Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: PAD1028

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT PAPER

ON A

PROPOSED ADDITIONAL CREDIT

IN THE AMOUNT OF SDR 3.3 MILLION (US$5 MILLION EQUIVALENT)

TO THE

REPUBLIC OF COTE D’IVOIRE

FOR A

GOVERNANCE AND INSTITUTIONAL DEVELOPMENT PROJECT

May 14, 2014

Poverty Reduction and Economic Management Unit 4 Country Department AFCF2 Africa Region

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

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

i

CURRENCY EQUIVALENTS

(Exchange Rate Effective 04/30/2014)

Currency Unit = CFA Franc (CFAF) US$1.00 = CFAF 471

SDR$1.00 = US$0.645

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AF Additional Financing AfDB African Development Bank AFRITAC Africa Regional Technical Assistance Center AFO Administrative and Financial Officer AIP Ivorian Press Agency, Agence Ivoirienne de Presse ARCC Coffee and Cocoa Regulatory Agency, Autorité de Régulation du Café et du Cacao ANRMP National Authority for the Regulation of Public Procurement, Autorité Nationale de

Régulation des Marchés Publics ASTER Networked Treasury Services Application, Application des Services du Trésor en Réseau BCEAO Central Bank of West African States BCC Cocoa and Coffee Exchange, Bourse du Cacao et du Café CBA Communication Based Assessment CCC Coffee-Cocoa Council, Conseil Café Cacao CFAA Country Financial Accountability Assessment CFAF Franc of the African Financial Community COJO Committee Meeting for the Opening and Evaluation of Tenders, Commission

d’Ouverture et de Jugement des Offres CPAR Country Procurement Assessment Review CPS Country Partnership Strategy CSC Monitoring and Coordination Committee, Comité de Suivi et de Coordination DA Designated Account DDR Disarmament, Demobilization and Reintegration DPO Development Policy Operation EC European Commission EU European Union EPA Public Enterprises of an Administrative Nature, Etablissements Public à Caractère

Adminisratif EPIC Public Body with Industrial and Commercial Functions, Établissement Public à

Caractère Industriel et Commercial EPN National Public Institutions, Établissements Publics Nationaux FIMR Rural investment fund, Fonds d’Investissement en Milieu Rural GIDG Governance and Institutional Development Grant, Don de Gouvernance et de

Développement Institutionnel GUOAR Fiscal Unified Management of Revenues Transactions, Gestion Unifiée des Opérations

d'Assiette et de Recettes HIPC Heavily Indebted Poor Countries Initiative HILSS Houshold Living Standard Survey IMF International Monetary Fund IDA International Development Association IDF Institutional Development Fund IGE State General Inspectorate, Inspection Générale d’État IGF General Inspectorate of Finance, Inspection Générale des Finances

ii

IMF International Monetary Fund ISN Interim Strategy Note LCS Least Cost Selections LDP Letter of Development Policy LICUS Low-Income Country Under Stress EITI Extractive Industries Transparency Initiative FBS Fixed Budget Selection FDPCC Development Fund for the Promotion of Coffee and Cocoa Producers’ Activities, Fonds

de Développement et de Promotion des Activités des Producteurs du Café et du Cacao FIMR Rural Investment Funds, Fonds d’Investissement en Milieu Rural FN Forces Nouvelles FRC Fund for the Regulation and Control of Coffee and Cocoa, Fonds de Régulation et de

Contrôle du Café et du Cacao GDP Gross Domestic Product MC Ministry of Communication, Ministère de la Communication MEF Ministry of Economy and Finance, Ministère de l’Économie et des Finances MEWF Ministry for the Environment, Water and Forestry MFP Ministerial Focal Points MINAGRI Ministry of Agriculture, Ministère de l’AgricultureMME Ministry of Mining and Energy, Ministère des Mines et Énergie MSC Monitoring and Steering Committee MTEF Medium-term Expenditure Framework OECD Organisation for Economic Co-operation and Development OHADA Organization for the Harmonization in Africa of Commercial Law, Organisation pour

l’Harmonisation en Afrique du Droit des AffairesPCAP Post-Conflict Assistance Project PCU Project Coordination Unit PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PEMFAR Public Expenditure Management and Financial Accountability PETROCI National Company for Petroleum Operations in Côte d’Ivoire, Société Nationale

d’Opérations Pétrolières de la Côte d’Ivoire PFM Public Financial Management PGES Environmental and Social National Management Plan, Plan de Gestion Environnemental

et Social PIM Project Implementation ManualPIU Project Implementation Unit PMU Project Monitoring Unit PTC Project Technical Committee PND National Development Program, Programme National de Développement QBS Quality Based Selection UNDP United Nations Development Program RBM Results-based Management RICI-EPN Information System Network for the Integrated Accounting of State Owned Entities,

Réseau Informatique de Comptabilité Intégrée des Etablissements Publics Nationaux RTI National Radio and TV Station, Radiodiffusion Télévision Ivoirienne SIGADE Integrated Debt Management System, Système Intégré de Gestion de la Dette SIGB Integrated Debt Management System, Système Intégré de Gestion du Budget SIGFAE Integrated System for the Management of the Civil Servants’ Records, Système Intégré

de Gestion du Fichier des Fonctionaires et Agents de l’État SIGFIP Integrated Public Finance Management System Système Intégré de Gestion des Finances

Publiques SIGMAP Integrated Procurement Management System Système Intégré de Gestion des Marchés

Publics SIGESCOD Integrated Decentralized Authorities Management System, Système Intégré de Gestion

des Collectivités Décentralisées SNGRC National Secretary for Governance and Capacity Building, Secrétariat National à la

Gouvernance et au Renforcement des Capacités

iii

SODE State Owned Enterprises, Société d’État SOE Statement of Expenditure SNDI Information System Development National Society, Société Nationale des

Développements Informatiques SSS Single Source Selection SYDAM Customs Automated Clearance System, Système de Dédouanement Automatisé des

Marchandises TFP Technical and Financial Partners US United States PCU Project Coordination Unit WAEMU West African Economic and Monetary Union

Regional Vice President: Makhtar Diop Country Director: Ousmane Diagana

Sector Director: Marcelo Giugale Sector Manager: Miria Pigato

Task Team Leader: Robert A. Yungu

iv

CÔTE D’IVOIRE

Additional Financing for the Governance and Institutional Development Project (P147016)

TABLE OF CONTENTS

I. INTRODUCTION .......................................................................................................................... 1

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING .............................. 1

A. COUNTRY CONTEXT AND DEVELOPMENT CHALLENGES.....................................................................1B. SECTORAL AND INSTITUTIONAL CONTEXT................................................................................................2C. DESCRIPTION OF THE ORIGINAL FINANCING (OF) PROJECT AND PERFORMANCE.................5D. PROJECT’S IMPLEMENTATION RECORD AND PROJECT PERFORMANCE........................................6E. ALIGNMENT WITH THE COUNTRY PARTNERSHIP STRATEGY (CPS)..............................................7F. RATIONALE FOR ADDITIONAL FINANCING.................................................................................................7

III.PROPOSED CHANGES ................................................................................................................ 8

A. PROJECT BENEFICIARIES............................................................................................................................................11

B. PROJECT COMPONENTS................................................................................................................................................11

IV. APPRAISAL SUMMARY ........................................................................................................... 16

A. ECONOMIC AND FINANCIAL ANALYSIS...............................................................................................................16

B. TECHNICAL ANALYSIS...................................................................................................................................................17

C. FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS….………..…………………….17

D. PROCUREMENT..................................................................................................................................................................18

E. FRAUD AND CORRUPTION...........................................................................................................................................18

F. ENVIRONMENT (INCLUDING SAFEGUARDS).....................................................................................................18

G. SOCIAL (INCLUDING SAFEGUARDS).......................................................................................................................18

H. DATED LEGAL COVENANTS.......................................................................................................................................19

I. RISKS AND RESULTS........................................................................................................................................................19 List of Annexes: Annex 1: Revised Results Framework and Monitoring Indicators ....................................................... 20Annex 2: Results Framework and Monitoring ...................................................................................... 24Annex 3: Operational Risk Assessment Framework (ORAF) ............................................................... 27Annex 4: Procurement Arrangements ................................................................................................... 30Annex 5: Country Map .......................................................................................................................... 32 List of Tables: Table 1: Evolution of scores for PEFA indicators ................................................................................... 3 Table 2: ISR ratings ................................................................................................................................. 6 Table 3: Key Performance Indicators ...................................................................................................... 7 Table 4: Project Costs by Component (US$ Million) ........................................................................... 15

v

ADDITIONAL FINANCING DATA SHEET

Côte d'Ivoire

Governance and Institutional Development Additional Financing (P147016)

AFRICA

AFTP4 .

Basic Information – Parent

Parent Project ID: P107355 Original EA Category: B - Partial Assessment

Current Closing Date: 30-Nov-2014

Basic Information – Additional Financing (AF)

Project ID: P147016 Additional Financing Type (from AUS):

Scale Up

Regional Vice President: Makhtar Diop Proposed EA Category: C - Not Required

Country Director: Ousmane Diagana Expected Effectiveness Date:

01-Aug-2014

Sector Director: Marcelo Giugale Expected Closing Date: 30-Nov-2016

Sector Manager: Miria A. Pigato Report No: PAD1028

Team Leader: Robert A. Yungu

Borrower

Organization Name Contact Title Telephone Email

Ministry to the Premier Minister in charge of Economy and Finance

225-20-30-25-25

Project Financing Data – Parent ( Governance and Institutional Dev.-P107355 )

Key Dates

Project Ln/Cr/TF Status Approval Date

Signing Date Effectiveness Date

Original Closing Date

Revised Closing Date

P107355 IDA-H4010 Effective 12-Jun-2008 25-Jul-2008 22-Oct-2008 15-Dec-2012 30-Nov-2014

Disbursements

Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed Undisbursed% Disbursed

P107355 IDA-H4010 Effective XDR 8.00 8.00 0.00 8.00 0.00 100.00

Project Financing Data: Côte d’Ivoire - Governance and Institutional Development Additional Financing (P147016)

[ ] Loan [ ] Grant [ ] IDA Grant

[X] Credit [ ] Guarantee [ ] Other

Total Project Cost: 5.00 Total Bank Financing: 5.00

Financing Gap: 0.00

vi

Financing Source – Additional Financing (AF) Amount

BORROWER/RECIPIENT 0.00

International Development Association (IDA) 5.00

Total 5.00

Policy Waivers

Does the project depart from the CAS in content or in other significant respects?

No

Explanation

Does the project require any policy waiver(s)? No

Explanation

Team Composition

Bank Staff

Name Title Specialization Unit

Kishor Uprety Senior Counsel Senior Counsel LEGAM

Robert A. Yungu Senior Public Sector Specialist

Team Lead AFTP4

Nabil M. Chaherli Sector Leader Sector Leader AFTSN

Pierre M. Lenaud Program Assistant Program Assistant AFTP4

Aissatou Diallo Senior Finance Officer Senior Finance Officer CTRLA

Jean Charles Amon Kra Senior Financial Management Specialist

Senior Financial Management Specialist

AFTMW

Maurice Adoni Senior Procurement Specialist

Senior Procurement Specialist

AFTPW

Jean-Noel Amantchi Gogoua

Senior Economist Senior Economist AFTP4

Bronwyn Grieve Consultant Consultant AFTP4

Anders Jensen Senior Monitoring & Evaluation Specialist

Senior Monitoring & Evaluation Specialist

AFTDE

Haccandy Yao Alexis Consultant AFTA2

Akoua Gertrude Tah E T Temporary E T Temporary AFCF2

Faly Diallo Financial Officer Financial Officer CTRLA

Catherine Marie Rose Defontaine

Consultant Consultant AFTP4

Locations

Country First Administrative Division

Location Planned Actual Comments

Côte d'Ivoire Region des Lagunes Abidjan X

Institutional Data

Parent (Governance and Institutional Development - P107355)

vii

Sector Board

Public Sector Governance

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Public Administration, Law, and Justice

Central government administration

100

Total 100

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Public sector governance Public expenditure, financial management and procurement

40

Environment and natural resources management

Other environment and natural resources management

20

Rural development Rural policies and institutions 20

Public sector governance Other public sector governance 20

Total 100

Additional Financing: Côte d’Ivoire - Governance and Institutional Development Additional Financing (P147016)

Sector Board

Public Sector Governance

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Public Administration, Law, and Justice

Central government administration

100

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project.

