Document of The World Bank Public Disclosure Authorized Report No: ICR0000943
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-33940 IDA-3394A TF-54741)
ON A
Public Disclosure Authorized CREDIT
IN THE AMOUNT OF SDR 15.8 MILLION (US$21 MILLION EQUIVALENT)
TO THE
REPUBLIC OF MALI
FOR A
FINANCIAL SECTOR DEVELOPMENT PROJECT Public Disclosure Authorized
December 17, 2008
Finance and Private Sector Development Western and Central Africa Africa Region
Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective August, 31, 2008 Currency Unit = C.F.A. Francs BCEAO 1.00 = US$0.00225038 US$1.00 = CFAF 444.36
FISCAL YEAR July 1 – June 30
ABBREVIATIONS AND ACRONYMS
APBEF Bankers’ Association (Association Professionnelle des Banques et Etablissements Financiers) APIM Association of Microfinance Institutions (Association Professionnelle des Institutions de Microfinance) BCEAO Central Bank of West African States (Banque Centrale des Etats de l’Afrique de l’Ouest) BCS Commercial Bank of the Sahel (Banque Commerciale du Sahel) BDM-SA Development Bank of Mali (Banque de Développement du Mali) BHM Bank for Housing of Mali (Banque de l’Habitat du Mali) BIM Mali International Bank (Banque Internationale pour le Mali) BMCD Malian Bank for Credit and Deposits (Banque Malienne de Crédit et de Dépôts) BMCE Moroccan Bank of External Trade (Banque Marocaine du Commerce Extérieur) BNDA Agricultural Development Bank (Banque Nationale de Développement Agricole) BRVM Regional Stock Exchange (Bourse Régionale des Valeurs Mobilières) CAS Country Assistance Strategy CAS/SFD Support and Monitoring Unit for Microfinance Institutions (Cellule d’Appui et de Suivi des Systèmes Financiers Décentralisés) CAR Central African Republic CB Banking Supervision Commission (Commission Bancaire) CCS/SFD Microfinance Supervisory Unit CDC Collateral Deposit Company (La Caisse de Dépôt et Consignations) CE Credit Effectiveness CGAP Consultative Group to Assist the Poorest CRSRDA Consultative Group for the Financial Sector (Cellule de Réflexion et de Suivi de la Réforme du Droit des Affaires) CI Initiative Credit (Crédit Initiative) CIDA Canadian International Development Agency CIMA Inter-African Conference for Trade and Insurance (Conférence inter-africaine du marché des assurances) CIPRES Inter-African Conference for Social Prevention (Conférence inter-africaine de prévention sociale) CMDT Malian Textile Company (Compagnie Malienne de Textiles) CNAR National Insurance and Reinsurance Company (Caisse Nationale d’Assurance et Réassurance) CPM Malian Postal Checking System (Chèques Postaux du Mali) CPA/SFD Microfinance promotion agency CRM Pension Fund (Caisse de Retraite du Mali) DCA Development Credit Agreement DPL Development Policy Loan FIRST Financial Sector Reform and Strengthening FMI Financial Management Initiative FMS Financial Management System FSAP Financial Sector Assessment Program FSPAU Financial Sector Policy and Advisory Unit GDP Gross Domestic Product GOM Government of Mali GPN General Procurement Notice GRSF Consultative Group for the Financial Sector (Groupe de Réflexion sur le Système Financier) GTZ German Agency for Technical Cooperation HIPC Heavily Indebted Poor Countries Initiative IAPSO Inter-Agency Procurement Services Office of the united Nations Development Program ICA Investment Climate Assessment ICB International Competitive Bidding ICR Implementation Completion and Results Report IDA International Development Agency IFAD Institutional Fund for Agricultural Development IFC International Finance Corporation IMF International Monetary Fund INPS Social Security Institute (Institut National de Prévoyance Sociale) IRVM Income Tax on Financial Instrument (Impôt sur les Revenues des Valeurs Mobilières) LACI Loan Administration Change Initiative MFIs Microfinance Institutions MoEF Ministry of Economy and Finance NBFIs Non-Bank Financial Institutions NBF Not-Bank Financed NCB National Competitive Bidding NGOs Non-Governmental Organizations NPL Non-Performing Loans OHADA Organization for the Harmonization of Business Law in Africa (Organisation pour l’Harmonisation du Droit des Affaires en Afrique) OPs Occupancy Permits PA Project Account PAD Project Appraisal Document PARMEC Projet d’Appui à la Réglementation sur les Mutuelles d’Epargne et de Crédit PFMS Project Financial Management System PIUs Project Implementation Units PMR Project