REPUBLIC OF GUINEA ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT (PARCGEF) APPRAISAL REPORT. September 2010

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1 Language : ENGLISH Original : French AFRICAN DEVELOPMENT FUND REPUBLIC OF GUINEA ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT (PARCGEF) APPRAISAL REPORT GOVERNANCE, ECONOMIC AND FINANCIAL MANAGEMENT DEPARTMENT OSGE September 2010 Team Leader: Mr. A MAHDI, Chief Financial Analyst, OSGE.2 Team Team Members: Messrs. J.K. HOMAWOO Operations Officer OSGE.2 M. Moctar Ould El HACEN Technical Assistant OSGE.1 - M. CAMARA Consultant OSGE.2 - A. TARSIM Consultant OSGE Sector Director: Mr. I. LOBE NDOUMBE OSGE - Regional Director: Mr. F. PERRAULT ORWB Peer Review - Mrs. B. ALPERTE Financial Governance Expert OSGE.1 - Mrs. K. GASSAMA Country Economist SNFO - Mr. T. HOUENINVO Senior Macro-Economist OSGE.2 - Mr. F. SYLLA Senior Country Economist ORCE

2 TABLE OF CONTENTS CURRENCY EQUIVALENTSS... ii FISCAL YEAR... ii ACRONYMS AND ABBREVIATIONS... ii PROJECT INFORMATION SHEET... iv PROJECT PROVISIONAL IMPLEMENTATION TIMEFRAME... vi RESULTS-BASED LOGICAL FRAMEWORK... vii Implementation Schedule of Project Activities... xii I. STRATEGIC THRUST AND RATIONALE Project Linkages with Country Strategy and Objectives Rationale for Bank s Involvement Aid Coordination... 3 II. PROJECT DESCRIPTION Project Components Technical Solutions Adopted and Alternatives Explored Project Type Project Cost and Financing Arrangements Expenditure Schedule by Component and by Expenditure Category Project Target Area and Beneficiaries Participatory Process for Project Identification, Design and Implementation Key Performance Indicators III. ENVIRONMENTAL AND SOCIAL IMPACT Environment Climate Change Gender Social IV. IMPLEMENTATION Implementation Arrangements Monitoring of Project Activities Governance Sustainability Knowledge Building Major Project Risks and Mitigative Measures V. LEGAL FRAMEWORK Legal Instrument Conditions Associated with Bank s Intervention Compliance with Bank Policies VI. RECOMMENDATIONS... 20

3 LIST OF APPENDICES Appendix I Key Macroeconomic and Financial Indicators Appendix II Status of Bank Portfolio in Guinea as at 30 September 2010 Appendix III Administrative Map of Guinea LIST OF TECHNICAL ANNEXES (available in french only) Technical Annex 1 Bank Group Strategy for Guinea Technical Annex 2 Institutional Architecture for the Coordination, Monitoring and Implementation of Economic and Financial Programmes Technical Annex 3 Country Profile Technical Annex 4 Detailed Project Costs Technical Annex 5 Expenditure Schedule by Expenditure Category (UA million) Technical Annex 6 Joint TFP Matrix for Public Finance Reforms Technical Annex 7 Areas of Donor Intervention in Guinea Technical Annex 8 Note on Extractive Industries Transparency Initiative in Guinea EITIG Technical Annex 9 Draft Terms of Reference of the PCIU Technical Annex 10 Draft Terms of Reference of Technical Assistance for Training Technical Annex 11 Draft Terms of Reference for the Formulation of a Budget Preparation Model for the National Budget Department Technical Annex 12 Procurement Arrangements Technical Annex 13 List of Reference Documents LIST OF TABLES Table 1.1 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Project Components and Activities Planned Estimated Cost by Component (UA million) Project Cost by Expenditure Category (UA million) Source of Financing (UA million) Estimated Cost by Expenditure Category (UA million) Expenditure Schedule by Component (UA million)

4 CURRENCY EQUIVALENTS (September 2010) Currency Unit = GNF UA 1 = USD 1.51 UA 1 = EUR 1.19 UA 1 = GNF FISCAL YEAR 1 January - 31 December ACRONYMS AND ABBREVIATIONS ADF AFD ANLC CFAA CPAR CPP CSP CTSP DGD DNB DNEEP DNEF DNI DNMP DNP DNSI EITI EITIG GDP GFOT GNF Govt. GTZ HIPCI IFAC IMF ISA MEF MEFDD MMG MPC MSEGUI African Development Fund French Development Agency National Anti-Corruption Agency Country Financial Accountability Assessment Country Procurement Assessment Report Economic and Financial Programmes Steering Committee Country Strategy Paper Project Technical Monitoring Unit General Directorate of Customs National Budget Department National Department of Economic Research and Forecasting National Water Affairs and Forestry Department National Tax Department National Procurement Department National Planning Department National Information Systems Department Extractive Industries Transparency Initiative Extractive Industries Transparency Initiative-Guinea Gross Domestic Product Government Financial Operations Table Guinean Franc Government German Cooperation Agency Heavily Indebted Poor Countries Initiative International Federation of Accountants International Monetary Fund International Standard on Auditing Ministry of Economy and Finance Ministry of Environment, Forestry and Sustainable Development Ministry of Mines and Geology Ministry of Planning and Cooperation Simulation Model for Guinean Economy ii

5 MTEF NTF OHADA PADIPOC PARCGEF PCIU PEFA PER PIU PRSP PSRFP RBCSP REDD SMI TA TFP TOR UA UNDP UNICEF Medium-Term Expenditure Framework Nigeria Trust Fund Organisation for the Harmonisation of Business Law in Africa Public Debt and Investment Management and Control Institutions Capacity Building Support Project Economic and Financial Management Capacity Building Support Project Project Coordination and Implementation Unit Public Expenditure and Financial Accountability Public Expenditure Review Project Implementation Unit Poverty Reduction Strategy Paper Strategic Plan for Public Finance Reform Results-Based Country Strategy Paper Reducing Emissions from Deforestation and Forest Degradation Integrated Monetary System Technical Assistance Technical and Financial Partner Terms of Reference Unit of Account United Nations Development Programme United Nations Children s Fund iii

6 PROJECT INFORMATION SHEET CLIENT INFORMATION Borrower : Republic of Guinea Executing Agency : Project Coordination and Implementation Unit in the Ministry of Economy and Finance Sector : Multi-sector (Public Finance Management and Governance) FINANCING PLAN Source Amount (UA Million) Instrument ADF ADF Grant ADF GRANT KEY INFORMATION Grant Currency : Unit of Account (UA) Maturity : 4 years Main Milestones - Identification : June Preparation : July Concept Note Approval : August Project Appraisal : August Country Team Meeting : 8 October Operations Committee : N/A - Grant Agreement Negotiations : October Grant Approval : November Effectiveness : December First Disbursement : February Last Disbursement Deadline : 31 December Project Closing : 31 December 2014 iv

7 EXECUTIVE SUMMARY 1. Guinea is a post-crisis country beset with the myriad socio-economic failings typical of that condition. Recurrent political instability over the past few years has hampered Government efforts to sustain economic and financial reforms, and create an enabling macroeconomic environment for growth. Indeed, having been one of the very first countries to achieve HIPC decision point in 2000, Guinea is yet to reach completion point, thus missing substantial external debt reduction and investment opportunities in basic infrastructure. 2. The overall goal of the Economic and Financial Management Capacity Building Support Project (PARCGEF) is to create an enabling environment to revive economic growth through more credible financial management and improved governance of the extractive and forestry sectors. The specific objectives of the project are to: (i) build the capacity of the structures of the Ministry of Economy and Finance responsible for planning, budgeting and resource mobilisation; and (ii) improve governance in the extractive and forestry sectors. 3. The project has three main components: (i) improving public finance management; (ii) improving governance in the extractive and forestry sectors; and (iii) strengthening coordination and monitoring economic and financial reforms. Components (i) and (ii) complement each other, as the first aims to improve public resource management, while the second aims to replenish these resources through improved contribution of the productive sectors to the economy. 4. Therefore, this project is in line with: (i) priorities set by the Ministry of Finance to support implementation of the Public Finance Reform Strategic Plan (PSRFP), correct malfunction and streamline preparation and execution of Government budget; (ii) improvement of governance in the productive sectors to enhance public resource mobilisation; and (iii) the need to review the legal arsenal of the extractive industries and forestry sectors. Implementation of the Public Finance Reform Strategic Plan, with assistance from technical and financial partners, will focus on streamlining public expenditure and stepping up mobilisation of public revenue to contribute to the achievement of the HIPCI completion point by 2011, with a view to easing the debt burden. Support to such productive sectors as mining and forestry will build their capacity to generate more revenue for the State. 5. The PARCGEF formulation draws on Bank projects and those of other development partners, in terms of institutional framework assessment, beneficiary accountability and coordination with technical and financial partners. This project complements PADIPOC. As such, it will allow for implementation of an integrated approach to public finance management. The activities of PARCGEF will focus on improving budget management and mobilizing Government resources, while those of PADIPOC will deal with strengthening public expenditure control bodies. Implementing PARCGEF will help to develop knowledge on best practices in public finance management and planning. Best practices will be disseminated within the administration through training, procedures and training manuals. Knowledge on institutional capacity building and implementation of a reform programme should be another project outcome. Knowledge will also be disseminated within the Bank. Studies to be conducted under the project and geared towards diagnosing the country s tax system and the contribution of the productive sectors to the national economy will help to develop knowledge of these sectors and guide recommendations that would be made to improve their participation in Guinea s growth and development. v

8 6. The main project beneficiaries are: (i) the entire government apparatus, whose operational structures will be upgraded, its institutional capacity built and resources increased; (ii) the departments in charge of economic and financial administration, which will be able to streamline public expenditure management and mobilise additional domestic revenue for channelling to the social sectors, and (iii) Guinea s entire population, who will be the prime beneficiaries of jobs created, following improved efficiency of the public sector and socioeconomic services. Moreover, import/export companies will stand to gain from the trade facilitation that will result from a more modern and efficient customs service. PROJECT PROVISIONAL IMPLEMENTATION TIMEFRAME Activities Responsibility Date/Timeframe 1. Board Presentation and Approval ADF November Signature of Grant Protocols of Agreement and Effectiveness ADB/ December 2010 Government 3. Project Launching Mission ADB December Launching of Project Activities PCIU December Re-adaptation of Project Procedures Manual PCIU January Commencement of Procurement of Project Goods and Services PCIU January Supervision ADB June Supervision ADB December Annual Audit Government December Mid-Term Review ADB June Supervision ADB December Annual Audit Government December Supervision ADB June Supervision ADB December Closing of PARCGEF Government / December 2014 PCIU 16. Last Audit Government December Project Completion Report (PCR) ADB March 2015 vi

