, compared to 39.7% of GDP in 2011, which puts it below the 70% ceiling
retained under the WAEMU convergence criteria4. The debt remains sustainable according to the last
sustainability analysis conducted by the National Public Debt Committee in September 2011.
2.1.5. The business environment, which remains unfavourable to investment expansion and
support to SMEs, especially women entrepreneurs and young project proponents, is not
effective. In Doing Business 2013, Senegal is ranked 166th
out of 185 countries, which is poor
performance compared to 2012, when it ranked 154th5
. This stems from the difficulty of initiating new
reforms in this area during 2012 (an election year). The new government is pursuing a series of
reforms that mainly relate to the General Tax Code and the Customs Code, with a view to improving
the private sector environment.
Social Context
2.1.6. As concerns the social sector, the results obtained in the area of poverty reduction and
human development were average, and gender disparities, underemployment and exclusion of
the youth and women from the labour market remain major problems that undermine the
attainment of sustainable and inclusive growth. Provisional statistics from the Senegal Poverty
Monitoring Survey (ESPS II) of September 2012 show that the number of individuals living below the
poverty line was 46.7% in 2011 compared to 48.3% in 2006, representing a decline of 1.6 points.
According to the UNDP’s Gender Inequalities Index (GII) for Senegal, the labour force participation
rate (male/women ratio) was 0.748 in 2012, while a report on women entrepreneurs’ contribution to
the national economy shows that women's contribution to GDP rose from 17.63% for the 1994 - 2000
period to 20.04% for 2001-2005, and 22.88% for 2006-2010. Women’s contribution to GDP is twice
lower than their demographic weight (52%), thus representing low productivity for women’s labour
that is concentrated mainly in the primary and service sectors. According to the same study, the
contribution of women entrepreneurs to GDP is growing rapidly, even exponentially: rising from
0.06% in 1994 to 0.28% in 2000, 1.19% in 2005 and 5.54% in 20106. Regarding the MDGs,
significant progress was made in access to primary education, safe drinking water and health, although
the results are still modest specifically in connection with maternal and child health or the primary
school completion rate. Improving these results apparently requires the introduction of gender-
sensitive budgeting to promote better public resource allocation because it will lead to targeted budget
programming.
2.1.7. To address the equity challenge, a National Strategy for Gender Equality and Equity
(SNEEG) by 2015 was prepared from 2004 to 2005, and two institutional mechanisms, namely
the Directorate for Gender Equity and Equality (DEEG) and the National Observatory on
Parity (ONP), were set up. The mid-term review process for SNEEG was launched on 20 March
2013 through stakeholder mobilisation (sector ministries, parliament, TFPs, private sector and civil
society). An institutional readjustment was recently made to attach the Microfinance Directorate to
DEEG or the Women's Organisations and Women’s Entrepreneurship Directorate to the Ministry of
Women's Empowerment, Children's Affairs and Women’s Entrepreneurship. The new authorities have
placed women’s empowerment and youth support at the core of government action. At the
institutional level, certain flagship measures were adopted such as the application of parity to
Parliament or actions to curb State expenditure and the lifestyles of elected representatives (abolition
of the Senate7, reduction of the size of the Government from 41 to 25 Ministers), streamline
4 Under WAEMU’s multilateral surveillance framework, the GDP debt ratio must be below 70%.
5 Doing Business 2012 and 2013. 6 "Assessment of the Contribution of Women Entrepreneurs to the National Economy (GDP)", Directorate for Women’s Entrepreneurship, Ministry
of Women’s Entrepreneurship and Microfinance, December 2011.
7 Constitutional Law No. 06/2012 to amend the Constitution.
4
administrative structures (reduction of the number of public and semi-public entities), and
institutionalise a culture of transparency (reform of the Audit Bench, audit of public bodies, creation
of the Fraud and Corruption Control Authority, the Public Finance Management Transparency Code,
etc.).
Perspectives, Constraints and Challenges
2.1.8. Economic activity should pick up in 2013, with the maturity of major projects in the road
infrastructure and energy sub-sectors, the execution of major government projects for heavy minerals
such as the one in Grande Côte (zircon), the commencement of major projects and the continuation of
agricultural sector recovery. In all, the real GDP growth rate should stand at 4% in 2013 compared to
3.5% in 2012. This net improvement in the growth rate is supposedly driven essentially by the primary
and secondary sectors. The projected inflation rate for 2013-2015 is 1.8%, which is below the
community ceiling of 3%.
2.1.9. The major challenges and constraints that hamper Senegal’s socioeconomic
development mainly relate to economic and financial management weaknesses and poor private
sector development, especially for SMEs. Despite the progress made in economic and financial
governance in recent years, the results remain average because of regulatory instability characterized
by several amendments in the Public Procurement Code and inadequate accountability in government
policies. To address this situation, the new authorities intend to improve public management and State
efficiency through actions based on transparency, performance and results-based management, mainly
by: (i) mainstreaming the gender and employment dimensions into budget programming; (ii)
increasing oversight of government action; and (iii) instituting a government policy
monitoring/evaluation framework.
2.1.10. As concerns private sector governance more specifically, businesses and especially
SMEs, face two major constraints: upstream, difficult access to financing; and downstream, a
limited market for saleable goods and services. SME performance could improve considerably
through enhancement of the business environment, access to credit, adapted assistance in the
preparation of business plans, and facilitation of market access, especially for public procurements.
The preparation of a Corporate Governance Code and the political will to enforce the new status of
“entreprenant” adopted by OHADA, constitute favourable prospects for improvement of the business
climate and inclusive private sector promotion.
2.1.11. In general, the private sector is characterized by a high bankruptcy rate for new
businesses, informal sector predominance, difficult access to government contracts and SME-
adapted financing, especially for women and young entrepreneurs. This is compounded by
difficult access to land, which is a major constraint to the business environment, especially for women
who rarely have access to landed property. Such difficulty in having access to landed property
prevents the development of the mortgage loan, which is the main guarantee that SMEs can propose.
In public management, there are no tools for ensuring monitoring/evaluation of government policies
used for cost-benefit analysis that includes the gender dimension. Nevertheless, despite a sluggish
international environment, growth opportunities are real insofar as government policies are reoriented
towards greater efficiency in terms of results and inclusion.
5
2.2. Bank Group Portfolio Status
2.2.1. As of 30 April 2013, the Bank’s total active portfolio in Senegal comprised 9 active
national operations, 7 multinational operations and 3
private sector operations. This portfolio has a net total
commitment volume of UA 146.69 million from the public
window, with a disbursement rate of 74.5%. In the current
portfolio of operations in Senegal, the infrastructure sector
has the lion’s share with 37.2%, followed by the rural
sector (21.2%), water and sanitation (20.45%), and multi-
sector operations (21%). Financing is broken down into
loans (97.5%) and grants (2.5%).
2.2.2. With total commitments of EUR 137 million, the private sector has 3 active operations
(Sendou power plant, the Dakar-Diamniadio toll highway and the Blaise Diagne International
Airport). The Bank’s private sector projects in Senegal generated an investment of over EUR 1.2
billion through co-financing arrangements. These highly complementary projects should play a key
role in fuelling economic growth and boosting national competitiveness. The multinational projects
portfolio was over UA 146.78 million end April 2013 for a total disbursement rate of approximately
45.3%.
2.2.3. The performance of the Bank’s national public sector portfolio is deemed satisfactory. The
total portfolio assessment score of 2.49 on a scale of 0 to 3 in 2012 reflects a net positive trend since
2009 (score 2.01). The combined report for the CSP 2010-2015 mid-term review and portfolio
performance review was approved on 22 March 2013. The performance of Bank operations has
improved since the last portfolio review (2011). This is seen in the efficiency of operations as regards
processing of files (payment and disbursement requests), the procurement of goods and services and
financial execution in 2012. The Bank's national public sector portfolio in Senegal has an average age
of 3.47 years, representing a net rejuvenation since the last review of 2011 (5.5 years).