Management Report PPF Project Preparation Facility PSAP Private Sector Assistance Project QAG Quality Assurance Group QCBS Quality and Cost Based Selection SCPCE Postal Checking and Savings Fund (Société des Chèques Postaux et de la Caisse d’Epargne) SGI General Brokerage and Intermediation Company (Société de Gestion et d’Intermédiation) SMEs Small and Medium Enterprises SOMAFI Malian Company for Financing (Société Malienne de Financement) SA Special Account TA Technical Assistance TORs Terms of Reference TTL Task Team Leader UNDP United Nations Development Program USAID United States Agency for International Development WAEMU West African Economic and Monetary Union ZOPP Ziel-Orienterte Projekt Planung
Vice President: Obiageli E. Ezekwesili Acting Country Director: McDonald P. Benjamin Sector Manager: Iradj A. Alikhani Project Team Leader: Djibrilla Issa ICR Team Leader: Emmanuel Diarra Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph
1. Project Context, Development Objectives and Design ...... 1 2. Key Factors Affecting Implementation and Outcomes...... 9 3. Assessment of Outcomes ...... 12 4. Assessment of Risk to Development Outcome...... 18 5. Assessment of Bank and Borrower Performance...... 19 6. Lessons Learned...... 22 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners...... 22 Annex 1. Project Costs and Financing ...... 24 Annex 2. Outputs by Component...... 25 Annex 3. Economic and Financial Analysis ...... 31 Annex 4. Bank Lending and Implementation Support/Supervision Processes...... 32 Annex 5. Beneficiary Survey Results ...... 34 Annex 5. Beneficiary Survey Results ...... 34 Annex 6. Stakeholder Workshop Report and Results...... 35 Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR ...... 35 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...... 36 Annex 9. List of Supporting Documents...... 37 MAP A. Basic Information ML-Finance Sec Dev Country: Mali Project Name: (FY00) -(PDSF) IDA-33940,IDA- Project ID: P001748 L/C/TF Number(s): 3394A,TF-54741 ICR Date: 12/24/2008 ICR Type: Core ICR Lending Instrument: SIL Borrower: GOVERNMENT Original Total XDR 15.8M Disbursed Amount: XDR 13.5M Commitment: Environmental Category: C Implementing Agencies: Cellule de Gestion PDSF Cofinanciers and Other External Partners:
B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 01/10/1999 Effectiveness: 04/16/2001 04/16/2001 Appraisal: 03/20/2000 Restructuring(s): Approval: 06/27/2000 Mid-term Review: 07/26/2004 Closing: 04/30/2006 04/30/2008
C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance:
C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Yes Quality at Entry Satisfactory
i at any time (Yes/No): (QEA): Problem Project at any Quality of Yes Highly Satisfactory time (Yes/No): Supervision (QSA): DO rating before Moderately
Closing/Inactive status: Unsatisfactory
D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Banking 13 13 Capital markets 21 21 Central government administration 46 46 Micro- and SME finance 10 10 Non-compulsory pensions, insurance and contractual 10 10 savings
Theme Code (Primary/Secondary) Legal institutions for a market economy Secondary Secondary Regulation and competition policy Secondary Secondary Rural markets Primary Primary Small and medium enterprise support Primary Primary State enterprise/bank restructuring and privatization Primary Primary
E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E. Madavo Country Director: McDonald P. Benjamin Hasan A. Tuluy Sector Manager: Iradj A. Alikhani Gerard A. Byam Project Team Leader: Djibrilla Adamou Issa Noel K. Tshiani ICR Team Leader: Emmanuel Diarra ICR Primary Author: Emmanuel Diarra
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) The objective of the proposed project is to improve the soundness, performance and competitiveness of the financial sector and enable it to support broad-based private sector growth. This will be accomplished by (a) restructuring and privatizing viable state-owned banks, and strengthening non-bank financial institutions, including social security and
ii retirement funds; (b) enhancing the capacity of financial institutions through training financed on a cost-sharing basis; (c) strengthening microfinance institutions and the Government Microfinance Supervisory Agency; and (d) helping to improve the legal and regulatory environment affecting the financial sector.