9 GUINEA: ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT RESULTS-BASED LOGICAL FRAMEWORK Hierarchy of Objectives Expected Results Reach Performance Indicators Indicative Targets Timeframe Assumptions/Risks 1. Project Goal Impact Beneficiaries Impact Indicators Anticipated Medium-Term/Long- Term Progress - Timeframe Assumptions Create an enabling environment for economic recovery through more credible public finance management and enhanced governance of the extractive and forestry sectors 1.1. More credible public finance management 1.2. Enhanced contribution of the mining and forestry sectors to wealth creation Guinean population Public administration 1.1.a CPIA Indicator 13 relating to quality of financial and budgetary management 1.1.b Level of government revenue relative to GDP 1.2.a Mining sector contribution to GDP 1.2.b Forestry sector contribution to GDP 1.1.a - CPIA 13 rises from 3 in 2008 to 4 by b Government revenue increases from 15% of GDP in 2009 to 17% of GDP by a Mining sector contribution to GDP increases from 14% in 2009 to more than 17% by b Forestry sector contribution to GDP increases from 2% in 2009 to more than 3% by Sustained government commitment to implementation of PSRFP - Sustained support of TFPs Risks Possible deterioration of post-election political situation, leading to suspension of reforms (see Risk 1 4.6) Mitigative Measures Support of TFPs urging Government to continue implementation of reforms in order to attain HIPC completion point by 2011 Sources: MEF, MPC, MMG, MEFDD 2. Project Objectives Expected Outcomes Beneficiaries Outcome Indicators Anticipated Medium-Term Progress Assumptions 2.1. Build the capacity of MEF structures responsible for planning, budgeting and resource mobilisation Improved budgeting and macroeconomic forecasting Fiscal and customs regulations and procedures aligned with international standards Guinean population Government - Public Administration Economic operators a Extra-budgetary expenditure b Lead time for budget submission to Parliament a Average time per year required for a company to pay taxes (Doing Business) b Time required to complete one customs clearance procedure a The proportion of extrabudgetary expenditure decreases from 80% of budget in 2010 to 20% by b The time reduces from +60 days at the beginning of the fiscal year in 2009 to 60 days before the start of the 2013 fiscal year a The average time required drops from 416 hours in 2009 to 300 hours by b The time required to complete one customs clearance procedure reduces from over 96 hours in 2009 to 48 hours by 2013 Sources: MEF, MPC Project ownership by beneficiary structures Risks (i) Lack of skilled human capacity within the beneficiary structures to implement project activities (ii) Failure to implement recommendations of studies, legal texts and new procedures for public finance management Mitigative Measures (i) Specific training envisaged in the project and strengthening of the implementing body (ii) Intensify monitoring of activity implementation by PCIU and subject vii

10 Hierarchy of Objectives Expected Results Reach Performance Indicators Indicative Targets Timeframe Assumptions/Risks 2.2. Strengthen governance in the mining and agricultural sectors 2.2. The regulatory framework of the mining, oil and forestry sectors is transparent and consistent with international standards. 2.2.a Status of Guinea in the EITI accession process 2.2.b Mining licenses granted 2.2. a - Validation of Guinea s EITI status before end b Granting of at least 200 mining licenses, based on the revised Mining Code before December 2013 future projects to effective application of new legal texts 2.2. C Percentage of logging permits governed by the revised Forest Code. 2.2.c 90% of logging permits are governed by the Code no later than end Resources and Activities 3.1. Component I - Strengthen public finance management Outputs Beneficiaries Government Public administration Output Indicators Sources : MMG Anticipated Short-Term Progress Risks The slowness of beneficiary structures to implement reform measures Improve the budget preparation, implementation and monitoring process Technical assistance, training and equipment a - A budget preparation model is designed and computerized b Guides and procedures manuals on budgeting techniques are prepared c DNB personnel are trained in modern budget preparation Economic operators a Budget preparation model and its computer application b - Dissemination of Guides and Procedures Manuals c Number of DNB staff and officers trained a Budget preparation model developed before end 2011 and operational before end b - Guides and manuals printed and disseminated to staff before end c staff and officers trained before end 2014, i.e. the entire personnel. Mitigative Measures This risk is mitigated by the fact that the revenue collection institutions have signed performance contracts. In addition, provision has been made for the PCIU Coordinator to sign a performance contract with the Steering Committee. Achievement of results will serve as a criterion to determine his/her continuation in office Improve the preparation of macroeconomic planning and forecasting Technical assistance, training and equipment a MSEGUI model is updated b The Economic and Social Report (ESR) are prepared c DNP staff are trained in macro-economic forecasting and planning techniques a MSEGUI-based macroeconomic projections b - Publication of ESR 2011, 2012 and c Number of DNP staff and officers trained Source: DNB a Macro-economic projections for 2012 done before end b - ESR 2011, 2012 and 2013 published before end 2012; 2013 and 2014, respectively c 244 staff and officers trained before end 2014, i.e. the entire personnel Source: DNP viii

11 Hierarchy of Objectives Expected Results Reach Performance Indicators Indicative Targets Timeframe Assumptions/Risks Support to the Modernisation of Analytical and Information Tools a The blueprint for the establishment of a MEF integrated information system is developed a - Validation of the blueprint a Blueprint validated by MEF by end 2012 Technical assistance, training and equipment Enhance efficiency in fiscal resource mobilisation Technical assistance, training and equipment 3.2. Component II - Improve governance of the productive sectors Support to the mining sector Technical assistance, training and equipment b DNSI personnel are trained Taxes: a The General Tax Code is revised and the Charter and Code of Ethics prepared b A tax study is conducted c Tax officials are trained Customs: d The Customs Code is revised and the customs nomenclature updated e Migration from the ASYCUDA++ system to ASYCUDA World is carried out f Customs personnel are trained in new regulations and tools a Institutional audit of MMG is conducted b Study on impact of the mining sector on the economy is conducted b Number of DNSI staff and officers trained a General Tax Code, the Charter and Code of Ethics b - Validation and dissemination of study results c Number of DNI staff and officers trained d New Customs Code and nomenclature e Operationalisation of ASYCUDA World f Number of DND staff and officers trained a Validation of institutional audit b - Validation and dissemination of study results b Thirty-five staff and officers trained by end 2014, or 50% of the staff Source: DNSI a The new General Tax Code and the Charter and Code of Ethics are disseminated to staff and businesses by end b - Validation of study results by MEF and dissemination at a workshop before end c All tax officials are trained before end d New Customs Code and nomenclature finalised and disseminated before end e - ASYCUDA World operational before end f Two thousand staff and officers trained before end 2014, or 95% of the entire personnel Sources : DNI, DGD a Audit recommendations validated and disseminated within MEF before end b - Validation of study results by MMG and dissemination at a workshop before end 2012 ix

12 Hierarchy of Objectives Expected Results Reach Performance Indicators Indicative Targets Timeframe Assumptions/Risks c Study on the harmonisation of local development approach in mining areas is conducted c - Validation and dissemination of study results c - Validation of study results by MMG and dissemination at a workshop before end d The Petroleum Code and its implementing instruments are prepared e A mining policy letter is drafted f - Audits ( ) envisaged as part of EITI and publication of audit results g Studies fund is established h MMG staff and officers are trained d New Petroleum Code e Mining policy validated and disseminated f - Validation of audit results and publication g Implementation of mining sector studies h Number of MMG staff trained d New Petroleum Code adopted by the National Assembly before e - Validation of mining policy by Government and its dissemination at a workshop before end f - Validation of audit results by MMG and publication before end g - Publication results of studies before end h staff and officers trained before end Support to the forestry sector Technical assistance, training and equipment a The forestry policy paper is updated and disseminated b - The forestry and wildlife codes and their implementing regulations are revised c Study on contribution of the forestry sector to the national economy is conducted d DNEF staff are trained a Forestry policy validated and disseminated b Adoption of revised codes c - Validation and dissemination of study results d Number of DNEF staff trained a - Validation by Government and dissemination at a workshop before end b The revised codes are adopted by the National Assembly before end c - Validation of study results by MEEFDD and dissemination at a workshop before end d 400 staff trained before end 2014, or 25% of entire staff x

13 Hierarchy of Objectives Expected Results Reach Performance Indicators Indicative Targets Timeframe Assumptions/Risks 3.3. Strengthen coordination and monitoring of economic and financial reforms Support to CTSP Programmes Technical Monitoring Unit Technical assistance and equipment CTSP is operational a Number of meetings held b Half yearly report on implementation of economic and financial programmes a At least two meetings held annually over the period b The half-yearly reports distributed within two months of the half-year under review Strengthen the Project Coordination and Implementation Unit Technical assistance, training and equipment Activities of PARCGEF and other projects are implemented a Performance contract signed between CTSP and PCIU b PCIU quarterly progress reports a - Contract signed before end b Quarterly progress reports released within the following month Financial Resources ADF: UA million Guinean Government Disbursement rate 100% at project completion Fulfilment of grant effectiveness and disbursement conditions. xi

14 Implementation Schedule of Project Activities COMPONENT / SUB-CZOMPONENTS T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 Component I. Support to Improved Public Finance Management I.1. Improve the budget preparation, implementation and monitoring process (DNB) Setting up of a budget preparation model Design and installation of a computer application for budget preparation Design and establishment of a framework for budget implementation mid-term review Preparation of guides and procedures manuals on budgeting techniques Training of DNB staff in modern budget programming and monitoring techniques DNB computer equipment DNB furniture Budget reproduction I.2. Support to Improved Preparation of Macroeconomic Planning and Forecasting (DNP) MSEGUI update Data collection and production of Economic and Social Report On-site training of DNP staff Training of DNP staff in the sub-region DNB computer equipment DNB furniture Reproduction of macro-economic frameworks Reproduction of Economic and Social Report I.3. Support for the Modernisation of Analytical and Information Tools (DNSI) Preparation of a blueprint for the MEF information system Technical assistance to support DNSI Training of DNSI staff DNSI computer equipment I.4. Support to Increased Efficiency in Fiscal Resource Mobilisation (DNI and DND) Update of General Tax Code Study on taxation Formulation of Charter and Ethics Guide DNI computer equipment DNI furniture Training of DNI staff Reproduction of the General Tax Code Reproduction of the Charter and Ethics Guide Update of the Customs Code Update of customs nomenclature xii