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Public sector governance Public expenditure, financial management and procurement

70

Rural development Rural policies and institutions 20

Public sector governance Managing for development results 10

Total 100

1

I. INTRODUCTION

1. This Project Paper seeks the approval of the Executive Directors to provide an additional financing (AF) in the amount of SDR 3.3 million (equivalent to U$5.0 million) to the Republic of Côte d’Ivoire for the Governance and Institutional Development Grant (GIDG). It also proposes to: (i) add new activities and (ii) revise the Project Development Objective (PDO) and the Results Framework. The AF responds to an official request of the Government of Cote d’Ivoire received on April 8, 2013. The time lag for the response to this request is due to the lack of lending resources available for the country, during fiscal year FY13. The total duration of the overall project, with the new AF project closing date extension, is eight years. 2. The proposed AF will help to deepen the engagement and development impact of the successful Original Project, which has fully disbursed (100%) and has systematically been ranked Satisfactory for both Development Objectives and Implementation Progress over the last two years. Significant improvements have been achieved in public financial management (PFM), governance and transparency in the upstream management of oil and gas and in the cocoa sector. However, many challenges remain which require additional funding to continue and deepen policy reforms and institutional development, particularly in the PFM and the cocoa sector.

3. The second Public Expenditure Management and Financial Accountability Review (PEMFAR II), undertaken in 2013, has highlighted critical areas of weakness in PFM that the Government needs to address. The country’s goal of achieving emerging economy status by 2020, as outlined in its National Development Plan (NDP), heavily depends on the efficiency and effectiveness of PFM systems, as well as good performance of the leading economic sectors in Cote d’Ivoire, particularly the cocoa sector.

4. A key element for strengthening governance and efficiency in the economically pivotal cocoa sector is the achievement of conformity with the new Organization for the Harmonization in Africa of Commercial Law (Organisation pour l’Harmonisation en Afrique du Droit des Affaires – OHADA) Uniform Act1 by all the cooperatives operating in the sector. In this regard, there is a critical need for technical and organizational assistance to support the professionalization of producers and the development of well-managed cooperatives.

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING

A. COUNTRY CONTEXT AND DEVELOPMENT CHALLENGES 5. Côte d’Ivoire’s prolonged period of political instability and conflict resulted in a deterioration of governance and transparency. With frequent changes in government, political and security concerns, and the absence of an approved budget often until mid-year, the standard budget cycle was disrupted and PFM processes and procedures suffered. An increasing share of public expenditures (over 50 percent in 2006) was executed outside regular budget procedures using discretionary treasury advances, a major part of oil revenue stayed off-budget and quasi-fiscal levies on cocoa were not used to benefit producers as intended. 6. Poverty rates have steadily increased since 1985. Poverty was reduced from about 38 percent to 32 percent as a result of the brief economic recovery of the mid-1990s. However, the poverty rate began to climb after 1998 back to 38 percent by 2003. A household living standard survey (HLSS) in 2008 revealed that absolute poverty had further increased to a rate of 49 percent. According to this data, between 1985 and 2008, the poverty rate went from 10 percent to nearly 50 percent. 7. Poverty has increased most dramatically in rural areas and in the Center, North and West (CNW) zone, highlighting issues of geographic inequality. Rural poverty has grown steadily, from 49 percent in 2002 to 63 percent in 2008. The regions with the highest incidence of poverty are

1 The OHADA Uniform Act for cooperatives was adopted in December 2010 with a two year grace period before implementation.

2

the North - where poverty has nearly doubled during the crisis, from 40 percent to 77 percent - followed by the West, the Center-West and the North-West. By comparison, poverty in Abidjan is estimated at 21 percent. Sixty percent of cocoa growers are poor (compared to the overall 2008 poverty headcount of 43 percent using the national poverty line in 2008) and cocoa-farming households account for about 28 percent of poor Ivoirians.

8. Since mid-2011, Côte d’Ivoire has regained political stability. After a decade of political crisis and conflicts, a presidential election took place in October 2010, and following a civil war that led to the death of over three thousand people, the elected President was sworn in on May 2011. The Parliament was inaugurated on April 12, 2012, the three branches of government are now fully functional, and the administration is deployed all over the country. The Dialogue, Truth, and Reconciliation Commission, designed to promote social cohesion and political reconciliation, is functional, although progress has been slow.

9. The economy is recovering well. After a decline of GDP by 4.7 percent in 2011 following the 2010/11 crisis, GDP grew by 9.5 percent in 2012 with a projected rate of 8.7 percent in 2013 (IMF 2013). Average inflation was contained at 1.3 percent in 2012, down from 4.9 percent the previous year. The 2012 overall fiscal deficit narrowed sharply to 3.4 percent of GDP from 4.3 percent of GDP in 2011 and was financed through domestic financing of about 1.2 percent of GDP, budget support and net debt relief from development partners (approximately 2 percent of GDP). There was also a significant effort to improve tax collection since the second half of 2011. Tax revenues reached 17.6 percent of GDP in 2012 and 17.5 percent of GDP in 2011 (up from 17.0 percent in 2010).

10. Côte d'Ivoire is behind schedule to reach most of the MDGs. Gender parity in school, halting the spread of HIV/AIDS and access to an improved source of water are three MDGs that may be attained by 2015. Otherwise, nearly all social development indicators have stagnated or deteriorated. The impact is reflected in a high child mortality rate of 127 deaths per 1,000 children, though this has improved from the rate of 151/1,000 in 1990; and one of the highest maternal mortality rates in the region, with 543 mothers dying for 100,000 births. This rate is an improvement over the 1995 estimated rate of 1,200 deaths per 100,000 births. However, the MDG of 300/100,000 is unlikely to be achieved by 2015. The immunization rate has been declining since 2006 and polio has re-emerged. The primary education completion rate has been around 47 per cent since 1985 and illiteracy rates are high. Reaching the MDG of 12 percent poverty by 2015 is highly unlikely.

11. The Government has developed the National Development Plan (NDP) for the period 2012-2015 to transform the country into an emerging economy by 2020. The NDP is underpinned by an ambitious social and development agenda, centered on private and public investments. However, without reconciliation, security and good governance, the transformational and ambitious goals set in the NDP will be difficult to achieve.

B. SECTORAL AND INSTITUTIONAL CONTEXT

Public Financial Management

12. The first PEMFAR review completed in 2008 led to the first set of PFM reforms. The review was carried out jointly by the Bank, the International Monetary Fund (IMF), the African Development Bank (AfDB), and the European Union (EU). The review identified a number of shortcomings and recommended policy reforms and institutional development in the areas of budget comprehensiveness and transparency, budget preparation and execution, reporting, controls and procurement. The Original Project was initiated on the heels of the first PEMFAR review to address these shortcomings and led to a number of achievements. 13. Progress has been achieved in the following areas: (i) improved budget preparation and monitoring of debt, (ii) reduction in delays in the chain of expenditures (SIGFIP), (iii) improved public information on budgetary allocations and execution, (iv) enhanced external controls, and (v) timely adoption of budget execution review laws.

14. The scores of the 2013 PEMFAR show stronger overall results than those contained in the 2008 assessment in all three categories of performance indicators: budget credibility, budget

3

comprehensiveness and transparency, and budget cycle. Twenty-one indicators out of 31 have improved; seven have remained unchanged; and three have deteriorated (of which two concern donor practices).

Table 1: Evolution of scores for PEFA indicators

Indicator Score 2008 2013A. PFM OUT-TURNS: Credibility of the Budget PI-1: Aggregate expenditure out-turn compared to original approved budget NR A PI-2: Composition of expenditure out-turn compared to original approved budget NR C+ PI-3: Aggregate revenue out-turn compared to original approved budget B B PI-4: Stock and monitoring of expenditure payment arrears D+ D+ B. CROSS-CUTTING SPECIFICITIES: Comprehensiveness and Transparency PI-5: Classification of the budget B B PI-6: Comprehensiveness of information included in budget documentation C B PI-7: Extent of unreported government operations NR D+ PI-8: Transparency of inter-governmental fiscal relations D+ C PI-9: Oversight of aggregate fiscal risk from other public sector entities C C PI-10: Public access to key fiscal information C B C. BUDGET CYCLE C(i) Policy-based budgeting PI-11: Orderliness and participation in the annual budget process D D+ PI-12: Multi-year perspective in fiscal planning, expenditure policy and budgeting D D+ C(ii) Predictability and Control in Budget Execution PI-13: Transparency of taxpayer obligations and liabilities C+ B+ PI-14: Effectiveness of measures for taxpayer registration and tax assessment C+ B PI-15: Effectiveness in collection of tax payments D+ D+ PI-16: Predictability in the availability of funds for commitment of expenditure D+ C+ PI-17: Recording and management of cash balances, debt and guarantees B B PI-18: Effectiveness of payroll controls D+ B+ PI-19: Competition, value for money and controls in procurement C B+ PI-20: Effectiveness of internal controls for non-salary expenditure D+ D+ PI-21: Effectiveness of internal audit D+ C+ C(iii) Accounting, Recording and Reporting PI-22: Timeliness and regularity of accounts reconciliation C+ C PI-23: Availability of information on resources received by service delivery units D D PI-24: Quality and timeliness of in-year budget reports D+ C+ PI-25: Quality and timeliness of annual financial statements D+ C+ C (iv) External Scrutiny and Audit PI-26: Scope, nature and follow-up of external audit D D+ PI-27: Legislative scrutiny of the annual budget law D+ D+ PI-28: Legislative scrutiny of external audit reports D C+ D. DONOR PRACTICES D-1: Predictability of Direct Budget Support NR NR D-2: Financial information provided by donors for budgeting and reporting on project and program aid

D+ NR

D-3: Proportion of aid that is managed by use of national procedures D NR

Note: rating from A (best) to D (worst); NR for “not rated”

15. Despite progress, the PFM system still faces challenges, as revealed by PEMFAR II. These include: (i) persistence of large arrears; (ii) insufficient controls and consolidation at different levels of government; (iii) inadequate macroeconomic framework to forecast the level of revenues; (iv) absence of multi-year budgeting; (v) incomplete reporting on budget execution; and (vi) weak internal and external controls. 16. The PEMFAR II main recommendations are to: (i) improve efficiency and transparency in budget preparation and execution and sharing of information; (ii) strengthen the interface between the budget execution information system, the procurement information system, treasury accounting and

4

payroll; (iii) extend the Government’s financial management information system (SIGFIP) to local branches of government throughout the country; (iv) monitor the implementation of a global Medium-Term Expenditure Framework (MTEF); (v) improve external auditing mechanisms by promulgating the organic law, creating the Auditor- General’s Office, appointing the judges and clearing the backlog of the audit of Budget Review Acts and State Accounts; (vi) improve internal audit systems and procedures; (vii) implement the West African Economic and Monetary Union (WAEMU) guidelines; (viii) strengthen public procurement practices and set up the National Public Procurement Regulatory Authority (Autorité Nationale de Régulation des Marchés Publics, ANRMP); and (ix) fight corruption.