The government is looking to the privatization of financial institutions as a means of improving their governance and the overall efficiency of the financial sector. The project would provide technical assistance (TA) to help the government implement a restructuring and privatization program which is at the core of its economic reforms supported by the World Bank and the International Monetary Fund. Achievement of these reforms would contribute to the fulfillment of the government's macroeconomic stability objectives.
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Financial institutions comply with key prudential financial ratios (capital Indicator 1 : adequacy, risk concentration, liquidity) and substantially reduce the level of NPL. 1.1. Compliance 1.1. Percentage of banks with the required in compliance with the minimum capital minimum required capital 1.1. Banks comply norm: 82% norm: 75% with key 1.2. Compliance 1.2. Percentage of banks prudential ratios with the capital Value in compliance with the 1.2.Ratio of gross adequacy ratio quantitative or capital adequacy ratio NPL to total (Cook Ratio): 82% Qualitative) (Cook Ratio): 75% outstanding loans 1.3. Compliance 1.3. Percentage of banks of 10% with the liquidity compliance with the ratio: 71% liquidity ratio: 22% 1.4. Ratio of gross NPL, excluding BHM of 11.97%. Date achieved 12/31/2001 04/30/2008 12/31/2007 The compliance with prudential norms has improved substantially over the Comments project life. For the ratio of non performing loans, all but one bank (the housing (incl. % bank-BHM) have NPL ratios less than the regional average of 18.9% (gross achievement) NPL) and 7.4 percent. Financial intermediation has been broadened by the end of the project with the Indicator 2 : introduction and development of new instruments such as CDs, leasing and venture capital.
iii 2.1. Number of financial institutions increased from 12 2.1. Number of Financial to 17 Institutions in 2001: 12 2.2. Ratio of Introduction and 2.2. Ratio of M2/GDP: M2/GDP: increased development of Value 22% from 22% in 2001 new instruments quantitative or 2.3. Ratio of Credit to to 30% in 2007 such as CDs, Qualitative) GDP: 15% 2.3. Ratio of Credit leasing and 2.4. Financial to GDP increased to venture capital. intermediation is not lack 18% diversity 2.4. Leasing activity has increased by 146% from 2001 to 2007.
Date achieved 06/01/2000 04/30/2008 12/31/2007 Financial depth measured by the ratio of M2/GDP has increased, above the Comments regional average of 25%. Beyond the indicators monitored by the project (incl. % provided TA to a local firm (SEMA) that raised CFA achievement) 5 billion in the regional capital market. Treasury deposits will be placed with banks following regular competitive Indicator 3 : bidding. 3.1. The Treasury opened several Treasury deposits 3.1. No competitive accounts in Value placed with banks bidding process. Treasury different banks, quantitative or following a deposits are only made including private Qualitative) competitive with state owned banks. banks and make bidding process. deposit based on efficiency. Date achieved 06/01/2000 04/30/2008 04/30/2008 Comments (incl. % This indicator was achieved. achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : State Owned banks are restructured and privatized. 1.1. BIM is under interim 1.1. BIM Reduce the 1.1. BIM has been Value administration and privatized by Government fully restructured: (quantitative Government owned 2001 share in banks (i) the solvability or Qualitative) 61.5% of its capital 1.2. BCS to 20% ratio increased from 1.2. BCS is 50% owned privatized by 2004 (excluding 5.6% to 8.05% in
iv by the Government 1.3. BDM and BNDA and 2007 (above the 8% 1.3. BDM and BMCD are BMCD privatized BHM). norm), liquidity Government owned by 2001 ratio increased from 1.4. BHM is (i) insolvent; 1.4. Key 56% to 91% (ii) illiquid (depositors do recommendations (required minimum not have access to their of the viability of 75%), funds) study of BHM are profitability has being implemented improved from a 1.5. Government loss in 2005. share in the banking sector reduced to 20% by 2001 Date achieved 06/30/2005 04/30/2008 04/30/2008 04/30/2008 The banking sector has been restructured and opened to foreign competition. Comments Five new banks have since entered the market and the sector is mostly privately (incl. % owned. achievement) This indicator was achieved.