15 Installation of ASYCUDA World DND computer equipment Reproduction of the Customs Code Reproduction of Customs Tariff Training of customs staff COMPONENT / SUB-CZOMPONENTS T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 Component II. Improve Governance in the Mining and Forestry Sectors II.1. Support to the Mining Sector Study on contribution of the mining sector to the economy MMG Institutional Audit Community development around mining sites Mining Policy Letter Preparation of the Petroleum Code and its implementing regulations Studies financed by support funds for the mining sector Preparation of EITIG audit report Update of EITIG administrative, accounting and financial manuals Computer equipment Training of MMG staff II.2. Support to the Forestry Sector Conduct of Study on the Contribution of Forestry to the Economy Update of the forestry policy Update of the Forest Code Update of the Wildlife Protection Code and hunting regulations Computer equipment Training of DNEF staff Component II. Support to CTSP Programmes Technical Monitoring Unit III.1. Support to the Programmes Technical Monitoring Unit (CTSP) Technical assistance on economy Furniture Computer equipment III.2. Strengthening of the Project Coordination and Implementation Unit (PCIU) Technical assistance for training Technical assistance in IT Computer equipment, furniture and vehicles xiii

16 REPORT AND RECOMMENDATION OF ADB GROUP MANAGEMENT TO THE BOARD OF DIRECTORS ON A PROPOSED GRANT TO THE REPUBLIC OF GUINEA FOR THE ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT (PARCGEF) Management hereby submits the following Report on a proposal to award a UA million ADF grant to the Republic of Guinea to finance the Economic and Financial Management Capacity Building Support Project (PARCGEF). Guinea is a post-crisis country beset with the myriad socio-economic failings typical of that situation: rising poverty rate since 1996 (43% compared to 52% in 2008), low growth rate (- 0.3% in 2009) and double-digit inflation (13.5% in 2008) 1. This is due in part to the recurrent political instability since 2006, punctuated by a military coup in 2008 and a military transition since then. The second stage of the transition resulted on 10 June 2010 in the first round of presidential elections. After the second round, the new democratically elected authorities will require massive and urgent support from Guinea s development partners to address the country s socio-economic challenges. I. STRATEGIC THRUST AND RATIONALE 1.1 Project Linkages with Country Strategy and Objectives The Poverty Reduction Strategy Paper (PRSP II), adopted by the Guinean authorities in 2007 and covering the period , is the main reference document for the country s Technical and Financial Partners (TFPs). It presents the country s principal short- and mediumterm development strategies, and revolves around the following three areas of focus: (i) improvement of governance and strengthening of institutional and human capacity; (ii) faster growth and expansion of job opportunities and income for all; and (iii) improved access to quality social services Consistent with the aforementioned document, the Bank s intervention strategy, RBCSP under extension 2 through 2010, aims to boost growth and strengthen basic infrastructure. This strategy hinges on two pillars: (i) consolidation of basic infrastructure and promotion of growth sectors; and (ii) improvement of basic social services. The first pillar is further broken down into three sub-pillars, the third of which relates to macro-economic stabilisation and economic governance. The RBCSP Mid-Term Review, approved on 18 November 2008, maintained the two pillars and recommended that special attention be given to human and institutional capacity building The Economic and Financial Management Capacity Building Support Project (PARCGEF) is consistent with the thrust of the RBCSP, especially the third sub-pillar on macroeconomic stabilisation within a context of capacity building and promotion of good governance. It also plugs into the first thrust of the PRSP. It aims at improving governance and strengthening institutional and human capacity (see Technical Annex 1) Furthermore, the proposed project is aligned with the Bank s Medium-Term Strategy, with improved governance as priority. Indeed, the project aims to create an enabling environment for economic recovery through more credible public finance management and enhanced governance of the extractive and forestry sectors. The project is also in line with the Bank s Governance Strategy (GAP, 2008). 1 2 This data is from the Macro-Economic Framework prepared by Guinea s National Planning Department and the IMF in The request for extension of the RBCSP through 2010 will be considered by CODE in the 30 November 2010.

17 1.2 Rationale for Bank s Involvement The recurrent political instability in recent years has not allowed the Guinean Government to maintain a sustainable course of economic and financial reforms and to create a stable macro-economic framework conducive to growth. Thus, after having been one of the very first African countries to reach HIPC decision point in 2000, Guinea has yet to reach the completion point, thus depriving itself of a substantial reduction of its external debt and investment opportunities in basic infrastructure. The Ouagadougou Agreements of January 2010 initiating the second phase of the transition in Guinea have opened up new political and economic prospects If successfully conducted, the first presidential elections scheduled before end 2010 (the incumbent will not participate) will present Guinea with new opportunities to: (i) initiate major changes in the management of State affairs; and (ii) adopt strategic orientations and sweeping reforms to put the country on a path of strong and sustainable growth. To ensure the best chances of success for these reforms, the new authorities will need urgent and massive support from the country s Technical and Financial Partners Currently, the public finance system is showing inconsistencies at several levels. A number of factors hamper the mobilisation of public resources and the effectiveness of expenditure, including: (i) the obsolete legal framework; (ii) the inconsistency between the strategic vision reflected in the PRSP and the annual Budget Act; (iii) the late submission of the annual Budget Act to the National Assembly and the existence of extra-budgetary operations;(iv) the misuse of the negotiated contract procedure and lack of signature of financial controllers; (v) the lack of interface between the expenditure and revenue chains (Taxes and Customs) that would create an integrated budget information system; (vi) the obsolete nature of the State Chart of Accounts in force since 1989; (vii) low government revenue; (viii) the control function is still weak owing to the limited independence of auditors, an inadequate assignment of roles between the authorising officer, the financial controller and the public accountant across the entire expenditure chain; and (ix) the existence of many weaknesses in the current local finance management system affecting both the legal framework and its applicability In contrast, the extractive sector, especially the mining sector, plays a key role in Guinea s economy, accounting for more than 80% of the country s export earnings, 25 to 30% of government revenue and 15 to 20% of GDP. However, this sector has weaknesses relating to the obsolete nature of legal texts that have not kept pace with the country s economic development. Indeed, certain mining agreements and conventions, particularly those signed in the 1960s, need to be adapted to international standards and best practices in the extractive industry. Besides, the existing human capital is not sufficiently trained to meet the challenges of effective management in mining and to safeguard Guinea s interest when negotiating with partners. Since 2005, Guinea has taken steps under the Extractive Industries Transparency Initiative (EITI) (see Technical Annex 8) and the Kimberly Process geared towards enhancing transparency in the mining sector. In addition, according to some estimates, the sector is expected to record an average increase of 7% per annum, over the period, thanks to major investments planned. Indeed, foreign direct investments planned by various multinational corporations active in the mining sector in the next three to five years are estimated at USD 12 billion 3. Furthermore, Guinea has hydrocarbon potential in its sedimentary basins where prospecting is underway (offshore). In view of these prospects, it is necessary to address the governance issues facing the extractive sector to enable it to contribute more effectively to economic growth and poverty reduction. 3 These companies include BHP-Billiton (Australia), Vale (Brazil), Rio Tinto (Australia, Great Britain), Alcoa-Alcan (United States) and Rusal (Russia). 2

18 1.2.5 The forestry sector s contribution to the economy remained limited to 2% of GDP in Yet, the forest cover makes up 13% of the forest region, or ha of thick forest containing an unparalleled plant quality and very diverse wildlife. The preservation of this forest and its wildlife, some of which have been classified as World Heritage, and its rational exploitation at the scientific, economic and tourism level can contribute far more to the country s economic development than is currently the case. However, the sector is beset by several weaknesses, especially the obsolete nature of the legal and regulatory framework, the lack of a strategic framework for developing the sector and insufficient human capacity. In addition, current management of the sector endangers the country s natural resources without generating the needed resources for the economy The Bank s intervention is for two reasons: First, it aims to support implementation of the Strategic Plan for Public Finance Reform (PSRFP) by removing the above constraints (see 1.2.4). Implementation of the PSRFP with Bank support will provide greater efficiency in revenue mobilisation and streamline public expenditure. To support the government in this reform, sustained consultations were held between the Bank, the World Bank, the IMF and the European Union, in May and August. Following these consultations, a matrix of priority areas to be strengthened was drawn up. The matrix identified six areas of intervention as well as the type of technical assistance to be mobilised for each of these areas to maximize synergy. The six areas of focus are as follows: (i) strengthening coordination and monitoring of economic and financial reforms; (ii) improving budgeting; (iii) improving government revenue; (iv) streamlining expenditure; (v) improving financial governance; and (vi) civil service reform/streamlining the payroll. The matrix highlights the positioning of each TFP in the support to be provided Guinea (see Technical Annex 6). Thus, in the distribution of roles, it was agreed that the Bank s support will focus on improving economic and financial governance, with emphasis on revenue mobilisation and streamlining of public expenditure. This is the specific objective of the Economic and Financial Management Capacity Building Support Project (PARCGEF). Second, to ensure better sustainability of actions envisaged under the project, there is need to strengthen governance in the extractive industries and forestry to ensure increased and sustained mobilisation of State resources. This will help to create enough financial resources to support public investment policies Therefore, the project is consistent with: (i) the priorities established by the Ministry of Finance to support implementation of the Strategic Plan for Public Finance Reform (PSRFP), correct the problem areas mentioned above and provide more consistency in preparing and implementing the Government budget; (ii) improve governance in the productive sectors in order to mobilise public resources; and (iii) review the legal arsenal of the extractive industry and forestry sectors. With the assistance of TFPs, the implementation of the Strategic Plan for Public Finance Reform through the promotion and streamlining of public expenditure and enhanced mobilisation of public revenue, will contribute to achieving the HIPCI completion point from 2011, thus helping to ease the stranglehold exercised by the debt burden. The support given to the productive sectors will boost their capacity to generate more revenue for the State. 1.3 Aid Coordination On the government side, the set-up in charge of steering economic and financial reform programmes and coordination of donor interventions is built around the following institutional framework: (i) the Economic and Financial Programmes Steering Committee (CPP), chaired by the Prime Minister and comprising most ministries; and (ii) the Programmes Monitoring Technical Unit (CTSP), under the authority of the Minister of Economy and Finance (see Technical Annex 2). However, due to the weak government capacity and inadequate coordination between the Government and the TFPs, this set-up is not yet operating satisfactorily. Therefore, two initiatives have been taken to remedy this weakness in coordination between the Government 3