2.2.4. In the area of economic and financial governance, the Bank implemented the Economic
Reform Support Programme (ERSP) over the 2011-2012 period. In 2012, it also launched the Private
Sector Promotion Support Project (PAPSP) that focuses on improving the business environment,
especially for SMEs. Hence, the Bank continues to dialogue with Senegalese authorities on economic
and financial priorities thanks especially to its presence in the country.
2.3. Government’s Overall Development Strategy and Medium-term Reform Priorities
2.3.1. Senegal’s development policy reference, namely the National Economic and Social
Development Strategy (SNDES) validated in November 2012, strengthens the linkage between: (i)
economic and financial governance; and (ii) sustainable and inclusive growth. The SNDES focuses on
the following three pillars: (i) growth, productivity and wealth creation; (ii) human capital, social
protection and sustainable development; and (iii) governance, institutions, peace and security. This
strategy includes cross-cutting issues, focusing on gender and employment.
2.3.2. The SNDES is implemented through a Priority Action Plan that is operationalized
through the Triennial Public Investment Plan and the Medium-Term Expenditure Framework
(MTEF). These instruments enable the Government of Senegal to maintain consistency between the
macroeconomic framework, the budget framework and sector policies, and to optimize public
resource allocation in accordance with national socio-economic priorities.
Table 2
Portfolio Situation as of end April 2013
Sector Number of
Operations Amount
(UA) % of
Portfolio Transport 1 45 30.68%
Water and
sanitation 1 30
20.45%
Agriculture 4 31.06 21.18%
Energy 1 9.58 6.53%
Governance 2 31.04 21.16%
Total 9 146.68 100.00%
6
III RATIONALE, KEY DESIGN ELEMENTS AND SUSTAINABILITY
3.1. Links with the CSP, Analytical Underpinnings and Country Readiness Assessment
3.1.1 Links with the CSP: The budgetary and financial reforms supported by PACICE seek
to facilitate the implementation of SNDES 2013 and SNEEG. Therefore, the proposed programme
is consistent with SNDES and SNEEG, and in line with the new guidelines of CSP 2010-2015 and the
Bank’s new strategy for 2013-2022, which focus on private sector governance and development, and
treat the gender dimension as a major cross-cutting pillar. This programme is equally justified by its
alignment on AfDB’s strategic guidelines on gender reiterated during the first AfDB Gender Forum
held on 10 May 2013. PACICE will help to support the new authorities in implementing priority
reforms that promote gender-sensitive public management and inclusive private sector development
and to sustain the pace of reforms implemented in previous programmes related to governance,
oversight of government action and the business environment.
3.1.2 Prerequisite for implementing a programme-based operation: The proposed operation is
consistent with the Bank's Policy on Programme-based Operations adopted in March 2012
(ADB/BD/WP/2011/68 - ADF/BD/WP/2011/38). The country preparedness analysis presented in the
table below shows that Senegal fulfils the conditions for application of the programme-based support
instrument.
Table 3
Eligibility Conditions for Programme-based Operations
Preliminary
Conditions Observations on the Current Situation
Government’s
determination to
combat poverty
Senegalese authorities are determined to reduce poverty and improve the wellbeing of the people.
This commitment is clearly seen in the adoption of the National Economic and Social
Development Strategy (SNDES 2013-2017) in November 2012, which focuses on inclusive
growth, improvement of governance, and development of strategic sectors that have a significant
positive impact on social wellbeing and social demand. The SNDES focuses on the following
three strategic pillars: (i) growth, productivity and wealth creation; (ii) human capital, social
protection and sustainable development; and (iii) governance, institutions, peace and security. It is
implemented through a Priority Action Plan (PAP) which is its driving force and serves as the
reference framework for the drafting of the finance law. The PAP covers the major actions that
contribute to the attainment of set objectives through yearly readjustments of the finance law and
the triennial programming of public investments.
Macroeconomic
stability
As soon as the country’s new authorities took office, they asserted their resolve to preserve
economic stability through a cautious budget policy, with a controlled budget deficit. The first
pillar of the National Economic and Social Development Strategy (SNDES) for 2013-2017
includes private sector development and is implemented through the Accelerated Growth Strategy
(SCA). The SCA seeks to improve public finance management and the business environment.
Furthermore, the Economic Policy Support Instrument programme is being implemented
satisfactorily with the IMF. The latest assessment (April 2013) confirmed the stability of the
national macroeconomic framework.
Satisfactory
fiduciary risk
assessment
Based on the existing diagnosis (PEFA 2011 review, 2012 review of the implementation status of
budgetary and financial reforms jointly implemented by Senegal and technical and financial
partners, fifth EPSI review by the IMF from 25 March to 10 April 2013), the fiduciary framework
review is satisfactory. Senegal has made much progress in public finance management. These
efforts will be consolidated through the implementation of texts resulting from the transposition of
the new WAEMU guidelines for the harmonized public finance management framework that are
consistent with international standards. Senegal’s public procurement code contains WAEMU
provisions and serves as a reference in this area. As regards corruption control, a National Fraud
and Corruption Control Authority has been set up. Progress remains to be made regarding public
access to financial information.
7
Preliminary
Conditions Observations on the Current Situation
Political stability
Senegal has enjoyed political stability since achieving independence in 1960. Recent presidential
elections consolidated peaceful regime change at the helm of State while legislative elections led
to a change of majority at the National Assembly with the application of full parity for the very
first time.
Harmonisation
A partnership exists between Senegal and donors as illustrated in the Budget Support Framework
Arrangement (ACAB) signed between Government and donors: ACAB-2 (2013-2015) reflects the
determination of the Senegalese Government and development partners (AfDB, World Bank,
European Union, Canada, Netherlands, Spain) to continue using budget support as one of their
financial cooperation instruments for implementing national policies.
3.1.3. Underlying analytical work: a number of analytical and consultancy studies underpin
the proposed general budget support operation. They pertain primarily to: SNDES, PEFA 2011,
Doing Business 2013, the national competitiveness report (2011), the national report on the
implementation status of PCRBF budgetary and financial reforms (November 2012), the global MTEF
for 2012-2014, the CPI recommendations matrix, the DASP study to establish an inventory of
guarantee funds in Senegal, the PAPSP appraisal report, and a Bank study on gender-sensitive
budgeting that yielded information on various gender-sensitive budgeting experiences in Senegal. The
main findings of this study are presented in PACICE Technical Annex 2.
3.2. Collaboration and Coordination with Other Donors
3.2.1. In Senegal, official development assistance is coordinated through various exchange and
dialogue frameworks. At the very top of the coordination mechanism is the Enlarged Group of
Technical and Financial Partners or “Group of 50”, co-chaired by AfDB and USAID since January
2013. The "Group of 50" is the framework for policy dialogue between the Government and TFPs. It
is assisted by a Consultative Committee of Technical and Financial Partners (CCPTF), known as the
"Group of 12",8 chaired by Belgium, which serves as the technical secretariat for "Group of 50"
meetings and as the interface with thematic working groups.
3.2.2. Coordination and dialogue on budget support are conducted under ACAB, with the
Bank serving as Vice-chair. ACAB is a sustainable and dynamic framework for coordinating
TFP operations using this instrument and for monitoring reforms based on a common
evolutionary matrix. It has significantly contributed to the improvement of TFP coordination and the
predictability of budget support financing. The common matrix of measures to be promoted
constitutes a permanent framework for dialogue between the Government and ACAB-2 (2013-2015)
members. Apart from ensuring the harmonized definition of disbursement criteria for budget support,
ACAB enables TFPs to develop synergies in terms of joint missions, studies, audits or simply the
sharing of best practices. The Bank relied on this consultative framework during PACICE preparation
and appraisal by collaborating with TFPs within ACAB, especially the World Bank’s budget support
estimated at UA 19.93 million for FY 2013, but also bilaterally with other partners such as UN
Women.
3.2.3. In the area of private sector development, the "Private Sector" Group whose lead agency is
the United States, comprises a thematic sub-group that is specifically devoted to SME problems,
among others. Although the Bank’s PAPSP is a major operation in this area, there are other operations
initiated by partners such as USAID, EU, AFD or the German (GIZ) and Italian cooperation agencies.
