Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: T7726-TD

REPUBLIC OF CHAD TECHNICAL ANNEX

ON A PROPOSED

GRANT OF SDR5.8 MILLION (US$9 MILLION EQUIVALENT)

TO THE REPUBLIC OF CHAD

AS PART OF THE SDR 17 MILLION (US$26.2 MILLION EQUIVALENT) FOR THE COMMUNICATIONS INFRASTRUCTURE AND TECHNOLOGY APL

PROJECT (APL1A)

IN SUPPORT OF THE FIRST PART OF THE FIRST PHASE OF THE CENTRAL AFRICAN BACKBONE PROGRAM

August 19, 2009

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

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CURRENCY EQUIVALENTS

[Exchange Rate Effective June 30, 2009]

Currency Unit = SDR $ 1.5522 = SDR 1

CFAF 464.46 = $ 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

$ United States Dollar, all dollars are US dollars unless otherwise indicated AfDB African Development Bank APL Adaptable Program Loan APL1A Communications Infrastructure and Technology APL Project which is the

First Part of the First Phase of CAB Program APL1B Second Part of the First Phase of CAB Program AU African Union CAB Central African Backbone CAB APL1 First Phase of CAB Program. CAB APL1 is composed of APL1A and

APL1B CAS Country Assistance Strategy CDMA Code Division Multiple Access CEMAC Communauté Economique et Monétaire des Etats de l’Afrique Centrale CENADI Centre National de Développement de l’informatique CFAA Country Financial Accountability Assessment CITCD Communications Infrastructure and Technology APL Project-Chad Grant CPIPP Country Procurement Issues Paper DFID UK Department for International Development ECCAS Economic Community of Central African States EDGE Enhanced Data Rates for GSM Evolution EMP Environmental Management Plan ESMF Environmental and Social Management Framework FBS Fixed Budget Selection FM Financial Management GDP Gross Domestic Product GIS Geographic Information Systems ICB International Competitive Bidding ICT Information and Communication Technology IDA International Development Association IFC International Finance Corporation IFMIS Integrated Financial Management Information System

FOR OFFICIAL USE ONLY

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

IFR Interim Financial Report ISP Internet Service Provider ISR Implementation Status Report ITU International Telecommunication Union IXP Internet Exchange Point MPTIC Ministry of Post and ICT MMDS Multichannel Multipoint Distribution System M&E Monitoring and Evaluation NICI National Information and Communications Infrastructure OTRT Office Tchadien de Régulation des Télécommunications PCU Project Coordination Unit PIM Project Implementation Manual PPIAF Public-Private Infrastrucure Advisory Facility PPF Project Preparation Facility PPP Public Private Partnership PRSP Poverty Reduction Strategy Paper RCIP Regional Communications Infrastructure Program RAP Resettlement Action Plan RNT Radiodiffusion Nationale Tchadienne RPF Resettlement Policy Framework SOTEL TCHAD

Société des Télécommunications du Tchad

STPE Société Tchadienne des Postes et de l'Epargne TA Technical Assistance UNCTAD United Nations Conference on Trade and Development WBG World Bank Group WiMAX Worldwide Interoperability for Microwave Access

Vice President: Obiageli Katryn Ezekwesili Ac ting Regional Integration Director: Richard Scobey

Sector Director: Mohsen Khalil Country Director: Mary Barton Dock Sector Manager: Philippe Dongier

Task Team Leader for CITCD: Yann Burtin Co-Task Team Leader for CITCD: Jérôme Bezzina

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AFRICA Central African Backbone Program Communications and Infrastructure

Technology APL Project (APL1A) Chad Grant (CITCD)

CONTENTS Page

A STRATEGIC CONTEXT AND RATIONALE ..................................................... 1

1. Country and Sector Issues .................................................................................. 1

2. Rationale for Bank involvement ......................................................................... 7

3. Higher level objectives to which the project contributes ................................... 8

B PROJECT DESCRIPTION ..................................................................................... 8

1. Lending instrument ............................................................................................. 8

2. Project development objective and key indicators ............................................. 9

3. Project components .......................................................................................... 10

4. Lessons learned and reflected in the project design ......................................... 11

5. Alternatives considered and reasons for rejection ............................................ 12

C IMPLEMENTATION ............................................................................................ 13

1. Institutional and implementation arrangements ............................................... 13

2. Monitoring and evaluation of outcomes/results ............................................... 13

3. Sustainability .................................................................................................... 14

4. Critical risks and possible controversial aspects .............................................. 15

5. Grant conditions and covenants ....................................................................... 19

D APPRAISAL SUMMARY ..................................................................................... 19

1. Economic and financial analysis ...................................................................... 19

2. Technical .......................................................................................................... 20

3. Fiduciary ........................................................................................................... 20

4. Safeguard policies ............................................................................................ 21

5. Policy Exceptions and Readiness ..................................................................... 22

Annex 1: Major Related Projects Financed by the Bank and/or Other Agencies .... 23

Annex 2: Results Framework and Monitoring ............................................................ 24

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Annex 3: Detailed Project Description .......................................................................... 27

Annex 4: Project Costs ................................................................................................... 29

Annex 5: Implementation Arrangements ..................................................................... 30

Annex 6: Financial Management and Disbursement Arrangements ......................... 33

Annex 7: Procurement Arrangements .......................................................................... 40

Annex 8: Economic and Financial Analysis ................................................................. 50

Annex 9: Statement of Loans and Credits for Chad ................................................... 53

Annex 10: Country at a Glance ..................................................................................... 55

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AFRICA

CENTRAL AFRICAN BACKBONE

COMMUNICATIONS INFRASTRUCTURE AND TECHNOLOGY APL PROJECT (APL1A)

CHAD GRANT (CITCD)

A STRATEGIC CONTEXT AND RATIONALE

1. Country and Sector Issues 1. Chad is one of the world’s poorest countries, struggling to overcome nearly four decades of civil war and regional instabilities. Poverty is widespread, and social indicators are well below the average for sub-Saharan Africa. It ranked 173 among the 177 countries surveyed in the 2005 U.N. Development Program (UNDP) Human Development Index. The incidence of poverty (defined as the proportion of households with annual spending below what is necessary to meet minimal needs) is estimated at 55 percent according to a 2003 household survey. About four-fifths of the population of about 8.8 million is living on less than a dollar a day. Of the population older than 15 years, more than 73 percent (and 76 percent of women) are illiterate. Access to potable water has improved in past years, but is still limited to one of three people in 2005. Less than two percent of the population has access to electricity. In this country twice the size of France, a total of only 1,021 kilometers of roads has been paved.

2. Chad has made progress in macroeconomic stabilization and economic reforms in the past decade. Under the economic adjustment and reform program supported by the World Bank and the International Monetary Fund (IMF), the government managed to contain inflation, improve the external current account deficit, and achieve several years of robust economic growth. The construction of a 1,100-kilometer pipeline to exploit the oil fields in southern Chad, a project supported by the World Bank Group, has given the country a major new source of revenues that holds promise for reducing poverty and creating a more sustainable economic footing for the future.

3. These developments have yet to produce the sustainable economic outcomes that are needed if Chad is to achieve sustainable development. Chad remains highly vulnerable to political instability and armed rebellion. The situation has been made more precarious by the advent of petroleum revenues, which have unleashed new economic opportunities, but also created new political pressures on how the revenues are used and distributed. The Darfur crisis in neighboring Sudan and other sources of domestic and regional instability are putting heavy demands on government spending. As security and defense spending grow, poverty reduction and lasting economic and institutional reforms are losing ground to an unsustainable deficit and mounting budgetary arrears.

4. The Government and its development partners have laid out a number of strategic plans for confronting the country’s economic problems. The National Poverty Reduction Strategy Paper (PRSP) revised in April 2008 focuses not only on

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using oil revenues for poverty reduction, but also calls for promoting good governance and strengthening institutional capacity to ensure effective management of public resources. The Bank and IMF have financed numerous other projects and programs focused on structural reforms and poverty reduction; however, the Joint IMF/Bank Staff Assessment in 2004 and the government assessment of implementation of the PRSP showed that little progress had been made on this agenda.

5. Overall economic activity was sluggish in 2008 and prospects for 2009 are worrisome. Oil production is estimated to have dropped 11.8 percent from 2007 to 2008 to hit 127,000 barrels a day and 46.5 million for the whole year. Still, high international oil prices have yielded major benefits for Chad through high revenues in 2008 estimated at $1.9 billion from $1.2 billion in 2007. Yet, conflicts between the government and rebel forces in 2008 affected to a significant extent economic performance in the non-oil sectors. The economic loss deriving from the rebel attack was significant. The decline in investment that accompanied the drop in overall real GDP growth was largely on account of lower private sector investment in the oil sector. While the government stepped up investment spending to rehabilitate public buildings and repair roads, public investment remained slightly lower than its 2007 level. With the worldwide oil prices steep decline from $145 in summer 2008 to $40 in December 2008, there are real concerns about Chad's ability to maintain its current level of public spending and to weather the on-going financial crisis. Against this backdrop of severe economic prospects, the country is discussing with the IMF a new Staff Monitored Program that is expected to be signed by end of the first 2009 semester and that would pave the way for the revival of the HIPC program.

6. Telecom and ICT Snapshot. In Chad, out of a total population of 10.8 million in December 2007, the number of main fixed-line in operation was 13,000 and 5,000 CDMA1 and the number of mobile subscriptions was 1.1 million, representing a fixed teledensity2 of 0.17 and a mobile teledensity3 of 10.26. The number of broadband subscribers and international bandwidth were respectively estimated to less than 100 and 50 to 55 Mbps in the same period. In Chad, the number of cybercafé and computer was respectively less than 100 and between 20,000 and 30,000. The eGovernment Readiness for Chad was 0.1047 in 2008 as compared to a level of 0.1433 in 2005 and to be benchmarked to an average Central Africa eGovernment Readiness of 0.2530 (average eGovernment Readiness for the World: 0.4514).

7. The telecom and ICT sector detailed structure. Chad’s teledensity is among the lowest in the world and even far below the average for sub-Saharan Africa. With a population of almost ten million inhabitants and an area more than twice the size of France, the country has only around 13,000 fixed telephone lines and around 100 public payphones. This development gap is even more marked in the rest of the country, with 80 percent of fixed telephone lines located in the capital N’Djamena and the remaining 20 percent distributed among the other major towns. There is no telecommunications fiber-optic backbone network in Chad, long-distance and international connections are entirely satellite-based or using microwave radio technologies (the latest are used by the mobile private operators). The Société des Télécommunications du Tchad (SOTEL TCHAD), 1 CDMA stands for Code Division Multiple Access. 2 Number of fixed telephone lines per 100 inhabitants. 3 Number of mobile subscriptions per 100 inhabitants.

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the country’s incumbent operator, provides limited telecommunications and data services. SOTEL TCHAD is an incorporated State Owned Enterprise (SOE). Internet uptake is suppressed by high access prices and poor quality of service (in N’Djamena an hour of access costs CFAF 2,000 around $4, compared to CFAF300, $0.6 in Benin) and, (iv) International mobile calling prices are high. At around CFAF400-600 per minute, a call to Paris is two to three times more expensive than in neighboring Cameroon.

8. As in many other African nations, the number of mobile subscribers in Chad is now far greater than the number of fixed-line connections. Thanks to the development of mobile telephony since 2000, Chad has boosted its total telecommunications penetration rate from 0.1 line per 100 inhabitants (1999) to over 11 lines (fixed and mobile) per 100 inhabitants at the end of 2007(about 1.6 million active mobile subscribers). Until the end of 2007, two private mobile operators, Celtel and Tigo, shared the local market. In December 2007, Salam, a third GSM operator (SOTEL TCHAD affiliate) started commercial operations (mainly in N’djamena). Chad was connected to the Internet in 1997. Two years later, Internet Protocol (IP) telephony, using prepaid cards, was introduced. Radiodiffusion Nationale Tchadienne (RNT) is the state-operated national radio broadcaster, while Télé-Tchad is the national television broadcaster.

9. Policy and regulation overview. The Ministry of Post and ICT (MPTIC) was responsible for regulation of the telecommunications sector until the Telecommunications Act was passed in August 1998. In July 2000, the Office Tchadien de Régulation des Télécommunications (OTRT) was established. The OTRT is a public body under the responsibility of the MPTIC. The OTRT has financial and management autonomy. Following the adoption of the CEMAC4 Directives on Electronic Communications Services (in line with good international practices and consistent with Central African Backbone (CAB) design, the Government of Chad has requested a Project Preparation Facility (PPF) to finance he harmonization and adaptation of sector legal and regulatory framework.

10. High cost structure is resulting in less trade. The isolation and high cost structure of Chad have held back the availability of affordable telecommunications infrastructure. Without access to low price and high quality telecommunications services, it is very costly for the Chadians to trade with each other, and with the rest of the world (limiting opportunities to create jobs, and expand production of goods and services).

11. The lack of modern backbone infrastructure5 at the national level is an additional key constraint. All operators do not have broadband terrestrial networks and rely on expensive and poor quality satellite connectivity or microwave backbones to link up cities at the national level. Some projects have been proposed in the past, but none have materialized due to a combination of factors including inadequate legal and

4 Central African Economic and Monetary Community (CEMAC) 5 For the purposes of this project, backbone infrastructure refers to a collection of high-capacity fiber optic or point-to-point wireless (e.g., microwave) links between main populated areas, both within countries and between countries, which serve as the basis on which telecom operators provide voice and data services. The text at some points will make the distinction between: national backbone networks (within countries), regional backhaul networks (between neighboring countries, terrestrial networks), and regional backbone networks (between the region and the rest of the world, e.g., undersea cables).