19 and the TFPs: (a) create a Project Coordination and Implementation Unit (PCIU), charged with managing the resources made available by both the Bank (under PARCGEF) and other donors. This will avoid the proliferation of project implementation units and thus reduce transaction costs; and (b) provide the resources necessary for the proper functioning of the CTSP Public finance has received significant support from TFPs, in the form projects or ad hoc assistance such as from the IMF (AFRITAC), the French Cooperation Agency, GTZ and the European Union. For instance, in establishing the MEF information system, in addition to the Bank (modernisation of analytical and information tools), the European Union (interfacing the payroll file with the Civil Service file), Spain and the UNDP (application of biometrics for establishing a reliable list of Public Service staff) are active or must intervene. However, most of this support has been frozen for two years now, thus preventing the implementation of public finance reforms. In this context, implementation of the priority action plan for improving public finance management is and will remain the focus of dialogue with development partners. Hence, alongside the Bank s support through this project, the World Bank is preparing a project to support the country in reforming the Finance Act, strengthening the expenditure chain and developing a materials accounting management application The French Development Agency (AFD) leads a thematic group for the mining sector that brings together various TFPs. The Bank will intervene in this sector by coordinating its support with that of AFD. The ADF mainly assists with reviewing the Mining Code and its implementing regulations, in addition to providing vocational training for miners for the benefit of companies active in the sector Coordination between various development partners operating in the country is provided through continuous exchange of information and joint dialogue missions with the authorities for instance those conducted by the Bank with the World Bank in May and August 2010, wherein the IMF also participated. The table in Technical Annex 7 describes the areas of intervention of various TFPs in Guinea. II. PROJECT DESCRIPTION 2.1 Project Components The project s overall goal is to create an enabling environment for economic recovery through more credible public finance management and enhanced governance of the extractive and forestry sectors. The specific objectives of the project are to: (i) build the capacity of MEF structures responsible for planning, budgeting and resource mobilisation; and (ii) strengthen governance in the extractive and forestry sectors PARCGEF, amounting to UA million (see table of detailed costs in Technical Annex 4), will be implemented over a four year period The project hinges on three main components, namely, (i) improving public finance management; (ii) improving governance in the extractive and forestry sectors; and (iii) strengthening coordination and monitoring of economic and financial reforms. The objectives of the first two components complement each other. While the first aims to improve management of public resources, the second seeks to replenish such resources through improved contribution of the productive sectors to the economy. The purpose of the third component is to strengthen the Programmes Monitoring Technical Unit and the Project Coordination and Implementation Unit, as well as improve the implementation of various project activities in the area of economic and financial governance. 4

20 Table 1.1: Project Components and Activities Planned Component Name Cost (*) Component Description (UA million) Component 1: Improve public finance management 3.57 Sub-component 1: Improve the budget preparation, implementation and monitoring process Sub-component 2: Support the improved preparation of macroeconomic planning and forecasting Sub-component 3: Support the modernisation of analytical and information tools Sub-component 4: Support the enhancement of effective fiscal resource mobilisation Component 2: Improve 2.46 Sub-component 1: Support to the mining sector governance in the mining and forestry sectors Sub-component 2: Support to the forestry sector Component 3: Strengthen coordination and monitoring of economic and financial reforms Total Costs 7.18 (*) Cost excluding provision for price escalation and physical contingencies Component 1: Improve Public Finance Management 1.16 Sub-component 1: Support to the Programmes Monitoring Technical Unit (CTSP) Sub-component 2: Strengthen the Project Coordination and Implementation Unit (PCIU) This component aims at overcoming the weaknesses in budget preparation and execution as well as in mobilising State financial resources. It comprises four sub-components: (i) improve budget preparation and management; (ii) strengthen the economic forecasting and planning process; (iii) modernise the MEF analytical and information tools; and (iv) improve the mobilisation of tax and customs revenue. Sub-Component 1: Support to Improved Preparation of Macroeconomic Planning and Forecasting Constraints and Challenges: The budgeting process requires a good macroeconomic framework upstream that determines the main thrust of government s short-, medium- and longterm economic and social policy. A well-developed framework document is thus essential to budget preparation and management - hence the need to strengthen the design, formulation, analysis and monitoring of government policy on economic, social and cultural development planning. The macro-economic framework developed by the National Planning Department (DNP) is the basis for formulating the budget framework. This exercise is still fraught with significant difficulties in terms of collecting data needed to develop its analyses. These difficulties are threefold: (i) lack of material resources, particularly computers and duplication equipment; (ii) inadequate skilled human resources; and (iii) insufficient financial resources necessary for conducting activities, in particular those relating to research, the development and publication of key macro-economic analytical, management and planning documents. It is therefore necessary to support the DNP to acquire the physical and human capacity to enable it provide the macro-economic framework and forecasts as well as reliable economic studies and reports that will lay the groundwork for coherent and effective budget preparation Planned Project Activities: The project will help to build human and technical capacity with a view to having more competent human capital capable of performing the tasks assigned to the DNP. This support will involve: (i) training; (ii) technical assistance; and (iii) procurement of office equipment and computer hardware. The technical assistance will consist in making available to the Department an international expert specialized in strategic planning. The expert will provide on-site support to various divisions in charge of planning and help to update the simulation model of the Guinean economy (MSEGUI) to incorporate elements of the Poverty 5

21 Reduction Strategy and produce gender and regional disaggregated indicators. The dilapidated state of the computer stock requires the procurement of new hardware at the central level and in the eight Regional Directorates of Planning and Economic Development Key Expected Outcomes: The project will allow for updating the simulation model of the Guinean economy (MSEGUI) to incorporate the gender aspect in its projections, among others. The project will contribute to the formulation of the macro-economic framework as well as economic and social reports. It will also provide training in forecasting and planning techniques for DNP staff and officers. Sub-Component 2: Improving the Budget Preparation, Implementation and Monitoring Process Constraints and Challenges: Currently, public finance management in Guinea is characterised by a number of weaknesses that hamper transparency and fiscal discipline. These weaknesses relate in part to the regulatory and institutional framework of the agency responsible for preparing the government budget, the National Budget Department (DNB), and also to the malfunction resulting from lack of human and physical resources to prepare the budget, keep accounts and generally manage local finances. This creates a mismatch between budget preparation and execution. It is therefore necessary to establish a coherent framework for budget preparation, using modern tools for macro-economic forecasting and effective sector budgeting Activities Planned under the Project: The project will support DNB through: (i) the establishment of a budget preparation model consistent with the macro-economic framework and the Poverty Reduction Strategy (see Technical Annex 11); (ii) the preparation of procedures manuals on planning, programming and budgeting techniques; (iii) the design and installation of a computer application for budget preparation; and (iv) the training of staff in modern programming and budget monitoring techniques Key Expected Outcomes: Project activities will allow DNB to have a computerised budget preparation model capable of incorporating information on the macro-economic framework and those of the PRSP. They will also help to develop procedures manuals and guides for budget techniques that are consistent with the model used. Lastly, the DNB staff will be trained to use these tools. Sub-Component 3: Support to the Modernisation of Analytical and Information Tools This project sub-component represents crosscutting support to various government departments involved in public finance management Constraints and Challenges: The National Information Systems Department (DNSI) has the essential role of designing and implementing policy on public administration information systems. It ensures the implementation of the information programme for securing revenue and public expenditure control, and covers the main needs of the MEF national directorates. The major constraints in achieving this mission are threefold: (i) absence of a necessary overall strategic vision of integrated information at MEF; (ii) lack of interconnection between different ministerial departments, the Central Bank and the expenditure chain network, in accordance with the services devolution policy; and (iii) absence of certain functions within the Directorate due to shortage of proven expertise/specialists in network administration and security, systems administration, advanced hardware maintenance, software project management and website development/management. To contribute effectively to the public finance management reform process, it is necessary to overcome the weaknesses in IT infrastructure needed to manage the Government budget. 6

22 Activities Planned under the Project: PARCGEF will contribute to building the human and technical capacity of DNSI by supporting: (i) the setting up of network, telecommunications and computer application facilities; (ii) the development of a blueprint for the establishment of an integrated information system in various revenue collection institutions; and (vi) human capacity building through training locally and abroad Key Expected Outcomes: The project will help to develop a blueprint for the establishment of an integrated information system for MEF and obtain specialised skills for IT support professions. Sub-Component 4: Support to Improved Efficiency in Tax Resource Mobilization Constraints and Challenges: The revenue collection institutions, including the Tax and Customs Departments, face several problems that affect their performance, including: For the Tax Department:(i) failure to observe hierarchical control over service performance; (ii) mismatch of policy instruments and inadequate use of human resources; (iii) insufficient knowledge of regulations and procedures; (iv) fraud and corruption; (v) lack of a Code of Professional Ethics; and (vi) need to revise the General Tax Code for consistency with tax measures issued under the annual Finance Act. For Customs: (i) inadequate level of training of some officers and staff in relation to changing customs techniques; (ii) failure to adapt the basic texts (the Customs Code and tariffs) to international standards and best practices; and (iii) insufficient IT tools in the country s interior. To improve the efficiency of State revenue collection, it is necessary to take specific action to address these weaknesses Activities Planned under the Project for the National Tax Department: The project will finance activities that will help to improve internal processes and streamline DNI operations. These activities will include: (i) training, (a) at the central level, for officials of the Medium-Size Enterprises Department, on the general rules of corporate taxation, business accounting and tax control methods and procedures; (b) at the community level, for local officials, on the broad principles of local taxation and the different categories of income tax; (ii) equipping the DNI with computer hardware; and (iii) providing technical assistance for the study on taxation and revision of the General Tax Code Key Expected Outcomes: The project will enable DNI to disseminate the revised Tax Code as well as the Taxpayer s Charter and the Code of Ethics for tax officials. It will also allow for conducting a study on taxation in Guinea. Finally, as part of the project, tax officials will be trained to give them the necessary capacity to improve services to citizens Activities Planned under the Project for the National Department of Customs (DND). The objective of this component is to: (i) adapt the legal arsenal (customs legislation and customs nomenclature) of Guinean Customs to international standards; and (ii) build human and physical capacity. The component comprises three key areas of intervention: training, technical assistance (TA) and procurement of computer hardware. The TA involves making available to the Department an expert who will be responsible for revising the Customs Code, dating back about 20 years, with a view to adapting it to the country s socio-economic development imperatives and international standards, and updating the customs nomenclature (Version 2002 to Version 2007). The project will also support DND in its project to migrate from ASYCUDA++ customs IT system to ASYCUDA World, with UNCTAD assistance Key Expected Outcomes. Provision has been made to procure the ASYCUDA World system for managing trade flows. Through the project, it is also expected that the code and customs nomenclature would meet international standards and best practices. Customs officers will also be trained in using the new tools to be developed. 7