3.2.4. It should be noted that the measures supported by this programme were designed in
consultation and coordination with donors involved in ACAB and private sector development in a bid
to ensure the complementarity and harmonization of operations.
8 The CCPTF or "Group of 12" comprises Germany, Belgium, Canada, Spain, France, Italy, Japan, Netherlands, African Development Bank (ADB),
World Bank, World Food Programme (WFP) and UNFPA.
8
3.3. Outcomes of Past and On-going Similar Operations and Lessons
3.3.1. The lessons from implementing previous programmes were reflected in designing this
programme. The completion reports of previous operations, especially that of the Economic Reform
Support Programme (ERSP), highlighted a number of lessons that guided the choices made under
PACICE. These include the need to:
(i) Improve selectiveness to underpin reforms with fewer but higher impact measures.
While the previous programme (ERSP) had a large number of measures, including
sensitive ones, to be implemented over 2 years, this programme has a streamlined
number of measures that reflect government priorities;
(ii) Increase the involvement of operational departments to ensure greater ownership of
measures. Under the current programme, the quality of meetings with various structures
concerned facilitated agreement on priority reforms and implementation mechanisms
that last for the duration of the programme (18 months); and
(iii) Improve TFP coordination to build synergies in an effort to ensure the efficiency of
official development assistance. The programme was designed through consultation
with TFPs that have complementary instruments or actions. Hence, the measures of this
new AfDB programme are found in the common ACAB matrix.
3.3.2. The Bank has already conducted several similar operations in Senegal, the latest of which
(ERSP) had two components: (i) support to public finance management improvement; and (ii) support
to SME promotion. The ERSP, whose completion report has been prepared, supported the reforms
that yielded convincing results (public contracts, Audit Bench, land tenure, transposition of new
WAEMU guidelines into the harmonized framework for public finance management, etc.). These
reforms also concerned the corporate environment, especially through the adoption of a new General
Tax Code that contains several provisions relating to SME development. The implementation of
certain reforms promoted by the ERSP was hampered by a few obstacles that engendered a number of
lessons (c.f. Technical Annex 10). PACICE builds on the reforms of previous programmes, especially
those relating to the application of WAEMU guidelines, and will support PAPSP-backed activities,
particularly in the area of SME assistance, in an effort to promote inclusive private sector
development.
3.4. Relationship to On-going Bank Operations
The proposed programme seeks to ensure complementarity with other Bank projects, such as
the Youth and Women’s Employment Promotion Project (PAPEJF) and the Private Sector
Development Project (PAPSP). This quest for synergy, which pre-empts any inconsistencies between
projects and programmes, should have a direct positive impact on the implementation of operations
mentioned. PACICE also complements initiatives developed in related sectors, e.g. youth
employment. Besides, through its private sector development activities, PACICE will help to increase
the impact of Bank operations sponsored by the private sector window and should also have a direct
positive impact on the portfolio of on-going multinational operations. PACICE will contribute to
consolidating gains from reforms initiated under past budget support operations and also support the
implementation of activities scheduled under the on-going Institutional Support Project, PAPSP.
9
3.5. Bank’s Comparative Advantage and Value-added
The Bank’s value-added resides in the continuity between various budget support operations
(ERSP, PACICE) and their complementarity with project support initiatives (PAPSP,
PAPEJF). Furthermore, the linkage between PACICE Component 1 (“improvement of State
efficiency and support for gender-sensitive government policies”) and Component 2
(“operationalizing government policies targeting improvement of the business environment to ensure
inclusive private sector development, focusing on women and young entrepreneurs”) reflects a holistic
and integrated approach that has a comparative advantage over more separate approaches.
3.6. Application of Good Practice Principles on Conditionality
The programme was designed in accordance with best practices regarding conditionality.
Measures adopted were first discussed with the Government, which was keen to have them validated
by the competent structures. Discussions also focused on the terms and programming of support to
ensure consistency with national needs outlined in various national strategy documents.
3.7. Application of the Bank Group policy on Non-concessional Loans
The Government of Senegal is aware that all non-concessional financing must be tied to projects
deemed economically profitable (as appraised by an internationally renowned firm) and should not
undermine public debt sustainability. In accordance with the Bank’s policy on non-concessional debt
accumulation amended in 2011, the loan agreement has a specific clause requiring the country to
report new non-concessional loans and apply a debt policy that is consistent with the terms agreed
upon with the IMF. Senegal fulfils the conditions precedent to budget support as required in the Policy
on Programme-based Operations9 (see table). Although the proposed operation is autonomous, it falls
within the framework of multi-year reforms that may be supported by the Bank in the medium term
following a programme-based approach under ADF 13.
IV THE PROPOSED PROGRAMME
4.1. Programme Goal and Objectives
PACICE development objective is to create appropriate conditions that guarantee sustainable
and inclusive economic growth by mainstreaming the gender and job-creation dimension through
improvement of economic and financial governance, and support to private sector development.
PACICE seeks to achieve growth that benefits everyone, especially women and the youth, by
promoting gender-sensitive public management (Component 1) and inclusive private sector
development (Component 2). Although the entire Senegalese population stands to benefit, special
emphasis will be laid on women and the youth, as both users of public services and entrepreneurs,
with a view to generating inclusive and sustainable growth.
4.2. Programme Components, Operational Objectives and Expected Results
4.2.1. The programme’s main expected outcomes are: (i) improvement of State efficiency,
accountability, transparency and equity in public management; and (ii) improvement of corporate
governance and the business environment to ensure inclusive private sector development through an
innovative approach that includes the gender and job-creation dimensions.
4.2.2. Hence, PACICE has two components, namely: (i) Component 1: Improvement of State
efficiency, accountability, transparency and equity in public management; and (ii) Component 2:
Improvement of corporate governance and the business environment to ensure inclusive private sector
development.
9 ADB/BD/WP/2001/68/Rev.3/Approved-ADF/WP/2011/38/Rev.3/Approved
10
4.2.3. Component 1 of the programme has two sub-components, namely: (i) promoting results-
based and gender-sensitive public management; and (ii) strengthening oversight of Government action
in an effort to ensure accountability and transparency. Under Component 1, this entails supporting
reforms that enhance budgetary credibility and transparency by operationalizing the new public
finance management framework resulting from transposition of WAEMU guidelines to introduce a
gender-sensitive budgeting approach in the medium-term. Integrating the gender dimension
“upstream” – that is, during the design, preparation, planning, programming and budgeting of
Government action – will yield more targeted public policies “downstream”, including impact
indicators on gender and job creation, and provide new ways of measuring the performance of
government action.
4.2.4. Component 2 of the programme has two sub-components, namely: (i) improvement of the
business environment and harmonisation of "entreprenant" guidance mechanisms to ensure the
inclusive development of businesses10
; and (ii) operationalization of SME guarantee and financing
mechanisms for women and youth entrepreneurs. The guidance of "entreprenants" (according to
OHADA terminology), including women and youth entrepreneurs, will be done by aligning the
various SME support mechanisms at the national and local level to enhance the efficiency of
government action in this area as well as the viability and sustainability of businesses. It also entails
ensuring that SMEs, especially those managed by women, have easy access to financing and
guarantee mechanisms by streamlining the various development support funds for private initiatives
into SMART-based entities11
.
Component 1: Improvement of State efficiency, accountability, transparency and equity in
public management
4.2.5. Component 1 of the programme seeks to support the Government in implementing its
extensive reform drive resulting from transposition of the new WAEMU guidelines, with the objective
of achieving results-based management characterised by equity and inclusiveness. It also entails
promoting the establishment of a public policy monitoring/evaluation framework that includes impact
indicators on gender and job creation to improve State efficiency while strengthening oversight of
government action in an effort to ensure accountability and transparency in public management.
Sub-component 1.1: Promotion of results-based and gender-sensitive public management
4.2.6. Observations and Challenges: The implementation of the Medium-Term Expenditure
Framework (MTEF) and the Medium-Term Sector Expenditure Framework (MTSEF) paved the way
for the preparation of the general State budget through a results-based budgeting approach.