4

regulatory framework and investment climates, and the complexity of a multi-country investment project and related concerns about financial sustainability. Recently, existing operators (fixed and mobile) and public authorities began to explore new business models that could foster the deployment of such infrastructure at the national level. The new infrastructure could be developed through a public-private partnership (PPP) public funding to complement private financing when the risk-return profile is unattractive and overall operation is managed by the private sector, under principles of competitive level pricing and Open Access principles.6 Such backbones would connect the capital and secondary cities (contributing to reduce the urban-rural divide) to neighboring countries but also provide redundancy routes (network securization). Operators and service providers could then provide affordable and better quality ICT and eGovernment services to citizens. Effective cross-border links and supporting regulatory frameworks are therefore critical for the Chad and the region as a whole.

12. Closing the infrastructure gap and opening up access to cheaper bandwidth. The transmission network (long-distance and international) is entirely based on satellites. The proposed fiber-optic transmission backbone proposed by the Central African Backbone (CAB) Program would link the telecommunications network in Chad to those in Cameroon, CAR, Nigeria and eventually Sudan. The telecommunication networks in Chad will then connect international submarine fiber-optic cables, with onward connectivity to other African countries, Europe and the Far East. The CAB Program would provide additional bandwidth capacity to enable the development of the telecommunications and internet sector.

13. Without cross-border initiatives and regional coordination, Chad may not be in a position to solely achieve low-cost broadband access and low-cost regional connectivity. A prefeasibility study was conducted by a specialized international firm in Cameroon, CAR and Chad that evidence the economies of scale and cost efficiencies of a truly regional and fully integrated end-to-end backbone infrastructure. The study demonstrates the financial and technical feasibility of the CAB Program and recommends the implementation of CAB APL1 involving Cameroon, CAR, and Chad. The study forms the basis for the design and framework for the CAB Programt intervention. The CAB network, as designed, is a regional telecommunications network made up of suitable on-ward terrestrial fiber connections to submarine fiber-optical cable systems linking several Central African countries and providing the region with a digital broadband access to the global fiber network. In addition to the build-out of approximately 2,200 km of new fiber-optic infrastructure, the planned broadband backbone would leverage the 1,000 km existing fiber-optic infrastructure laid along the oil pipeline between Kribi (Cameroon) and Doba (Chad). The study developed nine scenarios, the traffic demand and flows for the targeted countries and has set key principles (the CAB network is to be a shared infrastructure promoting an Open Access regime and owned and operated according to PPP principles).

14. In May 2007, based on the findings of the study, the heads of state of CEMAC adopted a Declaration calling for the establishment of the CAB under Open Access and Public-Private Partnership (PPP) principles and asked for donor intervention. In line with

6 “Open Access” is broadly defined as an equal opportunity for operators and service providers to have unfettered access to given infrastructure or services under similar terms and conditions.

5

the Regional Integration Assistance Strategy (RIAS) and national CAS/ PRSP, the World Bank Group (World Bank and IFC) and the African Development Bank (AfDB) provided Technical Assistance (TA) to CEMAC and Central African countries to conduct preparatory studies. Regional and national technical committees were set-up since 2007. In parallel, the World Bank participated (as an observer) to the elaboration of the 2008 CEMAC Directives on Electronic Communications Services in line with sector good practices and the CAB Program as designed.

15. A new operating model consisting of a new regional network and national telecom operators will become fully integrated, thus driving prices lower. The CAB structure as designed and supported by the proposed World Bank Program calls for the establishment of a new regional telecom operator and national operators. These operators would be in charge of reselling international, regional, and national capacity to existing national operators and service providers at discounted rates compared to current pricing in the targeted countries. In a medium scenario, international bandwidth price reduction could be above 50 percent for landlocked countries (including Chad) the first year of operation. As such, the CAB network will increase competition for the provision of international and national capacity (new alternative infrastructure, fiber-optic backbone, competing with satellite and microwave connectivity).

16. Key principles (promoting Open Access regimes, developing wholesale markets and promoting PPPs have been defined in the study and have to be endorsed by all participating countries in order to be eligible for World Bank financing. To keep some flexibility, the detailed arrangements (in terms of ownership and management) will be defined at the country-level, taking into account the difference of all eligible countries in terms of sector structure, level of development and access, operational and financial situation of the respective SOE.

17. The backbone network that will be installed at the country-level will use a hybrid competitive and cooperative approach. This reflects the need to differentiate the role of the government and the operators and to build strong partnerships with the private sector to develop telecommunications infrastructure.

18. The government’s role is to focus on providing the right incentives for infrastructure and services to reach areas unattractive to the private sector (on a purely commercial basis), as well as in cases where large initial sunk investments are required. Government participation through the financing of segments of the CAB backbone will be used to buy-down the cost of capital: therefore the prices that could be charged to consumers to recover the investment (regulatory mechanisms will be set-up to ensure that lower costs are passed to the consumer). Additional government support may take the form of government participation in the new legal entity created for the build-out of the backbone networks (such as through contribution of existing assets), guarantees, subordinated debt, ensuring rights-of-way, and/or commitment to purchase certain capacity on the network for a given time period.

19. Role of the private sector. The private sector will participate in financing, and will install, maintain and operate the CAB network. The capital and financing structure will be a blend of public and private sector. The inclusion of the private sector and profit sharing can bring several benefits including: (i) access to private finance; (ii) reduced

6

operational risk for public sector; (iii) faster delivery of capital projects; (iv) project management skills; and (v) entrepreneurship and innovation. The PPP structure will share the risks and rewards between the government and the private companies.

CAB PPP Structure and financing

20. The CEMAC - in coordination with the Governments of Cameroon, CAR and Chad, the World Bank Group, the AfDB, and the International Telecommunication Union (ITU) - has launched the recruitment of the investment bank and legal adviser (transaction advisers) to finalize the structure and mobilize the private funding.

21. The design and ownership structure of the PPP will (i) maximize the use of private financing (or minimize the use of public financing); (ii) ensure feasibility and attractiveness of the transaction; (iii) secure Open Access to regional connectivity infrastructure; and (iv) ensure competitive, reasonable tariff of international, regional and national capacity

22. New legal entities will be formed for the purposes of owning and operating the CAB networks. This will take the form of a consortium including the private operators, private financers’, incumbent operators and/ or governments. The private sector will install and maintain the CAB networks. A contract will be set between the private sector and the existing public telecommunications operators on the management of the national backbones (the new structure could also be leveraged to manage these networks). Final ownership distribution will be based on the amount of private financing mobilized and final contributions made by the Governments.

23. The IFC is playing a role as part of the World Bank Group’s support to the CEMAC and to Governments as they finalize an optimal structure for the public-private partnership that ensures the feasibility and attractiveness of the transaction. If needed IFC may also assist in mobilizing funding or assist investors7.

24. Financing CAB Program APL1. The first phase of the CAB program proposed for IDA financing will cover Cameroon, Central African Republic and Chad. This first Phase of CAB Program 8 comprising APL-1A and APL-1B, will be structured as a vertical APL. APL1A will cover the technical assistance to strengthen the enabling environment and prepare the PPP structure for the establishment of the CAB Network. APL1B will focus on financing the connectivity infrastructure of the CAB Network. To establish the CAB infrastructure in Cameroon, CAR and Chad (that will utilize the existing 1,000 km fiber-optic backbone laid next to the oil Chad-Cameroon oil pipeline), approximately $40 million will be contributed from the first phase of the CAB program (technical assistance will be provided through APL1A and connectivity infrastructure will be partly financed by APL1B).

7 In consultation with the Conflict of Interest Office, the WBG has disclosed the potential risk of perception of conflict of interest to the Governments highlighting the expected benefits from the institution to intervene as a Group. 8 The first Phase, CAB APL1, includes two parts: APL-1A and APL1B. See Para 33 for more explanation on the structure.

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25. In addition, the AfDB will provide parallel financing to establish complementary backbone infrastructure in CAB APL1 countries. However, the cost and design of this additional infrastructure is not included in the CAB APL 1. As structured, the World Bank CAB Program and CAB APL1 will not be affected if the AfDB financing does not materialize.

26. Private sector interest. An additional $27.8 million is estimated to be needed to establish the CAB network for the CAB APL1 countries. It will be mobilized from the private sector (private equity, off-take agreements and commercial debt). The structure as recommended has been presented to all public and private operators in CAB APL1 countries (but also in other eligible countries). Despite the economic and financial crisis, all operators have confirmed their strong interest in the venture since CAB will lower significantly their operating cost and provide new opportunities for additional network coverage. Several operators have announced that they will explore the opportunity to contribute financially, and some international commercial banks have also expressed an interest.

2. Rationale for Bank involvement 27. Strong government commitment to the ICT sector and to digital divide initiatives. Chad’s government has put in place an ICT development program (Sector Strategy and NICI adopted in 2008) that focuses on building a fiber network linking the country to Cameroon, Central African Republic and Sudan to provide affordable data and voice services and support the development of eGovernment projects. The Government has initiated the first regional study for the CAB and has been a key promoter of the regional program. Finally, the adoption of a specific Declaration for the project in May 2007 by the CEMAC heads of state highlights the commitment of the government of Chad. Significant technical and financial resources have been mobilized by the countries and the CEMAC Commission to accelerate the implementation of the CAB Program.

28. The proposed operation is consistent with the Interim Country Assistance Strategy (CAS) of Chad and particularly within the framework of the Africa Action Plan. The Interim CAS highlights the role of key infrastructure (such as roads and telecom backbones) and the need for policy harmonization in the sector. The World Bank’s Africa Region Development Strategy (discussed at the Board in July 2003) identified advances in ICT as one of the three emerging positive trends in the 21st century for Africa, offering “enormous opportunities to leapfrog stages of development”. The CITCD also fits within the Bank’s comprehensive Africa Action Plan developed in 2005, which further articulates goals and objectives covering several important development areas including: (i) building national development strategies and measuring results; (ii) building capable states and improving governance; (iii) supporting drivers of growth; and (iv) strengthening and implementing partnerships at the country level. The CITCD will facilitate cross-border communications traffic and hence promote trade, stimulate cross-border movement of factors of production and promote regional integration.

29. The CITCD fits well with WBG’s Regional Integration Assistance Strategy for Africa (RIAS). The Bank’s RIAS discussed at the Board in April 2004, identified

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advances in ICT as one of the three emerging positive trends in the twenty-first century for Africa, and highlight its role for the regional connectivity objective. The CITCD and APL1A will strengthen and implement partnerships at the regional level (including regulatory harmonization) and will support for both Economic Community of Central African States (ECCAS) and CEMAC objective of creating a unified economic space in Central Africa.

30. The World Bank Group is well placed to contribute within the frame of a multiple development partners’ effort. The WBG has been involved in the CAB program since 2005. The May 2007 Declaration of the CEMAC heads of state called explicitly for World Bank Group financial support for the implementation of the CAB program. The overall program has been formulated with other key stakeholders and DFIs (the AfDB joined the initiative in 2007 and is providing parallel financing for the CAB Program; The African Union (AU) is also playing an important role in facilitating inter-governmental cooperation and policy harmonization, in conjunction with the CEMAC).

3. Higher level objectives to which the project contributes 31. The development objective will be the engine of shared growth achieved by: (i) accelerating the physical roll-out of backbone infrastructure (investment intervention based on PPPs to leverage private sector investment in infrastructure); and (ii) removing monopoly regimes through policy and regulatory support to ensure that once in place, the infrastructure is accessible to all operators on open, transparent and non-discriminatory terms.

32. The project will help reduce the cost of doing business in Chad. In the 2009 Doing Business report which presents quantitative indicators on business regulations and the protection of property rights compared across economies, Chad was ranked 175 out of 181 countries, while Cameroun was ranked 164, Equatorial Guinea 167, and Gabon 151. Infrastructure services remain costly and inefficient, thus making the cost of doing business very high. For Chad to achieve higher and sustained growth performance, it will need to develop rapidly its basic infrastructure. A better communications infrastructure, capable of delivering advanced ICT services throughout the country would reduce the cost of doing business.

B PROJECT DESCRIPTION

1. Lending instrument

33. Lending instrument. The lending instrument is a Regional IDA horizontal and vertical Adaptable Program Loan (APL). The Communications Infrastructure and Technology APL Project (APL1A)_ - Chad Credit (CITCD) is part of the first phase of the CAB Program. The APL instrument is well-suited to take into consideration the length of time it takes to achieve the overall objective of establishing a regional network for Central Africa. An APL is also flexible enough to accommodate the different level of

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readiness of the participating countries (horizontal APL) and to phase Technical assistance if needed prior to the mobilization of the required financing for the infrastructure (vertical APL).

34. Breakdown of Regional and National IDA allocations. Since this is a Project included in a regional Program, supplementary regional IDA funding can be used to leverage country allocations for up to two-thirds of the full proposed IDA amount of the project, with country allocations covering one third of the project cost attributable to each individual country involved (taking into account that the National IDA allocation cannot exceed 20 percent of the FY National Allocation). The table below provides a summary of the regional/national IDA breakdown for CITCD and estimated breakdown for the activities in Chad to be supported under APL1B 9.

2. Project development objective and key indicators

Project Development Objective (PDO). The core PDO is to contribute to increase

geographical reach and usage of regional broadband network services and reduce their prices. Key monitoring and evaluation indicators are summarized in Table 1.