17. As a follow-up to the PEMFAR recommendations and other diagnostics2 done on some specific areas of PFM, the Government and the donors are in the process of elaborating a general strategic plan for PFM reforms3. The PFM strategic reform plan is being reviewed by the Government for validation and should be approved within six months. Among key actions proposed to be undertaken in the short and medium-term are: (i) the implementation of the WAEMU PFM guidelines, particularly those related to multi-year program budgeting; (ii) systems interconnection; (iii) development of decentralized local public finance management; (iv) strengthening of the management and control of public enterprises; and (v) increasing significantly the capacity of the auditing and control bodies.

18. Implementation of the WAEMU PFM guidelines needs to be accelerated. The deadline for full compliance of these sub-regional guidelines, which consist of 6 directives4, has been set up for 2017. So far only, the directive on the adoption of the organic budget law (Loi Organique de la loi des Finances – LOLF) has been met. The Government, with the help of donors, is making efforts to develop medium-term expenditure frameworks and program budgeting. 19. The development of a fully integrated financial management information system is critical to improving the transparency, accountability, and efficiency of PFM. Côte d’Ivoire already has many sophisticated systems, but unfortunately few are interconnected. Instead of developing an entirely new system to incorporate the range of different PFM modules, the Government is in the process of adopting a more pragmatic and potentially less costly approach by focusing on the gradual interconnection of existing systems. It is in this fashion that efforts are being pursed to interconnect: (i) the treasury system (ASTER) with the customs system (SYDAM); (ii) ASTER with the fiscal system (GUOAR); (iii) ASTER with the budget system (SIGFIP); (iv) SYDAM with GUOAR; and (v) SIGFIP with the procurement system (SIGMAP). The civil service human resources system (SIGFAE) is now fully operational across the country and interfaces well with the payroll system (SOLDE) in the Ministry of Finance. 20. To enhance local governance and hence create opportunities for sustained economic growth across the country and not just at the central level, robust public financial management is required. The development of the decentralized local PFM system (SYGESCOD) is being piloted in eight localities and should soon be deployed in major localities. The Government is committed to promote local development by supporting the redeployment of civil servants across the country, rebuilding state facilities destroyed during the civil war, and providing adequate funding.

21. The connection of the public enterprise individual information systems (RICI-EPN) to a central system in the Ministry of Finance needs to be strengthened. The Government makes transfers to public enterprises, but it is not always clear how these enterprises, which garner significant revenues from their services, are managed. Thus, the Government seeks to encourage increased accountability and ensure greater efficiency of the public enterprises through the centralization and closer monitoring of their operations.

2 These diagnostics include the report on Strengthening the Chain of Expenditure (Renforcer l’Efficacité de la Chaine de la Dépense), AFRITAC, March 2014. 3 Strategic Framework for PFM reforms in Côte d’Ivoire (Schema Directeur de réformes des Finances Publiques en Côte d’Ivoire), April 2014 mission by World Bank, IMF, and AfDB. 4 The six directives relate to the: Transparency Code (Code de Transparence), Budget Organic Law (Loi Organique de la loi de Finances), General Regulation on Public Accounting (Reglement Général sur la Comptabilité Publique), Budgetary Classification (Nomenclature Budgétaire de l’Etat), Chart of Public Accounts (Plan Comptable de l’Etat), and Table of Financial Operations (Tableau des Opérations Financières de l’Etat).

5

22. The performance of the control and audit entities has been a perennial challenge for the Government. It is one of the areas that registered the lowest score in the PEFA and with respect to which no improvement was made between 2008 and 2013. The Government is now seeking to significantly enhance their capacity and improve their performance.

Cocoa Sector

23. Côte d'Ivoire is the world’s largest cocoa producer, with an average production of 1,300,000 tons of beans per year. Cocoa accounts for one quarter of its exports and public revenues. Approximately 700,000 smallholder families (about 6 million people) depend on the sector for their main source of income. Cocoa is produced by about 500,000 producers and the sub-sector is an essential pillar of the rural economy. However, inadequate producer incentives and poor management of the sector’s agencies have limited cocoa’s contribution to rural growth and poverty reduction. An estimated 60 percent of cocoa farmers live below the poverty line and they account for some 28 percent of all the poor in Côte d’Ivoire. 24. In November 2011, the Government reformed the cocoa sector with the creation of the Council of Coffee and Cocoa (CCC). The main objective of the reform was to ensure good earning of revenues by cocoa producers through the payment of a minimum of 60 percent of the international price. The reform also sought to address the role of traitants. In Côte d’Ivoire, over 80 percent of farmers sell through trader networks rather than through co-operatives. Local traitants are the gatekeepers to the exporter market, sending agents (pisteurs) by motorbike to the villages to buy cocoa from individual farms. Even when farmers are organized into co-operatives, the traitants may be involved. Many farmers, if offered a better price, bypass agreements made with the co-operative and sell directly to the traitants. Both co-operatives and traitants sell their cocoa to exporters in Côte d’Ivoire, of which the most important are international companies. A forward sales mechanisms is used to create a direct link between the average international price received for the major part of the cocoa harvest and the farm-gate price (the value of cocoa when it leaves the farm) received by farmers,. This mechanism smooth farm-gate prices, thus reducing income volatility of the rural poor. The Government guarantees a minimum price of 60 per cent of the international price to cocoa farmers. This measure is meant to make farmers less prone to the vagaries of international cocoa prices and give them more financial stability. 25. The lack of professionalism and organization has been a major handicap for the small producers in optimizing their revenues and creating economic opportunities. Often the price by a professional exporter to a producer does not reflect the guaranteed price (i.e. 60 percent of the international price). This begs the need for producers to regroup into strong cooperatives and professionalize in order to generate more revenues.

26. The CCC is promoting the professionalization of producers and institutionalization of stronger cooperatives, by supporting the cooperatives to adhere to the new OHADA Uniform Act. The new OHADA legal requirements of 2010, which have been delayed in implementation, are intended to transform cooperatives, which up to now were set up in a very informal manner, into enterprises that are required to legally register with the Court and follow standard governance practices including those related to reporting, accountability, and transparency. A deadline (October 2014) has been set up by the CCC for cooperatives that want to participate in the 2015 cocoa campaign to comply with the OHADA requirement.

C. DESCRIPTION OF THE ORIGINAL FINANCING (OF) PROJECT AND PERFORMANCE 27. The Governance and Institutional Development Grant was approved on June 12, 2008 for an amount of US$13 million and became effective on October 22, 2008. The project closing date has twice been extended and the project is currently scheduled to close on November 30, 2014. The objective of the Original Project is to contribute to strengthening Government capacity to: (i) enhance efficiency and transparency in the use of public resources; (ii) manage the development of its hydrocarbon resources in an environmentally and socially sound and sustainable manner; and (iii) foster governance and efficiency in the cocoa sector. The project formed a foundational element of the

6

Bank’s strategy to support Cote d’Ivoire’s post-conflict recovery, as outlined in the Interim Strategy Note, discussed by the Executive Directors on April 1, 2008. 28. The project included four components:

Component One – Strengthening public financial management (US$4.5 million) sought to

improve the efficiency and transparency of public resource management through: enhanced procedures for budget planning, execution and control, and development of capacity for the management of these functions; harmonization of the PFM legal and regulatory framework with the WAEMU and international norms; and improvement in the generation and dissemination of economic and financial information.

Component Two- Strengthening Capacity to Manage the Upstream Petroleum Sector (US$2.9 million) aimed to strengthen the Government’s capacity to manage the development of its oil resources in a socially and environmentally sound and sustainable manner. It focused on specific measures targeted towards creating the conditions for the design and implementation of the long-term institutional and policy reform outlined in the Evaluation Report on the Performance of the Energy Sector.

Component 3 - Setting up an Adequate Institutional and Regulatory Framework for the Cocoa Sector (US$2.0 million) was designed to foster governance and efficiency in the cocoa sector by helping the Government: (i) establish an adequate policy and regulatory framework; and (ii) increase the accountability of the entities entrusted with the management and regulation of the sector.

Component 4 - Project Management and Communication (US$2.5 million) supported the

Project Coordination Unit (PCU) and the project technical committee with resources to coordinate the activities of the three implementing ministries; to monitor and evaluate the implementation of the project activities; and to finance project audits.

D. PROJECT’S IMPLEMENTATION RECORD AND PROJECT PERFORMANCE 29. Notwithstanding a challenging country context, the Original Project has performed well. Throughout the implementation period, the project has achieved significant and tangible results in three areas targeted by the project (PFM, cocoa-coffee and oil). Project supervision ratings have consistently been Satisfactory for both Development Objectives and Implementation Progress in the past two years (see Table 2). 30. Eighty-eight activities were successfully carried out of a total of 92 planned activities, which represents an implementation rate of 96 percent of planned activities. The implementation rate of planned activities is as follows: (i) 97 percent for component 1; (ii) 89 percent for component 2; and (iii) 100 percent for component 3.

Table 2: ISR ratings

ISR Period July 2012 June 2013 Jan 2014 Summary DO rating S S S Overall IP rating S S S Financial Management S S MS Project Management S S S Counterpart Funding S S S Procurement S S S Monitoring and Evaluation S S S Source: Operations Portal 31. Progress toward achievement of the PDO is well advanced as evidenced by the substantial improvement of PFM indicators in the 2013 PEFA report, the country's attainment of the EITI compliance status, and the impact of the implementation of the cocoa reform, which is providing more revenue to farmers. Details of performance towards the PDO indicators is provided in Table 3 below:

7

Table 3: Key Performance Indicators

PDO level Indicators Target Status in March 2014 Percentage of parafiscal levies executed in the budget

100 percent Achieved. 100 percent

Côte d'Ivoire obtains EITI validation Compliant status achieved. Compliant status achieved on May 22, 2013.

New contracts are subject to new terms and conditions of the new regulatory framework

All new contracts Achieved. New contracts are awarded according to the new hydrocarbon code.

Composition of real expenditure in accordance to the initial approved budget

PEFA Indicator improvement to C

Surpassed target. PEFA Indicator C+

Access of public to principal budget information

PEFA Indicator B Achieved. PEFA Indicator B

Source: Operations Portal

E. ALIGNMENT WITH THE COUNTRY PARTNERSHIP STRATEGY (CPS) 32. The proposed AF is aligned with Pillar 1 “Strengthening Governance and Institutions” of the CPS that seeks to set up a more efficient and transparent management of public financial resources (1.2) and increase transparency and efficiency in governance in key economic sectors (1.4). Under this pillar, the Bank supports the objectives of the NDP which stress the importance of improving budget strategic planning and strengthening public finance management. 33. The proposed AF is aligned with the NDP’s first and second outcomes. These are respectively “that the people live in harmony in a secure society where good governance is ensured” and “that national wealth creation has increased, is being sustained and its fruits are being shared equitably”. The Bank supports NDP implementation and helps reinforce economic governance, both in PFM and sectors such as cocoa, energy and financial services. The emphasis put on PFM aims at ensuring that public expenditures are allocated to NDP priority sectors. The focus on key economic sectors ensures that the sectors that generate significant revenues have the greatest impact on economic growth and that wealth is more equitably shared.