23 Component 2: Improved Governance in the Mining and Forestry Sectors This component aims to strengthen governance in two productive sectors representing a major source of State revenue, particularly taxes. Sub-Component 1: Support to the Mining Sector Constraints and Challenges: The Ministry of Mines and Geology is vested with an important role - regulation, supervision, monitoring and control of mining activities, as well as promotion and facilitation of such activities. The constraints to the development of the mining sector are numerous. These include mainly: (i) lack of capacity to manage the sector; (ii) inadequate institutional, legal, regulatory and appropriate contractual framework; (iii) failure to promote the sector; (iv) insufficient budgetary resources to finance important programmes such as the EITI; (v) lack of strategic vision to develop the sector; and (vi) lack of harmonised approach to community development around the mining areas. These are the constraints that the project aims to overcome, in coordination and in complementarity with other donors active in the sector Activities Planned under the Project: Actions to be financed by the project include: (i) diagnostic studies and support to the preparation of legal texts and strategy documents (institutional audit of the Ministry, study on the sector s impact on the economy, study on the harmonisation of local development in mining areas, petroleum code and implementing regulations, and mining policy letter); (ii) capacity building (allocation of material resources and focused training for Ministry officials); (iii) support to EITI with the conduct of audits ( ) stipulated as part of adherence to this initiative and dissemination of the results of such audits; and (iv) setting up of a Study Fund to finance projects derived from the studies to be undertaken under the project Key Expected Outcomes: These include mainly the following outcomes: (i) institutional audit of the MMG; (ii) study on the contribution of the mining sector to the economy; (iii) study on the harmonisation of the community development approach in mining areas; (iv) drafting of a Petroleum Code and its implementing regulations; (v) drafting of the Mining Policy Letter, (vi) conduct of audits ( ) stipulated under EITI; (vii) setting up of a study fund for the sector; and (viii) training of MMG officers and staff. Sub-Component 2: Support to the Forestry Sector Constraints and Challenges: The constraints relate mainly to the degradation of forest resources, which stems from several factors, including: (i) the inadequate knowledge of resources; (ii) the insufficient harmonisation and poor dissemination of laws and regulations relating to natural resource management (forest code, code on wildlife protection and regulation of hunting, pastoral code, mining code, water code, property and public lands code, environmental code, community code, etc.); (iii) weakness and aging of human capital in Forestry Administration; and (iv) lack of equipment Activities Planned under the Project: The project will provide three types of support: (i) update and dissemination of the policy document and legal instruments (forest policy and a medium-term action plan, the forest and wildlife code and their implementing regulations); (ii) a study on the contribution of the forestry sector to the national economy, including forest taxation, and study on knowledge of forest and wildlife resources; and (iii) strengthening the response capacity of the forestry administration Key Expected Outcomes: These mostly include the following results: (i) updating of the forest policy and revision of the forest and wildlife codes, and their implementing regulations; (ii) 8

24 training of DNEF staff; and (iii) the study on the contribution of the forestry sector to the national economy. Component 3: Reforms Strengthening Coordination and Monitoring of Economic and Financial As part of implementing PSRFP and other economic and financial reforms, the Guinean authorities have designed a new institutional architecture to better drive reform monitoring and execution, and ensure more effective coordination of TFP interventions. Sub-Component 1: Support to the Programmes Monitoring Technical Unit (CTSP) Constraints and Challenges: The main constraints lie in: (i) the failure to operationalise the Programmes Monitoring Technical Unit (CTSP), the inter-ministerial body responsible for monitoring and coordinating economic and financial programmes (see 1.3.1); and (ii) the lack of a permanent core of professional staff to routinely monitor the implementation of reform programmes. The main challenge is to make the CTSP fully operational by equipping it with human and technical resources to enable it to fully play its role. In this regard, the Government will provide the CTSP with suitable premises to make it operational Activities planned under the Project: The project will provide technical assistance to the Unit in the area of public economy; the Unit will facilitate meetings and follow-up. It will also provide administrative support for the secretarial and organisational aspects (see Technical Annex 2) Key Expected Outcomes: The project will help to effectively operationalise the CTSP through the holding of regular meetings to coordinate and monitor the implementation of programmes and projects in economic and financial management. Half-yearly reports will be prepared that reflect the status of projects. Sub-Component 2: Strengthening of the Project Coordination and Implementation Unit (PCIU) Constraints and Challenges: The weaknesses observed in implementing PADIPOC include: (i) the absence of half-yearly meetings between the implementing and steering structures, (ii) the lack of overall vision of project activities by the steering structure, and (iii) inadequate capacity to plan and monitor the implementation of project activities. Dialogue between the authorities and donors led to the establishment of a structure that will be used for project implementation and coordination of public finance interventions by development partners operating in the country. As such, the PCIU is not a conventional Project Implementation Unit because it is not only responsible for implementing PADIPOC and PARCGEF, but also for managing funds from Guinea s other TFPs Activities Planned: The project will support the establishment of the team responsible for implementing and monitoring, comprising: a Coordinator, a procurement officer, a training specialist, a monitoring and evaluation specialist, an administrative and financial officer, and a qualified and experienced accountant. The Unit will be strengthened in line with the project it has to implement. All the material resources available to the PADIPOC Implementation Unit will be transferred to the PCIU. The PCIU will come under the supervision of the CTSP and will be the body responsible for implementing activities planned for projects concerned (see Technical Annex 2). Given the volume of training activities involved in the proposed project, specific technical assistance will accompany the implementation of these activities. 9

25 Key Expected Outcomes: The project will help to improve the performance of PADIPOC and PARCGEF (the subject of this report), as well as all other projects financed by other TFPs, thus reducing management costs by avoiding the proliferation of implementation units. It will also contribute to maximizing the synergy between the activities of partners by strengthening the country s ownership of such projects and programmes. 2.2 Technical Solutions Adopted and Alternatives Explored During project preparation, several options were advanced notably regarding project anchoring, the number of structures to support, the scale of investments to make and coverage of all constraints in certain structures likely to be selected. In the face of all these issues, tradeoffs had to be made to: (i) steer project objectives towards targets consistent with the financial package available; and (ii) take into account synergies with the interventions of other TFPs. The effectiveness sought in the support provided is the ongoing effort to increase State revenue and streamline public expenditure Strengthening institutional capacity in economic and financial governance is essential in the context of implementing the PRSP. It is to support the Government in its institutional reform efforts that the Bank has committed to provide financial support through the funding of capacity building programmes under the PARCGEF, directed at key structures of the MEF (DNB, DNI, DGD ) and the MPC (DNP), as well as in ministries and departments in charge of governance in the extractive and forestry sectors. The National Treasury and the Public Accounts Department both involved in revenue mobilisation - did not receive support from the Bank due to the distribution of roles among donors (the World Bank is to provide support in this area, once the conditions for its re-engagement with Guinea are met). 2.3 Project Type PARCGEF is an institutional support project financed by an ADF grant, and is intended to consolidate the institutional reforms undertaken and the gains already obtained, including notably domestic resource mobilisation and improved governance in the productive sectors The institutional support that this project puts in place will create the conditions for moving towards the use of other national systems-based type of instruments, such as budget support. 2.4 Project Cost and Financing Arrangements The total cost of PARCGEF, excluding taxes and customs duty, is estimated at UA million, to be covered in full by the Bank from the ADF country resource allocation The following table gives a brief summary by component. The costs were determined based on the unit prices obtained in recent bids for similar services in Guinea, particularly during procurement for the implementation of PADIPOC. Besides the base cost, these estimates include a provision of 2% for physical contingencies and 3% for price escalation. Table 2.1 Estimated Cost by Component (in UA Million) Component USD Million UA Million % F.E. L.C. Total F.E. L.C. Total Total % in F.E. I. Improved Public Finance Management % 78.09% II. Improved Governance in Productive Sectors % 78.02% III. Coordination, Monitoring and % 15.07% Implementation of Programmes Total Base Cost % 67.91% Physical Contingencies (2%) % Price Escalation (3%) % Total Project Cost % 67.91% 10

26 Table 2.2 Detailed Project Cost by Expenditure Category (UA million) Code EXPENDITURE CATEGORY USD Million UA Million % Total % in F.E. F.E. L.C. Total F.E. L.C. Total 1 Goods % 73.6% 1.1 Computer Hardware and Software % 1.2 Furniture, Office Equipment and other % Goods 1.3 Vehicles % 1.4 Documents, Manuals and Publications % 2 Consultancy Services % 72.2% 2.1 Technical Assistance % 2.2 Training % 2.3 Study Trips % 2.4 Audit % 3 Operating Costs % 0.00% 3.1 Allowances for EP Members % 3.2 Other Operating Expenses % Total Base Cost % 67.9% Physical Contingencies % Price Escalation % Total Project Cost % 67.9% Table 2.3 Source of Financing (UA million) Source UA Million % of Total F.E. L.C. Total ADB ADF % GOVT. OF GUINEA % Total Project Cost % ADF will cover 100% of the project cost 4. This is founded on the analysis of the financing parameters under the new eligible expenditure policy, which reflects the country s fragile public finance situation resulting from the weight of the debt service, worsened by its failure to reach completion point, as well as the reasonable level of taxes and duties. Nonetheless, alternative measures are envisaged to ensure the Donee s ownership and commitment to the project, particularly the provision of suitable premises for the CTSP and the PCIU. Table 2.4 Estimated Costs by Expenditure Category (in UA Million) EXPENDITURE CATEGORY USD Million UA Million F.E. L.C. Total F.E. L.C. Total A. Goods B. Consultancy Services D. Operating Cost Total Base Cost Physical Contingencies (2%) Price Escalation (3%) PROJECT COST See «Bank Group Eligible Expenditures Policy, ADF/BD/WP/2007/72», ORPC,

27 2.5 Expenditure Schedule by Component and by Expenditure Category Table 2.5 Expenditure Schedule by Component (in UA million) Component Total % in F.E. I. Support to Improved Public Finance Management % II. Improved Governance in Productive Sectors % III. Coordination, Monitoring and Implementation of % Programmes Total Base Cost % Physical Contingencies (2%) Price Escalation (3%) Total Project Cost 2, % Table 2.6 Expenditure Schedule by Category (in UA million) Expenditure Category Total A. Goods B. Consultancy Services C. Operating Cost Total Base Cost Physical Contingencies (2%) Price Escalation (3%) Total Project Cost Project Target Area and Beneficiaries The main project beneficiaries are: (i) the entire government apparatus, whose operational structures will be strengthened, its institutional capacity built and resources increased; (ii) the department in charge of economic and financial administration, which will be able to streamline public expenditure management and mobilise additional domestic revenue that can be channelled to the social sectors; and (iii) the entire population of Guinea who will be the prime beneficiaries of jobs created, particularly through improved public sector efficiency and, thus, more effective socio-economic services. In addition, the population living around mining areas will receive financial allocations to fund community projects (schools, health centres...). Moreover, import/export companies will stand to gain from the trade facilitation that will result from a more modern and efficient customs service. 2.7 Participatory Process for Project Identification, Design and Implementation The participatory process included consultations with government beneficiary structures. During the preparation and evaluation mission, this process was further strengthened and extended to civil society (trade unions, non-governmental organisations, economic operators, etc.) The PARCGEF preparatory mission fielded in July 2010 held several working sessions with all project beneficiary structures including civil society, consumer representatives and employers, during which the main thrusts of the operation were selected and validated. Each beneficiary structure presented a detailed estimated action plan, and these estimates were 12