Table 1 Monitoring and Evaluation framework

Project Development Objective Outcome Indicators At closing of project

Contribute to increase geographical reach and usage of regional broadband network services and reduce their prices

Volume of international traffic [APL1B]

International Communications (Internet, Telecoms, and Data) bandwidth per person (bits)

50

Volume of national traffic using 2 proxies [CITCD]:

Internet users per 100 inhabitants 1.4

Total teledensity (active fixed and mobile subscribers per 100 habitants)

49

Average price of international communications using the proxy [APL1B]:

Average monthly price of

9 The National IDA allocation cannot exceed 20% of the FY National Allocation. We have assumed that APL1B will be presented for Board approval in FY10.

$million Regional IDA Pilot

National IDA Total

APL1A - Chad portion 6.00 3.00 9.00

13.90 0.80 14.70APL1B – Chad portion

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wholesale international capacity link from Ndjamena to European hub (E110).

$2000

3. Project components

35. The first phase of the CAB proposed for Chad will be structured as a vertical APL to cover first the technical assistance to strengthen the enabling environment and prepare the PPP structure for the establishment of the CAB (APL1A) then a subsequent part will focus on financing the connectivity infrastructure of the CAB (APL1B).

36. The CITCD (part of APL1A) will therefore finance activities related to the “enabling environment” component, and the “project management” component while APL1B (expected to be presented for Board approval in April 2010) will finance activities related to the “connectivity” component described in the CAB Program. APL1B will be triggered after (i) the establishment by the recipients and other stakeholders of a legal structure which will install and manage the CAB network in accordance with PPP principles and Open Access regime; and (ii) the CAB legal structure has received the legal rights to install, manage and operate the CAB network on the Recipient’s territory.

37. The CITCD will have the following components and activities see Annex 3 for more details):

38. Component 1 – Enabling environment ($7.4 million). This component will finance various activities in the form of technical assistance (TA), training and equipments in order to (i) modernize the ICT policy, legal and regulatory environment; (ii) strengthen key public institutions (including OTRT, MPTIC, SOTEL TCHAD and STPE); and (iii) promote a pro-competitive environment and restructure of Incumbent operators. This component is a key for the effective establishment of the Central African Backbone network.

- Modernize and harmonize the ICT legal and regulatory framework in Chad to accelerate sector growth and ICT development. It will include, in particular the following activities (i) TA to modernize and harmonize the legal and regulatory framework for Electronic Communications Services, and (ii) TA to develop ICT legislation.

- Strengthen capacity of key public stakeholders (MPTIC and OTRT) to promote further sector reform. It will include the following activities: (i) TA to develop regulatory tools (i.e., interconnection/tariffs, networks monitoring, Open Access); (ii) TA to increase ICT access in remote areas; (iii) TA to review spectrum management framework in Chad and prepare bidding documents for the acquisition of a spectrum management and monitoring system; (iv) training/

10 E1: This is equivalent to two (2) Mbps.

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capacity building; and (v) equipments (i.e., spectrum management and monitoring system, information systems).

- Promote a pro-competitive environment and restructure of incumbent operators to maximize the benefits from the regional backbone. The project will finance in particular the following activities: (i) TA to promote and establish PPP to deploy the CAB; and (ii) TA to define and implement the restructuring options and privatize of incumbent operators.

- Establish Internet Exchange Point (IXP) to complement the other investments that the government and the private-sector are undertaking to boost connectivity and the capacity of the regional backbone network. The project will include the following activities: (i) TA to design the establishment of an IXP in Chad and (ii) Equipments for the IXP.

- Launch structuring and start-up consultancies required for the establishment of CAB networks including CAB-related environmental and resettlements consultancies (i.e. the preparation of specific Environmental Management Plans (EMP), Resettlement Action Plans (RAPs) and Indigenous Peoples Plan (IPP) if planned).

39. Component 2 – Project management capability ($1.6 million). This component will consist in financing project management related issues. It will support the following activities: (i) consultants to staff the Project Coordination Unit (PCU) (i.e., a procurement specialist, a Financial Manager, an internal auditor, an accountant, a backbone expert); (ii) equipments (i.e., financial management system); (iii) various TA (i.e., Audits); (iv) training and (v) operating expenses.

40. With respect to CAB APL1 countries including Chad, the connectivity component will be financed under APL1B expected to be presented for Board approval in April 2010. The financing to be provided for Chad for this subsequent phase is estimated at about $14.7 million (including contingencies). Most connectivity infrastructure will support the deployment of regional backhaul links in the country and across the borders with neighboring countries.

4. Lessons learned and reflected in the project design 41. Enabling environment to meet market potentials. The inadequate enabling environment prevents or reduces investments from operators or services providers. It is expected that the CITCD , while promoting a pro-competitive environment on services and markets, will leverage existing strengths of the ICT markets. The growth of the ICT market in Chad can be accelerated if actions are taken to mitigate bottlenecks jeopardizing the development of markets. As an example, Celtel’s network coverage reached over 53 percent of the population in 2007 with the main hubs being N’Djaména, Moundou and Abéché. The reduction of call rates and adoption of universal access

12

policy would therefore be the key drivers for growth in the mobile sector. Moreover growth in the Internet industry is still very slow and highly constrained. It remains a service for use by industry, government and a privileged few at home. This can be attributed to several factors such as: (i) the high cost of international bandwidth, especially of the SAT3/WASC/SAFE system, and (ii) the lack of an IXP to reduce the cost of local traffic.

42. Different roles for public and private actors in the ICT sector. The CITCD reflects the need to develop strong partnerships with the private sector to develop telecommunications infrastructure, where government and the telecommunications operators have differentiated roles. This project is based on the well-learned lesson that the private sector is better placed to develop and operate ICT infrastructure, as it is generally able to provide investment for infrastructure rollout. The role of the government is to focus on providing the right incentives for infrastructure and services to reach areas unattractive to the private sector on a purely commercial basis, as well as in cases where large initial sunk-investments are required. The private sector is better placed to invest in, install, manage and maintain ICT infrastructures Moreover the inclusion of the private sector and profit sharing can bring the following benefits: (i) access to private finance; (ii) reduced operational risk for public sector; (iii) faster delivery of capital projects; (iv) project management skills; and (v) entrepreneurship and innovation. Therefore, the models presented here which involve the sharing of risk between the government and the private companies (PPP) can be defined as an agreement between government and private entities for the purpose of delivering a project or service by sharing the risks and rewards of the venture. The PPP model helps to bridge gaps in quality, speed, and efficiency in the provision of services by the public sector.

5. Alternatives considered and reasons for rejection 43. Focusing on development of applications would be premature. Activities for the development of eGovernment services are eligible for support under the CAB program. However without adequate infrastructure in place to support the bandwidth need for IT services/ Internet, it would prove very difficult and inefficient to develop such applications at a larger scale. Therefore it was decided to delay the beginning of these activities at a later stage (this would be mainly supported by the CAB AfDB Project).

44. Cooperative approach is welcome in a resource-constrained environment. The project will promote the development of a collaborative framework to finance and establish a regional and national backbone. An alternative design would have been to finance backbone links under a competitive structure, where each operator would bid separately for the construction of a particular link or group of links. However, the countries targeted have inadequate environment or the market size does not justify multiple backbones outside the main cities. The proposed solution will accelerate the deployment of broadband backbones within Chad and will be used by all operators and service providers (Open Access).

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C IMPLEMENTATION

1. Institutional and implementation arrangements Institutional and implementation arrangements (See Annex 5)

The MPTIC will be responsible for the overall coordination, implementation, and supervision of the project. For each activity concerned, MPTIC, through the PCU, will consult with and delegate to the relevant agencies and ministries.

45. The implementation arrangements involve three organizational levels: (i) a Project Steering Committee (Comité de Pilotage) will be responsible for providing advice regarding cross-sectoral issues; (ii) the PCU will be responsible for project implementation, coordination of activities and fiduciary management; and (iii) a Chad CAB Technical Committee that will provide technical input for the development of the regional backbone.

46. The MPTIC and the Chad CAB Technical Committee liaise with other CAB participants.11

2. Monitoring and evaluation of outcomes/results

47. The Monitoring and evaluation (M&E) of CAB will be embedded in the various components of the project, and TA provided through the project will include support for M&E. The MPTIC and the OTRT will collect most indicators needed to monitor and evaluate the project (the last indicators are collected by an international organization on a yearly basis). Both national institutions have been collecting the selected indicators for several years. However, the project will provide support through technical assistance to strengthen their statistical units.

48. Moreover, at the regional level, an IDF grant (CEMAC - strengthening capacity in the telecom & IT sector – IDF Grant P109923) has been processed to strengthen the telecom legal and institutional environment of CEMAC region and improve the telecom and information technology representation/visibility to increase regional telecommunications and Information Technology (IT) investments. The grant will finance short-term TA to adequately monitor regional telecom and IT activities and to develop a common M&E system shared by all CEMAC Member States (including Chad). This system will be validated by CEMAC Member States. The establishment of this M&E system will (i) increase knowledge transfer between member states and reinforce CEMAC coordination and policy role for the region; (ii) improve sector visibility for the

11 To date CAB APL1 countries have established: (i) an Inter-Ministerial Committee involving sector ministers, (ii) an expert commission involving three representatives from each participating CAB APL1 country, and one representative from the following institutions: the World Bank, the AfDB, the CEMAC, the Economic Community of Central African States (ECCAS) and the International Telecommunications Union; (iii) national technical committees involving representatives from the government, the regulatory agency, the public and private operators and users groups.

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government (as a main growth contributor) and therefore improve sector policy decision to attract additional foreign direct investment.

49. Outcome indicators for Chad related to APL-1B (financing of the Connectivity/ infrastructure component defined in the CAB Program) are provided on a indicative basis.

Project Development Objective Outcome Indicators Use of outcome information Contribute to increase geographical reach and usage of regional broadband network services and reduce their prices

Volume of international traffic [APL-1B]

International Communications (Internet, Telecoms, and Data) bandwidth per person (bits)

Volume of national traffic using 2 proxies [CITCD]:

Internet users per 100 inhabitants

Total teledensity (active fixed and mobile subscribers per 100 inhabitants)

Average price of international communications using the proxy [APL-1B]:

Average monthly price of wholesale international E1 capacity link from Ndjamena to European hub (E1)

Assess trends in international communications and regional communications integration

Assess level of access to communications services within targeted countries

Assess competitiveness of countries with regards to cost of capacity

Intermediate Results Results Indicators for Each component

Use of results monitoring

Component 1: Enabling Environment, including Monitoring & Evaluation capacity-building Sound environment conducive to investment and competition

Price of mobile call and internet access

Average cost of mobile call [three minutes, local, peak]

Average monthly price of Internet access (256kbps)

Geographic reach of mobile services :

Coverage of mobile network (% of population)

Monitor sector competitiveness and efficiency of regulation

Monitor efficiency of regulation

3. Sustainability

50. The component 1 will support the establishment of the CAB PPP environment and structure. APL1B will finance CAB connectivity infrastructure to be implemented through the set PPP. The CITCD will also stimulate sector development in the country and promote competition. The stimulation of the supply of low-cost wholesale international connectivity will be a major boost to investment and competition in the

15

downstream segments of the market. These benefits thereof will last beyond the end of the project, increasing the sustainability of the project outcome.

Component Sustainability Component 1: Enabling environment at the regional and national levels

Technical assistance is being provided to improve sustainability through capacity building within the Ministry and regulator.

4. Critical risks and possible controversial aspects 51. The table below summarizes the team’s assessment of the key risks to the project.

Table 2 Risks Assessment and Mitigating Measures

Main Risks Initial Rating

Mitigating measures Residual Rating

Macroeconomic Framework Chad reached the decision point under the enhanced HIPC Initiative in May 2001 but attainment of the completion point has been delayed mainly because of unsatisfactory fiscal performance (including extra-budgetary spending, transfers between expenditure lines, signature of contracts without the Ministry of Finance’s approval, and poor quality of spending). Efforts to maintain macroeconomic stability and to channel resources to priority sectors have been hindered by the difficult political and security environment, and dwindling government commitment to public finance reforms. While the authorities are keen to have new Staff-Monitored Program (SMP starting in April 2009) there is little evidence that the required changes in government spending plans would be achieved through end of 2009. Current expenditure levels are putting fiscal sustainability at risk unless a sharp downward adjustment is made in the 2009 and 2010 budgets.

H It’s not clear yet on how Chad will address the impact of the financial crisis, particularly their approach to revise and balance the budget given the significant drop in oil prices (from $83 in the budget to current WEO prices of $44), and the measures envisioned to protect pro- poor spending. The Bank’s ability to respond has been severely limited due to our limited engagement. Government had curtailed military expenditures through the beginning of the year. Under current spending plans, oil savings would be depleted and a large financing gap would arise this fiscal year. Dialogue with the Fund is currently underway to address the financing gap. A SMP is central to Bank and IMF dialogue with the country, as it would be a critical piece of evidence that Chad is committed to macro stability. A six month SMP track record is a key requirement for PRGF resumption and for HIPC completion point.

S

Security Risk A deterioration of the security situation constitutes the largest source of risk for the program.

H The security situation in Chad remains fragile. There has been no significant progress in implementation of the various agreements between the government and rebel groups. Relations between Chad and

H/S

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neighboring Sudan remain tense despite ongoing efforts to restore diplomatic relations between the two countries. The Security Council is considering keeping an international presence in the region when the mandate of EUFOR ends in December 2009. With the EU’s support, the Government is in the process of adopting new electoral legislation, reforms of the Conseil Constitutionnel and the Supreme Court, new regulations for the freedom of the press and the status of the opposition parties. A number of these texts are expected to be adopted by the National Assembly by end 2008.

Systemic Corruption There is no evidence of systemic corruption in the award of telecommunications contracts. More concerns have been raised from the use of the funds from the regulatory authority.

