PROJECT INFORMATION DOCUMENT (PID)APPRAISAL STAGE

Report No.: AB5103Project Name SN - Economic Governance ProjectRegion AFRICASector Public administration- Industry and trade (40%); Law and justice

(40%); General public administration sector (20%)Project ID P113801Borrower(s) GOVERNMENT OF SENEGALImplementing Agency

Cellule d’Exécution Administrative et Financière (CEDAF)Address : Rue 55 x 70, Fann Hock , Dakar, SénégalTel/Fax: +221 33 842 72 99

Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined)Date PID Prepared October 14, 2009Date of Appraisal Authorization

December 14, 2009

Date of Board Approval February 18, 2010

1. Country and Sector Background

Senegal is located on the West Coast of Africa, and is part of the West African Economic and Monetary Union (WAEMU). With an estimated population of 12 million, its economy is dominated by several strategic sectors: groundnuts, fisheries, and services. Senegal has an average per capita income of approximately US$820 (2007) and ranks 153 of 177 countries in the 2007 UN Human Development Index. The informal sector accounts for approximately 60 percent of its economy. The importance of the agricultural sector has declined over time, from almost 15 percent of GDP in 1960 to 7 percent in 2004. Its rural economy suffers periodically from drought and lacks access to basic services and infrastructure. The country’s challenges are compounded by the fact that that almost half of the population lives in cities, including 30 percent in Dakar and its surrounding areas. The urbanization ratio is projected to increase by as much as 60 percent by 2015. Since the mid-1990s, Senegal’s macroeconomic performance has been encouraging, with an average annual real gross domestic product (GDP) growth of nearly 5 percent annual over a 10-year period. This was the first sustained increase in average per capita growth since independence in 1960, and was supported by a stable overall macroeconomic environment. For much of this time, growth has been driven by tourism, construction, and telecommunication. Growth was supported by a significant increase in foreign direct investment (FDI) since 2003, as well as significant debt forgiveness within the Heavily Indebted Poor Countries (HIPC) initiative/Multilateral Debt Relief Initiative (MDRI).

Senegal’s economic performance has been uneven since 2006. Real GDP growth decreased by 1 to 2 points from the previous trend, while inflation increased more than 3 times (while still remaining single digit), and the fiscal and external positions deteriorated sharply. The overall fiscal deficit thus rose from 2.5 percent of GDP during 2003–05 to 4.7 percent in 2006–08, leading to the first accumulation of arrears vis-à-vis the private sector since 1997. The

deterioration of the fiscal deficit has been associated with a widening of the current account deficit from 6.7 percent of GDP in 2003–05 to more than 10 percent of GDP in 2006–08. This gradual deterioration was driven by a strong domestic demand, mainly from the public sector, and lackluster export performance. The slippage in the macroeconomic framework also was explainable due to the unfavorable international market conditions. These were, in particular, higher commodity prices (oil prices since 2006 and food prices between mid-2007 to mid-2008) as well as internal mismanagement and governance issues of some key enterprises in the energy and mining sectors (the largest exporting firm, ICS (Industries Chimiques du Sénégal); SAR; and the state-owned electricity company, SENELEC).

As stated in its Poverty Reduction Strategy Paper (PRSP) and Accelerated Growth Strategy, the Government of Senegal intends to reduce poverty by half by 2015.1 To do so, Senegal needs to increase its annual growth rate 4 percent to 7 percent or more. Mindful that this rate of growth will not be generated by the public sector, and that additional job creation in the formal sector has been limited, the Government has adopted a strategy that makes the private sector the engine of its economy. The government also has determined that, to foster private sector growth, it would need to improve the investment climate and economic governance. To this end, the government adopted one strategy to improve the investment climate and another to fight corruption and improve economic governance. With support provided through the World Bank’s ongoing Private Investment Promotion Project (PIPP), the Government already has taken concrete actions to improve the investment climate. As a result, the 2009 Doing Business Report ranked Senegal the best performer in Sub-Saharan Africa in annual improvement of the investment climate. Despite this progress, Senegal’s investment climate needs significant improvement. This was well captured in the 2007 Investment Climate Assessment, which showed that private firms faced a myriad of constraints when doing business in Senegal, including poor access and quality of electricity and a high level of corruption. Moreover, the country is still ranked 146 of 181 countries in the 2009 Doing Business report. As a result, Senegal wants to further improve its investment climate to meet the level of an average OECD country. This would contribute to creating the conditions for a greater number of small and medium enterprises to move from the informal into the formal economy and help generate an economic growth that also creates formal sector employment. Moreover, Senegal intends to consolidate these improvements through setting up better access to justice and improved economic governance.