F. RATIONALE FOR ADDITIONAL FINANCING 34. The proposed AF will allow the Government to maintain the positive reform momentum achieved to date by scaling up and deepening reform efforts in the public finance and cocoa sectors and by responding to new reform challenges that have emerged in these sectors. Although Côte d’Ivoire has made significant progress in the wake of the protracted period of instability and crisis, the country remains fragile and has limited resources to undertake institutional reforms of this kind. To accompany the country on its path to economic recovery and stability, additional support for critical institutional reforms is warranted. 35. The proposed AF is fully consistent with Operational Policy Guidelines OP/BP10.00 and the OPCS instructions on Additional Financing. All of the conditions for an AF are met. In particular, the Original Project is currently rated Satisfactory for implementation progress for more than twelve months. The Original Financing Project has substantially complied with financing covenants. The AF is also economically justified given the potential positive benefits that could result from further improvements to PFM, and enhanced governance in the cocoa sector. The proposed activities are consistent with the development objectives of the Original Project, the strategic objectives of the CPS and the NDP. 36. Given the recent reform momentum, an AF is the best option to achieve the Original Financing Project objective and will help in scaling up the project while minimizing disruption. The advantage of an Additional Financing is that it can build on the existing activities and implementation structure. Compared to a new operation, the AF can be prepared and implemented more rapidly, in order to maintain the positive dynamic of the results achieved so far. The Government is committed to continue implementing reforms. The AF will be complementary to the activities

8

initiated by other development partners, such as the AfDB, the EU, the IMF, France and the United States.

III. PROPOSED CHANGES

Summary of Proposed Changes

The proposed AF will allow the Government to maintain the positive reform momentum achieved to date by scaling up and deepening reform efforts in the public finance and cocoa sectors and by responding to new reform challenges that have emerged in these sectors. It proposes to: (i) add new activities; and (ii) revise the PDO and the Results Framework. The AF will not include financing for the energy (upstream petroleum) component. The Government will support the energy component through its own resources. Due to the unavailability of grant funds in the quota of funds allocated to Côte d'Ivoire during the last fiscal year of the IDA cycle 16, the Additional Financing will be a credit instead of a grant as was the case in the Original Financing.

Change in Implementing Agency Yes [ ] No [ X ]

Change in Project's Development Objectives Yes [ X ] No [ ]

Change in Results Framework Yes [ X ] No [ ]

Change in Safeguard Policies Triggered Yes [ ] No [ X ]

Change of EA category Yes [ X ] No [ ]

Other Changes to Safeguards Yes [ ] No [ X ]

Change in Legal Covenants Yes [ ] No [ X ]

Change in Loan Closing Date(s) Yes [ ] No [ X ]

Cancellations Proposed Yes [ ] No [ X ]

Change in Disbursement Arrangements Yes [ ] No [ X ]

Reallocation between Disbursement Categories Yes [ ] No [ X ]

Change in Disbursement Estimates Yes [ X ] No [ ]

Change to Components and Cost Yes [ X ] No [ ]

Change in Institutional Arrangements Yes [ ] No [ X ]

Change in Financial Management Yes [ ] No [ X ]

Change in Procurement Yes [ ] No [ X ]

Change in Implementation Schedule Yes [ ] No [ X ]

Other Change(s) Yes [ ] No [ X ]

Development Objective/Results PHHHDO

Project’s Development Objectives

Original PDO

The project development objective (PDO) is to contribute to strengthen Government's capacity to (i) enhance efficiency and transparency in the use of public resources; (ii) manage the development of its hydrocarbon resources in an environmentally and socially sound and sustainable manner; and (3) foster governance and efficiency in the cocoa sector.

Change in Project's Development Objectives PHHCPDO

Explanation:

The PDO has been revised (i) for clarity and focus on sector outcomes rather than inputs and capacity building, (ii) to reflect that the outcomes in the petroleum sector are dealt with government’s own programs, and (iii) for the deepening of the project activities in the area of public financial management and in the cocoa sector

Proposed New PDO - Additional Financing (AF)

The project development objective (PDO) is to achieve enhanced transparency and efficiency in the management of

9

public finances and improved governance and efficiency in the cocoa sector.

Change in Results Framework PHHCRF

Explanation:

New PFM and cocoa sector activities and related result indicators have been added and some indicators have been dropped.

Compliance PHHHCompl

Change of EA Category PHHCEAC

Original EA Category: Current EA Category: Proposed EA Category:

Partial Assessment Partial Assessment Not Required

Explanation:

The Additional Financing will not include the component on the upstream petroleum as in the original project. No environmental and social activities are envisaged; the focus of the additional financing will be on capacity building activities in PFM and the cocoa sector.

Covenants - Additional Financing (CI Governance and Institu Dev Addit Fin - P147016 )

Source of Funds

Description of Covenants Date Due Recurrent Frequency Action

IDA

Set up an upgraded Project Financial Management Information System to replace the current system (SUCCESS) which has limited functionalities with regard to reporting, monitoring, and procurement.

01-Oct-2014 New

IDA Update the Procedure Manual particularly regarding the sections on missions and bank arrangements

01-Oct-2014 New

Conditions

PHC Source Of Fund Name Type IDA No condition Description of Condition

Finance n

Loan Closing Date - Additional Financing (CI Governance and Institu Dev Addit Fin - P147016 )

Source of Funds Proposed Additional Financing Loan Closing Date

International Development Association (IDA) 30-Nov-2016

Loan Closing Date(s) - Parent ( Governance and Institutional Dev. - P107355 ) PHHCLCD

The current closing date of the Original Financing Project is November 30, 2014.

Ln/Cr/TF Status Original Closing Date Current Closing

DateProposed Closing Date

Previous Closing Date(s)

IDA-H4010 Effective 15-Dec-2012 30-Nov-2014 30-Nov-2014 30-Sep-2013

Change in Disbursement Estimates (including all sources of Financing)PHHCDE

Explanation:

The Original Project Financing has been fully disbursed. The Additional Financing (US$5 million) is expected to be fully disbursed before the new closing date (November 30, 2016).

Expected Disbursements (in US$ Million) (including all Sources of Financing)

Fiscal Year 2015 2016 2017

10

Annual $2.0

$2.5 $0.5

Cumulative $2.0

$4.5 $5.0

Allocations - Additional Financing (CI Governance and Institu Dev Addit Fin - P147016)

Source of Fund

Currency Category of Expenditure Allocation

Disbursement % (Type Total)

Proposed Proposed

IDA US$ Goods, works, services, training, and operating costs

5,000,000.00 100.00

Total: 5,000,000.00

Components mpo

Change to Components and Cost PHHCCC

Explanation:

New activities and additional budget for the PFM and the Cocoa components; No financing for the Strengthening Capacity to Manage the Upstream Petroleum sector under the Additional Financing.

Current Component Name Proposed Component Name Current Cost (US$M)

Proposed Cost (US$M)

Action

Strengthening Public Finance Management

Strengthening Public Finance Management

4.50 8.00 Revised

Strengthening Capacity to Manage the Upstream Petroleum Sector

Strengthening Capacity to Manage the Upstream Petroleum Sector

2.90 2.90 No Change

Setting up an Adequate Institutional and Regulatory Framework for the Cocoa Sector

Setting up an Adequate Institutional and Regulatory Framework for the Cocoa Sector

2.00 3.00 Revised

Project Management and Communication

Project Management and Communication

3.60 4.10 Revised

Total: 13.00 18.00

Appraisal Summary S

Economic and Financial Analysis PHHASEFA

Explanation:

Given the nature of the operation, quantifiable analysis of the direct and indirect financial economic and social benefits of this capacity-building project and clear linkages between outcomes and the attribution to the project’s interventions are not straightforward. However, it is estimated that the following impact may be expected: Considerable efficiency gains in public financial management are likely to be made from: (i) the reduced processing delays and data mistakes; (ii) the timely and accurate accounts reconciliation and consolidation; (iii) the faster analysis and decision making through timely production and availability of financial data. Such efficiency gains and related savings should normally translate into increased fiscal space, public investments, services delivery, and better social outcomes for citizens. The least cost approach to the project activities under additional financing has been used, after considering alternative approaches. Significant economic and social benefits for cocoa producers through improved organization and professionalization in the new type of cooperatives as mandated by OHADA. With the new OHADA directives, the cooperatives should operate more transparently and be managed as true enterprises with obligations for results, efficiency, and accountability. In this process, the bargain power of producers grouped in well-organized cooperatives would increase vis-à-vis buyers and exporters and this would lead to increased revenues for the estimated 500 000 cocoa producers. As part of the appraisal of the Côte d’Ivoire Agriculture Sector Support Project, undertaken in 2013, an

11

Economic Rate of Return (ERR) of 24% was determined in the economic analysis of the impact of capacity building and technical assistance in the value chain of the cocoa sector.

Technical Analysis PHHASTA

Explanation:

The project is ready technically. The PFM component was developed on the basis of PEMFAR recommendations. Technical discussions have been grounded in long-standing interventions and dialogue between the World Bank and the Government of Côte d’Ivoire on fiscal and governance aspects of the cocoa sector. Within each component, the activities have been identified and designed on the basis of the availability and quality of technical studies. Previous experience with the GIDG will facilitate the rapid and timely implementation of the procurement plan and the quick disbursement the period of the project. Close implementation support will be provided to ensure timely completion of the activities and delivery of outputs

Social Analysis PHHASSA

Explanation:

The project is expected to have positive social impacts, as a result of: (i) the improvements in the allocation and technical efficiency of public expenditures; and (ii) the key reforms in the cocoa sector. Specifically, efforts to improve the capacity of the Government to implement its budget priorities and reinforce public financial management would enhance efficiency, transparency and accountability in public resource use and scale up the country’s absorptive capacity for external resources. Strengthening of governance and transparency in the cocoa sector is likely to improve the livelihood of a large proportion of the population, which relies on this cash crop as a dominant source of income. Cocoa is produced by about 500,000 producers and the sub-sector is an essential pillar of the rural economy. An estimated 60 percent of cocoa farmers live below the poverty line and they account for some 28 percent of all the poor in Côte d’Ivoire.

Environmental Analysis PHHASEnvA

Explanation:

No safeguards are triggered for the AF of the project. For the Project, Financial Management and Procurement has been rated Satisfactory and no safeguards have been triggered (the environmental category is rated “C”) The Project does not trigger an exception to Bank policies and procedures. It will not require any waivers of Bank policies

Risk PHHASRisk

Explanation:

Overall risk is rated moderate for implementation. Indeed, the successful performance of the original project highlights the effectiveness of mitigation measures to contain the risks regarding corruption, governance and capacity. A detailed presentation of the project risks is included in the ORAF.

37. The four original components remain, but the AF will not support any new activities for the Upstream Petroleum component. The PDO indicators have been rationalized and no longer include the indicators related to upstream petroleum. The project’s Results Framework (Annex 2) has been updated to reflect the new activities envisaged.

A. PROJECT BENEFICIARIES 38. The main beneficiaries of the project under the AF will be the Ministry of Economy and Finance, the Ministry of Budget, and the Ministry of Agriculture. There is no involvement of other stakeholders. Cocoa producers will benefit from the professionalization of cocoa cooperatives which will be supported in line with the new OHADA guidelines.

B. PROJECT COMPONENTS 39. The additional financing will cover three components of the original project: (i) strengthening public financial management, with a particular focus on systems interfacing, internal controls, local public finance management, and management of public enterprises; (ii) strengthening the cocoa sector to ensure increased professionalization of cooperatives; and (iii) supporting project implementation, M&E and communication.

12

Component 1: Strengthening Public Financial Management (US$3.5 million)

40. Existing Activities under the Original Financing Project: 65 activities on a total of 67 planned activities were carried out, which represents 97 percent of the planned activities. The implemented activities included:

Budget planning, preparation and implementation process: decentralization of the budget execution system (SIGFIP); development of an interface between the budget execution system (SIGFIP) and treasury accounting (ASTER); development of a National System for Programming, Monitoring and Evaluation (SYNAPSE); support to the elaboration of a manual for investments planning and monitoring-evaluation; and support to ASTER deconcentration.