28 considered and updated during the appraisal mission. Civil society will be fully integrated into the Project Steering Committee Revision of the mining, forest and wildlife codes will be carried out with the participation of all stakeholders, namely the mining and forestry administration, civil society, village communities of the mining and forest areas, and mining companies. This will help to produce a legal framework acceptable to all, hence less subject to challenge in future. 2.8 Bank Group Experience and Lessons Reflected in Project Design As at 30 September 2010, Guinea s active portfolio comprised six ongoing operations, financed from ADF resources, amounting to a net total of UA million and disbursed up to 40.7%. The sector breakdown continues to be dominated by three key sectors, namely, agriculture (30%), social (23.3%) and infrastructure (42.2%). Multi-sector accounts for 4.5% of the total portfolio amount. Implementation of the Tombo-Gbessia Road Project and the Public Debt and Investment Management Capacity Building Support Project (PADIPOC) is behind schedule, with completion scheduled for This is due mainly to exogenous factors arising from the socio-political crises that the country has experienced and the recurrent sanctions for accumulation of arrears. Based on the last review conducted in 2009, the portfolio performance is deemed unsatisfactory overall, with a score of In the area of capacity building, Bank interventions have focused on improving public investment and public debt functions as well as public expenditure control, through the PADIPOC project, approved in July Through this support, progress has been made in debt and public investment management with the introduction of modern techniques, the preparation of procedures manuals, training and technical assistance. In addition, the capacity of institutions responsible for ex post control, particularly the General Inspectorate of Finance, has been strengthened with technical resources and tailored training. Procedures manuals for monitoring and verification have also been updated Lessons drawn from the PADIPOC project indicate that: (i) the approach adopted, targeting institutions responsible for ex post control, had its limitations owing to weaknesses in other departments involved in public finance management, particularly in the area of budget preparation and execution; (ii) the Bank s overestimating the capacity of the Guinean Administration to adopt the regulatory texts has resulted in the blockage of project activities, particularly at the Court of Audit and the Anti-Corruption Agency; and (iii) the institutional anchoring of project steering in one of the beneficiary structures did not allow for effective implementation and monitoring of activities because of the absence of an overall vision for the entire project The formulation of PARCGEF is based on these lessons, particularly in terms of assessing the institutional framework, beneficiary accountability and coordination with TFPs. The new institutional arrangement has provided enough innovation to improve effectiveness of project implementation, especially with regard to change of oversight and strengthening of the implementation unit (see description of Project Component 3). Moreover, this project complements PADIPOC and thus allows implementation of an integrated approach to public finance management. PARCGEF activities will focus on improving fiscal management and State revenue mobilisation while those of PADIPOC concentrate on strengthening public expenditure control institutions In addition, the Fragile States Facility (Window 3) will provide support to the Department of Economic Research and Forecasting. This will strengthen the activities to be conducted under PARCGEF, particularly in terms of strengthening the budgeting process. Lastly, 13

29 it is worth noting that the African Legal Support Facility could assist Guinea in negotiating/renegotiation contracts and complex transactions. To this end, it will be necessary to: (i) engage with the Guinean authorities; (ii) identify the technical assistance needs when negotiating mining contracts and resolving conflicts and disputes pending; and (iii) determine the terms and conditions for the Bank s intervention. 2.9 Key Performance Indicators The key performance indicators identified and the expected outcomes at project completion are those listed in the results-based logical framework. With regard to improved credibility in public finance management, the main expected outcomes are: (i) reduction of the proportion of extra-budgetary expenditure from 80% in 2010 to 20% by 2014; (ii) improvement in the lead time for submission of the Budget to the National Assembly; (iii) reduction of the average time per year required for a company to pay taxes from 416 hours in 2009 to 300 hours by 2013 (the average in sub-saharan Africa); and (iv) reduction of the time required to complete a customs clearance procedure from 96 hours in 2009 to 48 hours by Concerning the strengthening of governance in the extractive and forestry sectors, it is expected that the status of Guinea in the EITI accession process would be validated in 2011 while at least 200 mining licenses, based on the revised mining code, would be awarded by December For the forestry sector, 90% of logging permits are to be governed by the revised code no later than end Finally, it is also expected to increase the area covered by dense forest by 10 ha annually from 2012 (the forest coverage in 2010 is about ha) These indicators will be verified using data collected by the unit in charge of project implementation, which has proven experience in data collection and which will have its capacity strengthened. The provision of half-yearly progress reports and other reference documents will be made in liaison with the PCIU and during Bank missions. PARCGEF performance will be measured by comparing project implementation data from year to year. III. ENVIRONMENTAL AND SOCIAL IMPACT 3.1 Environment The project is classified under Category III based on the Bank s criteria and will therefore have no adverse effect on the environment. On the contrary, the project will have a positive effect on the environment by improving the management of Guinea s forest resources through a review of the existing regulatory frameworks for the exploitation of such resources. This will help Guinea to achieve MDG No. 7 5 on the sustainable development and management of natural resources, particularly forests. This is even more important considering that mining often affects the forest cover by causing the degradation of vast tracts of land, both in depth as well as on the surface, rendering such areas unfit for farming. 3.2 Climate Change Preserving the climate and the ecosystem is of vital importance to the country. This is borne out by Guinea s participation in all international climate activities organised since the Intergovernmental Group on Climate Studies (IGCS) was set up. By signing the United Nations Framework Convention on Climate Change (UNFCCC) in June 1992 and ratifying it in May 1993, Guinea demonstrated its will to participate in the global effort to protect the climate. 5 MDG 7: To ensure environmental sustainability. Indicators: (i) Forests as a percentage of total area; and (ii) percentage of protected areas for biological preservation to total area. 14

30 3.2.2 By sector of activity, the most important source of CO 2 is forest conversion and land use change, followed by the energy sector. Methane emissions come from the energy sector (7.5%), waste (5%), agriculture (35.5%) and forestry and land use change (52%). Carbon dioxide (CO 2 ) is absorbed at 101, Gg by the various plant formations that cover the country (abandonment of forests and changes in forest stands) The project will have positive impacts on REDD 6 (Reducing Emissions from Deforestation and Forest Degradation). It is an acknowledged fact that a mitigation of global warming will not be achieved without the inclusion of forests in an international system. This fact formed the basis for the signing of an agreement in Bali in 2007 on the urgent need to take new measures to reduce emissions from deforestation and forest degradation. The aim of these measures, referred to as REDD, is to tilt the economic balance towards the sustainable management of forests so that their economic, environmental and social goods and services will benefit countries, communities and forest users while contributing to significant reductions in greenhouse gas emissions. Its initial objective is to reduce greenhouse gas, but can also have additional benefits such as conserving biodiversity and poverty alleviation By strengthening the mining sector legal framework and improving the management of forest resources, the project will contribute to mitigating the effects of climate change and to sustainable forest management. 3.3 Gender Women represent 51% of the total population of 10 million inhabitants. They are, however, under-represented in public administration. The project will ensure that women form at least 30% of the staff of beneficiary institutions to receive training. Furthermore, the implementation of Guinea s economic simulation model will take gender mainstreaming into account. This will allow economic policies and budgetary allocations to be adapted to the needs of each population category. Moreover, the mining law, whose review will be supported by the project, makes provision for mining companies to support villages with local infrastructure; mining operations can have multiplier effects on the farming activities of neighbouring communities, particularly women. 3.4 Social Socially, PARCGEF will help to improve budget preparation and, in particular, allocations to the priority sectors noted in the PRSP: Health, Education, Urban Development and Housing. The project will also improve social affairs whose allocation in the National Development Budget stood at 59.5% in The community development approach will make it possible for the population living around the mining areas to benefit from the mining companies in the form of socio-economic infrastructure such as schools, health centres and rural roads Another Bank project, the Sustainable Social Development Project in Middle and Upper Guinea Phase II (Guinea s two poorest regions) will complete the social impact activities of PARCGEF. Private Sector Development Programme (PDSP) II aims to reduce poverty in Guinea by promoting and developing businesses, creating employment and strengthening local level governance. 6 REDD: Reducing Emissions from Deforestation and Forest Degradation 7 Ref Annual Macroeconomic Guidelines, National Directorate of Planning, Ministry of Planning and Cooperation, page 21 15

31 IV. IMPLEMENTATION 4.1 Implementation Arrangements Institutional Framework The institutional framework for managing the Project comprises: (i) the Programmes Technical Monitoring Unit (CTSP); and (ii) the Project Coordination and Implementation Unit (PCIU) 8. The CTSP, located in the Ministry of Economics and Finance, will be responsible for coordinating and monitoring project activities by supervising their performance. It will assist the Economic and Financial Programmes Steering Committee (CPP). The PCIU will be the implementation agency for this Project and for PADIPOC. It will be in charge of project technical aspects, procurement and financial management, and will consequently be strengthened to take into account the required expertise for its implementation. Knowing the post-crisis conditions in Guinea and drawing lessons from the PADIPOC implementation, the Bank collaborated with the development partners based in the country such as the UNDP, the World Bank, the European Union, the French Development Agency and Cooperation Française (French Cooperation Agency), which have accepted the PCIU as the sole implementation agency for capacity building in economic and financial reform projects, to avoid the duplication of implementation units and facilitate the effective coordination of donor interventions. This synergy in TFP interventions is in line with the commitments set forth in the Paris Declaration. When PADIPOC is completed, the Government will continue to provide the PCIU with appropriate offices Procurement Arrangements Procurement of all Bank-financed goods, works and consulting services will be done in accordance with its Rules of Procedure for the Procurement of Goods and Works, or, as appropriate, the Rules of Procedure for the Use of Consultants, based on standard Bank bidding documents. The Project Coordination and Implementation Unit (PCIU) will be responsible for the procurement of goods, works, service contracts, consultancy services, training and other procurements as detailed in Annex VII. PCIU s resources, capacity, expertise and experience are presented in detail in Annex The assessment of the PCIU s capacity has revealed that it needs its capacity enhanced in the area of procurement. To this end, a procurement consultant will be recruited to help the PIU with its procurement. Consequently, all procurement will be done in conformity with the ex ante review procedure under the conditions laid down in Annex Financial Management Arrangements Public finance arrangements specifically, the financial information circuit and media are generally not used in the administrative, financial and accounting management of public sector investment projects funded by the Bank in Guinea. To meet PARCGEF s needs, a financial management system will be put in place to ensure transparency, traceability and reliable financial information on the resources invested in the project. The PCIU will be in charge of the financial management of the project and a private accounting and financial system will be used to manage financial operations. The general and analytical accounting for the project will be done in conformity with the OHADA system, using appropriate software. Since the PCIU will work with both PADIPOC and PARCGEF, it will use the software procured and installed by PADIPOC. 8 The composition and duties of the CPP, CTSP and PCIU are described in Technical Annex 2. 16