M The project will support the establishment of a modernized telecommunication and IT legal, regulatory and institutional framework. This should increase the OTRT independence but at the same time more controls will be imposed (i.e. Annual financial and technical audit). Also the Project will provide some support (technical assistance and training) to the regulator.

M

Country/Sector Governance Telecom sector governance remains challenging Budget support to the telecommunications sector may increase risks of misallocation of sector financing.

M The World Bank Country Team and the sector specialists are following closely these issues with the Ministry of Finance to ensure that appropriate financing is allocated to the sector on specific and identified items. The Project will support the development of systems and procedures for improving the standards of sector governance. The project will also support the restructuring and privatization of SOTEL TCHAD that will lead to increased transparency in the sector.

M/L

Country ownership (incl. political aspects) High degree of project ownership from the Presidency, ministries of finance and ministry of Posts and TIC. A Declaration promoted by the sector Ministry and Ministry of Finance has been adopted by all CEMAC heads of state in April 2007. The Declaration calls for the implementation of the regional CAB Program and World Bank support.

M/L The Project team has established Task Groups at the regional level (an inter-ministerial Committee, a regional Expert Commission and national technical committees). The Task Groups include representatives from CEMAC, Ministries (including all sector Ministers in Cameroon, CAR and Chad), telecommunications regulatory authorities, public and private sector operators, user groups and selected Development Financial Institutions (including the World Bank). The project includes activities to increase awareness of key stakeholders. The communication campaign will disseminate progress of the project and its proposed outcomes.

L

Operation-specific Risks Sector policies and institutions

M Policy support has been provided since 2006 to the Government. UNDP is currently

L

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The Ministry has benefited from Bank’s support until 1999 for key sector reforms. The sector Law reflects good practices (establishment of an autonomous telecommunications regulatory authority; key regulation missions identified; liberalization of the sector). However, the policy, legal and regulatory framework needs to be updated (clear separation of roles between the MPTIC and the OTRT; and strengthening the independence of the OTRT)

financing the new Telecommunication and IT sector policy The Bank’s has maintained an active sector policy dialogue with key stakeholders (Ministry of Telecom; Ministry of Finance). The CEMAC Directives for Electronic Communications Services have been recently adopted (November 2008). The World Bank has been involved during the preparatory process. The Directives follow good international practices. The Project will support the transposition of the Directives in Chad.

Restructuring and Privatizing SOTEL TCHAD Privatization efforts in the past failed to attract interest in the incumbent operator. Commitment of the authorities to transparent privatization was also questionable.

H The SOTEL new management show keen interest in finalizing the privatization/ restructuring of the company. The project will help to define options, restructure and privatize the incumbent telecom operator.

S

Problem to access International Submarine cable (SAT3) at competitive prices. The feasibility study has already included a “price-cap” on potential capacity price to access SAT3 in Cameroon (presently the only international route for the basic configuration). Cameroon government, regulator and incumbent operator have used this price as a benchmark in the country. CAMTEL, by virtue of its status as the only Local Provider and also the local SAT3 partner, wields tremendous control over the main international gateways.

S The regional approach will enable the regional operator to bundle all national traffic and negotiate at much higher discount international capacity price. Also, the CAB network is planned to connect additional undersea cables with international broadband access to increase competition and even further reduce international capacity tariffs (new West-Africa undersea international cables are supposed to be operational in 2010 – WACS and Glo-1). Political and technical discussions have started to connect Nigeria (access to SAT3, Glo-1), Sudan (access via the Red Sea to SEA-ME-WE 3&4), Republic of Congo (WACS) and Democratic Republic of Congo (access via the Rwanda or Burundi Broadband cable to access EASSy, TEAMS, SEACOM or WASC).

M

Inadequate coordination could delay project implementation

H Following the adoption by heads of state of the CEMAC Region of the Declaration for the establishment of the CAB Program, the telecoms sector Ministries have set-up working groups at the national and regional levels to oversee project planning and implementation. Working groups include stakeholders from the government, regulatory agencies, public and private operators, user groups and donors (World Bank and AfDB).

M

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During Program preparation, the WB and AfDB identified activities to be financed by each stakeholder. The WB is focusing on the core/main routes mitigating the overall implementation risk if AfDB financing is delayed or canceled Also the Commission of the AU is providing a strong political support to the CAB program as it is seen as a key regional program for Africa.

Inadequate implementation capacity and readiness could delay project implementation

M While there are high demands and interests from participant countries, and from regional coordination body (CEMAC), the lack of implementation capacity and readiness itself may cause the serious delay of project implementation. Key principles and implementation arrangements both at national and regional levels have been established ahead of Board approval.

M

Inadequate financing S A feasibility study has been carried out to quantify risks and required public and private financing for the CAB basic configuration infrastructure requirements. Due to the ongoing financial and economic crisis, it may be more difficult to raise private financing for the CAB Program (most infrastructures are financed and managed under a PPP scheme). For the time being, however, investment in the telecommunications sector continues to remains strong12. Also, structuring the CAB Phase1 as a vertical APL will mitigate this risk since the Public financing could be adjusted to match the requirements and parts not funded by the private sector.

M

Governance issues with regards to build out of infrastructure where SOE coexist with private operators

S While the participation of enterprises with poor efficiency records in the roll-out of the infrastructure may not be desirable, it cannot be completely avoided, especially in countries where the telecommunications market is not open to competition. Hence, the project will provide funds to promote liberalization, restructuring and privatization of public telecommunications incumbents

M

Risk Rating: H = High, S = Substantial, M = Moderate, N = Negligible.

12 For the time being, however, investment in the telecommunications sector continues to remain strong. The investment and legal advisers will test the market before finalizing/freezing the overall structure to ensure private sector adoption and adequate financing. IFC in collaboration with the World Bank will provide support to the CEMAC Commission and CAB APL1 countries to ensure adequate final structuring (feasibility and attractivity of the transaction) while ensuring long term economic viability and adequate return for potential investors. IFC could also consider mobilizing funding.

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5. Grant conditions and covenants

52. Conditions for project effectiveness:

(a) Establishment of the Steering Committee and a CAB Technical Committee with functions, members and resources satisfactory to IDA;

(b) Recruitment of a procurement specialist, a financial manager, an accountant and an internal auditor;

(c) Install a computerized financial management system in a manner satisfactory to IDA

(d) Adoption of a sound Project Implementation Manual (PIM) acceptable to IDA.

53. Dated covenant:

(a) Recruit independent external auditors acceptable to IDA not later than 4 months after effectiveness.

D APPRAISAL SUMMARY

1. Economic and financial analysis

54. The benefits accrued in the targeted countries (i.e. increased access to quality and affordable ICT services) spill over country boundaries as: (i) higher volumes increase the viability of the regional communications infrastructure network, decrease cost of access and increase trade between African countries and (ii) cross-border initiatives provide countries with the incentives to develop missing infrastructure to increase ICT access. Indeed, the implementation of the CAB Program will have a transformational impact on regional connectivity which will impact regional trade and overall economic integration of the participating CAB countries.

55. A detailed traffic study and a financial model have been developed by International consultants for CAB APL1 countries and Nigeria. Results from the study shows that traffic will expand significantly due to the growth of mobile operators and the development of the Internet market (i.e. International bandwidth in Chad will increase from 32 Mbps in 2006, to 338 Mbps in 2011, to 560 Mbps in 2016) . The CAB network will carry a significant portion of this traffic (especially for landlocked countries using exclusively satellites).

56. The opportunity cost in Cameroon, CAR and Chad calculated to measure economies from the cost of providing bandwidth relying on satellite connection as opposed to CAB Network until 2021 is estimated at $117 million (discount rate of 13 percent and average annual decrease of satellite connection of 8 percent).

57. The economic impact in Cameroon, CAR and Chad on a 10 year model is estimated at $94 million out of which $76 million as consumer surplus and $18 million as producer surplus.

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58. Based on the financial projections and taking into account the existing public-private structure, it is expected that CAB network could generate a positive net income in the first twelve months of operations.

2. Technical

59. The design and ownership structure of the PPP to be established based on ongoing technical assistance provided at Regional-level and the technical assistance to be provided under the CITCD will be consistent with international best-practices. The CAB Program, APL1A and the CITCD will (i) maximize the use of private financing (or minimize the use of public financing); (ii) ensure feasibility and attractiveness of the transaction; and (iii) secure Open Access to regional connectivity infrastructure and ensure competitive, reasonable tariff of international, regional and national capacity.

3. Fiduciary

60. Financial Management. Chad is a conflict-affected country with a weak PFM system which cannot be used directly to implement the proposed CITCD. As a result, a PCU is set up within MPTIC with full fiduciary responsibility to manage the project. At the time of writing this assessment, there is no FM system in place in the PCU due to the delay caused by the late release of the PPF deposit. Therefore, the following FM arrangements are agreed upon and have to be met before effectiveness: (i) recruit a Financial Manager, an accountant and an internal auditor to handle the fiduciary functions; (ii) install a computerized accounting system; and (iii) develop a sound PIM to manage the project.

61. In terms of reporting, it’s agreed that quarterly unaudited Interim Financial Reports (IFR) will be submitted by the PCU to IDA within 45 days after the end of each quarter. The PCU will appoint an external auditor acceptable to IDA to audit the Project annual financial statements and submit the audit reports within 6 months after the end of each FY.

62. Ultimately it’s expected that the financial management function with the PCU will serve to manage AfDB financing once signed as well. Specific staffing adjustment will be discussed in due course with AfDB, eth World Bank and the Government when it occurs (additional support for financial management and procurement functions).

63. Disbursement. One Designated Account in CFAF will be opened in a commercial bank and managed by the PCU under the responsibility of the Project coordinator and the Financial Manager. Upon effectiveness, the DA will receive an initial deposit equivalent to four month expenditures forecast and replenished regularly on a monthly basis against statements of expenditures (SOE) through Withdrawal Applications cleared by the Internal Auditor. Direct payment may be used whenever appropriate for payments of expenditures equal to 20 percent or more of the DA. At the beginning, the transactions-based disbursement method will apply. In the second FY, the project may shift to the report-based disbursement method if satisfactory IFR and audit reports are submitted in a timely manner and the project sustains satisfactory FM rating. The grant will finance 100% of eligible expenditures exclusive of taxes.

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64. Procurement. The PCU of the MPTIC will be responsible for the administration, coordination, monitoring of the Project and procurement activities including compliance with procurement procedures. The PCU include a coordinator appointed by the Government, a Financial Manager (recruitment in process), a procurement specialist (recruitment in process), an internal auditor (recruitment in process) and, an accountant (recruitment in process), all recruited on a competitive basis.

65. A PIM including the financial administrative arrangements with a detailed section on procurement is currently under drafting and outlines, among others, the procurement arrangement and the relevant procedures applicable to the management of the grant.

66. Procurement corrective measures have been identified and an action plan has been defined with tasks to be performed, responsible body as well as time-frame (see annex 7).

67. Procurement risk. The overall project risk for procurement is substantial because, among other factors, there was no previous Bank operation with this ministry and the PCU with procurement responsibility, which is been set up and staffed, is a completely new entity and is not familiar with procurement processes. Although procurement risk rating is presently substantial, the above well designed action plan with mitigation measures to be implemented and appropriate monitoring will reasonably bring this risk to moderate.

68. Guidelines: All international competitive bidding (ICB) and selection of consultants involving international consultants will be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004 and revised in October 2006; and “Guidelines: Selection and Employment of Consultants by World Bank Recipients” dated May 2004 and revised in October 2006, and the provisions stipulated in the Financing Agreement.

4. Safeguard policies

69. Category B rating. The APL1A (including CITCD) has a Category B rating. Activities financed under CITCD are fully consistent with the set of activities eligible for financing under the CAB Program.

70. The physical components of the CAB Program in Chad (to be financed under APL1B) will mostly be limited to the establishment of the regional backbone which consists of terrestrial networks (e.g. fiber-optic cables laid next to main national roads. The risk associated with the kind of infrastructure financed under this Program is low, and the project is therefore assigned to environmental category B under OP 4.01.

71. The ESMF and the RPF have been prepared, reviewed and approved by the Bank and publicly disclosed prior to appraisal in Chad. They are available at the InfoShop.

72. Specific costed Environmental Management Plans (EMP) and Resettlement Action Plans (RAPs) will be prepared as necessary for the terrestrial facilities during project implementation, in line with the ESMF and RPF, once the exact locations of those facilities have been identified. The institutional responsibilities for preparing the various safeguards instruments would lie with the implementing agency. These agencies will be

22

assisted by consultants financed by the project. Any specific required action for some of the Civil Works will be taken into account during project implementation.

73. Since CAB APL1 (APL1A and APL1B) in Chad will only finance fiber-optic cables laid next to main national roads (no rural networks and landing stations will be financed), OP 4.10 for indigenous peoples, OP 4.36 for Forests and OP 4.11 for Cultural Property will not be triggered. The CITCD will not finance any fiber-optic cable/ backbone infrastructure (it will be funded under APL1B expected to be presented for Board approval in April 2010).

5. Policy Exceptions and Readiness 74. The project does not require any exception to the Bank policies.

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) [x] [ ] Natural Habitats (OP/BP 4.04) [ ] [x] Pest Management (OP 4.09) [ ] [x] Cultural Property (OPN 11.03, being revised as OP 4.11) [ ] [x] Involuntary Resettlement (OP/BP 4.12) [x] [ ] Indigenous Peoples (OD 4.20, being revised as OP 4.10) [ ] [x] Forests (OP/BP 4.36) [ ] [x] Safety of Dams (OP/BP 4.37) [ ] [x] Projects in Disputed Areas (OP/BP/GP 7.60)* [ ] [x] Projects on International Waterways (OP/BP/GP 7.50) [ ] [x]

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Annex 1: Major Related Projects Financed by the Bank and/or Other Agencies

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD)

Project Latest Supervision Ratings (Bank-financed projects only)

World Bank/IDA Financed Implementation Progress (IP)

Development Objective (DO)

Chad – Public Financial Management Capacity Building (P090265) – Pipeline. The proposed operation is to help the GoC improve the quality of its Public Financial Management (PFM) system to increase the efficient and transparent use of public resources. To this end, the proposed IDA project will support the implementation of the government action plan for modernization of PFM in a concerted manner with other donors.