Transparency and efficiency of public procurement: support to the operationalization of the ANRMP; support to the operationalization of the procurement system (SIGMAP); support to the transposition of WAEMU directives into national procedures and; support to the elaboration of reference documents (tender dossier, standard procurement documents, 2009 Public Procurement Code, manual of public procurement procedures, companies classification, legal framework for project management, capacities strengthening strategy, publication in the Official Journal for Public Procurement Tenders (Bulletin Officiel des Annonces de Marchés Publics, BOMP)

41. Proposed Additional Activities under AF: This component aims to improve results in the areas of: (i) revenue management, budget preparation, and execution; (ii) local public finance management; (iii) management of public enterprises; and (iv) performance of control units. It is worth mentioning that the implementation of activities related to the development of information systems infrastructure such as laying out of networks, hosting servers or setting up data centers would require the realization of works in addition to consultancies and goods. 42. Improvement of revenue management, budget preparation and execution. Increased celerity and accuracy of data exchanged through systems interfacing between the different revenue units should lead to more accountability and better reporting on public revenues, as well as enhancing the efficiency of PFM processes. Meanwhile, compliance with the WAEMU PFM directives, which is expected to bring dramatic improvements to budget preparation and execution, requires immediate and close attention. 43. Development of interfaces between revenue management systems. The following interfaces are proposed: (i) interface between Treasury accounting (ASTER) and the Fiscal Unified Management of Revenues Transactions (Gestion unifiée des opérations d'assiette et des recettes, GUOAR); and (ii) interface between ASTER and the Customs Automated Clearance System (Système de Dédouanement Automatisé des Marchandises, SYDAM). The interface between GUOAR and SYDAM is almost complete and will only need marginal support in terms of training. The management of public revenues is likely to improve with the interconnection of these three revenue systems. 44. Implementation the WAEMU PFM directives related to multi-year program budgeting, results-based management, and information systems upgrade. The Government is developing the migration of its budget execution system (SIGFIP) from its current set-up on annual budget accounting to a multi-year perspective and RBM focus. To adapt the information systems to the WAEMU directives, the AF project will support the development and piloting of the new SIGFIP in a limited numbers of ministries. 45. Support to the development of a local public financial management system to ensure better resource utilization and transparency at the decentralized level. The Government is in the process of developing a Decentralized Integrated Information Management System (Système Intégré de Gestion des Collectivitiés Décentralisées, SIGESCOD) in eight pilot localities. The AF project will test these pilots for potential modifications, before scaling-up the deployment, as requested by the

13

Government, to other decentralized localities. Additionally, significant support will be provided to build the capacity of local authorities and to facilitate the provision of operational manuals. 46. Improving the transparency, accountability, and performance of public enterprises through centralized, close monitoring of operations. About seventy-eight national public enterprises (Etablissements Public Nationaux, EPN) operate stand-alone accounting systems (Réseau Informatique de Comptabilité Intégrée des Etablissements Publics Nationaux, RICI-EPN), which are not connected to the central government budgeting system to allow a rapid exchange of data, reporting and monitoring. The AF project will help set up a central system in the Ministry of Budget and will initially support the interconnection of some of the most significant EPNs to this system. Capacity building support will be also provided in the area of public enterprise management. Traditional commercial state-owned-enterprises (Etablissements Public à caractère Industriel et Commercial, EPIC) will not be involved in this centralized and interconnected information system, as the system is designed solely for public enterprises of an administrative nature (Etablissements Public à caractère Administratif, EPA). Nevertheless, EPICs will still receive limited support in capacity building, particularly with respect to training in audit, public private partnerships, and financial engineering. 47. Strengthening audit and control functions to ensure that resources are utilized as intended and rules and procedures are strictly adhered to. The sub-component mainly targets internal audit and control. Substantive support is currently being provided to the Chamber of Accounts through budget support, and parliamentary control is being strengthened via a dedicated Institutional Development Fund (IDF) grant operation. To help tackle this daunting challenge of weak internal audit and controls, the AF project proposes the following activities: (i) training in audit and risk management for inspectors, controllers, auditors, and managers of control, audit, and regulation bodies; (ii) pursuit of the risk-based audit mapping exercise in three additional ministries; and (iii) harmonization of audit and control procedures and development of a common protocol for joint interventions in audit/control operations by all the control entities so as to avoid redundancies. The activities are intended to lead to increased: (i) efficiency, economy and regularity of control operations; (ii) production and publication of quality public information; and (iii) professionalization, normalization, and harmonization of control and audit practices. Component 2: Strengthening Capacity to Manage the Upstream Petroleum Sector (US$0 million) 48. No activities under Component 2 will be financed by the Additional Financing. Component 3: Setting up an Adequate Institutional and Regulatory Framework for the Cocoa Sector (US$1 million) 49. Existing Activities under the Original Financing Project: 7 activities of a total of 7 planned activities were carried out, which represents 100 percent of the planned activities. The implemented reforms included the following activities:

Support to the reform of the cocoa-coffee sector: support to the institutional, technical and financial audit of the entities entrusted with the management and regulation of the cocoa sector; support to the institutional audit of the rural investment fund (Fonds d’Investissement en Milieu Rural, FIMR); support to the technical audit of the census of cocoa-coffee growers; support to the updating of the cost approach for the cocoa-coffee sector; support to the study on international price transmission and reduction of parafiscal levies on domestic prices; and support to the study on Ad-valorem taxation.

50. Proposed Additional Activities under AF: This component aims at supporting the efforts of the Government of Côte d’Ivoire to foster governance, transparency and efficiency in the cocoa sector, and improve producer incomes.

14

51. More specifically, this component will contribute to the:

Organization of an awareness-raising workshop about the new provisions of the OHADA Uniform Acts;

Organization of training sessions for farmers’ cooperatives through workshops, seminars and monitoring to enhance understanding and support efforts of cooperatives to conform to the new OHADA provisions. 3000 cooperatives have been identified; about 1500 cooperatives are active and produce 500 tons of cocoa production. 55 percent of commercialized production is achieved through these cooperatives;

Support to the registration of cooperatives at court offices in order to professionalize cooperatives;

Support the professionalization of cocoa producers and ultimately improve efficiency in the sector. With the new OHADA directives, the cooperatives should operate more transparently and will be managed as true enterprises with obligations for results, efficiency, and accountability. The bargaining power of producers grouped in well-organized cooperatives should increase vis-à-vis buyers and exporters, and this would lead to increased revenues for producers;

Development and redesign of the MINAGRI website to facilitate the provision of information on the agricultural sector to the public, including the development of resource materials to familiarize the public with the agricultural sector.

Component 4: Project Implementation and Communication (US$0.5 million) 52. Existing Activities under the Original Financing Agreement:

Communication, management and monitoring activities: organization of 4 financial audits of the Governance and Institutional Development Grant (GIDG) Project in 2009, 2010, 2011 and 2012; development of 4 communication strategies; support to the design and implementation of communication plans (BLC, ANRMP); capacity reinforcement of communication services of the ministries involved in the communication strategy; strengthening economic journalist skills on good governance; support to the creation, hosting, maintenance and updating of 6 websites (MEF, MINAGRI, MMPE, GIDG, ANRMP, and Public Procurement Directorate – Direction des Marchés Publics - DMP); support to the technical Road Free Movement Control Technical Committee – Commité Technique de Contrôle de la Fluidité Routière (CTCFR) to realize an outreach campaign on racketeering combating; producing television programs on economic governance; and equipment provision.

Overall, 18 studies and 13 audits were carried out; 61 persons have benefited from study trips abroad; and 2 312 persons have benefited from capacity strengthening activities.

53. Proposed Additional Activities under AF: The objective of this component is to support the PCU, that handles the coordination of the entire project, with the necessary resources to efficiently manage project implementation under the responsibility of the three ministries and coordinate their activities; monitor and evaluate the implementation of the project activities; finance project audits; and promote communication outreach focused on the reforms supported by the project and their progress in order to better inform the public and help build demand for governance and transparency. Communication and outreach activities will help to improve access to economic information and transparency and strengthen the capacity of involved public institutions to communicate effectively. 54. The component would include the following activities:

Technical and financial audits of the project activities,

Implementation of M&E activities and training,

Implementation of communication and information activities on the project.

15

55. Communication activities will cover all the components of the project in order to inform the public on the implementation of governance reforms. The project will provide strategic support for the dissemination of information on governance and the fight against corruption. This will include the following activities: (i) strengthening the capacities of the communication structures that will be involved in the spreading of information, in particular the National Radio and TV Station (Radiodiffusion Télévision Ivoirienne, RTI), Ivorian Press Agency, (Agence Ivoirienne de Presse, AIP) and other local radios; (ii) the development of effective communication strategies and actions plans on the promotion of good governance; and (iii) the preparation and implementation of communication activities on the GIDG. Most of the communication activities targeting cocoa farmers and cooperatives will be undertaken in strong partnership with the CCC and the Ministry of Agriculture in order to build support for the professionalization of the cocoa cooperatives. 56. The proposed revised financing plan reflects the cost of new project activities. Table 5 shows changes in project cost per component.

Table 4: Project Costs by Component (US$ Million)

Component OF Budget AF Amount Amount After AF

Component 1: Strengthening public financial management

4.5 3.5 8.0

Component 2: Strengthening Capacity to Manage the Upstream Petroleum Sector

2.9 0.0 2.9

Component 3: Setting Up an Adequate Institutional and Regulatory Framework for the Cocoa Sector

2.0 1.0 3.0

Component 4: Project Management and Communication

2.6 0.5 3.1

Unallocated 1.1 1.1

Total 13.0 5.0 18.0

Institutional and Implementation Arrangements

57. The current institutional arrangements will be maintained in the proposed additional financing project. These arrangements include: (i) the existing Monitoring and Steering Committee (MSC), which has the responsibility for the overall project oversight, (ii) the PCU, which implements and monitors day-to-day project activities including procurement, disbursement and financial management, and its Project Technical Committee (PTC), and (iii) the Ministerial Focal Points (MFP) in the three beneficiary ministries: Ministry of Economy and Finance, Ministry of Budget, and Ministry of Agriculture which have the responsibility for implementing their respective components. The effectiveness of the existing implementation arrangements and the significant capacity of the PCU, in particular, are considered optimal for the implementation of the additional financing. Indeed, the PCU has developed an excellent track record for project implementation and its strong reputation has resulted in it being conferred with responsibility for other projects. The robust nature of the PCU will likely mitigate the potentially conflicting influences of the newly restructured Ministry of Economy and Finance. 58. Funds flow arrangements would be largely the same as before, with the project having one Designated Account located at the Central Bank of West African States (BCEAO) and one Project Account in a commercial bank, which is managed by a Public Accountant appointed by the MEF in coordination with the PCU. 59. In terms of results monitoring, current arrangements of the Original Project have been satisfactory. The Additional Financing will nonetheless support activities to further strengthen the monitoring and evaluation capacity of the project. The results of PEMFAR II provide the input necessary to strengthen the PFM results framework.

16

60. Outreach and communications are important factors to the success of the project and the implementation of the overall PFM reform program. The AF will provide funding to scale up communication and outreach in the project. Sustainability

61. The sustainability of this project is underscored by the high level of government commitment to the project. The project’s incorporation of government-identified development priorities has strengthened the counterpart’s ownership of the targeted reforms. Given this, it is expected that there will be a continuation and scaling up of public financial management and cocoa reform efforts. The project’s focus on building the necessary operational and institutional systems for public financial management and professionalization of cocoa farmers will create the necessary foundations for sustained reform implementation in these two key sectors. Through improvement of PFM, the project will help ensure macroeconomic stability and improvement in public services delivery. 62. To ensure sustainability of the project’s outcomes, the project places an emphasis on Capacity Development to support the creation of the right conditions for capacity to grow and be effectively utilized and retained. In time, the Government will need to allocate additional resources to sustain the reform efforts supported by the project. At the same time, close collaboration between the Bank’s project team and sector teams in agriculture and PFM will ensure that ongoing and future sector support will complement and maintain the momentum of the project-supported reform efforts.