Regarding the improvement of the investment climate, the Senegalese authorities reaffirmed the critical importance of addressing the main constraints to fostering private sector investment and increased productivity––in a context of worldwide financial crisis––during the Presidential Investment Council held in November 2008. Presided over by the head of state, the participants affirmed that obtaining additional private investment would depend on the effective implementation of investment climate reforms, including in these three areas: (a) enforcing contracts, (b) closing down a business, and (c) protecting investors. Addressing these constraints will require that the Project take into account the fact that some important aspects of the investment climate in Senegal are established by the Organization for the Harmonization of Business Law in Africa (OHADA) or Organisation pour l’Harmonisation en Afrique du Droit des Affaires in French. The Uniform Act which aims at harmonizing business law in 16 countries

1 The overall poverty rate is estimated at 57%.

in Africa establishes the common rules governing the establishment, operation, and closing down of businesses. These rules can be changed only at the regional level. Another g tecTA is being provided to the OHADA Secretariat by the IFC, part of the World Bank Group, to address constraints contained in the OHADA texts.Other constraints to additional investment highlighted were (a) the high cost of electricity and its inadequate quality, (b) the significant backlog of government debt to the private sector; (c) the difficult access to land, and (d) concerns over macroeconomic stability. These concerns are being addressed by other Bank instruments and other donor support.

The Justice Sector Program (PSJ) also highlights its role in contributing to an improved climate as well as a number of challenges that need to be overcome to improve the sector’s performance and foster a greater adherence to the rule of law and increased credibility and transparency of the justice sector. This improved performance will depend on the effective implementation of the PSJ in three key areas. These include (a) improving institutional capacity to support the effective implementation of the PSJ, which faces severe resource constraints (material, financial, and human); (b) broadening access to justice; and (c) improving the availability and analysis of data on the justice sector’s performance, to be able to monitor the sector’s performance in a periodic and timely manner and adopt corrective measures, when required.

The Economic Governance2 Project will contribute to the establishment of this improved performance through focused assistance that fosters an improved effectiveness of justice and a better investment climate. In addition, the Project will help improve economic governance through the following actions: (a) strengthening the Cellule d’Exécution Administrative et Financière (CENTIF); (b) strengthening the Public Procurement Investigation Unit, and (c) fostering business-led actions against corruption.

2. Objectives

The proposed Development Objective is to improve aspects of the functioning of the justice sector relevant to the investment climate. The key expected outcomes of the Project are (a) enhanced effectiveness of justice, as measured by the number of cases judged and the speed at which they are judged; (b) improved investment climate, as reflected by the number of commercial cases being enforced and the reduction in time to enforce these contracts and (c) strengthened CEDAF, as measured by its ISO 9001 quality management certification. Additionally, the Project will improve the effectiveness of two key economic governance agencies Cellule Nationale de Traitement des Informations Financières (CENTIF); and Investigation Unit of the Public Procurement Agency and an increase in the number of firms that adopt a no-bribes integrity pact and obtain an ethical business certification.

2 Economic governance is a wide ranging and multi faceted concept “… that refers to those parts of a country’s public and private sector institutional infrastructure that exert a determining or guiding influence in or over how individuals, enterprises, and/or countries carry out economic and commercial transactions.: Byrnes 2001. For the public sector, the “institutional infrastructure” or institutional framework is said to comprise (1) policies (including laws and regulations) that influence economic, financial and commercial transactions; (2) the organizations through which policies are implemented; and (3) the tools (procedures, practices, and technologies) used to formulate, implement and evaluate policies.