32 Since the PADIPOC accounting system has not worked very well due to the limited capability of the accounting team, a new, better qualified and experienced team will be recruited on a competitive basis for PARCGEF financial and accounting management This team will comprise two qualified persons: (i) an administrative and finance officer assisted by (ii) a qualified accountant responsible for keeping the accounts and preparing financial statements. The accountant will be given extra training in the use of the software, and one of the Bank s financial management experts will be on hand to assist as soon as the project starts to ensure that a good financial management system is put in place and that the accountant actually has the skills required. During the period that the two projects (PADIPOC and PARCGEF) will run concurrently, the same PCIU accounting team will keep two separate accounts, using the same software The internal control system, which will be put in place by the Coordinator based on the major risks identified, should include all the control and supervision activities to ensure proper implementation of operations, protection of the means of payment and project assets. Thus, management of project resources and preparation of annual financial statements for auditing will be the responsibility of the PCIU, using a Bank-approved manual of administrative, financial and accounting procedures, and a general and analytical accounting software Disbursement Arrangements It is expected that the ADF grant will be disbursed over a maximum period of 48 months from the date of first disbursement. Operating expenses covered by the ADF grant will be disbursed using the Special Account method. Therefore, the project will open a Special Account with a bank approved by the ADB Group to receive funds from the ADF grant. The opening of this account will constitute a condition precedent to disbursement of the grant. The Special Account will be provisioned by an initial deposit based on a four-month schedule of activities previously approved by the Bank. If necessary, the Account will be replenished upon presentation of a request and evidence of using at least 50% of the previous disbursement. The request for replenishment should be accompanied by a schedule of activities for the next 12 months and supporting documents for expenses made. In support of the request for the initial deposit or for replenishing the Special Account, the Borrower must present an annual budget and budget estimates for project activities for a period not exceeding six months. Supporting documents for the Special Account must be presented for each replenishment or within six months of the payment of the deposit, or of replenishing the Special Account Disbursements in respect of contracts for equipment, supplies and auditing of accounts will be done by direct payment to suppliers based on contracts signed with them. However, payments below UA 20,000 can be made from the Special Account with the prior approval of the Bank (with the exception of contracts for auditing services). Nevertheless, in the case where the Special Account is adequately provisioned, the PCIU may make a payment above UA 20,000 with the Bank s prior consent. After verifying the conformity of the project s suppliers and service providers with the specifications, the PCIU will prepare the requests for disbursement and submit them directly to the Bank for payment. It shall also be the duty of the PCIU to inform the CTSP of the direct payments Audit Arrangements Financial statements for PARCGEF will be prepared by the PCIU, using the appropriate accounting software. The statements will be verified by an independent auditing firm, which will be recruited on a competitive basis in line with Bank procedures, and then sent to the Bank latest six months after the end of the financial year in conformity with Bank directives. Four annual audits of 17

33 the project will be conducted during the project implementation period by an independent auditor in accordance with specific terms of reference for projects funded by the Bank Group and in conformity with international auditing standards (IFAC ISA). These audits will be covered by the ADF grant. The project audit will provide specific facts on financial statements, certified statements of expenditure and special accounts. 4.2 Monitoring of Project Activities The monitoring/evaluation system will be based on: (i) scheduled supervision twice a year; (ii) report of meetings of the Programme Monitoring Technical Unit; and (iii) the mid-term review to assess project implementation performance. Drawing lessons from the performance of PADIPOC, which fell short of expectations owing to an unstable socio-political environment since 2006, a specialist will join the PCIU to monitor/evaluate the indicators throughout the project implementation phase. At the end of project implementation, the Bank will prepare a completion report. An external audit of the project s financial management will be conducted at the end of each financial year by a competent independent audit firm, whose selection procedure would have received prior Bank approval. 4.3 Governance The Bank s experience with Guinea has shown that project governance practices and control systems are satisfactory, albeit rather fragile. At the end of the procurement process for previous Bank-financed projects, particularly PADIPOC, no complaints were made by bidding firms. However, the PCIU must undergo further training in Bank procurement and disbursement procedures, to build its capacity and improve knowledge of Bank rules and procedures For PARCGEF, the Bank s usual control and verification system will remain in force throughout project implementation. These include the procurement procedures, review of bidding documents, supervision missions, disbursement procedures and external audit of project accounts. Moreover, an audit report of project accounts will be submitted to the Bank as per the provisions of the General Conditions Applicable to Grant Agreements. 4.4 Sustainability The first factor for Project sustainability lies in the Government s determination to improve public revenue mobilisation and streamline public spending. The second is the training that officers of the beneficiary institutions will receive. The knowledge and skills acquired in modern budget procedures and identification of revenue areas will help the beneficiaries to improve on their performance and disseminate the good practices learnt. Therefore, the project is expected to enable Guinea to build its capacity in budget management and public revenue mobilization, in addition to maximizing its use to reduce poverty, which has been on the rise since 1996 (43% compared to 52% in 2008). Lastly, support to the mining and forestry sectors will lead to sustainable management of resources and sustained mobilisation of Government receipts, with the transparency required by EITI. 4.5 Knowledge Building The type of knowledge to emerge from PARCGEF comprises best practices in public management and planning. The best practices will be disseminated within the Administration through training, procedure manuals and training manuals. Knowledge on institutional capacity building and implementation of a reform programme should also emerge from the project. 18

34 Knowledge will also be disseminated within the Bank, through the project monitoring reports, the completion report and project post-evaluation report Moreover, studies to be conducted to diagnose the country s tax system and the contribution of the productive sectors to the national economy will help to develop knowledge on these sectors and guide recommendations for improving their participation in Guinea s growth and development. 4.6 Major Project Risks and Mitigative Measures The major risks identified at appraisal and the mitigative measures are as follows: Risk 1: Possible chaotic political situation in the election aftermath that could bring reforms of public finance and improvement of governance in productive sectors grinding to a halt. Mitigative measure: Development partners have urged Government to continue with the public finance reforms and improvement of economic governance in the productive sectors to sustain implementation of the PSRFP and PRSPII, to reach HIPCI completion point in Risk 2: Inadequate qualified human resources in beneficiary institutions to ensure achievement of project activities. Mitigative measure: PARCGEF capacity building programmes as part of targeted in-service training and learning through technical assistance. Risk 3: Non-implementation of recommendations made by studies, legal instruments and new public finance management procedures. Mitigative measure: Enhancing monitoring of activities implemented by the PCIU with the support of a monitoring/evaluation expert, and subjecting future projects to the application of new legal instruments. Risk 4: Delays by beneficiaries to implement reforms. Mitigative measure: Signing of results-based performance contracts between beneficiaries and MEF as well as by PCIU and CTSP. V. LEGAL FRAMEWORK 5.1 Legal Instrument The financial instrument proposed to the Republic of Guinea is a grant of UA million. 5.2 Conditions Associated with Bank s Intervention The Grant Protocol Agreement shall enter into force on the date of its signature by the Government of Guinea and the African Development Bank Group. The first disbursement of grant resources shall be subject to effectiveness of the Grant Protocol of Agreement and fulfilment by the Donee, to the satisfaction of the Bank Group, of the following specific conditions: - Provide proof, in the original, of the opening on behalf of the project at a bank acceptable to ADB, of a special account to receive the grant resources, specifying: 19

35 (i) the bank references of the account; and (ii) the name of the person(s) authorised to make disbursements on the account (see paragraph ) ; - Commit to provide functional offices to PARCGEF upon completion of PADIPOC (see paragraph ); - Provide proof of the availability of functional premises to accommodate the Programmes Monitoring Technical Unit (see paragraph ). 5.3 Compliance with Bank Policies The project complies with all Bank policies. VI. RECOMMENDATIONS 6.1 Management recommends that the Board of Directors of the Bank Group approve the proposed ADF grant of UA to the Republic of Guinea for the purposes and subject to the conditions stipulated in this report. 20

36 Appendix I REPUBLIC OF GUINEA ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT (PARCGEF) APPRAISAL REPORT Guinea COMPARATIVE SOCIO-ECONOMIC INDICATORS Year Guinea Africa Develo- ping Develo- Countrie Countrie Basic Indicators Area ( '000 Km²) Total Population (millions) , Urban Population (% of Total) ,9 39,6 44,8 77,7 Population Density (per Km²) ,0 3,3 66,6 23,1 GNI per Capita (US $) Labor Force Participation - Total (%) ,0 41,2 45,6 54,6 Labor Force Participation - Female (%) ,1 41,2 39,8 43,3 Gender -Related Dev elopment Index Value ,446 0, ,911 Human Develop. Index (Rank among 182 countries) ,514 n.a n.a. Popul. Liv ing Below $ 1 a Day (% of Population) ,8 25,0 Demographic Indicators Population Growth Rate - Total (%) ,4 2,3 1,3 0,7 Population Growth Rate - Urban (%) ,8 3,4 2,4 1,0 Population < 15 y ears (%) ,8 56,0 29,2 17,7 Population >= 65 y ears (%) ,3 4,5 6,0 15,3 Dependency Ratio (%) ,3 78,0 52,8 49,O Sex Ratio (per 100 female) ,0 100,7 93,5 94,8 Female Population y ears (% of total population) ,9 48,5 53,3 47,2 Life Ex pectancy at Birth - Total (y ears) ,4 55,7 66,9 79,8 Life Ex pectancy at Birth - Female (y ears) ,4 56,8 68,9 82,7 Crude Birth Rate (per 1,000) ,2 35,4 21,5 12,0 Crude Death Rate (per 1,000) ,7 12,2 8,2 8,3 Infant Mortality Rate (per 1,000) ,1 80,0 49,9 5,8 Child Mortality Rate (per 1,000) ,7 83,9 51,4 6,3 Total Fertility Rate (per woman) ,3 4,5 2,7 1,8 Maternal Mortality Rate (per 100,000) ,0 683,0 440,0 10,0 Women Using Contraception (%) ,5 61,0 75,0 Health & Nutrition Indicators Phy sicians (per 100,000 people) ,5 42,9 78,0 287,0 Nurses (per 100,000 people)* ,9 120,4 98,0 782,0 Births attended by Trained Health Personnel (%) ,0 50,5 63,4 99,3 Access to Safe Water (% of Population) ,0 64,0 84,0 99,6 Access to Health Serv ices (% of Population) ,7 80,0 100,0 Access to Sanitation (% of Population) ,0 38,5 54,6 99,8 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS ,6 4,5 1,3 0,3 Incidence of Tuberculosis (per 100,000) ,0 313,7 161,9 14,1 Child Immunization Against Tuberculosis (%) ,0 83,0 89,0 99,0 Child Immunization Against Measles (%) ,0 74,0 81,7 92,6 Underw eight Children (% of children under 5 y ears) ,8 25,6 27,0 0,1 Daily Calorie Supply per Capita Public Ex penditure on Health (as % of GDP) ,8 5,5 4,0 6,9 ped ,5 2,0 1,5 1,0 0,5 0, GNI per capita US $ Guine a Africa Population Growth Rate (%) Guinea Africa Life Expectancy at Birth (years) Guine a Africa Education Indicators Gross Enrolment Ratio (%) Primary School - Total ,9 100,2 106,8 101,5 Primary School - Female ,6 91,7 104,6 101,2 Secondary School - Total ,8 35,1 62,3 100,3 Secondary School - Female ,4 30,5 60,7 100,0 Primary School Female Teaching Staff (% of Total) ,6 47,5 Adult Illiteracy Rate - Total (%) ,4 19,0 Adult Illiteracy Rate - Male (%) ,8 13,4 Adult Illiteracy Rate - Female (%) ,4 24,4 Percentage of GDP Spent on Education ,7 4,5 5, Infant Mortality Rate ( Per 1000 ) 20 Environmental Indicators Land Use (Arable Land as % of Total Land Area) ,0 6,0 9,9 11,6 Annual Rate of Deforestation (%) ,7 0,4-0,2 Annual Rate of Reforestation (%) ,9 Per Capita CO2 Emissions (metric tons) ,1 1,1 1,9 12, Guine a Africa Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update : septembre 2010 UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available.