Chad – Chad/Cameroon Pipeline (P44305) – Closed The operation closed in 2005 was aimed at increasing public expenditures on poverty reduction sectors through environmentally and socially sound private investment in the petroleum sector.

HS S

CEMAC – Transport Transit facilitation Project (P079736). The development objectives are to enhance regional trade and integration and sub-regional cooperation between CEMAC and ECCAS member states, and specifically provide the landlocked countries (CAR and Chad) with a better access to the Port of Douala through: (i) assistance to the strengthening of the CEMAC Customs Union; and (ii) improvement of the logistics chain, including road and rail infrastructure to the Port of Douala's hinterland.

MS MS

Regional Communications Infrastructure Program, Phase I (RCIP I) (P094103): Madagascar ($30 million), Kenya ($114.4 million) and Burundi (IDA Grant $20.1 million). The development objectives (i) to contribute to lower prices for international capacity and extend the geographic reach of broadband networks (the "connectivity development objective") and (ii) contribute to improved government efficiency and transparency through e-government applications (the "transparency development objective").

MS MS

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

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Annex 2: Results Framework and Monitoring

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD)

1. Monitoring and evaluation of RCIP will be embedded in the various components of the project, and technical assistance provided through the project will include support for M&E. Outcome indicators for Chad related to APL1B (financing of the Connectivity/ infrastructure component defined in the CAB Program) are provided on a indicative basis. Project Development Objective Outcome Indicators Use of outcome information Contribute to increase geographical reach and usage of regional broadband network services and reduce their prices

Volume of international traffic [ APL1B] International Communications

(Internet, Telecoms, and Data) bandwidth per person

Volume of national traffic using 2 proxies [CITCD]: Internet users per 100

inhabitants. Total teledensity (active fixed

and mobile subscribers per 100 inhabitants)

Average price of international communications using the proxy [APL1B]:

Average monthly price of wholesale international E1 capacity link from N’Djamena to European hub (E1).

Assess trends in international communications and regional communications integration

Assess level of access to communications services within targeted countries

Assess competitiveness of countries with regards to cost of capacity

Intermediate Results Results Indicators for Each component

Use of results monitoring

Component 1 Enabling Environment, including Monitoring & Evaluation capacity-building

Sound environment conducive to investment and competition

Price of mobile call and Internet access:

Average cost of mobile call [three minutes, local, peak]

Average monthly price of Internet access (256kbps)

Geographic reach of mobile services

Coverage of mobile network (% of population)

Monitor sector competitiveness and efficiency of regulation Monitor efficiency of regulation

25

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27

Annex 3: Detailed Project Description

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD) 1. Components and subcomponents of CITCD. This section provides a description of the components and subcomponents for the CITCD. 2. CITCD Component 1 – Enabling environment ($7.4 million) will provide support to (i) strengthen the policy, legal, regulatory and institutional environment in Chad; (ii) support further regional market integration; (iii) strengthen key public institutions (MPTIC, OTRT, SOTEL TCHAD and STPE); and (iv) promote further sector reforms so as to maximize benefits from access to the regional backbone.

• Modernize and harmonize the ICT legal, regulatory and institutional framework of the ICT sector in Chad to accelerate sector growth and ICT development. The project will finance activities such as (i) (i) TA to modernize and harmonize the legal and regulatory framework for Electronic Communications Services and (ii) TA to develop ICT legislation and institutional framework (e.g. Digital signature, eCommerce, Intellectual Property Rights, Data Privacy).

• Strengthen capacity of key public stakeholders (MPTIC and OTRT) to promote further sector reform. It will include the following activities: (i) TA to develop regulatory tools (i.e., interconnection/tariffs, networks monitoring, Open Access); (ii) TA to increase ICT access in remote areas; (iii) TA to review spectrum management framework in Chad and prepare bidding documents for the acquisition of a spectrum management and monitoring system; (iv) training/ capacity building; and (v) equipments (i.e., spectrum management and monitoring system, information systems). Promote a pro-competitive environment and restructure incumbent operators. The activities will include: (i) TA to support sector reform, promote the establishment of PPP frameworks to accelerate the CAB deployment; (ii) TA to audit SOTEL TCHAD and the postal incumbent (STPE) operations; (iii) TA to identify restructuring options and recommendations for incumbent operators; (iv) TA to implement restructuring and PPP recommendations.

• Establish Internet Exchange Points (IXPs) to complement the other investments that the government and the private-sector are undertaking to boost connectivity and the capacity of the regional backbone network. This will include the following activities: (i) TA to design the establishment of a National and Regional IXP; and (ii) Equipments for the National and Regional IXPs.

• Launch structuring and start-up consultancies required for the establishment of CAB networks including CAB-related environmental and resettlements consultancies (i.e. the preparation of specific Environmental Management Plans (EMP), Resettlement Action Plans (RAPs) and Indigenous Peoples Plan (IPP) if planned).

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3. Component 2 - Project management capability ($1.6 million). The project will be primarily executed by MPTIC. A small experienced project management team is established within the MPTIC. This component will consist in financing project management related issues. It will support the following activities: (i) consultant to staff the PCU (i.e., a procurement specialist, a Financial Manager, an internal auditor, an accountant, a backbone expert); (ii) equipments (i.e., financial management system); (iii) various TA (i.e., Audits); (iv) training, and (v) operating expenses.

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Annex 4: Project Costs

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD)

Components Activities Amount

Technical assistance for the provision of a legal and regulatory framework for Electonic Communications Services

300,000

Study to design frequency spectrum management regulatory tools and prepare bidding documents for the purchase of spectrum management equipments

200,000

Spectrum management and monitoring equipments 2,000,000Technical assistance to define and implement universal access mechanisms to promote access in remote areas

250,000

Capacity building of the Ministry of Post and ICT (Technical Assistance, training, equipments)

800,000

Strengthening the capacity of ART (technical assistance, training) - Technical assistance to develop and set up operational regulatory tools (interconnexion, price control mechanisms, cost-modeling….)

800,000

Environmental and Social Plan Study 250,000Study and establishment of a national and regional Internet eXchange Point

200,000

Support to implement CAB in Chad 800,000Incumbent operators (SOTEL) -Audit and Public-Private Parnership/Privatization transactions

1,800,000

TOTAL Component

17,400,000

Establishment of the PIU 200,000Project Coordination Unit - Staffs/Consultants, equipments and operating costs

1,400,000

TOTAL Component

2 1,600,000

Total CIT3 9,000,000

out fo which Project Preparation Facility 530,000

Component 2 - Project Management

Component 1 - Enabling Environment at the Regional and National Level

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Annex 5: Implementation Arrangements

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD)

1. The MPTIC will be responsible for the overall coordination, implementation, and supervision of the project. For each activity concerned, MPTIC, through the PCU, will consult with and delegate to the relevant agencies and ministries.

2. The implementation arrangements involve three organizational levels: (i) a Project Steering Committee (Comité de Pilotage) will be responsible for providing advice regarding cross-sectoral issues; (ii) the PCU will be responsible for project implementation, coordination of activities and fiduciary management; and (iii) a Chad CAB Technical Committee that will provide technical input for the development of the regional backbone.

3. The figure below identifies these agencies and ministries, as well as other entities not concerned with the carrying out of the project, but whose responsibilities are related to its objectives and/or implementation.

Project Coordination Unit (PCU)

Project managerBackbone Specialist

Procurement SpecialistFin. Management Specialist

MPTIC

Implementation Arrangements for CIT3 in Chad

Including MPTIC, Ministry of Finance,

ProjectSteering Committee

Including MPTIC, OTRT, Public and

private operators, user groups

ChadCAB Technical

Committee

Support

Support

Advice/Direction/Oversight

Technicalinputs

MPTIC OTRT SOTEL STPE

…

Note: CIT3 refers to CITCD.

4. The PCU: Day to day project implementation, coordination of activities and fiduciary management of the project will be done by the PCU anchored in the MPTIC and financed through the project. The PCU, in close collaboration with the technical team

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from MPTIC, will be responsible for: (i) oversight of all technical, social, and environmental matters relating to Project implementation; (ii) planning of Project activities and preparation of Project annual work programs; (iii) monitoring and evaluation of Project activities including quality insurance; (iv) financial management, procurement, and audits under the Project; and (v) monitoring of implementation of the National ICT Policy. The PCU will also provide TA support to the Ministry by monitoring progress towards the government strategy on ICT. The PCU includes a Project Coordinator (nominated) and a Financial Manager, a procurement specialist, an internal auditor and, an accountant, all recruited on a competitive basis. Environmental expertise (and other position like backbone expert) will also be available, depending on the needs identified in the detailed environmental assessments. These experts will be financed by the project through performance based contracts linked to evaluation results acceptable to IDA. The PCU will be housed in MPTIC to facilitate knowledge transfer and strengthen capacity at Ministry level.

5. A Project Steering Committee (Comité de Pilotage) will be established and will be in charge of ensuring the consistency and smooth execution of the project. It will meet at least twice a year. Placed under the MPTIC (or his representative), it will comprise at least of representatives of the Ministry of Finance and of the participating agencies and ministries, as well as the Project Coordinator. The Steering Committee will provide advice on coordination of cross-sectoral interventions and ensure consistency of ICT activities carried out by different agencies/ institutions.

6. The CITCD Technical Committee has been already established to provide technical inputs from all key stakeholders from the sector on issues related to the establishment of the CAB network. All technical studies conducted at national and regional level have and will benefit from their support.

Other institutional strategic elements

7. Project Implementation Manual: The PIM includes all procedures and areas of M&E, coordination and implementation, financial management (including financial, administrative, accounting and procurement, internal controls and audits). The PIM describes the diverse roles, responsibilities, and individual work programs of each participating agency or entity (including the timetable that shall be respected to ensure the success of the project). Technical implementation of project activities shall be delegated to the participating agencies and ministries.

8. World Bank supervision. The Bank will conduct a minimum of two supervision missions per year during project implementation, including an annual progress review. A mid-term review will be conducted, which will encompass: (i) a thorough review of the execution of the project and the achievement of project objectives to date; and (ii) agreement between the Bank and the Recipient on recommended measures to ensure efficient execution of the project and successful achievement of project objectives in the period after the review, all in accordance with agreed performance indicators. The

32

Recipient will provide the Bank a project completion report within six months of loan closing and inputs to the Implementation Completion Report to be prepared by the Bank. The Bank will support public dissemination of project information, including supervision reports on the project’s performance.

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Annex 6: Financial Management and Disbursement Arrangements

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD)

Country issues

1. A country Financial Accountability Assessment (CFAA) was carried out by IDA in 2003. In April 2006 the donors, including the WB, IMF, European Union, and AfDB, conducted a general assessment of the country institutions - comprising public financial management - that concluded that Government of Chad needs to improve its Public Financial Management System significantly for donors to rely upon. The main fiduciary risks are with poor budget formulation, preparation and execution and weak cash management processes that need to be addressed. In terms of appropriate legislation and regulatory frameworks, significant progress needs to be made also to ensure that the risk associated with the lack of clear rules and regulations are mitigated. The assessment also concluded that audit institutions do not have adequate capacity to discharge their obligations and follow-up of audit findings. In July 2006, the government signed a memorandum of understanding with the Bank in which it commits itself to provide 70 percent of the budgeted resources to priority ministries. Since then, the Government has committed itself to modernize its PFM system with the ongoing IDA-supported PFM Reform Project. Still, all these commitments are yet to be implemented and the results monitored.

Risk assessment and mitigations

2. The following risk identification worksheet summarizes the significant risks with the corresponding mitigating measures.

Risk Risk Rating Risk Mitigation Measures Residual Risk Inherent Risk Country level According to questions 13 and 16 of the CPIA, the country is high risk on fiduciary management

H None. Beyond the control of the project. Still an ongoing IDA-financed PFM Reform project is being implemented though it is unlikely to yield into fruits quickly.

H

Entity level The MPTNT lacks the capacity to manage fiduciary aspects of the project

S A ring-fenced PCU will be set up within MPTIC to manage the project in accordance with IDA fiduciary requirements.

M

Project level The PCU is yet to be set up

H Adequate Financial Management (FM) arrangements agreed upon and will be implemented as detailed below.

M

Overall Inherent risk S M Control Risk Budgeting H Adopt budgeting procedures and annual

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Possibility of committing expenditures outside the budget. No variance analysis.

budgets derived from the work plans. Budget execution and monitoring to be closely monitored.

M

Accounting There is no accounting system in place; delay in keeping reliable and auditable accounting records.

H A computerized accounting system will be set up and maintained by a qualified accountant under the supervision of Financial Manager

M

Internal control Insufficient safeguards and controls may result in misuse of funds and impede the execution of the project.

H Sound financial and administrative procedures will be put in place and documented in a manual of procedures. An internal auditor will be appointed to ensure full adherence to the procedures

M

Funds flow and financial reporting The lack of exposure in WB disbursement procedures may cause delay (i) in disbursement and ineligible expenditures; (ii) in submitting the reports.