3. Rationale for Bank Involvement

The Economic Governance Project provides technical and financial assistance in areas of investment climate, and justice in which the World Bank is perceived as knowledgeable and as a partner that brings excellent technical expertise and good practices to address the critical constraints to an improved effectiveness of justice and better investment climate. The Project is part of an integrated strategy to build institutional capacity and strengthen different aspects of economic governance using complementary instruments. As such, the project’s activities would be complemented by the PRSC series which would not only be used to raise the profile of the reforms included in this investment operation, but also monitor and provide an additional venue for dialogue to ensure that the Project’s reforms are completed effectively and in a timely manner. This investment operation further complements the assistance provided thus far in improving public finance management. The assistance in public finance management was provided through the Public Financial Management Reform Support which is a Trust Fund jointly financed by the European Commission and The Netherlands for an amount of US$3.4 million. This joint assistance of three development partners is the entry point for development partner coordination in public finance management reform. This small was instrumental in helping achieve the following: (i) Building the capacity of the key Departments in line Ministries and at the Ministry of Economy and Finances on Medium Term Expenditures Framework (MTEF), (ii) building the capacity of the Inspection Générale des Finances and (iii) developing guidelines for the result oriented budget process and MTEF. While this project, which closed on November 30, 2009, served as an entry point, it would need to be pursued further once there is greater clarity and agreement regarding the key reforms to be adopted as well as the approach to be used.

The project also builds on previous operational support in both the investment climate and justice. More specifically, the Economic Governance Project builds on the implementation of the ongoing Senegal Private Investment Promotion Project. PIPP financed the successful drafting of, and consultation for, the Programme Sectoriel Justice. PIPP also provided targeted assistance to the Ministry of Justice through the adoption of an anti-money-laundering law, provision of training for ministry staff for the budget planning and execution, and modernization and computerization of the registry of firms. The PIPP was also critical by providing US$ 1.5 million to provide the capacity building, technical assistance and Information Technology support required to set up the ARMP. This Public Procurement Agency has quickly proven to be quite effective in improving economic governance by annulling numerous procurements of goods and services which did not comply with the established procurement code and regulations. Some of the more notable include the cancelling of a procurement of 50,000 computers and additional IT equipment for F. CFA 25 billion, which were awarded to a single supplier and for which the advertisement procedures were not observed and several complaints were received.

As this project was designed based on well targeted assistance request from the Ministry of Justice who implements the Justice Sector Program, it complements and reinforces the assistance finance the authorities and other development partners. The assistance provided by other development partners in the field of justice and economic governance are presented on Appendix 12.

The proposed project will expand the support provided for private-sector-led growth consistent with Pillar 1 of the government’s PRSP II –– wealth creation for a pro-poor growth –– as well as Pillar 4 on economic governance and decentralized and participatory development. This project also is aligned with the Accelerated Growth Strategy and is one of the IDA operations under the IDA Country Assistance Strategy (CAS) for FY08–113. The CAS focuses on strengthening economic management and public service delivery; enhancing productive capacity, and accelerating growth and competitiveness, which are fully consistent with the proposed project. The Cellule d’Exécution Administrative et Financière (CEDAF), the proposed implementing agency that has been implementing activities under PIPP, started project preparation activities and identified tentative project areas and activities. Project identification also has benefited from recent analytical work, including the Senegal Report on the Observance of Standards and Codes (ROSC)–Corporate Governance–, the Justice Sector Reform Program, le Document d’orientation stratégique de lutte contre la corruption, the National Program for Economic Governance, the Program for the Fight against Corruption, and the Senegal 2007 Investment Climate Assessment. Project identification also involved consultations with a wide range of stakeholders, including through the jointly organized (Ministry of Justice-World Bank) Workshop on Economic Governance of June 2008. During project preparation, the team helped the Ministry of Justice strengthen the collaboration with other key development partners in the justice sector, including the EC, France, UNDP, and USAID.

4. Description

To achieve the above-mentioned objective, the Project consists of four components: (a) improving the investment climate (estimated cost: US$2,200,000), (b) improving court performance and user-friendliness (estimated cost: US$3,100,000); (c) strengthening the demand side for economic governance (estimated cost: US$1,500,000); and (d) strengthening CEDAF and Project Implementation Support (estimated cost: US$1,000,000) and US$ 0,100,000 in contingencies. The total cost of the Project would be US$9,000,000, of which US$8,000,000 financed by IDA, and US$1,000,000 financed by the Borrower.