Nevertheless, the public policy monitoring/evaluation approach is not structured; its management is
not organised but rather fragmented among various stakeholders (DREAT, Prime Minister’s Office,
MINEFI, sector ministries, etc.) whose approaches need to be harmonised following a clear
methodology and relevant gender- and job-related indicators.
4.2.7. Recent Government Action: The entry into force of Decree No. 2009-85 of 30 January
2012 governing budget preparation, following transposition of WAEMU’s guidelines for the
harmonized public finance management framework, and which seeks to institutionalize the public
finance preparation schedule, requires that Annual Performance Reports (APRs) be prepared. This
reform equally translated into restoration of the programme planning and monitoring/evaluation
function. The number of ministries under MTSEF rose from 20 in 2010 to 27 in 2012. Following
reduction of the size of the new Government when power changed hands, 19 ministries designed their
10 According to OHADA, the "entreprenant" is an individual entrepreneur, physical person who, upon simple declaration provided for in the Uniform
OHADA Act, practices a civilian, commercial, handicraft or agricultural activity. 11 "Simplified, Measurable, Adaptable, Relative, Transparent" – 2013 Doing Business Report.
11
draft budgets for 2013 with an MTSEF and APR. Significant improvements were also noted in the
MTSEF preparation process itself: the sector frameworks are more precise, transmitted early in the
year (except for 2012 when the regime changed) and officially so. Great efforts were also made to
address the gender issue in public management. This is the case with SNEEG, prepared in 2005,
which highlights the pillars of Government policy on gender, and Pillar 2 of the new Statistics Master
Plan, which is devoted to gender-disaggregated statistics to facilitate measurement of policy impact on
the reduction of gender inequalities.
4.2.8. Programme Measures: Under this programme, the following measures will be promoted: (i)
update SNEEG 2005-2015 and define an action plan for mainstreaming gender into public policies:
this entails updating the strategy document based on the mid-term review of SNEEG and the policies
of the new government; (ii) operationalize Pillar 2 of Senegal's Statistics Master Plan on gender-
sensitive statistics and indicators by implementing the activities designed in that regard; (iii) have the
Minister of Economy and Finance validate the appraisal guide for projects to be included in the PTIP
while incorporating gender- and job-related indicators; (iv) define an action plan for setting up a
public policy monitoring/evaluation mechanism that includes gender- and job-related indicators; (v)
ensure adoption, by the Council of Ministers, of the decree setting up the National Employment
Observatory, and reinforce the system for production of job-related statistics and indicators.
4.2.9. Expected Outcomes: The main outcome sought is the availability of operational tools for
results-based budget programming that targets equity and inclusiveness. The proposed measures seek
to ensure better coordination of existing initiatives in terms of the performance of government action.
This entails encouraging the establishment of a public policy monitoring/evaluation framework that
includes gender- and job-related indicators, while defining its policy basis, technical management and
deployment, from the central government to the local level (via peripheral and decentralized entities).
Sub-component 1.2: Strengthening oversight of Government action in an effort to ensure
accountability in public management and transparency
4.2.10. Observations and Challenges: The transposition of new WAEMU guidelines opened up
new reform areas relating to oversight of government action. Such reforms essentially focus on
strengthening financial controls and the greater role of Parliament in this area, including the holding of
a mandatory budget policy debate at the beginning of the finance law preparation process, among
other. New areas were considered more recently, as evident in the Senegalese Government’s
willingness to join the Extractive Industries Transparency Initiative (EITI). The current challenge is to
set up oversight mechanisms in accordance with the changes in the nature and scope of government
action to promote a culture of transparency and accountability.
4.2.11. Recent Government Action: From the institutional standpoint, the Audit Bench reform
process was initiated with the adoption of an organic law. As regards transparency and accountability,
the issue of declaration of assets is under discussion. Following the recent discovery of minerals, such
as zircon and gold, Senegal has also initiated a process that will enable it to apply for the status of an
EITI candidate country.
4.2.12. Programme Measures: PACICE will support the following changes: (i) adoption, by the
Council of Ministers, of the enabling decree of the organic law on the Audit Bench; (ii) adoption, by
the Council of Ministers, of the texts governing the status of magistrates of the Audit Bench; (iii)
adoption, by the Council of Ministers, of the bill on declaration of ministers’ assets; (iv)
implementation of all measures precedent to Senegal’s membership of EITI.
4.2.13. Expected Outcomes: The main expected outcome is strengthening of the oversight of
Government action in an effort to ensure public management accountability and transparency.
12
Component 2: Improvement of corporate governance and the business climate to ensure
inclusive private sector development
4.2.14. Component 2 of the programme seeks to operationalize policies relating to the business
environment and private sector development, especially for young and women entrepreneurs. Special
attention will be paid to SMEs which constitute 90% of private businesses, contribute 20% to GDP
and employ 40% of the labour force. Specifically, it will entail improving the business environment
and harmonizing guidance mechanisms for "entreprenants" to ensure inclusive private sector
development, while operationalizing guarantee and financing mechanisms for SMEs that promote
women and youth entrepreneurship.
Sub-component 2.1: Improvement of the business environment and harmonization of guidance
mechanisms for “entreprenants” to ensure the inclusive development of businesses.
4.2.15. Observations and Challenges: Although the OHADA law became effective in the country
in 1995, Senegal is ranked 166th
out of 185 countries in Doing Business 2013. Procedures, deadlines
and costs remain unwieldy for private sector operators as regards dealing with construction permits,
registering property, getting electricity or paying taxes. This undermines inclusive private sector
development. SMEs are faced with the limited capacity of "entreprenants" not only in accounting and
financial reporting or relations with government services (especially the tax department) but also in
the development of a business plan, targeting of the appropriate customer base, searching for market
outlets and making medium-term projections. In general, the institutional framework for private sector
support is characterized by the absence of a common reference framework and the uncoordinated
intervention of many stakeholders (chambers of commerce, trade chambers, ADEPME, DASP,
Women’s Entrepreneurship Directorate, etc.), among others.
4.2.16. Recent Government Action: The activities of the Presidential Investment Council set up in
2002 attest to a growing awareness of the concerns of businesses. The Corporate Governance Code,
prepared by the Senegalese Institute of Administrators (ISA), was adopted in December 2011 and
provides for regular monitoring through the Governance Code Monitoring Committee. An assessment
guide for corporate governance practices was also developed by the ISA. As concerns the land tenure
regime and title deeds, a National Land Reform Commission (CNRF) was set up on 27 March 2013
and should adopt a land reform roadmap within the shortest time possible. Furthermore, the
Senegalese Government has improved the procedures and timeframe for addressing economic and
trade conflicts, and ratified about fifteen Investment Promotion and Protection Agreements (IPPAs)
and Non-Double Taxation Agreements (NDTAs). Besides, the SME framework law provides that
15% of government contracts be reserved for SMEs. The General Tax Code and the Public
Procurement Code have also been reformed to render them more favourable to the business
environment. Adoption of the OHADA Uniform Acts on guarantee operations and the status of
"entreprenant", which became effective on 15 May 2011, will improve access to credit and increase
the range of assets that can be used as guarantee, among others. In general, assessment of the global
private sector support mechanism is the core activity of CPI’s Work Group 1.
4.2.17. Programme Measures: PACICE will support reforms aimed at: (i) enforcing the new status
of "entreprenant" adopted by OHADA through the Government's adoption of two bills on the fiscal
status and social status of "entreprenant"; (ii) implementing the Corporate Governance Code by
disseminating the Monitoring Committee report prepared to that end; and (iii) adopting a road map on
land reform that lays greater emphasis on women's access to land.
4.2.18. Expected outcomes: The main expected outcome is the improvement of the corporate
governance regulatory framework so that the business environment will be more conducive to
inclusive private sector development.
13
Sub-component 2.2: Rationalisation of the guarantee and financing mechanisms for SMEs in an
effort to promote efficiency, equity and inclusion.