37 REPUBLIC OF GUINEA Appendix II ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT (PARCGEF) APPRAISAL REPORT Summary Table of Bank Group Operations, as of 30 September 2010 (amounts in UA million)* Project Name Approval Date Signature Date Effectiven ess Date Date of 1st Disbursem ent Closing Date Amount Approved Amount Disburse d Percentag e Disbursed Period of Fulfilme nt of Conditi ons for Effectiv eness (mnths) Period of Fulfilme nt of Cond. Preced. to 1st Disburs. (mnths) Project Age (yrs) Annual Disburs. Rate Period Extended (yrs) Status Agricultural Sector Haute Guinée Rural Water Supply Proj. ####### 09-déc-02 ####### ####### 31-déc-10 15,00 13,70 91,3% 6,8 6,8 8,2 11,9% 3,6 Non PP Nerica Rice Dissemination Proj ####### 13-févr-04 ####### ####### 31-déc-10 3,00 1,33 44,4% 18,0 18,0 7,2 7,8% 0 Non PP 18,00 15,03 83,5% 8,7 8,7 8,1 11,4% Infrastructure Sector Tombo-Gbessia Road Rehab. Proj 13-juil juil juil juin déc-10 8,25 2,49 30,1% 0,3 60,4 5,3 5,7% 0 Non PP Tombo-Gbessia Road Proj. Suppl. Grant 29-avr mai mai juin déc-12 5,17 0,00 0,0% 0,5 14,2 1,5 0,0% 0 Non PP Conakry Road Network Rehab. Proj. 29-oct mai mai août déc-13 12,00 0,00 0,03% 6,5 21,5 2,0 0,02% 0 Non PP 25,42 2,49 9,8% 3,2 32,6 3,0 3,6% Social Sector Education Dev. Proj. (Education IV) 13-juil Juil juil oct déc-11 14,00 6,12 43,7% 0,3 2,9 5,3 8,2% 0 Non PP 14,00 6,12 43,7% 0,3 2,9 5,3 8,2% M ultisecto r PADIPOC Debt and Investment Management 26-juil sept sept janv déc-10 2,50 0,77 30,8% 1,7 5,4 4,3 7,4% 0 Non PP 2,50 0,77 30,8% 1,7 5,4 4,3 7,4% T OT A L 59,92 24,41 40,7% 4,1 17,3 5,1 8,0% TOTAL (excluding infrastructure projects being started) 42,75 24,41 57,1% 3,9 16,6 6,4 9% (*) NB: An aluminium production project under the Private Sector Window, amounting to UA million, was approved on 3 Dec 2008 Non PP: Non-Problem Project

38 Appendix III REPUBLIC OF GUINEA ECONOMIC AND FINANCIAL MANAGEMENT CAPACITY BUILDING SUPPORT PROJECT (PARCGEF) APPRAISAL REPORT Administrative Map 0

39 FONDS AFRICAIN DE DEVELOPPEMENT Langue : FRANÇAIS Original : Français REPUBLIQUE DE GUINEE PROJET D APPUI AU RENFORCEMENT DES CAPACITES DE GESTION ECONOMIQUE ET FINANCIERE (PARCGEF) ANNEXES TECHNIQUES DEPARTEMENT DE LA GOUVERNANCE, ET DES REFORMES ECONOMIQUES ET FINANCIERES OSGE Septembre

40 LISTE DES ANNEXES TECHNIQUES Annexe technique 1 Stratégie du Groupe de la Banque Pour la Guinée Annexe technique 2 Architecture institutionnelle de la coordination, du suivi et de la mise en œuvre des programmes économiques et financiers Annexe technique 3 Profil Pays Annexe technique 4 - Coûts détaillés du projet Annexe technique 5 - Calendrier des Dépenses par catégories de dépenses (en million UC) Annexe technique 6 - Matrice conjointe des PTFs pour les réformes des finances publiques Annexe technique 7 - Domaines d intervention des bailleurs de fonds en Guinée Annexe technique 8 Note sur l initiative de transparence dans les industries extractives en Guinée ITIE G Annexe technique 9 Projet de Termes de Référence du coordonnateur de l UCEP Annexe technique 10 Projet de Termes de Référence de l assistance technique en formation Annexe technique 11 Projet de Termes de référence pour l élaboration d un modèle de préparation budgétaire pour la Direction Nationale du Budget Annexe technique 12 Dispositions de passation des marchés et de Gestion Financière du Projet Annexe technique 13 Liste des documents de référence

41 REPUBLIQUE DE GUINEE PROJET D APPUI AU RENFORCEMENT DES CAPACITES DE GESTION ECONOMIQUE ET FINANCIERE (PARCGEF) RAPPORT D EVALUATION Annexe technique 1 Ŕ Stratégie du Groupe de la Banque Pour la Guinée - 2 -

42 REPUBLIQUE DE GUINEE PROJET D APPUI AU RENFORCEMENT DES CAPACITES DE GESTION ECONOMIQUE ET FINANCIERE (PARCGEF) RAPPORT D EVALUATION Annexe technique 2 Ŕ Architecture institutionnelle de la coordination, du suivi et de la mise en œuvre des programmes économiques et financiers - 3 -

43 Composition Missions Comité de Pilotage des Programmes Economiques et Financiers Ŕ CPP Décret n 0931 portant création du CPP datant du 13/04/2010 Le Premier Ministre, Président Le Ministre de l Economie et des Finances, Vice-président Le Ministre Secrétaire Général de la Présidence Le Ministre des Mines et de la Géologie Le Ministre de l Hydraulique et de l Energie Le Ministre du Plan et de la Coopération Internationale Le Ministre de la Fonction Publique, de la Réforme Administrative, du Travail et de l Emploi Le Ministre du Commerce, de l Industrie et de la Promotion du Secteur Privé Le Gouverneur de la Banque Centrale Le Président de la Cellule Technique de Suivi des Programmes, Rapporteur Le Conseiller principal du Ministre chargé des Finances, Président Un Conseiller du Premier ministre, Vice-président Un Conseiller du Ministre chargé des Finances, Secrétaire Permanant Un Représentant du Ministre chargé des Mines et de la Géologie Un Représentant du Ministre chargé de l Hydraulique et de l Energie Un Représentant du Ministre chargé du Commerce et de l Industrie Un Représentant du Ministre chargé de la Fonction Publique Le Directeur National du Budget, MEF Le Directeur National des Etudes économiques et de la Prévision, MEF, 1 er Rapporteur Le Directeur National du Plan, MPCI, 2 ème Rapporteur Le Directeur général des Etudes Economiques et Monétaires, BCRG Le Directeur général de l Exploitation, BCRG Le Directeur de la Politique monétaire et du Crédit, BCRG Cellule Technique de Suivi des Programmes Ŕ CTSP Arrêté du MEF n 0933 du 13/04/2010 La CTSP peut faire appel à toute personne-ressource de l Administration publique et de la Banque Centrale en fonction des sujets à débattre La CTSP sera appuyée par un groupe d experts dans les thématiques concernées par les programmes de réformes La CTSP sera renforcée par un assistant technique qui assurera l animation des réunions et le suivi des actions ainsi que par une assistante administrative pour assurer le secrétariat de la CTSP et les aspects organisationnels Assurer la coordination et le suivi des programmes économiques et financiers : - Proposer des amendements aux politiques économiques et financières ainsi qu aux réformes structurelles - Valider les propositions contenues dans les notes techniques ou rapports de la Cellule Technique de Suivi des Programmes (CTSP) - Conduire les négociations avec les partenaires au développement dans le cadre des programmes économiques et financiers Dans le cadre de sa mission, le CPP est appuyé par la CTSP Le CPP se réunit une fois par mois La mission de la CTSP est d assister le CPP dans la coordination et le suivi des programmes : - Assurer le suivi de la mise en œuvre des mesures de politiques économiques et financières du gouvernement - Centraliser la collecte, le traitement, l analyse et la diffusion des données et informations économiques et financières - Evaluer les politiques sectorielles et s assurer de leur cohérence avec les politiques économiques et financières et les réformes structurelles - Préparer et mener les discussions techniques dans le cadre des missions de revue des programmes négociés avec les institutions financières internationales et les autres partenaires au développement - Veiller au renforcement de la coordination des actions des bailleurs de fonds - Suivi de la mise en œuvre des projets : validation des budgets et rapports d avancement - 4 -

44 Un Coordonnateur Un chargé d acquisitions Un expert en formation international Un expert de formation national Un spécialiste en suivi évaluation Un comptable Un assistant administratif Un chauffeur Un planton Composition Unité de Coordination et d Exécution de Projets Missions La mise en œuvre quotidienne des activités des projets, conformément aux manuels des procédures administratives, comptables et financières des pourvoyeurs des fonds Coordonner les activités confiées aux structures bénéficiaires Elaborer les programmes d activité annuels et trimestriels et superviser l élaboration des budgets annuels et trimestriels des projets Production de rapports d avancement périodiques La Cellule sera renforcée en fonction des projets qu elle sera amenée à mettre en œuvre - 5 -

45 REPUBLIQUE DE GUINEE PROJET D APPUI AU RENFORCEMENT DES CAPACITES DE GESTION ECONOMIQUE ET FINANCIERE (PARCGEF) RAPPORT D EVALUATION Annexe technique 3 Ŕ Profil Pays - 6 -