Component 1: Improving the investment climate (US$2, 200,000).4 As demonstrated in the World Development Report 2005: A Better Investment Climate for Everyone, a good investment climate drives both investment and productivity, the main sources of long-term growth. As a result, many governments are embarked on reforms to improve the investment climate. Senegal is one of them. The country has partially succeeded in implementing these reforms, as reflected in its garnering the ranking of best reformer in Sub-Saharan Africa in the Doing Business Report 2009. The authorities are keen to further improve the investment climate, so as to be more competitive in attracting private investment. In particular, investment climate reforms, which are

3 Approved by the IDA Board on May 2007.4 Broadly defined, “investment climate” includes a country’s unique attributes, or “geography” (climate, endowments of natural resources, distance from important markets and so on), as well as the state of its infrastructure, economic and social policies, institutions, and governance stability. For operational purposes, a narrower definition is used that focuses on the endogenous determinants of investment. For example, Stern (2000a) notes that it is “the policy, institutional, and behavioral environment, present and expected, that influences the returns, and risks, associated with investment.” This definition, in its reduced form, includes economic incentives, which are shaped by macroeconomic and regulatory policies and public administrative procedures, and incentives embodied in institutional arrangements, such as security of property rights and rule of law and governance stability.

related to the legal and judicial aspects, are a priority on the agenda, as confirmed in the Cabinet meeting of October 30, 2009.

As such, this component will focus on legal reforms that are necessary to improve the investment climate. These reforms will complement the ones already carried out –– and those ongoing –– aimed at making Senegal 1 of the 10 countries with the best business enabling environment in Sub-Saharan Africa. The Project will focus on three subcomponents, as follows:

a. Enforcing contractsb. Closing a business c. Protecting investors.

Under this component, the Project will provide TA and capacity building to support legal and institutional reform and implementation to significantly improve the performance of the above-mentioned three aspects of the investment climate.

More specifically, this component will provide the technical assistance to undertake the following tasks: (i) supporting the economic and financial section of the prosecutor’s office; (ii) specializing courts and judges; (iii) increasing the number of commercial hearings; (iv) improving the hearing process; (v) establishing strict timeframes for commercial judges; (vi) fostering better case management for faster enforcement of judicial decisions; (vii) improving enforcement procedures; (viii) speeding up the issuance of decisions; (ix) fostering the monitoring and evaluation of judges; (x) building bridges with alternative dispute resolution mechanisms; and (xi) reducing reliance and using experts more effectively.

Component 2: Improving court performance and user-friendliness (US$3,100, 000). The objective of this component is to enable the judicial system to more effectively play its role as warrantor of the rules regarding economically relevant activities and transactions. Examples would be to provide for fair and efficient commercial dispute resolution, effective protection of property rights, and predictable enforcement of legally binding rules. This component would be comprised of two subcomponents:

a. Improving court performanceb. Improving user-friendliness of courts.

Under this component, the Project will provide TA and capacity building to support the implementation of activities to significantly improve the performance of the Tribunal regional hors classe de Dakar, in which 80 percent of commercial cases are handled. Additionally, subcomponent b aims to improve the access to, and user-friendliness of, the courts in Dakar for court users through activities including analytical work, improvement of user guidance, and increased community outreach.

Subcomponent 1 aims to improve the performance of the courts in Dakar in both efficiency and quality of services. This would be done through the improvement of the court administration and the improvement of the case management. Regarding the improvement of the court, this requires the establishment of a three-part approach based on an effective court performance management

structure, increased court performance management capacity, and meaningful court performance management tools. To that end, the project will provide both technical assistance and capacity building. As for the improvement of case load management, it requires reforming the judicial map, improving enforcement structures, developing case management tools, adapting infrastructure, and building capacity for case management at various levels. The project will support the realization of these objectives by providing technical assistance and capacity building as well as the targeted purchase of some goods.

Subcomponent 2 will help improve the access to and user-friendliness of the courts in Dakar for court users. The Project will do this through a variety of activities, including technical assistance to assess, and will address obstacles to access justice. The project will also finance the preparation of materials to be distributed in the recently established reception and help desk of Justice so as to improve user guidance. Additionally, this sub component will finance the holding of “open house” during which the courts explain their inner working as a mean to foster community outreach.

Component 3: Strengthening the demand side for economic governance (US$1,5 00,000). Promoting the efficiency of justice and economic governance requires action on both demand and supply sides. To accompany the supply-side work described in components 1 and 2, the Project intends to support complementary demand-side activities. Under this component, the Project targets four areas that are critical in meeting the Project development objective (PDO) from the demand side by stimulating demand for effective and efficient investigation of money laundering cases, more transparent procurement of goods and services, as well as fostering business-led actions against corruption Its subcomponents are: (a) Strengthening CENTIF; (b) Strengthening the Anti-Corruption Commission; (c) Strengthening the new Investigation Unit of the national procurement agency, ARMP; and (d) Fostering business- led actions against corruption.