IV. APPRAISAL SUMMARY

A. ECONOMIC AND FINANCIAL ANALYSIS 63. The proposed project will have a significant impact on the economic growth and social welfare of the country. As the efficiency and governance of PFM and the cocoa sector improve through the optimization of information systems and training, and the professionalization of cocoa producers respectively, the probability of spurring economic growth and achieving development objectives is likely to increase. The project design has used the least cost alternative, after due diligence to consider other ways to achieve the PDO. 64. Given the nature of the operation, quantifiable analysis of the direct and indirect financial economic and social benefits of this project and clear linkages between outcomes and the attribution to the project’s interventions are not straightforward. However, it is estimated that the following impact may be expected:

Considerable efficiency gains in PFM are likely to be made from: (i) reduced processing

delays and data mistakes; (ii) timely and accurate accounts reconciliation and consolidation; (iii) faster analysis and decision-making through timely production and availability of financial data. Such efficiency gains and related savings should normally translate into increased fiscal space, public investments, service delivery and better social outcomes for citizens.

Significant economic and social benefits for cocoa producers through improved organization and professionalization of cooperatives in line with the OHADA directives. With the new OHADA directives, the cooperatives should operate more transparently and be managed as true enterprises with obligations for results, efficiency, and accountability. In this process, the bargaining power of producers grouped into well-organized cooperatives would increase vis-à-vis buyers and exporters and this would lead to increased revenues for the estimated 500 000 cocoa producers. As part of the appraisal of the Côte d’Ivoire Agriculture Sector Support Project, undertaken in 2013, an Economic Rate of Return (ERR) of 24% was determined in the economic analysis of the impact of capacity building and technical assistance in the value chain of the cocoa sector.

65. Positive results in similar Bank interventions provide a further compelling justification for the project. The cause and effect documented in other capacity development programs of the

17

same ilk have included the following: (i) efficient, transparent, and accountable fiscal and budget management has contributed to economic growth and poverty reduction; and (ii) efficient and better governed cooperatives have resulted in improved incomes for producers and poverty reduction.

B. TECHNICAL ANALYSIS 66. The project is ready technically. The PFM component was developed on the basis of PEMFAR recommendations and the country’s PFM Strategic Plan Technical discussions have been grounded in long-standing interventions and dialogue between the World Bank and the Government on fiscal and governance aspects of the cocoa sector. Within each component, the activities have been identified and designed on the basis of the availability and quality of technical studies. Previous experience with the GIDG will facilitate the rapid and timely implementation of the procurement plan and quick disbursement throughout the period of the project. Close supervision will be provided to ensure timely completion of the activities and delivery of outputs.

C. FINANCIAL MANAGEMENT (FM) REPORTING, AUDIT AND DISBURSEMENT

ARRANGEMENTS 67. The FM system and performance of the PCU under the Original Project are acceptable to IDA. The PCU will be responsible for FM of the AF and remains the Bank focal point. The PCU is familiar with the Bank FM requirements and is currently managing the first phase of this IDA-financed project. The FM of the AF will follow the same approach as the implementation arrangements in place for the ongoing project managed by the PCU. The current FM staffing including the assignment to the project of one financial controller and one accountant officer from the Ministry of Finance is adequate. The expected workload does not require additional staff. The project FM performance was rated Moderately Satisfactory (MS) following the last FM supervision mission conducted in February 2014. The MS rating was due mainly to (i) the delays in the retirement of advance payments made to staff and civil servants going on missions; (ii) the delays in addressing the 2012 accounts external audit reservations; and (iii) the delays in the release of the government contribution. Some of the recommendations of this mission are currently being implemented. The current version of SUCCESS, the accounting software and the configuration do not facilitate financial reporting, and M&E. Furthermore, the accounting software is not capable of producing withdrawal applications and the M&E and procurement modules are not functioning. For the purpose of this AF, a fully integrated and well-functioning accounting software will be set up (dated covenants 3 months following AF effectiveness). The existing FM procedures manual which has been prepared for the first phase of the project is deemed acceptable to IDA and will be used for the purpose of this AF. However, minor updates will be required to reflect the aspects of the AF mainly regarding the sections on missions and bank arrangements of the FM manual (dated covenants 3 months following AF effectiveness). The residual FM risk after mitigation measures remains Substantial. 68. The interim un-audited financial reports (IFR) are prepared every quarter and submitted to the Bank regularly (e.g. 45 days after the end of each quarter) on time. The frequency of IFR preparation as well as its format and content will remain the same.

69. The internal audit function contracted to an individual consultant operates well. Similar arrangements as for the ongoing project will be used for the purposes of the AF. The TOR of the current internal auditor will be updated to cover the AF activities as well as the reporting line including communication of internal audit reports. The internal audit reports will be communicated to the Coordinator and directly to the steering committee with a copy to the IGF/IGE and the Bank team.

70. There is no overdue audit report in the project and the sector at the time of update of the AF. The audit report of the project managed by the PCU covering the period ending on December 31, 2012 was submitted on time but the external auditor expressed a qualified opinion. The qualifications of the audit firm are mainly due to the delays in the liquidation of advance payments made to staff and civil servants on mission. The next audit report of IDA-financed projects in the sector in Cote d’Ivoire is due on June 30, 2014. The accounts of the AF will be audited on an annual basis and the external audit report will be submitted to IDA not later than six months after the end of each calendar year; similar to the on-going phase 1 of the project. The TOR of the current external auditing firm will be updated to reflect the scope of the AF. The project will comply with the Bank disclosure policy of

18

audit reports and place the information provided on the official website within one month of the report being accepted as final by the Bank team.

71. Upon project effectiveness, transaction-based disbursements will be used. The project will finance 100 per cent of eligible expenditures inclusive of taxes. A new designated account (DA) will be opened in a commercial bank under terms and conditions acceptable to IDA. The ceiling of the DA will be established at FCFA 250 million. An initial advance up to the ceiling of the DA will be made and subsequent disbursements will be made against submission of Statements of Expenditures (SOE) reporting on the use of the initial/previous advance. The option to disburse against submission of quarterly unaudited Interim Financial Report (also known as the Report-based disbursements) could be considered, as soon as the project meets the criteria. The other methods of disbursing the funds (reimbursement, direct payment and special commitment) will also be available to the project. The minimum value of applications for these methods is 20% of the DA ceiling. The project will sign and submit Withdrawal Applications (WA) electronically using the eSignatures module accessible from the Bank’s Client Connection website. Funds will be disbursed to decentralized or specialized implementing entities on the basis of three months budget depicted under a Work Plan. 72. Based on the current overall residual FM risk which is substantial, the project will be supervised twice a year to ensure that project FM arrangements still operate well and funds are used for the intended purposes and in an efficient way

D. PROCUREMENT 73. The existing procurement arrangements will be maintained under the proposed Additional Financing; however the updated “Guidelines for Procurement under IBRD Loans and IDA Credit” published by the Bank in January 2011 will apply to all contracts financed under the Additional Financing. Procurement of consultants’ services shall be governed by the “Guidelines for the Selection and Employment of Consultants by the World Bank Borrowers” published by the Bank in January 2011. 74. The PCU is experienced with the Bank’s procurement and financial management procedures. The Bank approved existing Procurement Manuals. The PCU will update the preliminary procurement plans that have already been submitted for project implementation.

75. A procurement capacity assessment of the PCU has been carried out and found Satisfactory. The Bank will continue to (i) to carry out at least two missions per year of project implementation support to minimize the risk of failing to follow procurement procedures as well as for supervision of project activities; and (iii) two supervision field visits per year to carry out post-review of procurement activities. It also agreed to anticipate all procurement activities in the procurement before approval and effectiveness of the AF.

E. FRAUD AND CORRUPTION 76. All procurement entities, as well as bidders and service providers, shall observe the highest standards of ethics during the procurement and execution of contracts financed under the project. This is in accordance with paragraphs 1.16 and 1.17 (Fraud and Corruption) of the Procurement Guidelines and paragraph 1.23 and 1.24 (Fraud and Corruption) of the Consultants Guidelines.

F. ENVIRONMENT (INCLUDING SAFEGUARDS) 77. No safeguards are triggered for the AF. The environmental category is rated “C”. 78. The Project does not trigger an exception to Bank policies and procedures. It will not require any waivers of Bank policies.

G. SOCIAL (INCLUDING SAFEGUARDS) 79. The project is expected to have positive social impacts, as a result of: (i) the improvements in the allocation and technical efficiency of public expenditures; and (ii) the key reforms in the cocoa

19

sector. Specifically, efforts to improve the capacity of the Government to implement its budget priorities and reinforce public financial management would enhance efficiency, transparency and accountability in public resource use and scale up the country’s absorptive capacity for external resources. Strengthening of governance and transparency in the cocoa sector is likely to improve the livelihood of a large proportion of the population, which relies on this cash crop as a dominant source of income.

H. DATED LEGAL COVENANTS 80. The Original Financing Project has been in compliance with all dated legal covenants. There are no overdue or qualified audit reports. For the purpose of this AF, fully integrated and well-functioning accounting software will be set up (dated covenants 3 months following AF effectiveness). Also, minor updates will be required to reflect the aspects of the AF mainly regarding the sections on missions and bank arrangements of the FM manual (dated covenants 3 months following AF effectiveness).

I. RISKS AND RESULTS 81. Overall risk is rated moderate for implementation. Indeed, the successful performance of the Original Project highlights the effectiveness of mitigation measures to contain the risks regarding corruption, governance and capacity. A detailed presentation of the project risks is included in the ORAF (Annex 3).

Risk Category Rating

Stakeholder Risk Moderate

Implementing Agency Risk

- Capacity Moderate

- Governance Moderate

Project Risk

- Design Moderate

- Social and Environmental Low

- Program and Donor Moderate

- Delivery Monitoring and Sustainability Moderate

Overall Implementation Risk Moderate

20

Annex 1: Revised Results Framework and Monitoring Indicators

Côte d’Ivoire: Governance and Institutional Development Project – Additional Financing

Revisions to the Results Framework Comments/ Rationale for Change

PDO

Current (PAD) Proposed to contribute to strengthen Government’s capacity to: (i) enhance efficiency and transparency in the use of public resources; (ii) manage the development of its petroleum resources in an environmentally and socially sound and sustainable manner; and (iii) foster governance and efficiency in the cocoa sector

Revised – ‘enhanced transparency and efficiency in the management of public finances and improved governance and efficiency in the cocoa sector’

The PDO has been revised (i) for clarity and to emphasize the focus on sector outcomes rather than inputs and capacity building, (ii) to reflect that the outcomes in the petroleum sector are now being dealt with under the Government’s own programs, and (iii) to show the concentration of project activities in the areas of public financial management and cocoa sector reform.

PDO indicators Current (PAD) Proposed change* PI-2: Composition of expenditure out-turn compared to original approved budget

Dropped Target has been achieved and the proposed activities under the AF do not support this result.

PI-10: Public access to key fiscal information

Continued Target has not been revised

PI-19: Competition, value for money and controls in Procurement

Dropped The proposed activities under the AF do not focus on procurement

New contracts are subject to new terms and conditions of the new regulatory framework

Dropped Target has been achieved and in AF no focus on the petroleum sector

Cote d’Ivoire obtains EITI validation

Dropped Target has been achieved and in AF no focus on the petroleum sector

Percentage of parafiscal levies executed in the budget

Dropped Target has been achieved.