4.2.19. Observations and Challenges: Although they constitute 90% of private businesses, SMEs
do not have easy access to financing and guarantee mechanisms. The Senegalese banking system is
indeed characterized by a high concentration of bank credits allocated to large corporations,
considered to be both viable and solvent. Furthermore, the bank guarantees required attain 150% of
the value of credits requested on average, depending on the sector. Moreover, SMEs resort to
alternative costly solutions such as self-financing, supplier credit or decentralized financial systems
(DFS) with low financing or refinancing capacity. Private sector guarantee and financing funds are
numerous but barely streamlined: Economic Promotion Fund (FPE), Microfinance Stimulus Fund,
National Fund for the Promotion of Women’s Entrepreneurship (FNPEF), National Credit Fund for
Women, Guarantee Fund for the Handicraft Promotion and Development Agency (APDA), ARIZ
(Insurance for Private Investment Financing Risk in Project Areas) Fund, Investment Support Fund
for Senegalese Nationals Abroad (FAISE), National Fund for Youth Promotion (FNPJ), Guarantee
Fund for the Federation of Mutual Cooperative Societies, etc.
4.2.20. Recent Government Action: The issue of financing mechanisms, equity participation and
guarantees for businesses is central to Government’s concerns as reflected in its determination to set
up FONSIS, FONJIP, BNDE or the public procurement fund. The willingness to create a National
Economic Development Bank (BNDE) addresses the need to facilitate SME access to financing,
among others. The BNDE’s registration request has been submitted to BCEAO. Furthermore, various
SME guidance structures were set up by the authorities, from Tool Centres to the Upgrade Office.
ADEPME is an SME guidance agency which has an Information and Formalisation Window (GIF)12
,
among others. However, this raises questions as to its relationship with government services in charge
of SMEs, including those responsible for women and youth entrepreneurs. The establishment of
Business Creation Centres was announced in the Prime Minister’s General Policy Statement
(September 2012) to ensure the harmonisation and efficiency of the SME guidance mechanism that
has hitherto left no visible impact. An SME labelling programme is supported through PAPSP, which
also seeks to set up an information system to collect, analyse and disseminate reliable data on women
entrepreneurs and to produce and disseminate an updated guide on them.
4.2.21. Programme Measures: In this regard, PACICE will support reforms aimed at: (i) getting the
ad hoc Agencies’ Evaluation Committee to adopt an action plan for streamlining financing
mechanisms for the development of private initiatives that result from rationalisation of executing
agencies and similar structures; (ii) ensuring the adoption of an action plan for the establishment of a
contracts fund in accordance with the recommendations of the relevant study; and (iii) streamlining
the guidance mechanisms of MSEs and SMEs at the national and local level.
4.2.22. Expected Outcomes: To facilitate SME access (especially for women and youth) to
guarantee and financing systems, guarantee and financing instruments (contract funds, factoring,
financial lease, venture capital, etc.) will have to be diversified to ensure complementarity and
harmonization. It would also entail harmonizing and disseminating the various SME guidance
mechanisms for MSEs and SMEs (existing Tool Centres and Business Creation Centres mentioned in
the Prime Minister’s General Policy Statement) at the national and local level so as to promote the
viability and sustainability of businesses, and improve the guidance of "entreprenants", especially
women and youth entrepreneurs.
12 2012 ADEPME Progress Report indicates that the GIF processed 149 (one hundred and forty-nine) applications for guidance out of
163 (one hundred and sixty-three) received in 2012, representing a rate of 91%.
14
4.3. Financing Needs and Arrangements
The financing requirement on external resources is projected to be CFAF 328.5 billion13
. Such
financing will comprise CFAF 217 billion from "project" loans, CFAF 55 billion from "programme"
loans expected mainly from the World Bank (CFAF 15.3 billion), AFD (CFAF 19.9 billion) and
AfDB (CFAF 19 billion), CFAF 91.4 billion from external debt write-offs, CFAF 18 billion from
HIPC assistance, the net amount from bond issues on the local and sub-regional markets projected at
CFAF 392 billion for 2013, and lastly non-concessional loans amounting to CFAF 129.9 billion. Net
domestic financing is projected at CFAF 49.2 billion, including CFAF 39.2 billion as net bank
financing (comprising CFAF 53.2 billion as net public securities) and CFAF 10 billion expected from
the non-banking system. Table 4
Financing Requirement in CFAF billion, except otherwise indicated) 2013 Prog. Total revenue and grants 1 812.39
Budget revenue and FSE 1 604.54
Grants 207.85
Budget 38.94
In capital 168.91
Total expenditure and loans (net) 2 190.21
Recurrent expenditure 1 277.83
Capital expenditure 912.38
Domestic financing 515.28
External financing 397.10
On-lending 12.80
Overall budget balance (cash basis. including grants) - 377.82
Financing 377.72
External financing 328.51
Including AfDB 19.00
Including WB 15.3
Including AFD 19.9
Domestic financing 49.20 Source: DPEE, estimates by Bank services
4.4. Programme Beneficiaries
Although the entire population of Senegal will benefit from this programme because it focuses on
inclusive and job-creating growth, women and the youth will benefit more as public service users,
entrepreneurs and stakeholders in various representation structures (civil society, socio-professional
organisations, dialogue frameworks such as the CPI or the National Land Reform Commission, etc.).
With respect to impact and outcomes, PACICE will directly strengthen institutions responsible for
reform implementation, especially those under the Ministry of Economy and Finance, the Audit
Bench, APIX, the Ministry in charge of SMEs and ADEPME, and DREAT. SMEs especially will
benefit from this programme because it seeks to facilitate access to financing and government
contracts.
4.5. Impact on Gender
Through this programme, the Bank supports the Government’s gender-sensitive budgeting initiatives.
The two components of the programme will have a positive impact on women, by mainstreaming the
gender dimension into public policies and promoting inclusive private sector development. In seeking
to promote the updating of SNEEG, PACICE will enable the Directorate for Gender Equity and
Equality to review its strategy to make it more effective. Similarly, the operationalization of Pillar 2 of
Senegal's Statistics Master Plan will endow the country with reliable statistics on the gender
dimension. The same applies to various measures recommended by PACICE to boost the development
13
DPEE: Report on the 2012 Economic and Financial Situation and the Outlook for 2013
15
of SMEs, a large number of which are managed by women entrepreneurs. Reforms relating to the
rationalization of private sector development funds and guidance mechanisms for SMEs, or to the
government contracts fund, will promote the formalisation of businesses and increase women's access
to government contracts.
4.6. Impact on the Environment
PACICE is a general budget support operation. It will have no impact on the environment and is
classified under Category III.
V. IMPLEMENTATION, MONITORING AND EVALUATION
5.1. Implementation Arrangements
5.1.1. Competent institution: The Ministry of Economy and Finance (MEF) is the programme
executing agency. Programme implementation will be piloted by the Budget Support Monitoring
Committee (the policy organ responsible for coordination, guidance and decision-making). The
Committee comprises institutions responsible for public finance management and other bodies such as
the Development Policy Studies Centre (CEPOD), the National Agency for Statistics and Population
Studies (ANSD), the National Agency for Investment Promotion and Major Projects (APIX), the
Directorate for Forecasting and Economic Studies (DPEE) and any other structure such as the Audit
Bench, where appropriate. Hosted within the MEF cabinet, this Committee has the requisite
experience and capacity. It has already satisfactorily managed and coordinated previous programmes
funded by the Bank and other TFPs. Furthermore, PACICE will be implemented in accordance with
the provisions of ACAB as a framework for coordinating TFPs and for dialogue with the Government.
Through ACAB, the Government and TFPs that signed the Arrangement agreed on a matrix
containing the measures of each TFP programme. They also agreed to hold joint periodic reviews
involving representatives of structures tasked with implementing measures retained in the matrix.
5.1.2. Procurements: The loan will be granted as a general budget support. Consequently, its
implementation does not raise direct questions of procurement of goods and services. A summary on
the monitoring of public procurement reforms is presented in Technical Annex VII of the appraisal
report.