The Project assistance to CENTIF will comprise the following three activities. The first one is the provision of specialized technical advisory support through the recruitment of an internationally recognized expert to advise CENTIF management and provide in-house training to analysts and CENTIF partners to fully adopt international standards and practices in all operations. The second one consists of the financing of critical information technology equipment to support investigation and operations. Specifically, the Project will purchase specialized analytical software (Anacrime and Analysis notebook) and high-level security software to protect and encrypt information. This software will limit access to confidential information, even to sophisticated hackers, as well as improve CENTIF’s analysis and performance. This assistance would be complemented by the purchase of two vehicles to supply CENTIF with the transportation to carry out its investigation. The absence of a vehicle has hindered CENTIF’s carrying out its investigatory work effectively and efficiently. The third one will be to assist CENTIF in designing and carrying out an awareness campaign to improve the public administration, private firms , as well as the general public understanding of what money laundering is and how CENTIF’s work contributes to preventing, combating, and prosecuting it.

To further contribute to strengthening the demand side for economic governance, the project will provide assistance to another pillar of the improvement of economic governance: Anti-Corruption Commission (CNLCC). Specifically, the project will provide capacity building

assistance through training for CNLCC members on anti-corruption. This would be done by providing access to an internationally recognized expert in the field of Governance and Anti-Corruption to help build the capacity of the members of the Anti-Corruption Commission and provide them with key principles in preventing, investigating and prosecuting corrupt practices. Additionally, if a relevant and cost effective twining arrangement is identified, the finance it to provide the members of the Commission with the TA required to carry out their functions effectively.

To complement this assistance and improve the Commission’s effectiveness, the project also will provide TA to revise the anti-corruption unit legal authority and institutional arrangements, to adopt good practices in institutional arrangements and mandate.

Additionally, the project also will help finance the formulation and implementation of a communication strategy to allow to help the Commission with the prevention and prosecuting aspects and to also show to the general public that the Commission is accountable to the tax payer and wants to report on its activities.

The project also will assist in the dissemination of annual report of CNLCC. The annual report of CNLCC is a public report according to the Law 2003-35. The publication of the report is a mean to validating the Commission’s work and a way to show to all stakeholders and the general public the relevance of its work. This dissemination includes publishing the report on the CNLCC website (www.cnlcc.net).

Since the establishment of its Investigation Unit (IU), ARMP has recruited a procurement specialist and a lawyer for the Unit. With its core team is in place, the IU can start to create the conditions to effectively review potential violations of national procurement principles and procedures. At this early stage, the IU has qualified staff that could significantly benefit from TA to operate based on good practices developed by other IUs around the world. Moreover, ARMP would like to ensure that the violations of procurement and related laws by corrupt practices that are duly uncovered by the IU are prosecuted in a timely and effective manner once reported to the justice system. To address these dual challenges, the Economic Governance Project will provide TA to both (a) strengthen the IU’s internal capacity, and (b) support the establishment of an adequate follow-up of the results of investigations by the justice system.

This assistance will take the form of strengthening of investigation capacity of the Investigation Unit by providing on-the-job TA related to investigation techniques, public procurement, and regulatory matters. Additionally, to expose staff to good practice investigation techniques, the Project will finance the study tour of one institution (national or international) that deals with procurement investigations and that is recognized as performing well.

The project will also finance the acquisition of investigation materials such as information technology equipment (laptops, digital recorder, digital scanner/sender, and digital camera) and a vehicle.

The sub component on fostering business-led action against corruption will work with committed local business associations and chambers of commerce to forge a collective anticorruption initiative. Specifically, it will facilitate the development and adoption of a No-Bribery Pact for private firms. Companies would become signatories of the Pact by which they would publicly commit to uphold a common code of conduct.5 As bribery is one of the key corruption challenges in Senegal, the pact will include rules on gifts and entertainment, facilitation payments and sponsorship, as well as on conflicts of interest, collusion, and bid rigging. These activities will be implemented in close collaboration with ARMP, the national procurement agency, ARMP so that Project activities are mutually reinforcing in addressing corrupt practices.

Component 4: Strengthening CEDAF and project implementation support (US$1,000,000). The objective of this component is two-fold. First, it will strengthen the Cellule d’Exécution Administrative et Financière (CEDAF) to enable it to implement the Justice Sector Program successfully and become a center of excellence in the public administration. Second, Component 4 will provide the implementation support to ensure that the Project meets its development objective.