H FM/disbursement training and implementation support will be provided to PCU in order to be acquainted with Bank’s procedures. This will be included in the PCU training plan.

M

Auditing No auditing arrangement in place; the national audit capacity is weak and not reliable.

H An independent external audit firm acceptable to IDA will be recruited to perform the audit in accordance with IAS.

M

Fraud and corruption

H Anti-corruption provisions will be included in the Private Public Partnership arrangements for infrastructure operations. Besides the proposed fiduciary arrangements are strong anti-corruption deterrents and will be all closely monitored by the project team altogether.

M

Overall control risk H M Overall risk rating H M

3. Strengths: the project design is very simple in essence. The CITCD will be implemented by a PCU under the oversight of the MPTIC. Ultimately, the same PCU will manage AfDB financing once effective by building on the proposed fiduciary arrangements.

4. Weaknesses and Action Plan: The project preparation activities are delayed by the late transfer of PPF resources. As a result, there is no FM system in place (request for quotation has been launched). Therefore, the FM assessment at this stage consists in designing the adequate arrangements and agreeing on a time-bound action plan.

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Implementing entity 5. A PCU will be set up within MPTIC to manage the CITCD. A Project coordinator is already appointed and is now recruiting the specialized fiduciary staff. The FM functions will be handled by the FM team under the supervision of a qualified Financial Manager so-called “Responsable Administratif et Financier” supported by an accountant. Besides, an Internal Auditor will be appointed to ensure full adherence to fiduciary rules including anti-corruption considerations.

Budgeting

6. The activities and the breakdown of cost to be financed under the CITCD have been identified. Annual work plans, to be approved by the Steering Committee, will clearly detail the activities and translate them into annual budgets. The PCU will monitor its execution with the integrated financial software in accordance with the budgeting procedures specified in the manual of procedures and report on variances along with the quarterly Interim Financial Monitoring Reports (IFRs). Basically the PCU will prepare the overall budgets on an annual basis. The budgeting system needs to forecast for each fiscal year the origin and use of funds under the project. Only budgeted expenditures would be committed and incurred so as to ensure resources are used within the agreed upon allocations and for the intended purposes.

Accounting policies and procedures 7. Chad is a member of OHADA organization, hence adheres to OHADA accounting standards, so-called Syscohada, which are in line with the international accounting standards. Syscohada accounting standards will apply to this project. A specific chart of accounts will be developed and documented in the manual of procedures. A computerized accounting system, with a double entry system, is being purchased and will be customized to record the PPF and the project’s transactions and to generate accurate financial reports in time.

Internal control and auditing

8. Internal controls are yet to be put in place. They will comprise the whole systems of control, financial or otherwise, established by management in order to (a) carry out the project activities in an orderly and efficient manner; (b) ensure adherence to policies and procedures; and (c) safeguard the assets of the project and secure as far as possible the completeness and accuracy of the financial and other records. A PIM will document the internal controls with a specific focus on the following: (i) segregation of duties; (ii) physical control of assets; (iii) authorization and approval; (iv) clear channels of command; (v) arithmetic and accounting accuracy; (vii) integrity and performance of staff at all levels; and (viii) supervision.

9. An internal auditor acceptable to IDA will be competitively selected and appointed to ensure full adherence to the procedures, pre-screen and clear all payments to ensure they are supported by the following reliable evidences: (i) expenditures are

36

budgeted; (ii) the service is rendered according to the contract; and (iii) the payment is within the available budget allocation. Besides, the PCU will coordinate with the “Inspection Générale des Finances” -IGF- to include this project in their annual audit program and reviewed it at least once a year. IGF audit report shall be communicated to the PCU and the World Bank supervision missions.

Financial Reporting. 10. PCU will record and report on project transactions then will submit to the World Bank an IFRs not later than 45 days after the end of each calendar quarter. At a minimum, the financial reports must include the following tables with appropriate comments; (i) Sources and Uses of Funds; (ii) Uses of Funds by Project Activity/Component; and (iii) Special account activity statement.

11. At the end of each fiscal year, the project will issue the Project’s Financial Statements (PFS) comprising: (i) a balance sheet; (ii) a statement of sources and uses of funds; (iii) accounting policies and procedures; and (iv) explanatory notes. These PFS will be subject to annual external audits as described below.

External audit.

12. The project annual financial statements will be audited by qualified external auditors yet to be appointed. The audit reports comprising the audited financial statements, a single audit opinion and a management letter will be submitted to IDA not later than 6 months within the end of each fiscal year. These audits will be carried out in accordance with the International Standards on Auditing (ISA). The audit TOR and appointment of the external auditors will be agreed upon within 4 months after effectiveness. The tentative due dates of the audit report will be as follow:

Fiscal Year Scope and Period covered Due date

2010 PPF and PFS : Sept 2009 – Dec.2010 June 30, 2011

2011 PFS: January to December 2011 June 30, 2012

2012 PFS: January to December 2012 June 30, 2013

2013 PFS: January to December 2013 June 30, 2014

2014 PFS: January to December 2014 June 30, 2015

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Disbursement arrangements and flow of funds

13. Flow of funds: One Designated Account (DA) in CFAF will be opened in a commercial bank and managed by the PCU under the responsibility of the Project coordinator and the Financial Manager in terms of ensuring fiduciary standards and accordance with Bank FM guidelines. Upon effectiveness, the DA will receive an initial advance up to a ceiling of CFAF 279,000,000 (equivalent to four month expenditures forecast) and replenished regularly through monthly Withdrawal Applications cleared by the Internal Auditor.

14. No replenishment of the accounts will occur until the previous expenditures made out of the process of the previous allocation have been properly documented.

15. Allocation of Grant Proceeds The World Bank will issue a “Disbursement Letter” which will specify the additional instructions for withdrawal of the proceeds of the Grant. The following table shows the allocation of the proceeds of the Grant by disbursement category.

Allocation of the Grant Proceeds

Category Amount of the Grant Allocated

(expressed in US$)

Percentage of Expenditures to be

Financed (exclusive of Taxes)

(1) Small Works, Goods, Consultants’ Services including audits, Training, Non-Consulting Services and Operating Costs for Components 1 and 2 of the Project

8,470,000 100%

(2) Refund of Preparation Advance 530,000 Amount payable pursuant to Section 2.07 of the General Conditions

TOTAL AMOUNT 9,000,000

Disbursement Methods: 16. Given the high risk environment and the lack of familiarity with the Bank fiduciary procedures by the project staff, the report-based disbursement may not be applicable by default. Thus the transaction-based disbursement method will apply at the beginning. Once the PCU demonstrates its ability to submit reliable quarterly IFR, the project may shift to the report-based method in the second year if it sustains a satisfactory FM rating. Other disbursement methods, such as reimbursement, direct payment and special commitment may be applicable. The minimum value for direct Payment, reimbursement and Special Commitment will be 20 percent of the DA ceiling.

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Types of Supporting Documentation:

17. The Bank requires either copies of the original documents evidencing eligible expenditures (“Records”) or summary reports of expenditure (“Summary Reports”). Disbursements will be supported by (i) Statement of Expenditures (SOE) summarizing eligible expenditures paid during a stated period for amounts below the SOE documentation threshold specified in the Disbursement Letter and (ii) records evidencing eligible expenditures (e.g. copies of receipts, supplier invoices). In all cases, the PCU will be responsible for retaining the original documents evidencing eligible expenditures and making them available for audit or inspection.

18. Taxes: The grant will finance 100% of eligible expenditures exclusive of taxes. The Country Financing Parameters for Chad dated June 2004 indicate that there are no taxes or duties that are discriminatory or unreasonable. For this operation, the Recipient and Bank team agreed to exclude taxes to ensure that most of the grant proceeds would be used to finance project activities rather pay for taxes.

Financial covenants: 19. Financial covenants are the standard ones as described in the legal documents and are comprised of maintaining project accounts in accordance with sound accounting practices, audit requirements and records well kept and secured.

Conclusion and Supervision Plan: 20. Currently the PCU does not have any FM system in place to manage the project. Hence the overall FM risk is high at this point in time but the residual risk would be Moderate provided the action plan below is implemented satisfactorily. On that basis and in accordance with the risk-based approach, one (1) supervision mission will be carried out in the first year once an acceptable FM system is effective at the PCU.

Action Plan Actions Completed by Responsible 1. Appoint a Financial Manager, an accountant and an Internal Auditor all acceptable to IDA

Prior to effectiveness PCU

2. Install a computerized financial management system in a manner satisfactory to IDA

Prior to effectiveness PCU

3. Develop and adopt a Project Implementation Manual acceptable to IDA.

Prior to effectiveness PCU

4. Appoint external auditors acceptable to IDA.

Within 4 months after effectiveness

PCU

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5. FM/disbursement training and implementation provided to PCU in order to be acquainted with Bank’s procedures.

As need during project’s life

PCU

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Annex 7: Procurement Arrangements

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD) A. General Procurement Environment 1. The Country Procurement Assessment Review (CPAR) has been conducted in Chad in 1993 and 2000. There was also an Audit for five significant bidding conducted by the Supreme Court in 2002. The conclusions of the CPAR can be summarized as follow : (i) absence of a national procurement regulatory body ; (ii) inexistence of the a formal process to contest decisions, (iii) cumbersome and lengthy validation process impacting ability to effectively disburse national and other/external financial allocations; (iv) excessive use of sole-sourcing selection.

2. To follow-up on CPAR recommendations, the government with the technical and financial assistance of the Association (IDA) has conducted a reform that let to the adoption of the new Procurement Code (December 5th, 2003). The Procurement Code and the secondary legislation have incorporated most comments and recommendations from the CPAR. In particular, the new Code (art. 5) recognizes the higher level of International Agreements in case of disagreement with the national procurement legislation. However, some areas needs to be strengthened/reviewed: (i) obligation given to international bidders/firms to associate with national bidders/firms; (ii) obligation for international and national bidders/firms to obtain a qualification certificate for international bidding processes; and (iii) complex process for the award and the signature of contracts involving the Minister of Finance and the President when contract are above $100,000. These weaknesses have been discussed with the government during the preparatory mission and its revision is included in the ongoing dialogue on Governance with our partner the African development Bank. For International Competitive Bidding, the directives highlighted in the “Guideline: Procurement under IBRD Loans and IDA Credit” and the standard IDA bidding documents will be used. For National Competitive Bidding, the government has accepted that “Guideline: Procurement under IBRD Loans and IDA Credit” will be applied.

Guidelines 3. Procurement for this project would be carried out in accordance with the World Bank “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004 and revised in October 2006; and “Guidelines: Selection and Employment of Consultants by World Bank Recipients” dated May 2004 and revised in October 2006, and the provisions stipulated in the Financing Agreement. The general description of various items under different expenditure category is described below. For each contract to be financed by the grant, the different procurement (works, goods and non-consulting services) methods or consultant selection methods, prequalification, estimated costs, prior

41

review requirements, and time-frame would be agreed between the Recipient and the Bank Task Team in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. To the extent practicable The Bank’s Standard Bidding Documents for goods and Standard Requests for Proposals for Proposals as well as all standard evaluation forms would be used throughout project implementation.

Publicity 4. A comprehensive General Procurement Notice (GPN) will be prepared by the Recipient and published in the United Nations Development Business online (UNDB online) and in the Development Gateway Market (dgMarket) following Board Approval, to announce major consulting assignments and any ICB13. The GPN shall include all ICB for goods contracts and all large consulting contracts (i.e., those estimated to cost $200,000 or more). In addition, a specific procurement notice is required for all goods to be procured under ICB in dgMarket and UNDB online. Requests for expressions of interest for consulting services expected to cost more than $200,000 shall be advertised in UNDB online and in dgMarket. An Expression of Interest (EOI) is required in the national gazette or a national newspaper or in an electronic portal of free access for all consulting firm services regardless of the contract amount. In the case of NCB14, a specific procurement notice will be published in the national gazette or a national newspaper or an electronic portal of free access. Contracts awards will also be published in UNDB and dgMarket, in accordance with the Bank’s Procurement Guidelines (para. 2.60) and Consultants Guidelines (para. 2.28).

Works 5. No major works are foreseen under this project. Small works estimated to cost less than $100,000 equivalent per contract may be procured through shopping, based on price quotation obtained from at least three contractors in response to a written invitation to qualified contractors.

Goods 6. Goods procured under this Project would include vehicles, furniture and office equipment. Taking into account (level of value added) manufactured/producers capacity in the country, procurement of goods will be bulked where feasible (similar nature and need at same time period) into bid packages of at least $ 500,000 valued, so that they can be procured through suitable methods to secure competitive prices. The procurement will be done using the Bank’s SBD for all ICB. Goods estimated to cost $ 500,000 equivalent and above per contract will be procured through ICB. For any others goods contracts cost less than $500,000 equivalent (and above $200,000), NCB procurement method in

13 ICB: International Competitive Bidding 14 NCB: National Competitive Bidding

42

accordance with national procedures can be used using Standard Bidding Document acceptable to the Bank. Procurement of readily available off-the-shelf goods that cannot be grouped into bid packages of $100,000 or more may be procured through shopping in conformity with the clause 3.5 of the procurement guidelines. Vehicles whose cost is estimated at less than $ 100 000 could be procured through UNOPS or quotation.

Procurement of non-consulting services

7. Non-Consulting services under this project include maintenance of the office electronic equipment and other services such as printing, and editing. Non-Consulting services are likely not to exceed the equivalent o f $100,000 per contract. Procurement of such services will be done using prudent shopping procedures in conformity with the clause 3.5 of the procurement guidelines.