Social Security fund, retirement funds(CRM and INPS) and insurance companies Indicator 2 : are strengthened. 2.1. Implement the recommendati 2.1. Within two ons of the 2.1.1. Actuarial years, of project financial audit studies for CRM 2.1. The public sector launch actuarial pertaining to and INPS have pension scheme (CRM) studies for CRM INPS and been conducted and doest not exist as an and INPS have caused INPS finalized in 2006 autonomous entity been completed to comply, in and 2.2. Actuarial studies not 2.2. By 2003 INPS due course, recommendations Value conducted for CRM and and insurance with CIPRES being implemented. (quantitative INPS, and companies comply regulations A new parameters or Qualitative) 2.3. Two insurance with regional 2.2. Help law for CRM has companies (CNRA and prudential implement been approved by Sabunyman) faced requirements CIMA's the Council of financial and institutions 2.3. By 2004, recommendati Minster on weakness and do not Government has ons February 20, 2008. meet. implemented the concerning 2.1.2. INPS comply recommendations insurance with key CIPRES of CIMA companies operating in Mali.
Date achieved 06/01/2000 04/30/2008 04/30/2008 07/30/2008 (i) CRM has been spined off from the public treasury; functions as an Comments autonomous institution and operates more efficiently (reduction in delay in (incl. % processing claims). Pensions and benefits are paid monthly, using the banking achievement) system. Indicator 3 : Microfinance institutions and the Government supervisory unit strengthened.
v 3.1. At least 40% 3.1. The of formal MFI's supervisory unit is are registered in operational, well the CAS/SFD 3.1. The supervisory unit staffed (25 database by 2002 is under the Ministry of persons), receives and 80% by Investment promotion, budgetary project end against the regional law; allocations (FCFA Value 3.2. By mid term and its lacks capacity to 67 million in 2006, (quantitative review, the register, license, and FCFA 150 million or Qualitative) microfinance supervise MFI in 2007, FCFA 170 association 3.2. The microfinance million in 2008) (APIM) starts to association (APIM) is not and has conducted provide a number representative of MFI's. 18 on site of demand based inspections in 2006, services to its 35 missions in members including 2007. seminars. Date achieved 11/30/2004 04/30/2008 04/30/2008 The supervisory unit capacity has improved. As the project funding was phasing Comments out, the Government made gradual budget allocations to bear the operating cost (incl. % of the unit. achievement) This indicator was achieved.
The legal and regulatory framework affecting the financial sector is improved Indicator 4 : and conducive to the development of the sector. 4.1.Within 24 4.1. At least 36 months of credit training sessions effectiveness 50% have been provided 4.1. No training is offered of credit staff in to 1,051 people to banks credit staff the major banking including banks 4.2. Pervasive acceptance institutions have credit staff of insecure temporary received training Value estimated at 220 land titles by banks with and 100% at the (quantitative people. The others negative impact of end of project and or Qualitative) beneficiaries are portfolio quality with 4.2. Bad loans especially from high non performing granted to SME Justice (judges, loans. and private lawyers.) customers dropped 4.2. All but one compared to a bank experienced baseline. decrease in their NP
Date achieved 06/01/2000 04/30/2008 04/30/2008 Besides the measures targeted in the PAD, the project helped the Government in Comments drafting a Commercial Procedures Code. Also a Code on Judiciary Experts (incl. % which defines standards and requirements for better accountability and probity achievement) has been adopted.
vi G. Ratings of Project Performance in ISRs
Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 12/28/2000 Satisfactory Satisfactory 0.00 2 06/29/2001 Satisfactory Satisfactory 0.62 3 12/20/2001 Satisfactory Satisfactory 0.76 4 05/14/2002 Satisfactory Satisfactory 1.57 5 11/27/2002 Satisfactory Satisfactory 2.13 6 04/22/2003 Satisfactory Unsatisfactory 2.58 7 06/13/2003 Satisfactory Unsatisfactory 2.71 8 11/26/2003 Satisfactory Satisfactory 3.71 9 05/28/2004 Satisfactory Satisfactory 5.74 10 12/14/2004 Unsatisfactory Satisfactory 7.91 11 06/29/2005 Unsatisfactory Moderately Satisfactory 10.90 12 12/12/2005 Satisfactory Moderately Satisfactory 12.68 13 03/28/2006 Satisfactory Moderately Satisfactory 13.30 14 08/01/2006 Satisfactory Moderately Satisfactory 15.48 15 12/29/2006 Satisfactory Moderately Satisfactory 15.66 16 06/27/2007 Satisfactory Moderately Satisfactory 17.82 Moderately 17 12/21/2007 Moderately Satisfactory 17.82 Unsatisfactory 18 05/09/2008 Moderately Satisfactory Moderately Satisfactory 19.70
H. Restructuring (if any) Not Applicable
vii I. Disbursement Profile
viii 1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
1. Mali is one of the poorest countries in the world with a per capita income estimated at about US$260 in 1997. Access to key social services, notably education, basic health, potable water, sanitation is limited. Adult illiteracy is estimated at 68 percent, primary school enrollment rates are among the lowest in the world and the ratios of population per physician and per nurse are below the standard World Health Organization norms for Africa.