Component 4 will provide the technical assistance and resources necessary to strengthen CEDAF’s fiduciary and monitoring/evaluation capacity in the first phase, which is expected to be concluded by June 2011. In the second phase - which will build upon the first phase – the project will provide the assistance so that CEDAF becomes a center of excellence. Today, CEDAF is a small organization with 10 staff and a drive for excellence. Its organizational chart shown on Appendix 4: detailed project description presents the institution’s current number of departments and staffing. Building on the institutional capacity that will be provided to support Project implementation, resources will be allocated to help CEDAF become an institution recognized for its quality management and excellence within the Senegalese public administration. In other words, the project will enable this unit to have all the capacities and skills set necessary to successfully implement the PSJ. This support will be based on the development and adherence to a quality approach in management and applied to the implementation of the Justice Sector Project, which is assessed by independent evaluators. To that end, the project will finance the ISO 9001–2009 quality management certification process. The main steps to achieve quality certification are as follows: (i) Educating CEDAF on what ISO 9001-2008 standards mean and provide the staff with the basic aspects of quality management systems and the implementation process; (ii) Identifying the ISO certification processes.; (iii) carry out a gap analysis to compare the organization’s current quality management system (QMS) to the requirement of the ISO 9001 standard; (iv) formulating a new QMS adhering to ISO 9001 standards; (v) completing the pre certification audit; and (vi) undertaking the certification audit.

The financing of this ISO 9001 certification will enable consolidating and maintaining high service standards and performance within CEDAF. The QMS also will reinforce CEDAF’s

5 Transparency International’s Business Principles for Countering Bribery might be one model for such a common code.

credibility and open possibilities to leverage additional funding from other development partners to finance the implementation of the Justice Sector Program, which faces a funding gap.

Additionally, this component of the project will finance the development of a digital law library physically located at the Ministry of Justice to give electronic access to legal documents to all of the country’s administrative departments. This law library will be made available through the Ministry of Justice website and will have its search engine adequately calibrated to facilitate the search of documents. The support under component 4 will also finance the purchase of office equipment and furniture, the establishment of an intranet, and the setting up a video conferencing facility for capacity building.

5. Financing

Source: ($m.)BORROWER/RECIPIENT 1.0International Development Association (IDA) 8.0

Total 9.0

6. Implementation

Implementation arrangements: In line with the Paris Declaration and the increased emphasis on national systems to implement projects, no Project Implementation Unit (PIU) will be set up. In fact, the day-to-day implementation of the Project will be the responsibility of CEDAF, the technical unit in charge of the implementation of Senegal Justice Sector Reform. It is noteworthy that the task team considered an alternative in which the fiduciary functions (procurement and financial management) would be carried out by an existing government agency (APIX), which is experienced in managing Bank-financed projects. However, based on Bank reviews and discussions with representatives of the Borrower, the task team adopted the approach that the Project, including its fiduciary responsibilities, would be implemented by CEDAF. As such, CEDAF will oversee the Project’s financial management (FM), procurement, M&E, audit, and public information campaign.

To complement these institutional arrangements, the Project will be overseen by a Project Steering Committee (which will comprise all the Project stakeholders, including CEDAF) supported by a professional secretariat (CEDAF). The steering committee will provide the strategic orientation to the Project, review and approve annual work plan and budget, and propose any needed corrective measures to be adopted during project implementation. . While there is a Justice Sector Steering Committee responsible for the follow up of the entire Justice Sector Program, a steering committee was set up for this Economic Governance Project to account for the fact that several of the project beneficiaries such as the ARMP, CENTIF, and private sector firms are not members of the Justice Sector Reform Steering Committee. Moreover, the focus Project activities may not receive the necessary attention for an effective monitoring and follow up if no Steering Committee is put in place. Additionally, the establishment of the Steering Committee would allow likeminded institutions to meet and discuss how to improve economic governance and foster better follow up on investigations

carried out by ARMP, CENTIF, CNLTCC by the judiciary branch and foster a strengthening of collaboration while enhancing the project’s effectiveness.

7. Sustainability

The Project provides financial and technical assistance for institutional reforms for well-defined, time-bound activities that include permanent improvements in the Borrower’s institutional framework and investment climate. These changes are, by and large, irreversible and highly unlikely to be reversed in light of the benefit accrued to the population through a more efficient justice sector and an improved investment climate.

Project preparation has several features that strengthen the sustainability of the proposed activities. These features include (a) clear political commitment, (b) substantial consensus building, and (c) significantly participatory preparation between the Borrower and the Association.