Selection of consultants 8. Consulting services will be needed for the following activities: (i) technical assistance; (ii) feasibility studies and any other critical studies; (iii) technical and financial audit; environmental and social studies, etc,.. These consulting services will be procured with the most appropriate method among the following which are allowed by Bank guidelines and included in the approved procurement plan: Quality-and Cost-Based Selection (QCBS), Quality-Based Selection (QBS), Selection under a Fixed Budget (SFB), Least-Cost Selection (LCS). Selection Based on Consultants’ Qualifications (CQ) will be used for assignments that shall not exceed $200,000. Single Source selection shall also be used in accordance with the provisions of paragraphs 3.9 to 3.13 of the Consultant Guidelines, with IDA’s prior agreement. All terms of reference will be subject to IDA prior review.

9. Short lists of consultants for services estimated to cost less than $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.

10. Assignments in excess of $200,000, and specialized technical assistance assignments, must be procured on the basis of international short-lists after appropriate advertisement in UNDB on line, DgMarket and in the national gazette or a national newspaper or in an electronic portal of free access.

11. Consultant for services meeting the requirements of section V of the consultant guidelines, will be selected, under the provisions for the Selection of Individual Consultants, through comparison of qualifications among candidates expressing interest in the assignment or approached directly.

43

Training, workshops and study tours 12. Participation in training sessions, workshops, seminars, conferences, and study tours will be subject to the approved annual programs. The latter will identify the general framework of training and similar activities for the year, including the nature of the training, study tours, workshops, number of participants, as well as estimated costs.

Operating costs 13. Operational costs, which will be financed by the project, would be procured using the project’s financial and administrative procedures manual previously agreed on by the Bank. For efficiency purpose, operational furniture packages will be procured on the basis of 6 or 12 months need and procured competitively. For services (car maintenance, computers maintenance etc…) to be financed through operational costs, the project will proceed by service contracting for a defined period.

B. Evaluation of the MPTIC and PCU’s capacity to award contracts in line with guidelines 14. An assessment of the procurement capacity of the MPTIC and the PCU has been conducted during the appraisal mission and the conclusions are the following.

- Ministry of Post, Information Technologies and Communications (MPTIC)

15. A Commission in charge of opening and assessing proposals (Commission d’Ouverture et de Jugement des Offres - COJO) located within the MPTIC is in charge of all the matters related to procurement. This commission is composed as follows:

General Secretary of the MPTIC : President ; A representative of the Ministry of Economics and Planning : Vice President ; The manager of Administrative and Finance Affairs MPTIC : Member ; The Head of Procurement Affairs MPTIC : Member ; The Director of Financial Control Affairs of the Ministry of Finance and Budget :

Member ; The structure in charge of public markets : observer :

16. Beyond COJO, a service in charge of Procurement is located at the MPTIC. This service aims at preparing and overseeing all activities related to procurement within the Ministry. This service is comprised of a head of procurement with proven experience with Bank procedures and countries in the region. The service also handles the COJO’s secretariat.

44

17. No particular anomaly was noted in the COJO and Procurement service’s operations. The delay for the Commission in charge of assess the proposal to produce the evaluation reports does not exceed ten days and usually, COJO rules on the evaluation report within a time not exceeding a week. However certain insufficiencies were reported during the evaluation mission and concern: (i) the lack of skilled staff at the level of the Service of Procurement Service (Service de Passation des Marchés SPM); (ii) lack of computers and financial management system software; and (iii) lack of office equipment. These weaknesses are likely to harm the good execution of the Project and it is thus proposed: (i) to reinforce the Procurement Service (SPM) with at least two agents and to ensure staff training in specialized centers in the Africa region; (ii) to computerize the management and follow-up of the procurement service within the MPTIC through the purchase of the desk and laptop computers equipped with financial and Procurement management and follow up software, (iii) to ensure the formation on the acquired software and (iv) to equip this service with office equipment (photocopier, printers etc.)

18. The table below summarizes actions to be carried out within the framework of reinforcement of the capacities of the Procurement Service within the MPTIC.

Actions to be undertaken Expected Time Frame Responsible Unit

Purchase of 2 desktop computers and 3 laptop equipped with Procurement management and follow up software, and purchase of 1 photocopier and 1 printer color

At the latest 6 months after Project effectiveness

Project Coordination Unit

Staff training to the use of the Procurement management and follow up software

At the latest 6 months after Project effectiveness

Project Coordination Unit

Participation of Procurement Service staff to workshops and training in Specialized centers in the Africa region

At the latest 6 months after Project effectiveness

Project Coordination Unit

Reinforcement of the Procurement Service by at least two agents

At the latest 2 months after Project effectiveness

Secretary General MPTIC

45

- Project Coordination Unit (PCU) 19. A Project Coordination Unit was set up and already includes a Project Coordinator. At the time of evaluation mission, the process of recruiting a procurement specialist, a Financial Manager, an internal auditor, an accountant, and an executive assistant was not finalized (recruited all on a competitive basis).

20. As per the above assessment an action plan was prepared to reinforce the capacities of the PCU. Keeping in mind that the recruitment process of the key personnel is currently in progress, this action plan includes (i) the preparation of a procurement plan for the next eighteen months (plus annual update) to ensure the project is carried out within the agreed timeline; (ii) the training of the Procurement specialist to be recruited on the World Bank Procurement Guidelines and Directives; (iii) the purchase of computers equipped with management software and furniture and office equipments; (iv) the design and finalization of an operation manual including the financial administrative arrangements with a detailed section on procurement in order to outline, among others, the procurement arrangement and the relevant procedures applicable to the management of the grant; and (v) the regular audit of procurement process.

21. The table below summarizes actions to be carried out within the framework of reinforcement of the capacities of PCU.

Actions to be undertaken Time Frame Responsible Unit

Recruitment a procurement specialist, a Financial Manager, an internal auditor, an accountant, and an executive assistant

Prior to effectiveness (in progress)

Project Coordination and Secretary General of the MPTIC

Prepare and submit to IDA a procurement plan

Prior to negotiation

(completed)

PCU

Training of the Procurement

Specialist on the World Bank

Procurement procedures and

Guidelines in the training Regional

centres (ISADE, CESAG etc…)

By effectiveness Project Coordination and Secretary General of the MPTIC

Purchase of 4 computers with

integrated management software and

3 laptops and training and purchase of

furniture and office equipments

In progress PCU

46

Prepare and submit to IDA an Project implementation manual (PIM), with a section on procurement

Prior to effectiveness PCU

Audit of Procurement procedures At least once a year after project effectiveness

World Bank staff and external auditor

22. Because of the above designed action plan with mitigation measures to be implemented and appropriate monitoring, the overall project risk for procurement is considered to be moderate.

Procurement plan 23. At appraisal, the Recipient will prepare a procurement plan for project implementation providing the basis for the procurement methods. This plan, covering the first 18 months of project implementation, will be discussed and agreed upon by the Recipient and the project team at negotiations. It will be available in the Project’s database and a summary will be disclosed on the Bank’s external website once the project is approved by IDA Board of Executive Directors. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvement in institutional capacity.

Fraud, Coercion and Corruption 24. The procuring entity as well as Bidders/Suppliers/Contractors shall observe the highest standard of ethics during the procurement and execution of contracts financed under the program in accordance with paragraphs 1.15 & 1.16 of the Procurement Guidelines and paragraphs 1.25 & 1.26 of the Consultants Guidelines.

C. Frequency of procurement supervision 25. The capacity assessment recommended that supervision missions and field visits by the World Bank should take place at least twice a year.

D. Performance Technical audit

26. The project financing and activities under the CITCD will be subject to technical audits. These should be conducted, at 100% contracts on an annual basis by independent auditors recruited by the PCU. During the execution of the Project and up to two years after the closing date of the Grant Agreement, all documentation with respect to each activity carried shall be kept by the Recipient for review and examination.

47

E. Details of the procurement mechanism 1. Works, Goods, and Non Consulting Services

(a) List of main ICB contract packages to be procured in the first 18 months.

1 2 3 4 5 6 7

Ref. No. Contract

(Description) Estimated

Cost Method

Review by

Bank (Prior / Post)

Expected Bid-

Opening Date

Comments/completio

n date

CITCD/OTRT/09/E/003

Purchase of spectrum management and monitoring equipments

2,000,000 ICB Prior March 2010

May 2010

(b) ICB Contracts estimated to cost above $500,000 for goods per contract and all Direct Contracting will be subject to prior review by the Bank. The procurement plan approved by the Bank will determine other contracts that will be subject to prior review by the Bank.

48

F. Details of the Procurement Arrangements for Consulting Services

(a) List of main consulting assignments with selection methods and time schedule for the first 18 months.

1 2 3 4 5 6 7

Ref. No.

Description of Assignment Estimated

Cost Selection Method

Review by Bank (Prior / Post)

Expected Proposals

Submission Date

Comments/

completion date s

CITCD/09/MPTIC/C/00

1

Technical assistance for the provision of a legal and regulatory framework for Electronic Communications Services

130,000 QCBS Prior November

2009 February

2010

CITCD/09/OTRT/C/002

Technical assistance to design frequency spectrum management regulatory tools and prepare bidding documents for the purchase of spectrum management and monitoring equipments

200,000 QCBS Prior November

2009 June 2010

CITCD/09/MPTIC_OTRT/C/0

03

Technical assistance to implement universal access in remote areas

250,000 QCBS Prior November

2009 December

2010

CITCD/09/MPTIC/C/00

4

Restructuring SOTEL – Public Private Partnerships

800,000 QCBS Prior December

2009 February

2011

CITCD/09/MPTIC/C/00

5

Technical Assistance for social and environmental activities

150,000 QCBS Prior November

2009 February

2010

CITCD/09/MPTIC/C/00

6

Study and establishment of a national and regional Internet eXchange Point

150,000 QCBS Prior December

2009 June 2010

CITCD/10/OTRT/C/007

Technical Assistance to design and set up of regulatory tools

150,000 QCBS Prior March 2010 July 2010

(b) Consultancy services estimated to cost above $200,000 for firms and $100,000 for individuals per contract, and Single Source Selection of consultants (firms and individuals), all audit contracts and the first contract to be awarded in accordance with each procurement method of consultants’ services regardless of contract amount to be procured will be subject to prior review by the Bank. The procurement plan approved by the Bank will determine other contracts that will be subject to prior review by the Bank;

49

(c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than $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.

50

Annex 8: Economic and Financial Analysis

Central African Backbone Program

Communications Infrastructure and Technology APL Project (APL1A) Chad Grant (CITCD)

1. Economic and financial analysis with a focus on connectivity. An assessment study for backbone connectivity was conducted with the help of international consultants in several CAB eligible countries (including Chad). A preliminary economic and financial analysis was carried out based on this study, and yielding the results outlined below.

2. The aim of CAB APL 1 ( APL1A including CITCM, CITCAR and CITCD and APL- 1B) is to establish a regional broadband network across Cameroon, CAR and Chad. This broadband network will reduce significantly the cost of international connectivity. This will have a direct economic impact through additional investment, value added, and employment and as a generator of tax revenues. It will also have an indirect economic impact through increased productivity of the public and private sectors (e.g. improved public service delivery).

0

200

400

600

800

1,000

1,200

1,400

1,600

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Mb

/s

CHAD – Traffic Forecasts

Private linesInternetVoice over IPPSTN Voice

Source: Terabits

2011338 Mb/s

2016560 Mb/s

20211.5 Gb/s

200632 Mb/s

CAGR, 2005-2010: 71%

CAGR, 2005-2021: 31%

Voice

3. The opportunity cost was calculated to measure the global economies from the cost of providing bandwidth relying on Satellite connection as compared to the cost of providing bandwidth relying on CAB connection. As suggested in the table below under the assumption of a discount rate of 13percent and an average annual decrease of 8 percent for satellite connection, the actual opportunity cost is estimated at more than $117 million: $34 million for Cameroon, $26 million for CAR and $58 million for Chad.

Total discounted opportunity cost

Chad $58Cameroon $34

CAR $26CAB $117

51

4. The estimated opportunity cost is a decreasing function of the annual decrease in satellite connection prices An average annual decrease of 21.6 percent of satellite connection prices between 2011 and 2021 would jeopardize the competitiveness of the CAB Program and would therefore produce a 0 (zero) opportunity cost. 5. The CAB Program in general will provide a major boost to the broadband market through increasing usage of broadband in public institutions, in the private sector and for consumers. CAB APL1 will significantly reduce the cost of international connectivity. The project will stimulate the market and the overall economy. The effect of the project is therefore to accelerate the development of the broadband market. It is estimated the backbone will carry more that 23,000 E1 in 2021.

6. The estimates of economic impact are based on a 10 year model of the broadband market in Cameroon, CAR and Chad. Broadband Internet is a new industry in Africa and there are very few countries with advanced broadband markets on which to base economic calculations. The economic impact is based on a micro-economic analysis calculating the social welfare as the sum of the consumer surplus and producer surplus. The consumer surplus is calculated as the amount that consumers benefit by being able to purchase a product for a price that is less than they would be willing to pay. The producer surplus is computed as amount that producers benefit by selling at a market price mechanism that is higher than they would be willing to sell for. The graph below gives a snapshot of the economic methodology used in this paragraph.

7. The global regional calculated economic surplus was estimated at $94 million out of which $76 million of consumer surplus and $18 million of producer surplus at the regional level.