2. In the late 1980s, the Government of Mali (GoM) began to change its economic strategy from a centrally planned system towards a market-based approach, a process which it deepened after the devaluation of the FCFA in 1994. The adjustment process began to show results, and in 1997, the economy grew by 6.7 percent in real terms, compared with 2.3 percent in 1994. Average consumer prices declined by 0.7 percent compared to an increase of 24.8 percent in 1994. Efforts to improve revenue collection and restrain expenditures resulted in significant decrease in the overall budget deficit from 13.7 percent of GDP in 1994 to 7.8 percent in 1997. In the external sector, the current account deficit, excluding official transfers, was reduced from 16.9 percent of GDP in 1994 to 9.3 percent in 1997.
3. The Country Assistance Strategy (CAS) for Mali discussed by the World Bank Board in 1998 sought to support the Government’s reform program and gave priority to medium term improvement in the Government budgetary performance and the promotion of private sector growth through an increase in the availability of diversified financial products. The project is fully consistent with the CAS objectives. The project would help reduce macroeconomic risks associated with poor financial performance of banks and non-bank financial institutions and encourage the development of financial intermediaries that are responsive to private sector needs. The project was also in line with the Government’s strategy which aimed to create a more enabling environment for private sector by improving the legal framework; strengthening microfinance; restructuring and privatizing bank and non-bank financial institutions, and improving financial intermediation by supporting the local branch of the regional stock exchange.
4. In 2001, Mali’s financial sector consisted of: (i) nine banks of which seven are commercial banks, one agriculture bank and one housing bank; (ii) non-bank financial institutions (NBFIs) that include five insurance companies, a credit institution (Crédit Initiative) and a pension system comprised of a social security and pension fund for private sector employees (Institut National de Prévoyance Sociale - INPS) and another for civil servants (Caisse de Retraite du Mali - CRM); and (iii) a significant number of micro-finance institutions supported mostly by external donors or non-Governmental Organizations (NGOs).
1 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
5. The objective of the proposed project is to improve the soundness, performance and competitiveness of the financial sector and enable it to support broad-based private sector growth. This will be accomplished by: (a) restructuring and privatizing viable state-owned banks, and strengthening non-bank financial institutions, including social security and retirement funds; (b) enhancing the capacity of financial institutions through training financed on a cost-sharing basis; (c) strengthening microfinance institutions and the Government Microfinance Supervisory Agency; and (d) helping to improve the legal and regulatory environment affecting the financial sector. The project would provide technical assistance (TA) to help the government implement a restructuring and privatization program which is at the core of its economic reforms supported by the World Bank and the International Monetary Fund.
6. The project fits into World Bank Strategy by strengthening performance of financial institutions and which would enable it to respond to private sector needs. The project is also consistent with Government strategy which aimed, among others, at creating a competitive business environment including credit facilities to support the private sector.
7. Project benefits would be measured through an assessment of the following:
• Financial institutions comply with key prudential ratios (capital adequacy, risk concentration and liquidity) and substantially reduce the level of non- performing loans from the present level (industry-average) of 23 percent to 18 percent by the second, 15 percent the third year and 10 percent by the end of the project; • Financial intermediation has been broadened by the end of the project with the introduction and development of new instruments as CD’s, leasing and venture capital; • Treasury deposits will be placed with banks following a competitive basis process; and • Reduced Government ownership in the banking sector
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification.
1.4 Main Beneficiaries
8. The project was expected to restore the viability of the banks, microfinance institutions, insurance companies, and the social security and pension funds by strengthening their institutional and operational activities. In this context, the associations of banks, insurance companies and microfinance institutions were to receive capacity building and benefit from project support. The project also aimed to develop the
2 institutional and operational capacity of Government bodies in charge of supervision /control of insurance companies and microfinance institutions thus benefiting the clients of microfinance institutions, which are generally small, and those of insurance companies. The soundness of financial institutions would improve through enhanced supervision, which would benefit the depositors. By addressing the constraints to the legal framework for the financial sector, the project was designed to increase financial intermediation and improve services of the banking sector which would ultimately benefit the clients of banks as well as increase their number.