The political commitment to carry out these reforms is well exemplified by the fact that the President of Senegal has asked the country’s administration to work diligently to improve Senegal’s investment climate. This high-level commitment is well complemented by the fact that substantial consensus building at the technical level involving relevant stakeholders had been carried out with PIPP financing. In addition, the current Project was prepared based on a participatory approach and an exemplary collaboration with the Borrower’s representatives. This approach was facilitated by the fact that the majority of the Bank staff working on the Project are based in Dakar, have acquired a good knowledge of the country, and can consult with the Borrower daily and cost effectively.

To strengthen the sustainability of the activities, the assistance being provided under the Project was selected strategically. Several aspects could be supported to improve the investment climate or the justice sector. However, the key areas chosen were based on the level of readiness and buy-in that enables these reforms to be carried out and sustained.

This approach is usefully complemented by the fact that the proposed activities build on areas in which past reforms have been successfully completed. For example, the investment climate reform built on the fact that Senegal was ranked best reformer in Africa in the 2009 Ease of Doing Business Index thanks to the reforms that had been carried out, including the modernization of the commercial registry.

Additionally, the sustainability is reinforced by the presence of the technical will and ability to implement the reform. The latter were indicated by the successful implementation of the modernization of the commercial registry and the preparatory work to implement the reform related to the indicators: (a) contracts enforcement, (b) protecting investors, and (c) closing a business.

Some features of the Project design also enhance sustainability. For example, to avoid creating a salary structure that could not be sustained at the Project’s closing, the Project does not finance staff salaries. Moreover, the training and the development of procedures and systems are key features of the Project assistance. The Project aims at making CEDAF an institution of

excellence through the acquisition and maintenance of an ISO 9001–2009 quality management certification, which foster a culture of excellence.

8. Lessons Learned from Past Operations in the Country/Sector

In light of the cross-cutting nature of the Project, particular attention has been paid to ensure that its design builds on the World Bank Group’s past experience in Senegal and in the sector in other developing countries. Project preparation benefited significantly from the input of several departments and networks, particularly, AFTFM, AFTPC, IFC, Investment Climate Unit, PREM, Quality and Knowledge (QK), and WBI. The main lessons and approaches that informed the Project’s design were:

Improving the investment climate. The participation of the Investment Climate Unit in the early phase of investment climate reform consultations was coupled with a prior consultation with the World Bank’s Doing Business Unit and the lessons drawn from World Development Report 2005, A Better Investment Climate for Everyone. Thus, the design of this Project reflects pan-African and global experience on how to improve the investment climate. Additionally, the Project design benefited significantly from the lessons learned from the implementation of two World Bank investments in Senegal that contained investment climate reform. These two operations are Credit 3762 SE for the Private Investment Promotion Project and Credit SE 3875 Private Sector Adjustment Credit. Experiences from these two projects show that investment climate reform is interactive and requires strong champions and consensus building. These aspects are reflected in the current Project design. For example, the lack of a clear consensus on labor market reforms led to the decision to drop this subcomponent previously identified in the Project concept note (PCN).

Supporting the Justice Sector Reform and improving access to justice. Lessons learned from the implementation of the Private Sector Capacity Building Project (Credit 2759 SE), as well as the Private Investment Promotion Project (PIPP) (Credit 3762 SE), have shown the critical importance of implementing legal reforms with the full involvement of the Justice Ministry. The first project mentioned above had difficulties in meeting its targets and objectives since it had only the partial involvement of the Justice Ministry. With the full assistance of the Justice Ministry, the PIPP (Credit 3762 SE) effectively assisted the authorities in reforming the commercial registry as well as improving the registration of firms. Moreover, the proposed assistance to the justice sector is pragmatic and based on well-targeted assistance for reform, which benefits from significant consultation and consensus-building.

Strengthening economic governance. The preparation of this component benefited from WBI’s knowledge of emerging good practices and international experience in Economic Governance and in line with the World Bank’s governance and anticorruption (GAC) strategy. The Project also builds on the 2006 Report on the Observance of Standards and Codes (ROSC) Corporate Governance Country Assessment, Senegal, which was drafted following wide-ranging consultation. Moreover, tackling corruption is more difficult for individual businesses. Therefore, the approach used under the business-led actions against the corruption subcomponent emphasizes a sustained joint process of collective

actions that enables private firms to implement anticorruption mechanisms together with industry peers and key stakeholders.

