Project Information Document (Pid) s4

PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No: AB3976 Project Name Niger Reform Management and TA Region AFRICA Sector Central government administration (100%) Project ID P108253 Borrower(s) GOVERNMENT OF NIGER Implementing Agency Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared September 9, 2008 Estimated Date of January 19, 2009 Appraisal Authorization Estimated Date of Board April 23, 2009 Approval

1. Key development issues and rationale for Bank involvement

Public Financial Management (PFM) reform in Niger was initiated in the mid 1990s through structural adjustment programs, but stalled many times before gaining momentum in 2005 following the Public Expenditure Management and Financial Accountability Review (PEMFAR) which was conducted in 2004. The PEMFAR recommended a certain number of actions which have been endorsed by the Government of Niger (GoN) and which constitute the basis for its current PFM reform strategy. Nevertheless, key issues remain, among which: (i) weak links between the budget and the PRSP priorities; (ii) weak budget preparation and execution, due among other reasons to extremely detailed and cumbersome ex-ante controls, and to the weak capacity of Treasury; (iii) exceptional spending procedures when line ministries face urgent needs not covered by the budget; (iv) inability by the Treasury to prepare and publish its annual closing balance in a timely manner; and (v) weak ex-post budget controls and reporting. In the meantime, prospects of Niger economic future are improving due to the current rising prices of uranium, which is the country’s major export. It is expected that uranium exports revenue will increase from CFAF 80 billion in 2006 to CFAF 400-500 billion in 2012. Hence, the pressing need for strengthening capacity of the Ministry of Economy and Finance (MEF) to properly manage the upcoming additional revenues, expand public expenditure in social sectors and infrastructures while ensuring its efficiency and impact on poverty reduction, and put in place transparency through better reporting on the use of public funds. The rationale for Bank involvement is to contribute to the implementation of Niger’s PFM reform and the advancement of good governance, which features prominently in the Niger’s new PRSP and which has also been identified by the Bank in the new CAS (FY08-11) as a cross- cutting theme. For the moment, social accountability is very low in Niger as civil society organizations, media, and other mechanisms for checks and balances are weak. As a result, there are vested interests to keep the status quo for the control of public resources and patronage in business and labour market. But there is currently, however, a window of opportunity for deepening and accelerating the reforms through this proposed TA operation as the Bank is playing a leading role in aid coordination and has a good dialogue with the government. MEF is open and willing to work with the Bank, which would serve as a catalyst to larger support from other donors in the near future.

2. Proposed objective(s)

The project development objective (PDO) is to enhance overall performance of MEF with the view of contributing to the PFM reform agenda, promoting good governance, and enabling the achievement of development outcomes. This is very much in line with the country’s priorities expressed in the new PRSP (PRSP II) and the Bank’s new CAS. PRSP II has candidly identified the main factors of poor governance, recognized their negative effect on economic growth and poverty reduction, and formulated proposals to promote good governance. The new CAS is built around two pillars: (i) accelerating sustained growth that is equitably shared; and (ii) developing human capital through access to quality social services. In addition, there are two cross cutting themes including slowing down population growth and promoting good governance on which the Bank will work closely with Niger to support results of the two pillars.

3. Preliminary description

The proposed operation, which is a TA project with no civil works, will have four components: (i) Capacity Development; (ii) Modernisation of MEF; (iii) Simplification and Full Integration of the Chain of Expenditure; and (iv) Support to the Project Management Unit. It is worthwhile noting that the activities envisioned for this project will mostly target shortcomings in budget preparation, execution, reporting, and internal controls. And this would ultimately lead to the improvement of budget processes and outcomes. It will also be necessary at the same time to ensure that good sequencing of project activities is followed so that the basics of a reasonable PFM reform are covered before embarking on complex processes and functionalities. Furthermore, since strengthening capacity is not a mere technical proposition, the project will include a stakeholder analysis which help shed the light on institutional arrangements and political drivers which underline the status quo. Component 1 – Capacity Development There is currently a severe shortage in MEF of modern skills and capacities in budget management, macro-fiscal policy, information systems, and organizational management that are critical for the implementation of PFM reform. But in order to adequately address these formidable challenges, it is necessary to first conduct a thorough assessment of existing skills and institutional arrangements of the Ministry in order to identify the gaps and underlying reasons of the status quo and then be able to propose effective solutions. Hence, in terms of logical sequencing of the project, two important activities will first take place: (i) capacity need assessment and (ii) stakeholder analysis. After these important activities have been conducted, then there will be proper capacity development activities that will follow. Proposed activities which are envisioned for capacity development include: (i) training of MEF in core business functions of the ministry of finance which typically include macro-fiscal policy, budget management, internal controls, and cash management; (ii) support to local training institutions where most of the MEF staff are trained; (iii) mentoring by young retirees from MEF; and (iv) reaching out to Nigerien experts from the Diaspora. Component 2 – Modernisation of MEF Different parts of the Ministry work in silos partly due to the lack of an integrated system and the absence of intranet. The activities proposed in the project for the modernization of MEF include: (i) Automation and computerization. There is an initial inventory of equipment needs that the Directorate of Information has done with the assistance of the EU, which has also made commitment to assist with some equipment. The project would build on this basis to determine its level of intervention. (ii) Intranet. The project will help design and deploy the intranet in the MEF. For the moment different parts of the ministry work in silo and don’t have access to same source of internal communication. The intranet will help reduce the communication gap and increase transparency. (iii) Information and Knowledge Management. The project will assist MEF develop strategy and action plan on knowledge management, i.e. the way that the information is collected and shared for knowledge learning and sharing Component 3 – Simplification and Fully Integration of the Chain of Expenditure There has been remarkable progress in the computerization of the chain of expenditure which has resulted in faster budget execution as delays due to manual processing and the multitude of control visas have been reduced. But there is still ample room for improvement in streamlining further the process and reducing the number of controls. Activities that are envisioned to further enhance the chain of expenditure and internal controls include: (i) Deployment of financial controllers in line Ministries. Increasing the number of financial controllers and having them deployed in the line ministries from their current setting at the centre in the MEF would increase the speed and quality of control. (ii) Countrywide network connection. For a faster and reliable budget execution at the regional and departmental levels, it is crucial to increase technological capabilities to connect Niamey with the rest of the country either through fibre optic, telephone line, or satellite. A feasibility study will look at different options and suggest the way forward. Component 4 – Supporting the project management unit to manage and monitor the project It is critical for the project to have a competent and credible implementation unit which will be able to manage the project and ensure that activities are properly carried out. This is particularly relevant in the context of Niger where managerial capacity is limited. 4. Safeguard policies that might apply

Not applicable. This is essentially a capacity development project with no civil works and won’t therefore pose any threat to the environment in Niger.

5. Tentative financing

Source: ($m.) BORROWER/RECIPIENT 0 International Development Association (IDA) 10 Total 10

6. Contact point: Helene Grandvoinnet Sr. Public Sector Specialist Tel: (202) 473-6764 Fax: Email: [email protected]