5.1.3. Disbursements: The financing proposed under the programme is a loan of UA 25.54 million.
It will be disbursed as a single tranche of UA 25.54 million once the applicable precedent conditions
have been fulfilled. The decision to make a single tranche disbursement in 2013 is justified by the
pragmatic approach of budget support operations, based on an annual disbursement to improve aid
predictability. Indeed, the Bank has been disbursing budget support to Senegal annually since 2010.
This will continue with future programme-based operations from 2014. The funds will be paid into a
Treasury account opened in the books of the BCEAO national branch in Senegal.
5.1.4. Financial Management: Since this is a budget support programme, the resources allocated
will all be used through the public expenditure circuit (resource allocation, expenditure chain, control,
audit). The Ministry of Economy and Finance shall assume responsibility for the administrative,
financial and accounting management of such resources.
5.1.5. Audit: Loan resources will be audited as part of review of the 2013 Budget Act by the Audit
Bench. A copy of the 2013 Draft Budget Act should be transmitted to the Bank at the same time that
the said draft is tabled before the National Assembly.
16
5.2 Monitoring and Evaluation Arrangements
The programme’s common matrix of measures and logical framework are reference instruments for
PACICE monitoring/evaluation. This programme will be supervised and subjected to mid-term
reviews in accordance with Bank regulations. The ACAB Secretariat will prepare half-yearly
monitoring reports for submission to the Bank. The Bank’s regional office in Dakar (SNFO) will
supervise and closely monitor the programme. SNFO will regularly update ACAB partners and the
IMF on programme status. The completion report, which will be shared with these partners, will be
prepared according to Bank regulations.
VI LEGAL DOCUMENTATION AND AUTHORITY
6.1. Legal Documentation
The legal document to be used under the programme is the Loan Agreement between the Republic of
Senegal (Borrower) and the African Development Fund (the Fund).
6.2. Conditions Precedent to Bank Group Intervention
6.2.1. Conditions precedent to loan effectiveness: Loan effectiveness shall be subject to fulfilment
of the conditions provided for in Section 12.01 of the Fund’s General Conditions Applicable to Loan
Agreements and Guarantee Agreements.
6.2.2. Conditions Precedent to Loan Disbursement: Apart from the effectiveness conditions set
forth under paragraph 6.2.1 above, disbursement of the loan resources shall be subject to fulfilment of
the following precedent conditions:
(i) Provide proof that the ad hoc Agencies’ Evaluation Committee has adopted an action
plan for streamlining financing mechanisms for the development of private initiatives
resulting from the rationalisation of executing agencies and similar structures;
(ii) Provide proof that the Minister of Economy and Finance has validated the appraisal
guide for projects to be included in the Triennial Public Investment Programme (PTIP)
by incorporating gender- and job-related indicators; and
(i) Provide proof that the Council of Ministers has adopted the enabling decree of the
organic law on the Audit Bench.
6.3. Compliance with Bank Group Policies
PACICE is in line with the Bank’s 2013-2022 Ten-Year Strategy Guidelines, and especially with its
pillar on governance. It is also consistent with the Bank’s Policy on Programme-based Operations. No
exemptions are requested under this programme.
17
VII RISK MANAGEMENT
The table below generally presents the risks that could affect programme implementation or the
attainment of results.
Table 5
Risks and Mitigation measures Risks Mitigation Measures
Macroeconomic risk related to Senegal’s
vulnerability to external shocks that have a
negative impact on economic growth and public
finance.
This risk is mitigated by the support of development partners to
Government efforts aimed at maintaining productive
investments to consolidate economic recovery and boost the
resilience of the population. The governance of external oversight and
procurement oversight institutions may also
affect the implementation of certain measures.
This risk will be mitigated through revision of texts governing
the Audit Bench, capacity-building for the Public Procurement
Directorate and the independence of ARMP. Resistance to change, as regards transitioning
from means-based to results-based management
would likely affect the achievement of expected
project outcomes.
High-level commitment (Presidency / Prime Minister’s Office)
to implement structural reforms, especially regarding new
WAEMU guidelines, as well as capacity-building actions
scheduled under implementation of new WAEMU guidelines,
can mitigate this risk.
VIII RECOMMENDATION
This programme will help Senegal to address the challenges of inclusive and sustainable growth. The
reforms it supports are consistent with the Government’s vision and address the priorities of the
Bank’s strategy in Senegal. It is recommended that the Board of Directors approve a loan of UA
25.54 million, as general budget support, for the Republic of Senegal to finance the Inclusive Growth
and Economic Competitiveness Support Programme (PACICE).
ANNEX I PAGE 1/4
LETTER OF DEVELOPMENT POLICY
Republic of Senegal No. 005149 MEF/CAB/CT/A.Nd One people –One Goal – One faith
Ministry of Economy and Finance Dakar, May 16th, 2013
The Minister,
SUBJECT: ADB Budget Support Operation 2013-2014
Mr. President,
In the context of the budget support that the African Development Bank
makes available to our country in 2013, I am hereby sending you the Letter of
economic and social development policy. This document lays out recent economic
and social developments, and the main orientations of our 2013-2017 Economic and
Social Development Strategy.
I take this opportunity to thank the authorities of the African Development
Bank group for the constant support they provide to our country.
Please accept, Mr. President, the assurance of my high consideration.
To Mr. Donald KABERUKA
President of the African Development Bank
Temporary Relocation Agency (TRA)
Tunis, Tunisia
ANNEX I PAGE 2/4
GOVERNMENT’S POLICY LETTER
I. Introduction
The Government of Senegal is determined to carry on implementing the necessary reforms to create
conditions conducive to sustainable economic growth that facilitates attainment of the MDGs by 2015. To that
end, it will continue to apply cautious macroeconomic policies while modernising the business environment to
boost its economic competitiveness and improve the people’s living conditions. To implement its reforms, the
Government is supported by the IMF within the framework of a triennial agreement under the Economic Policy
Support Instrument (EPSI).
II. Recent Macroeconomic Trends
Recent macroeconomic developments have in general been consistent with projections made in the
autumn of 2012. Growth reached 3.5% in 2012 (from 2.1 % in 2011), fuelled by strong agricultural sector
performance. Inflation was moderate with a consumer price increase of 1.4% in 2012. External trade was
characterised by deterioration in the current account balance whose deficit, net of official transfers, exceeded
10% of gross domestic product (GDP) in 2012 due to an increase in petroleum and food product imports. Credit
to the economy grew by approximately 10% while growth in money supply remained contained. Despite a
sluggish international environment, GDP growth should inch up to 4% in 2013. Inflation would remain below
2%. The current account deficit is expected to improve.
As regards budget and structural reforms, substantial results were obtained under the previous EPSI
programme. Budget execution was characterised in 2012 by moderate revenue collection and cautious execution
of public spending. Indeed, total budget revenue (including FSE) is estimated at CFAF 1,464 billion compared to
CFAF 1,376 billion in 2011, representing an increase of CFAF 88 billion (+5.2%). Grants are estimated at CFAF
205.9 billion in 2012 compared to CFAF 150 billion the previous year. This trend stems mainly from agricultural
sector support provided by UN System agencies and development partners, as well as budget support from Saudi
Arabia. Meanwhile, total spending and net loans amount to CFAF 2,077 billion compared to CFAF 1,980 billion
a year earlier. On the whole, the total budget deficit including grants is estimated at CFAF 424 billion (5.9% of
GDP) compared to CFAF 455 billion (6.7% of GDP) in 2011.
III. Macroeconomic Policies for 2011-2013
Growth should continue accelerating as the effects of external shocks abate. Inflation is expected to stay
below the 3% threshold set under the WAEMU convergence pact. The current transactions deficit (net of official
transfers) should improve. The overall balance of payments should be positive and contribute to consolidation of
the Union’s foreign exchange reserves. As part of the overriding objective of accelerating economic growth, the
main objectives of Government’s programme are to: (i) conduct a cautious public finance and debt policy and
improve the quality of expenditure to preserve macroeconomic stability; (ii) increase revenue to create
substantial budgetary leeway to finance priority expenditure, including additional spending on infrastructure; (iii)
continue strengthening public finance management and governance to improve on public finance transparency,
budget planning and implementation; raise public spending productivity and reduce budgetary risks; and (iv)
encourage private sector development by initiating structural reforms, especially in the energy and finance
sectors, as well as other reforms relating to the business environment.