PI-20: Effectiveness of internal controls for non-salary expenditure

New The indicator has been added to reflect increased focus on internal controls.

PEFA-21: Effectiveness of internal audit

New The indicator has been added to reflect increased focus on internal audit.

Cocoa Cooperatives registered with CCC that publish their accounts

New The indicator has been added to reflect increased focus on governance in the cocoa sector.

Cocoa Cooperatives registered with CCC that obtain buyer certificate by CCC

New The indicator has been added to reflect increased focus on cocoa cooperatives and the value of being registered as a means for improved efficiency and

21

Revisions to the Results Framework Comments/ Rationale for Change governance in the cocoa sector.

Direct project beneficiaries (of which female)

New Core indicator.

Intermediate Results indicators Current (PAD) Proposed change* COMPONENT 1: STRENGTHENING PUBLIC FINANCIAL MANAGEMENT PI-11 Organized and participatory process of budget preparation

Dropped

Not supported by AF activities

PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting

Continued In PEFA 2013 assessment, status is D+ and new target is C+ for the project up to 2016.

Number of communes connected to the SIGFIP

Continued Revision of the target.

Rate of integrated plan execution (% of budget expenditures captured by SIGFIP)

Dropped Target has been achieved and no revision of the target.

Rate of integrated capacity building plan execution (%)

Dropped Target has been achieved and no revision of the target.

Creation of an operational MEF website

Dropped Target has been achieved and no revision of the target.

Rate of transposition of WAEMU guidelines and international standards in the national procurement regulatory framework (%)

Dropped

Target has been achieved and no revision of the target.

PI-19: Competition, value for money and controls in procurement

Dropped AF does not focus on procurement

OECD/CAD Pilier IV Integrity and transparency of the procurement process

Dropped Target has been achieved and no revision of the target.

Average transfer time for DGI documents received at the registry to the Treasury

New The indicator has been added to reflect improved efficiency through electronic capture of documents in information management systems.

Average transfer time for transfer of DGD documents received at the registry to the Treasury

New The indicator has been added to reflect improved efficiency through interfacing of information management systems.

22

Revisions to the Results Framework Comments/ Rationale for Change

Average decentralized budget execution through SIGESCOD

New The indicator has been added to reflect improved efficiency through scaling up of information systems of local PFM.

Share of Government transfers to EPNs and internally generated funds executed through RICI-EPN

New The indicator has been added to reflect improved efficiency through scaling up of information systems of public enterprises

Internal audits carried out by harmonized core team

New The indicator has been added to reflect improved efficiency through strengthening of internal audits.

Internal controls carried out by harmonized core team

New The indicator has been added to reflect improved efficiency through strengthening of internal controls.

COMPONENT 2: STRENGTHENING CAPACITY TO MANAGE THE UPSTREAM PETROLEUM SECTOR Amended/new legal, regulatory and contractual framework is updated and adopted

Dropped Target has been achieved and in AF no focus on the petroleum sector

Flexible and efficient fiscal system for upstream petroleum sector is adopted

Dropped Target has been achieved and in AF no focus on the petroleum sector

Petroleum revenue forecast and variance analysis are carried out periodically (monthly, quarterly, and yearly)

Dropped Target has not been achieved and in AF no focus on the petroleum sector

Procedures for the transparent licensing of petroleum rights in line with good industry practice are in place

Dropped Target has been achieved and in AF no focus on the petroleum sector

The first EITI report is published Dropped Target has been achieved and in AF no focus on the petroleum sector

Updated environmental regulations are adopted

Dropped Target has been achieved and in AF no focus on the petroleum sector

Environmental Management Information system in place

Dropped Target has been achieved and in AF no focus on the petroleum sector

Percentage of non-compliance cases resolved in a reasonable time frame is measured and used as benchmark for monitoring regulatory efficiency

Dropped Target has not been achieved due to lack of data and dropped because in AF no focus on the petroleum sector.

COMPONENT 3: SETTING UP AN ADEQUATE INSTITUTIONAL AND REGULATORY FRAMEWORK FOR THE COCOA SECTOR Value of parafiscal levies in the cocoa sector

Dropped Target has been achieved and no revision of the target.

Standard deviation of data provided by the One-Stop shop,

Dropped The indicator is not reported on due to lack of data.

23

Revisions to the Results Framework Comments/ Rationale for Change

the Bourse du Café et du Cacao (BCC) and the Customs (billions of F CFA)

Cocoa cooperatives registered by CCC New

Indicator was added to reflect support for the professionalization of cooperatives through adherence to the OHADA directives.

24

Annex 2: Results Framework and Monitoring Côte d’Ivoire: Governance and Institutional Development Project – Additional Financing (P147016)

Project Name:

CI Governance and Institu Dev Addit Fin (P147016) Project Stage:

Additional Financing Status: FINAL

Team Leader:

Robert A. Yungu Requesting Unit:

AFCF2 Created by: Robert A. Yungu on 26-Jan-2014

Product Line:

IBRD/IDA Responsible Unit:

AFTP4 Modified by: Robert A. Yungu on 07-May-2014

Country: Cote d'Ivoire Approval FY: 2014

Region: AFRICA Lending Instrument:

Investment Project Financing

Parent Project ID:

P107355 Parent Project Name:

Governance and Institutional Dev. (P107355)

.

Project Development Objectives

Original Project Development Objective - Parent:

The project development objective (PDO) is to contribute to strengthen Government's capacity to (i) enhance efficiency and transparency in the use of public resources; (ii) manage the development of its hydrocarbon resources in an environmentally and socially sound and sustainable manner; and (3) foster governance and efficiency in the cocoa sector.

Proposed Project Development Objective - Additional Financing (AF):

The project development objective (PDO) is to achieve enhanced transparency and efficiency in the management of public finances andimproved governance and efficiency in the cocoa sector.

Results

Core sector indicators are considered: Yes Results reporting level: Project Level .

Project Development Objective Indicators

Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

New PI-20: Effectiveness of internal controls for non-salary expenditure

Text Value D+ D+ C+

Date 31-Mar-2013 31-Mar-2014 30-Dec-2016

Comment

25

New PI-21: Effectiveness of internal audit

Text Value C+ C+ B

Date 31-Mar-2013 31-Mar-2014 30-Nov-2016

Comment

New Cocoa Cooperatives registered with CCC that publish their accounts

Number Value 0.00 0.00 600.00

Date 31-Mar-2013 31-Mar-2014 30-Nov-2016

Comment

New Cocoa Cooperatives registered with CCC that obtain buyer or selling certificate by CCC

Number Value 0.00 0.00 600.00

Date 31-Mar-2013 31-Mar-2014 30-Nov-2016

Comment

New Direct project beneficiaries Number Value 0.00 60000.00

Date 31-Mar-2014 30-Nov-2016

Comment

New Female beneficiaries Percentage Value 0.00 30.00

Sub Type

Supplemental

Intermediate Results Indicators

Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target

New Internal controls carried out by harmonized core team

Number Value 2.00 8.00

Date 31-Mar-2014 30-Nov-2016

Comment

New Average transfer time for DGI documents received at the registry to the Treasury

Days Value 3.00 1.00

Date 31-Dec-2013 30-Nov-2016

Comment

New Average transfer time for transfer of DGD documents received at the registry to the Treasury

Days Value 3.00 1.00

Date 31-Dec-2013 30-Nov-2016

Comment

26

New New SIGFiP sites connected Number Value 0.00 57.00 60.00

Date 31-Mar-2009 30-Nov-2016

Comment

New Average decentralized budget execution through SIGESCOD

Percentage Value 0.00 100.00

Date 31-Mar-2014 30-Nov-2016

Comment

New Share of Government transfers to EPNs and internally generated funds executed through RICI-EPN

Percentage Value 0.00 100.00

Date 31-Mar-2014 30-Nov-2016

Comment

New Internal audits carried out by harmonized core team

Number Value 2.00 8.00

Date 31-Mar-2014 30-Nov-2016

Comment

New Cocoa cooperatives registered by CCC

Number Value 0.00 1500.00

Date 31-Mar-2014 30-Nov-2016

Comment .

27

Annex 3: Operational Risk Assessment Framework (ORAF)

Côte d’Ivoire: Governance and Institutional Development Project – Additional Financing (P147016)

Project Stakeholder Risks

Stakeholder Risk Rating Moderate

Risk Description: Risk Management:

A risk of weak ownership for the Project with multiple beneficiaries could impose high transaction costs and reduce the impact of the project.

The risk of weakened ownership is minimized through regular interactions between the Project Implementation Unit and Bank's staff. The TTL and team members are all based in Abidjan. The Ministry of Economy and Finance, the Ministry of Budget, and the Ministry ofAgriculture are the main beneficiaries of the Governance and Institutional Development Additional Financing operation. There is no involvement of other stakeholders.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Both

Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Moderate

Risk Description: Risk Management:

The limited capacity of the public administration negatively impacts the Government's ability to implement reforms. The public administration is negatively affected by a comparatively high turnover rates, politicization of civil service posts, low morale, weak productivity and resulting poor service delivery. However, under the Project Implementing Unit has been quite successful to carry out activities and help achieve expected outcomes.

While overall structural limitations are outside the control of the current activity, the Project has and will continue to provide targeted capacity building activities in the Ministry of Economy and Finance, the Ministry of Budget and the Ministry of Agriculture to mitigate capacity risks. The Project Coordination Team members were selected on the basis of their competence and the excellent performance of the team to date has exemplified the high level of capacity that exists within the PCU.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Implementation

Governance Rating Moderate

Risk Description: Risk Management:

The dominance of the Executive in Cote d’Ivoire brings with it the risk of discretionary or opaque practices and inefficiencies in service delivery. The effectiveness of some of the key institutions in charge of governance and oversight, including the State Inspector General (Inspection Générale d’État—IGE), the Chamber of Accounts and the Judiciary, is limited by the lack of adequate funding. The internal control mechanisms within the government are also weak, and there is limited participation of,

To mitigate governance risks at the country level, the Bank and other development partners provide support to the justice sector, parliament, civil society and to the Government's National Secretary on Governance and Capacity Building (Secretariat National a la Gouvernance et au Renforcement des Capacités). Quarterly meetings between the Prime Minister’s Office and Development Partners on issues of governance help the various stakeholders to keep track of governance risks and respond appropriately. One of the focus areas under the Additional Financing is the strengthening of internal audits and controls. With regard to governance at the implementing agency level, current supervision and audit arrangement will continue.

28

or contribution from, non-state actors. Although, the country has made significant progress compared to two years ago, it is still is ranked among the worst performers in the world in many governance indices, including the World Governance Indicators, Transparency International Corruption Perception Index, Mo Ibrahim, etc. Nevertheless the governance risks at the implementing agency level are moderate as regular supervisions and audits are regularly carried and no major breaches have been recorded in terms of governance.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Implementation

Risk Management:

The Government has taken a number of important measures to improve governance and reduce corruption. These measures include the ratification of United Nations Convention against Corruption, and the adoption of: (i) the National Governance and Anti-Corruption Plan; (ii) the Civil Service Obligations Code (which provides concrete guidelines for civil servants to follow); and(ii) an Ethics Charter. There are three highly anticipated laws on Anti-corruption which seek, among other things, to address the issues of assets declaration and illicit enrichment. The Government has recently established an Anti-Corruption authority (Haute Autorité pour la Bonne Gouvernance) A new Commercial Court has been established and should help to improve governance and transparency in the private sector. The reform and modernization of the public administration has started to pay some dividends with the elimination of ghost workers and increased transparency and efficiency in service delivery. But the real issue in the fight against corruption is law enforcement. Despite widespread corruption, there have been very few cases of prosecution or sanction. As long as the impunity continues, corruption will remain a real challenge and a significant obstacle for the country’s development. Under the AF, frequent audits and controls of the Implementing Agency will be carried.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Implementation

Project Risks

Design Rating Moderate

Risk Description: Risk Management:

The design of the additional financing, like the parent project, is relatively simple as there are only two main components and a very limited number of activities to be implemented by an equally limited number of stakeholders.