2011 2013 2015 2017 2019 2021

Chad 3,654 6,146 8,256 10,704 13,354 16,440Cameroon 847 1,252 1,930 2,847 4,213 6,285

CAR 50 76 106 151 218 320Capacity Carried on CAB (E1) 4,551 7,474 10,292 13,703 17,785 23,045

Price

QuantityEquilibriumQuantity

Mark

et

Price

Equilibrium

Supply Curve

Demand Curve

ConsumerSurplus

ProducerSurplus

Price

QuantityEquilibriumQuantity

Mark

et

Price

Equilibrium

Supply Curve

Demand Curve

ConsumerSurplus

ProducerSurplus

52

8. An analysis was conducted to analyze the financial viability of the CAB Program. In the detailed financial analysis conducted by International consultants, it is estimated the CAB Program will generate a positive EBITDA the first year of operation.

Consumer Surplus Producer Surplus Social Welfare

Chad $38 $9 $47Cameroon $25 $6 $30

CAR $14 $2 $17CAB $76 $18 $94

53

An

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9:

Sta

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of L

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55

Annex 10: Country at a Glance

Central African Backbone Program Communications Infrastructure and Technology APL Project (APL1A)

Chad Grant (CITCD)

Chad at a glance 9/24/08

Sub-Key Development Indicators Saharan Low

Chad Africa income(2007)

Population, mid-year (millions) 10.8 800 1,296Surface area (thousand sq. km) 1,284 24,242 21,846Population growth (%) 2.8 2.4 2.1Urban population (% of total population) 26 36 32

GNI (Atlas method, US$ billions) 5.8 762 749GNI per capita (Atlas method, US$) 540 952 578GNI per capita (PPP, international $) 1,280 1,870 1,500

GDP growth (%) 0.6 6.2 6.5GDP per capita growth (%) -2.1 3.7 4.3

(most recent estimate, 2000–2007)

Poverty headcount ratio at $1.25 a day (PPP, %) .. 50 ..Poverty headcount ratio at $2.00 a day (PPP, %) .. 72 ..Life expectancy at birth (years) 51 50 57Infant mortality (per 1,000 live births) 124 94 85Child malnutrition (% of children under 5) 34 27 29

Adult literacy, male (% of ages 15 and older) 41 69 72Adult literacy, female (% of ages 15 and older) 13 50 50Gross primary enrollment, male (% of age group) 90 99 100Gross primary enrollment, female (% of age group) 61 88 89

Access to an improved water source (% of population) 48 58 68Access to improved sanitation facilities (% of populatio 9 31 39

Net Aid Flows 1980 1990 2000 2007 a

(US$ millions)Net ODA and official aid 35 311 130 284Top 3 donors (in 2006): European Commission 9 21 18 58 France 10 125 25 42 United States 6 18 4 37

Aid (% of GNI) 3.4 18.0 9.5 5.7Aid per capita (US$) 8 51 15 27

Long-Term Economic Trends

Consumer prices (annual % change) .. 0.6 3.8 3.0GDP implicit deflator (annual % change) 8.7 8.0 5.3 2.4

Exchange rate (annual average, local per US 211.3 272.3 712.0 479.3Terms of trade index (2000 = 100) .. 125 100 234

1980–90 1990–2000 2000–07

Population, mid-year (millions) 4.6 6.1 8.5 10.8 2.8 3.3 3.4GDP (US$ millions) 1,033 1,739 1,385 7,085 6.1 2.2 12.2

Agriculture 45.1 29.3 42.3 23.4 2.3 4.9 3.3Industry 8.9 17.7 11.3 44.1 8.1 0.6 33.2 Manufacturing 10.3 14.4 8.9 6.4 .. .. ..Services 46.0 53.0 46.3 32.5 6.7 0.8 8.4

Household final consumption expenditure 98.3 97.6 86.8 59.7 2.6 1.5 2.2General gov't final consumption expenditure 5.5 10.0 7.7 6.0 17.0 -8.3 5.7Gross capital formation 3.2 6.8 23.3 19.1 18.6 4.0 1.5

Exports of goods and services 16.9 13.5 16.9 49.1 6.5 2.3 41.9Imports of goods and services 28.9 27.9 34.7 33.9 9.9 -1.8 6.2Gross savings -2.7 -2.7 7.9 23.3

Note: Figures in italics are for years other than those specified. 2007 data are preliminary. .. indicates data are not available.a. Aid data are for 2006.

Development Economics, Development Data Group (DECDG).

(average annual growth %)

(% of GDP)

30 20 10 0 10 20 30

0-4

15-19

30-34

45-49

60-64

75-79

percent

Age distribution, 2007

Male Female

0

50

100

150

200

250

1990 1995 2000 2006

Chad Sub-Saharan Africa

Under-5 mortality rate (per 1,000)

-30

-15

0

15

30

45

95 05

GDP GDP per capita

Growth of GDP and GDP per capita (%)

56

Chad

Balance of Payments and Trade 2000 2007

(US$ millions)

Total merchandise exports (fob) 184 3,294Total merchandise imports (cif) 278 706Net trade in goods and services -247 1,458

Workers' remittances and compensation of employees (receipts) .. ..

Current account balance -214 470 as a % of GDP -15.5 6.6

Reserves, including gold 110 539

Central Government Finance

(% of GDP)Current revenue (including grants) 7.8 10.6

Tax revenue 6.6 5.4Current expenditure 8.9 4.8

Technology and Infrastructure 2000 2007Overall surplus/deficit -11.6 -3.4

Paved roads (% of total) 0.8 ..Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 1,000 people) 0 5

Corporate .. .. High technology exports (% of manufactured exports) .. ..

External Debt and Resource Flows

Environment

(US$ millions)Total debt outstanding and disbursed 1,138 1,772 Agricultural land (% of land area) 39 39Total debt service 26 68 Forest area (% of land area) 9.8 9.5Debt relief (HIPC, MDRI) 214 .. Nationally protected areas (% of land area) .. 9.5

Total debt (% of GDP) 82.2 28.1 Freshwater resources per capita (cu. meters) .. 1,478Total debt service (% of exports) 10.8 1.8 Freshwater withdrawal (% of internal resources) 1.5 ..

Foreign direct investment (net inflows) 115 700 CO2 emissions per capita (mt) 0.01 0.01Portfolio equity (net inflows) 0 0

GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) .. ..

Energy use per capita (kg of oil equivalent) .. ..

World Bank Group portfolio 2000 2007

(US$ millions)

IBRD Total debt outstanding and disbursed 0 26 Disbursements 0 0 Principal repayments 0 5 Interest payments 0 2

IDA Total debt outstanding and disbursed 515 968 Disbursements 18 16

Private Sector Development 2000 2008 Total debt service 8 18

Time required to start a business (days) – 75 IFC (fiscal year)Cost to start a business (% of GNI per capita) – 175.0 Total disbursed and outstanding portfolio 0 13

Time required to register property (days) – 44 of which IFC own account 0 7 Disbursements for IFC own account 0 0

Ranked as a major constraint to business 2000 2007 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 0 2 n.a. .. .. n.a. .. .. MIGA

Gross exposure – –Stock market capitalization (% of GDP) .. .. New guarantees – –Bank capital to asset ratio (%) .. ..

Note: Figures in italics are for years other than those specified. 2007 data are preliminary. 9/24/08.. indicates data are not available. – indicates observation is not applicable.

Development Economics, Development Data Group (DECDG).

0 25 50 75 100

Control of corruption

Rule of law

Regulatory quality

Political stability

Voice and accountability

Country's percentile rank (0-100)higher values imply better ratings

2007

2000

Governance indicators, 2000 and 2007

Source: Kaufmann-Kraay-Mastruzzi, World Bank

Short-term, 18IBRD, 30

Other multi-

lateral, 512

IMF, 68

IDA, 925

Private, 33

Bilateral, 185

Composition of total external debt, 2006

US$ millions

57

Millennium Development Goals Chad

With selected targets to achieve between 1990 and 2015(estimate closest to date shown, +/- 2 years)

Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2007

Poverty headcount ratio at $1.25 a day (PPP, % of population) .. .. .. .. Poverty headcount ratio at national poverty line (% of population) .. 64.0 .. .. Share of income or consumption to the poorest qunitile (%) .. .. .. .. Prevalence of malnutrition (% of children under 5) .. 34.3 29.4 33.9

Goal 2: ensure that children are able to complete primary schooling

Primary school enrollment (net, %) 34 .. 53 60 Primary completion rate (% of relevant age group) 17 15 22 31 Secondary school enrollment (gross, %) 7 .. 11 15 Youth literacy rate (% of people ages 15-24) .. 17 38 ..

Goal 3: eliminate gender disparity in education and empower women

Ratio of girls to boys in primary and secondary education (%) 42 .. 56 61 Women employed in the nonagricultural sector (% of nonagricultural employment) 4 .. .. .. Proportion of seats held by women in national parliament (%) .. 17 2 7

Goal 4: reduce under-5 mortality by two-thirds

Under-5 mortality rate (per 1,000) 201 202 205 209 Infant mortality rate (per 1,000 live births) 120 121 122 124 Measles immunization (proportion of one-year olds immunized, %) 32 26 28 23

Goal 5: reduce maternal mortality by three-fourths

Maternal mortality ratio (modeled estimate, per 100,000 live births) .. .. .. 1,500 Births attended by skilled health staff (% of total) .. 15 16 14 Contraceptive prevalence (% of women ages 15-49) .. 4 8 3

Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases

Prevalence of HIV (% of population ages 15-49) .. .. 3.4 3.5 Incidence of tuberculosis (per 100,000 people) 119 179 259 299 Tuberculosis cases detected under DOTS (%) .. 35 34 19

Goal 7: halve the proportion of people without sustainable access to basic needs

Access to an improved water source (% of population) .. 24 34 48 Access to improved sanitation facilities (% of population) 5 6 7 9 Forest area (% of total land area) 10.4 .. 9.8 9.5 Nationally protected areas (% of total land area) .. .. .. 9.5 CO2 emissions (metric tons per capita) 0.0 0.0 0.0 0.0 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) .. .. .. ..

Goal 8: develop a global partnership for development

Telephone mainlines (per 100 people) 0.1 0.1 0.1 0.1 Mobile phone subscribers (per 100 people) 0.0 0.0 0.1 8.5 Internet users (per 100 people) 0.0 0.0 0.0 0.6 Personal computers (per 100 people) .. .. 0.1 0.2

Note: Figures in italics are for years other than those specified. .. indicates data are not available. 9/24/08

Development Economics, Development Data Group (DECDG).

Chad

0

25

50

75

2000 2002 2004 2006

Primary net enrollment ratio

Ratio of girls to boys in primary &secondary education

Education indicators (%)

0

1

2

3

4

5

2000 2002 2004 2006

Fixed + mobile subscribers

Internet users

ICT indicators (per 1,000 people)

0

25

50

75

100

1990 1995 2000 2006

Chad Sub-Saharan Africa

Measles immunization (% of 1-year olds)

1963 Level1973 Level

2001 Level

T i b e s t i

Bo

d é l é E n n e d i

B o r k o u

S a h a r a D e s e r t

K A N E M

B AT H A

S A L A M ATG U E R A

B I L T I N E

MOYEN- CHARITANDJILE

C H A R I -B A G U I R M I

LOGONEOCC.

O U A D D A Ï

B O R K O U - E N N E D I - T I B E S T I

L A C

LOGONE ORIENTAL

MAYO- KEBBI

Fada

Koro Toro

Salal

Bokoro

Kélo

Koumra

HarazéMangueigne

Pala

Masalasef

Melfi

Abou Deïa

Mangalmé

Goz Beïda

OumHadjer

Massenya

Gélengdeng

Bousso

Massaguet

Moussoro

Mouzarak

Oum-Chalouba

Zouar

Aozou

Mao

Ati

Mongo

Bol

Am Timan

Abéché

Biltine

Sarh

Doba

Lai

Bongor

Moundou

Faya-Largeau

N´DJAMENA

K A N E M

B AT H A

S A L A M ATG U E R A

B I L T I N E

MOYEN- CHARITANDJILE

C H A R I -B A G U I R M I

LOGONEOCC.

O U A D D A Ï

B O R K O U - E N N E D I - T I B E S T I

L A C

LOGONE ORIENTAL

MAYO- KEBBI

Fada

Koro Toro

Salal

Bokoro

Kélo

Koumra

HarazéMangueigne

Pala

Masalasef

Melfi

Abou Deïa

Mangalmé

Goz Beïda

OumHadjer

Massenya

Gélengdeng

Bousso

Massaguet

Moussoro

Mouzarak

Oum-Chalouba

Zouar

Aozou

Mao

Ati

Mongo

Bol

Am Timan

Abéché

Biltine

Sarh

Doba

Lai

Bongor

Moundou

Faya-Largeau

N´DJAMENA

NIGER

NIGERIA

LIBYA

SUDAN

CENTRAL AFRICANREPUBLIC

CAMEROON

LakeChad

MbakaouRes.

Wad

i How

ar

Logone

Gribingui

B amingui

O Fama

Bahr el

Ghaza

l (Soro

)

Batha

Chari

Bahr

Salam

at

Vina

Ban goran

To Séguédine

To Akhaltsikhe

To Nyala

To Birao

To Kaga Bandoro

To Bossangoa

To Bozoum

To Maroua

To Fotokol

To Maroua

T i b e s t i

Bo

d é l é E n n e d i

B o r k o u

S a h a r a D e s e r t

Emi Koussi(3,415 m)

Tarso Emisou(3,376 m)Pic Touside

(3,315 m)

15°E 20°E 25°E

15°E 20°E

10°N

15°N

20°N

15°N

20°N

CHAD

0 100 200

0 100 200 Miles

300 Kilometers

IBRD 33385

SEPTEMBER 2004

CHADSELECTED CITIES AND TOWNS

PREFECTURE CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

PREFECTURE BOUNDARIES

INTERNATIONAL BOUNDARIES

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endorsemen t or a c c e p t a n c e o f s u c h boundaries.