Pursue a cautious policy with regard to public finance, infrastructure needs and debt
Implementing a cautious policy on public finance and debt is the main instrument for preserving
macroeconomic stability, based on maintaining low inflation and public debt sustainability. Within the scope of
available financing, a budget deficit below 4% of GDP in the medium term and 3% of GDP in the long term will
facilitate attainment of Government’s set targets. It will also allow for maintaining the basic budget balance in
line with WAEMU convergence criteria. A cautious budget policy as Senegal complies with WAEMU's
monetary and foreign exchange policies will help to contain inflation.
The Government will relentlessly strive to improve the composition and efficiency of public spending.
After detailed analysis, it will adjust the composition of expenditure by cutting recurrent expenditure to increase
ANNEX I PAGE 3/4
investment spending. The Government will better monitor poverty control spending by improving data collection
and the definition and targeting of such data in coordination with the World Bank and within the framework of
SNDES 2013-2017. The Government intends to finance its investment programme by combining various
financing sources and adopting a sound loan policy that preserves public debt sustainability. To that end, it will
continue to prefer concessional financing and, in general, refrain from contracting or guaranteeing non-
concessional external loans. The Government is aware that all non-concessional financing must be tied to
projects deemed economically profitable (as appraised by an internationally renowned firm) and should not
undermine public debt sustainability. It will consult IMF services long in advance in case of any exceptions to
the above stipulations.
Increase revenue to generate greater budgetary leeway for priority expenditure financing
The Government is carrying on with its strategy to increase revenue as a percentage of GDP. The main
pillars of this strategy are: (i) rationalization of public spending; (ii) improvement of the tax and customs
departments; and (iii) improvement of the tax system in general with the help of an IMF technical assistance
mission responsible for conducting a diagnosis of the fiscal system. A new general tax code was adopted in 2012
and lays emphasis on the reduction of fiscal expenditure to increase revenue as well as transparency and
efficiency of the tax system.
The Government intends to continue modernizing the tax department following a strategic plan devised
by DGID and the customs department based on the DGD strategic plan. To that end, the DGID reorganized its
services to facilitate the payment of taxes by constructing new tax revenue offices and reducing the waiting time
for taxpayers.
Strengthen public finance management and governance
The Government is determined to continue improving public finance management and governance. It
intends to consolidate the progress made so far in budget preparation, modification and execution; the
improvement of accounting quality and the timely submission of management accounts. Accordingly, it has
mainstreamed all the new WAEMU guidelines into Senegalese national law. It plans to operationalize them and
has defined an implementation plan as part of the Budget and Financial Reform Plan (PRBF) designed by the
Government and development partners, and based in part on the 2011 PEFA report.
Private Sector Development
The Government is determined to implement reforms within the shortest time possible to support
private sector development, by laying special emphasis on the energy sectors, SME financing, the business
environment and governance.
Energy Sector
With respect to energy policy implementation, several reforms were initiated after a diagnosis that
highlighted the causes of structural imbalances such as, in particular, a major deficit between electricity supply
and demand as well as SENELEC’s critical financial situation.
However, difficulties were encountered in applying the emergency plan. This resulted in delays in
investments, notably the arrival of more powerful units to replace the rented power generators. These delays had
a considerable negative impact on operating costs and on the timeframe for improving the energy mix.
Nevertheless, the securement of fuel supplies to SENELEC, the rental of a 150 MW generator and the
rehabilitation of some power stations have helped to reduce the power generation deficit. Consequently, current
power outages are only due to disruptions caused by obsolescence of the transmission and distribution grids in
certain areas.
The Takkal Plan was evaluated during the second half of May 2012. After that, a decision was taken to
strengthen, adjust and broaden the plan’s strategic perspective, as well as continue to restructure the financing
and execution of investments that will be essential to the recovery and expansion of the country’s energy sector
by laying special emphasis on power transmission and distribution grids.
ANNEX I PAGE 4/4
All projects under the recovery plan were appraised and relevant alternatives to some of them,
especially in terms of power generation, are under consideration. Hence, to improve the energy mix, the
introduction of natural gas, hydropower and renewable energies will be considered as complementary to carbon.
The Government intends to speed up the implementation of delayed activities (for instance the financial
restructuring of SENELEC and demand management measures).
To ensure the sustainable restoration of the electricity sub-sector balance, an operational and financial
restructuring plan was prepared for SENELEC that seeks to restore the financial balance of the company. In
other words, it will restore its operational profitability and the fundamentals of its balance sheet, and ultimately
provide sustainable quality service at competitive prices. A performance contract will be signed between the
State and the company.
Private Sector Support
It will be recalled that Senegal set up a Presidential Investment Council (CPI) as far back as November
2002 to institute direct, frank and comprehensive dialogue between the Government and national and foreign
investors. The CPI has been a privileged framework for identifying the obstacles undermining the development
of private investment and constraints to Senegal’s competitiveness. It also prioritizes such constraints, proposes
reforms and monitors their implementation. The enforcement of CPI guidelines has been rather weak in recent
years - a factor that accounts for the decline in Senegal’s Doing Business ranking.
The Government has taken serious measures to improve SME access to financing. These are: (i) the
adoption of a specific and regulatory framework for the creation and development of companies specialized in
financial leases; (ii) the institutional transformation of the Economic Promotion Fund (FPE) into a National
Economic Development Bank (BNDE); (iii) the adoption of the OHADA Uniform Acts on guarantee operations
and the status of "entreprenant", which became effective on 15 May 2011, improve access to credit and increase
the range of assets that can be used as guarantee, among others; (iv) the creation of new instruments that will
help to improve the mechanism for financing the economy through the creation of Priority Guarantee and
Investment Funds (FONGIP) and the Sovereign Strategic Investment Fund (FONSIS).
Other Factors that Improve the Business Climate and Governance
The objective over the next few years is to improve the business environment by implementing CPI
decisions. This will also lead to an improvement of Senegal’s "Doing Business" ranking. Hence, emphasis will
be laid on key actions identified in the short term called “Quick Wins” (i.e. targeted reforms to be initiated and
implemented within the shortest time possible). These include: (i) facilitation of access to developed land and
access to financing; (ii) modernisation of justice and labour legislation; (iii) organisation, safeguard and
development of resources; and (iv) continuation with the dematerialisation of procedures.
A. AKANE
Minister of State in charge of Economy and Finance
ANNEX II
Annex 2: Matrix of PACICE Measures Extracted from the Common Matrix of PTF ACAB Members (*) Conditions precedent to disbursement of the single programme tranche
Sub-component Programme Measures
Component 1: Improvement of State efficiency, accountability, transparency and equity in public management
Sub-component 1.1: Promotion
of results-based and gender-
sensitive public management
(i) Update SNEEG 2005-2015 and define a plan of action for gender integration into public policies:
(ii) Operationalize Pillar 2 of Senegal's Statistics Master Plan on gender-sensitive statistics and indicators by implementing the action
designed to that end;
(iii) Have the Minister of Economy and Finance validate the appraisal guide for projects to be included in the PTIP while incorporating
gender- and job-related indicators;(*)
(iv) Define an action plan for setting up a public policy monitoring/evaluation mechanism that includes gender- and job-related indicators;
(v) Ensure adoption, by the Council of Ministers, of the decree setting up the National Employment Observatory and reinforce the system for
production of job-related statistics and indicators.
Sub-component 1.2:
Strengthening oversight of
Government action in an effort
to ensure accountability and
transparency
(i) Adoption, by the Council of Ministers, of the enabling decree of the organic law on the Audit Bench;
(ii) Adoption, by the Council of Ministers, of the texts governing the status of magistrates on the Audit Bench;
(iii) Adoption, by the Council of Ministers, of the bill on declaration of ministers’ assets;
(iv) Implementation of all measures precedent to Senegal’s membership of EITI.