Strengthening CEDAF and supporting the Project implementation (US$1.0 million). By using an International Organization for Standardization (ISO) 9001 quality management certification to build CEDAF’s institutional capacity and make it a center of excellence, the Project ensures adherence to emerging good practices in institutional capacity building. Moreover, the Project will strengthen CEDAF’s ability to implement the wide-ranging PSJ. Since CEDAF will support the Project’s implementation, no new Project Implementation Unit (PIU) will be set up––in line with the increased emphasis on national systems to implement projects.

The design of the proposed Project also draws on the experience acquired in other projects, including Credit 3762 SE for the Private Investment Promotion Project, Credit SE 3875 for the Private Sector Adjustment Credit, Credit MZ 3317 for the Mozambique Enterprise Development Project, and the IDA Credit 3483 LSO for the Lesotho Utilities Reform Project.

Moreover, project preparation benefited from the fact that substantial consensus-building at the technical level involving relevant stakeholders was carried out with the financing of another World Bank operation, the PIPP. In addition, the Project was prepared based on a participatory approach and an exemplary collaboration with the Borrower’s representatives. This approach was significantly facilitated by the fact that several of the Bank staff working on the Project are based in Dakar, have acquired a good knowledge of the country, and can consult daily with the Borrower cost effectively.

9. Safeguard Policies (including public consultation)

Safeguard Policies Triggered by the Project Yes NoEnvironmental Assessment (OP/BP 4.01) [ ] [ X]Natural Habitats (OP/BP 4.04) [ ] [X ]Pest Management (OP 4.09) [ ] [X ]Physical Cultural Resources (OP/BP 4.11) [ ] [X ]Involuntary Resettlement (OP/BP 4.12) [ ] [ X]Indigenous Peoples (OP/BP 4.10) [ ] [ X]Forests (OP/BP 4.36) [ ] [ X]Safety of Dams (OP/BP 4.37) [ ] [ X]Projects in Disputed Areas (OP/BP 7.60)* [ ] [ X]Projects on International Waterways (OP/BP 7.50) [ ] [ X]

10. List of Factual Technical Documents

1. World Development Report 2005. A Better Investment Climate for everyone. The World Bank Washington DC. 2005

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

2. Document d’Orientation stratégique de Lutte contre la Corruption, Sénégal

3. Medium-term Sector-based Expenditure Framework 2009-2011, Cadre de Dépenses sectorielles à Moyen terme 2009-2011, Ministère des Infrastructures, des Transports terrestres, des Télécommunications et des TICS, Sénégal

4. Medium-term Sector-based Expenditure Framework 2009-2011- Cadre de Dépenses sectorielles à Moyen terme 2009-2011, Ministère de la Famille, de la Solidarité nationale, de l’Entreprenariat féminin et de la Microfinance, Sénégal

5. Medium-term Sector-based Expenditure Framework 2009-2011- Cadre de Dépenses sectorielles à Moyen terme (2009-2011), Ministère des Sénégalais de l’Extérieur et du Tourisme

6. Poverty Reduction and Growth Strategy Paper 2006-2010 for Senegal (Document de Stratégie pour la croissance et la Réduction de la Pauvreté)

7. Report on the Observance of Standards and Codes (ROSC) Corporate Governance Country Assessment, Senegal, June 2006. The World Bank. Washington DC.

8. Private Sector Opinion Issue 1 “Crashes, Bailouts, Regulations”

9. Private Sector Opinion Issue 12“Where were the Directors?”

10. Private Sector Opinion Issue 13“Towards an Accountable Capitalism”

11. USAID Corruption Assessment Senegal (2007),

12. La corruption au quotidien en Afrique de l’Ouest – Approche socio-anthropologique comparative: Bénin, Niger et Sénégal (2003), G. Blundo & J. P. Olivier de Sardan

13. La corruption dans la justice au Bénin, au Niger et au Sénégal (2005), Mahaman T. Alou

11. Contact pointContact: Gilberto de BarrosTitle: Sr. Private Sector Development Spec.Tel: 5352+4100 / 221-33-859-4114Fax: 221 33 859-4283Email: gdebarros@worldbank.orgLocation: Dakar, Senegal (IBRD)

12. For more information contact:The InfoShopThe World Bank1818 H Street, NWWashington, D.C. 20433Telephone: (202) 458-4500

Fax: (202) 522-1500Email: pic@worldbank.orgWeb: http://www.worldbank.org/infoshop