Close supervision and regular reporting by the Project Coordination Unit will help to contain any design risks.

Resp: Status: Stage: Recurrent: Due Date: Frequency:

29

Social and Environmental Rating Low

Risk Description: Risk Management:

Not applicable

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Program and Donor Rating Moderate

Risk Description: Risk Management:

Not applicable

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Delivery Monitoring and Sustainability Rating Moderate

Risk Description: Risk Management:

Project results and sustainability could be negatively affected by a lack of monitoring or an over-reliance on outside consultants which would not be available beyond the program duration

A monitoring plan has been prepared and is being closely monitored by the Project team. The fact that the project is implemented for Ministry staff in a Ministry where most staff are planners and evaluators by training gives some assurance for good delivery monitoring and sustainability

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Overall Risk

Overall Implementation Risk: Rating Moderate

Risk Description:

The project risk is rated moderate; the successful performance of the parent project highlights the effectiveness of mitigation measures targeted towards containing the risks regarding corruption, governance and capacity.

30

Annex 4: Procurement Arrangements

Côte d’Ivoire: Governance and Institutional Development Project – Additional Financing

A. General 1. The procurement for the proposed Additional Financing will be carried out in accordance with: (i) the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers,” published by the Bank in January 2011; (ii) “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers,” published by the Bank in January 2011; and (iii) the provisions of the Financial Agreement. 2. Anti-corruption guidelines. The “Guidelines on Preventing and Combating Fraud and Corruption in projects Financed by IBRD Loans and IDA Credits and Grants,” dated October 15, 2006 and updated in January 2011, shall apply to this project. 3. Procurement Documents. Procurement transactions will be carried out using the Bank’s Standard Bidding Documents or Standard Request for Proposal, respectively, for all International Competitive Bidding (ICB) for goods and for selection of consultants. B. Procurement Methods

4. Procurement of Works. No civil works are planned in the project. Works to be financed by IDA would include small works for rehabilitation of offices. All contracts estimated to cost less than US$100,000 equivalent per contract may be procured through shopping procedures. For shopping, the Project procurement officer will keep a register of suppliers updated at least every year. 5. Procurement of Goods. The Goods to be financed by IDA would include: office furniture and equipment (including IT equipment); office supplies; and so on. Similar Goods that could be provided by the same vendor would be grouped in bid packages estimated to cost more than US$1,000,000 per contract and would be procured through ICB and goods estimated to cost less than US$1,000,000 per contact would be procured by NCB. Goods estimated to cost less than US$100,000 equivalent per contract may be procured through shopping procedures. For shopping, the Project procurement officer will keep a register of suppliers updated at least every six months. With prior approval of the Bank, Goods may also be procured through Direct Contracting, using Procurement from United Nations agencies such as UNOPS for purchase of vehicles and IT equipment, and/or by the use of the services of Procurement Agents. 6. Selection of Consultants. The Project will finance Consultant Services such as surveys, technical and financial audits, technical assistance and supervision of service delivery, trainers and workshop facilitators. Consultant firms will be selected through the following methods: (a) Quality and Cost Based Selection (QCBS); (b) selection based on the Consultant’s Qualification (CQS) for contracts that amount to less than US$300,000 equivalent and are relative to exceptional studies and research which require specific and very strong expertise; (c) Least Cost Selection (LCS) for standard tasks such as insurance and financial and technical audits costing less than US$200,000; (d) Single Source Selection (SSS), with prior agreement of IDA, for services in accordance with paragraphs 3.8 to 3.11 of the Consultant Guidelines. Individual Consultant (ICs) will be hired in accordance with paragraphs 5.1–5.4 of Bank Guidelines; Sole Source may be used only with prior approval of the Bank. 7. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants, in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines, if a sufficient number of qualified individuals or firms are available. However, if foreign firms express interest, they would not be excluded from consideration.

31

8. For the procurement of services other than consulting services covered by Consultant Guidelines, ICB or shopping will be used. 9. Training, Workshops, and Conferences. The training (including training material and support), workshops, and conference attendance will be carried out on the basis of an approved annual training and workshop/conference plan. A detailed plan giving the nature of the training/workshop, number of trainees/participants, duration, staff months, timing and estimated cost will be submitted to IDA for review and approval prior to initiating the process. The appropriate methods of selection will be derived from the detailed schedule. After the training, the beneficiaries will be requested to submit a brief report indicating which skills have been acquired and how these skills will contribute to enhance their performance and contribute to the attainment of the Project objective. 10. Operational Costs. Operating costs financed by the Project are incremental expenses, including office supplies, maintenance of equipment, communication costs, staff supervision costs (specifically transport, accommodation, and per diem), and salaries of locally contracted staff. They will be procured using the procurement procedures specified in the Project Financial and Accounting Manual. C. Assessment of the Agency’s Capacity to Implement Procurement

11. The Government has proposed to continue the delegation of project management, including procurement responsibilities, to DGDI, which has demonstrated experience under the current Project financed by the Bank. The agency is experienced in the Bank’s procurement procedures. 12. A procurement capacity assessment of the Implementing Unit has been carried out (Table 1 below) and found satisfactory with the following recommendations:

- The Project Implementation Manual will be updated to reflect project specificity.

Table 1: Procurement risk assessment and risk mitigation Designation Concerns Risk Mitigation Due Date Establishment of Terms of Reference and technical specifications

Interpretation and formatting of documents coming from technical units

Technical assistance for Beneficiaries and the Procurement Staff of the Implementing Unit, to well formulate the ToR

Before project implementation and onwards

Long procurement delays

Weak procurement capacity and cumbersome national procurement procedures delay the procurement process

Establishment of a procurement plan, minimizing the number of procurement activities, initiating procurement activities before AF approval and regular follow-up on procurement plan implementation by the Bank. Close procurement supervision by audio or Video conference

Establishment of a procurement plan, minimize the number of procurement activities and initiate procurement activities before project implementation. Regular follow-up of procurement plan implementation during project implementation.

Other Mitigation Measures:

32

13. Frequency of procurement reviews and supervision. The Bank’s prior and post reviews will be carried out on the basis of thresholds indicated in Table 2. The Bank will conduct six monthly supervision missions and two annual Post Procurement Reviews (PPRs), with the ratio of post review at least 1 to 5 contracts. The Bank may also conduct an Independent Procurement Review (IPR) at any time until two years after the closing date of the Project. Overall procurement risk assessment is moderate Procurement Review Thresholds

14. Prior-review and procurement methods thresholds for the Project are indicated in the procurement plan and guided by the Table below.

Table 2: Procurement thresholds

Expenditure category Contract value threshold (US$)

Procurement method Contracts subject to

prior review

1. Works <100,000 Shopping None 2. Goods and Services (other than Consultants’ Services

≥ 1,000,000 ICB All

≥100,000 < 1,000,000

NCB All

< 100,000 Shopping None All Direct Contracting All

3. Consulting Firms ≥ 200,000 QCBS All < 200,000 CQS and LCS All All Single Source All

4. Individual Consultants ≥ 100,000 IC All < 100,000 IC None All Single Source All

Annex 5: Country Map

Mont NimbaMont Nimba(1,752 m)(1,752 m)

KKoommooéé

NNzzii

NNzzii

KKoommooéé

BBaanndd

aammaa

BBllaann

cc

BBaaggoo

éé

LLoobboo

BBoouu

SSaassssaannddrraa

SSaassssaannddrraa

MMaarraaoouuéé

Lac deLac deKossouKossou

ManMan

DaloaDaloa

BouakéBouaké

KorhogoKorhogoOdienneOdienne FerkessedougouFerkessedougou

DabakalaDabakala

BondoukouBondoukou

AbengourouAbengourou

DaoukroDaoukro

BéoumiBéoumi

SoubréSoubré

BangoloBangolo

BoundialiBoundiali

KatiolaKatiola

SakassouSakassou

ZuenoulaZuenoula

MankonoMankonoSSééguguéélala

ToubaTouba

BiankoumaBiankouma

DananeDanane

DuekoueDuekoue

GuigloGuigloToulepleuToulepleu

VavouaVavoua

IssiaIssia

Grand-LahouGrand-Lahou

AlepeAlepe

DabouDabou

DivoDivoLakotaLakota TiassaleTiassale AgbovilleAgboville

AdzopeAdzopeGagnoaGagnoa

OuméOumé

SinfraSinfra

BouaflBouafléé

ToumodiToumodi

TiebissouTiebissou

DimbokroDimbokro

BocandaBocanda

BongouanouBongouanou

M'BahiakroM'Bahiakro

BounaBouna

TandaTanda

AdiakeAdiake

AboissoAboisso

TengrelTengrel

AgnibilékrouAgnibilékrou

DENGUÉLÉ

BAFING

MARAHOUÉ

LACS

SAVANES

WORODOUGOU ZANZAN

VALLÉE DU BANDAMA

DIX-HUITMONTAGNES

HAUT-SASSANDRA

MOYEN-CAVALLY

N’ZI-COMOÉ

AGNÉBY

FROMAGER

BAS-SASSANDRA

LAGUNESSUD-

BANDAMA

SUD-COMOÉ

MOYEN-COMOÉ

Man

Daloa

Bouaké

KorhogoOdienné Ferkessedougou

Dabakala

Bondoukou

Abengourou

Daoukro

Béoumi

Soubré

Bangolo

Boundiali

Katiola

Sakassou

Zuenoula

MankonoSéguéla

Touba

Biankouma

Danane

Duekoue

GuigloToulepleu

Vavoua

Issia

Tabou

San-Pédro

Sassandra

Grand-Lahou

Jacqueville Grand-Bassam

Alepe

Dabou

DivoLakota Tiassale Agboville

AdzopeGagnoa

Oumé

Sinfra

Bouaflé

Toumodi

Tiebissou

Dimbokro

Bocanda

Bongouanou

M'Bahiakro

Bouna

Tanda

Adiake

Aboisso

Tengrel

Agnibilékrou

Abidjan

YAMOUSSOUKRO

GUINEA

LIBERIA

GHANA

BURKINAFASO

MALI

Komoé

Nzi

Nzi

Komoé

Band

ama

Blan

c

Bago

é

Lobo

Bou

Sassandra

Sassandra

Maraoué

Lac deKossou

Gul f of Guinea

To Beyla

To Bamako To

Sikasso

To Bobo Dioulasso

To Kampti

To Batie

To Bole

To Wenchi

To Sunyani

To Prestea

To Monrovia

To Nzerekore

To Monrovia

Mont Nimba(1,752 m)

8ºW 7ºW 6ºW 5ºW 4ºW 3ºW

8ºW 7ºW 6ºW 5ºW 4ºW 3ºW

5ºN

6ºN

7ºN

8ºN

9ºN

10ºN

5ºN

6ºN

7ºN

8ºN

9ºN

10ºN

CÔTE D'IVOIRE

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 40 80

0 20 40 60 80 Miles

120 Kilometers IBRD 33393R

APRIL 2008

CÔTE D' IVOIRE

CITIES AND TOWNS

REGION CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

REGION BOUNDARIES

INTERNATIONAL BOUNDARIES