Component 2: Improvement of corporate governance and the business climate to ensure inclusive private sector development
Sub-component 2.1:
Improvement of the business
environment and
harmonization of guidance
mechanisms for
“entreprenants” to ensure the
inclusive development of
businesses.
(i) Application of the new status of "entreprenant" adopted by OHADA through the preparation of two bills on the fiscal status and social
status of the "entreprenant";
(ii) Implementation of the Corporate Governance Code through dissemination of the report of the Monitoring Committee set up to that effect;
(iii) Adoption of a road map on land tenure reform that lays special emphasis on women’s access to land.
Sub-component 2.2:
Streamlining of guarantee and
financing mechanisms for
SMEs that promote women’s
and youth entrepreneurship
(i) Adoption by the ad hoc Agencies’ Evaluation Committee of an action plan for streamlining financing mechanisms for the development of
private initiatives resulting from the rationalisation of executing agencies and similar structures;(*)
(ii) Finalise the study on the establishment of a contracts fund and propose a plan for the implementation of recommendations.
(iii) Finalise the streamlining of guidance mechanisms for MSEs and SMEs at the national and local levels.
ANNEX III
Statement on Country Relations with the IMF (Press Release No. 13/112 of 10 April
2013)
IMF Concludes 5th
PSI Review Mission to Senegal
The International Monetary Fund (IMF) mission that visited Senegal during March 27-April 10, 2013 to conduct
the fifth review under the three-year Policy Support Instrument (PSI) approved in December 2010 concluded as
follows:
"Recent macroeconomic developments were broadly in line with the projections made in fall 2012". Growth reached 3.5 percent in 2012 (from 2.1 percent in 2011), fuelled by strong performance in the agricultural
sector. Inflation has been moderate, with a 1.4 percent consumer price increase in 2012. External trade was
marked by a deterioration in the current account deficit which exceeded 10 percent of gross domestic product
(GDP) in 2012, driven largely by increases in imports of petroleum and food products. Credit to the economy
increased by about 10 percent, while growth of the money supply was contained. Notwithstanding the sluggish
international environment, GDP growth is expected to tick up to 4 percent in 2013. Inflation should remain
below 2 percent. The current account deficit is expected to improve.
"Program implementation was satisfactory overall." All quantitative assessment criteria and indicative
targets for the program at end-2012 were met, except for the indicative target on single tendering owing to
emergency procurement associated with the floods and preparation for the 2012/2013 crop year. For the first
time in the last few years, the annual fiscal deficit target was met despite significant revenue shortfalls (deficit of
5.9 percent of GDP). Progress was made with the implementation of structural reforms, notably with the entry
into force of the new general tax code on January 1, 2013. The discussions between the authorities and the
mission focused on efforts to reduce the fiscal deficit, which remains a priority objective for the authorities in
order to maintain debt sustainability and rebuild fiscal space. Since the last review, the fiscal outlook has been
affected by tax-revenue shortfalls and new spending pressures, largely reflecting the situation in the energy
sector. These developments should be matched by additional efforts to increase fiscal revenues and savings on
certain expenditures. Overall, however, deficit reduction will be slightly lower than expected in 2013, to allow
for non-recurrent expenditures associated with the security situation in Mali and the Sahel, and the launching of
the program in response to the major flooding of 2012. Nevertheless, the authorities reaffirmed their objective to
reduce the deficit to less than 4 percent of GDP by 2015.
"The mission expressed its concern regarding the situation in the energy sector." Energy price subsidies
(electricity and petroleum products) cost Senegalese taxpayers more than CFAF 160 billion in 2012 and would
remain high in 2013. The mission believes that this burden is difficult to bear for public finances and to justify,
given that only a small share of these subsidies benefit the poor. Consequently, the mission encouraged the
authorities to phase out these subsidies and replace them with better-targeted social protections. A long-term
reduction in electricity subsidies will require bringing online power stations that use more efficient and less
expensive technologies, as well as substantial efficiency improvements at SENELEC. Accordingly, the mission
encouraged the authorities to accelerate the implementation of their energy sector reform strategy.
"The IMF’s Executive Board is expected to take up the fifth program review in June 2013."
ANNEX III
Annex 4: Key Macroeconomic Indicators
Indicators Unit 2000 2008 2009 2010 2011 2012 2013 (e)
National Accounts
GNI at Current Prices Million US $ 5 038 12 023 12 954 13 428 13 661 ... ...
GNI per Capita US$ 530 1 020 1 070 1 080 1 070 ... ...
GDP at Current Prices Million US $ 4 693 13 414 12 807 12 901 14 355 12 613 13 425
GDP at 2000 Constant prices Million US $ 4 693 6 571 6 728 7 018 7 165 7 431 7 748
Real GDP Growth Rate % 3,2 3,7 2,4 4,3 2,1 3,7 4,3
Real per Capita GDP Growth Rate % 0,6 1,0 -0,3 1,6 -0,5 1,1 1,6
Gross Domestic Investment % GDP 20,4 31,3 22,1 22,6 25,3 25,8 27,0
Public Investment % GDP 4,5 6,2 6,3 6,4 6,6 7,6 8,8
Private Investment % GDP 15,9 25,1 15,7 16,2 18,7 18,2 18,2
Gross National Savings % GDP 14,6 19,7 22,6 25,3 22,3 22,5 22,9
Prices and Money
Inflation (CPI) % 0,7 5,7 -2,2 1,2 3,4 2,5 1,6
Exchange Rate (Annual Average) local currency/US$ 712,0 447,8 472,2 495,3 471,9 510,5 ...
Monetary Growth (M2) % 10,7 1,8 11,4 13,7 6,8 ... ...
Money and Quasi Money as % of GDP % 23,6 33,4 36,9 39,8 40,0 ... ...
Government Finance
Total Revenue and Grants % GDP 18,7 21,5 21,6 21,9 22,5 23,1 23,0
Total Expenditure and Net Lending % GDP 18,2 26,3 26,8 27,3 29,1 30,1 30,9
Overall Deficit (-) / Surplus (+) % GDP 0,5 -4,8 -5,2 -5,4 -6,6 -7,0 -7,9
External Sector
Exports Volume Growth (Goods) % -12,1 -8,3 26,3 0,8 2,7 -8,6 3,7
Imports Volume Growth (Goods) % -4,5 27,5 -7,8 -5,6 8,3 -4,7 0,1
Terms of Trade Growth % -1,4 35,9 -5,7 -2,4 1,5 1,2 -4,8
Current Account Balance Million US $ -328 -1 888 -856 -584 -1 103 -1 086 -1 251
Current Account Balance % GDP -7,0 -14,1 -6,7 -4,5 -7,7 -8,6 -9,3
External Reserves months of imports 2,7 2,7 4,8 4,7 3,9 3,5 ...
Debt and Financial Flows
Debt Service % exports 15,4 4,2 5,5 5,8 13,7 7,9 7,9
External Debt % GDP 81,0 43,7 51,9 53,2 48,5 59,7 60,2
Net Total Financial Flows Million US $ 482 1 361 1 396 924 1 255 ... ...
Net Official Development Assistance Million US $ 431 1 069 1 016 928 1 052 ... ...
Net Foreign Direct Investment Million US $ 63 398 320 266 286 ... ...
Source : AfDB Statistics Department; IMF: World Economic Outlook, October 2012 and International Financial Statistics, October 2012;
AfDB Statistics Department: Development Data Portal Database, March 2013. United Nations: OECD, Reporting System Division.
Notes: … Data Not Available ( e ) Estimations Last Update: May 2013
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
%
Real GDP Growth Rate, 2000-2013
-3
-2
-1
0
1
2
3
4
5
6
7
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Inflation (CPI),
2000-2013
-16,0
-14,0
-12,0
-10,0
-8,0
-6,0
-4,0
-2,0
0,0
2 000
2 001
2 002
2 003
2 004
2 005
2 006
2 007
2 008
2 009
2 010
2 011
2 012
2 013
Current Account Balance as % of GDP,
2000-2013