1.5 Original Components (as approved)
9. The project would include five components: (a) the restructuring and privatization of the banking sector; (b) the strengthening of non-bank financial institutions including the social security and retirement funds; (c) the strengthening of the microfinance sector; (d) the improvement of the legal and regulatory framework affecting financial institutions; and (e) the strengthening of the Ministry of Economy and Finance, so as to enable it to formulate and implement economic and financial sector policies.
Component 1: Restructuring and privatization of the Commercial Banking Sector (US$8.8 million)
10. At the start of the project, the banking sector in Mali was characterized by substantial Government control or ownership; only three banks of the nine were fully private. As part of its financial sector development strategy, the Government committed to disengage from the sector in order to improve governance and efficiency, and promote competition.
11. For this purpose, under this component, the project financed: (a) the assistance of legal advisors and privatization advisors to the Government to: evaluate the banks to be privatized, design a privatization strategy, determine the most appropriate privatization method, establish the list of potential investors, prepare the prospectus and bidding documents; assist in the evaluation of bids and selection of investors; and close on the transaction; (b) specialized bank diagnostics or audits, as needed, to support the Government in its efforts to restructure and or privatize banks by conducting customized analyses of selected banks prior to privatization; and (c) provide, on a cost-sharing basis, consultant services to help banks prepare strategic business development plans, identify needs for staff training, and implement a training program.
Assistance to the Malian Professional Bankers Association
12. The support to the Association Professionnelle des Banques et Etablissements Financiers (APBEF) was intended to enable it to provide, inter alia, advice and guidance to banks and other members with respect to banking regulations and concerns common to the industry, promote information exchange in the financial sector, and coordinate -the implementation of activities of interest to all members. APBEF’s role in facilitating training programs for staff of commercial banks has become increasingly important as a means to reinforce prudential regulations and supervision by the Commission Bancaire.
3 The project would finance through a cost-sharing basis 50 percent paid by the beneficiaries and 50 percent by the Government through the project): (a) consultants to help design and implement the training of banks and non-bank financial institutions; (b) the refurbishing of the local training center and some equipment for the APBEF; (c) the consultancy and advisory services to design and implement modem domestic interbank settlement system (with the Government playing only a catalytic role); and (d) training materials.
Assistance for Capital Markets Development
13. Although the BRVM (Regional Stock Exchange) has been established at the regional level with local branches in each of the West African Economic and Monetary Union (WAEMU) member countries, public listings and stock market activities were still extremely limited. This is due in part to insufficient awareness of stock market activities and to limited staff skills of the local branches of the BRVM and of the brokerage firm. These limitations apply also to the information available to the investor community, where individual and institutional investors have yet to learn how a stock market operates and what can be accomplished through it.
14. To facilitate the privatization of financial institutions, the project would provide financial support to the local branch of the BRVM and to the local broker (SGI) to raise awareness to the rules of the stock market, as well as to relevant regulations and policies. The project would also provide financial support for training of staff of the local branches of the BRVM, local SGI as well as the general public.
15. The results expected from implementation of the banking component are: the restructuring of all banks to ensure that they meet the prudential requirements of the Central Banque of West African States (Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO)) and the privatization of those controlled by the Government; the improvement of their services and efficiency through training of their personnel; and the improvement of savings mobilization and provision of credit to the economy. The results expected from implementation of the sub-component on the professional bankers association component is the improved coordination of justified concerns of the banking industry and dissemination of information within the financial sector, improvement of the skill-level and professionalism in the financial industry and the facilitation of joint and industry-wide product-development efforts, such as a well functioning local payment system. The results expected from implementation of the sub-component on capital market development are the facilitation of the privatization of financial institutions and a well functioning local capital market that allows efficient mobilization of risk- and/or long-term resources necessary to meet the needs of the individual and institutional investors and consumers.
Component 2 - The Strengthening of Non-Bank Financial Institutions Including the Social Security and Retirement Funds (US$3.7 million)
16. The non-bank financial institutions include the social security INPS and the civil servants retirement fund CRM and five private insurance companies (Caisse Nationale
4 d’Assurance et Réassurance (CNAR)), the SUTNBNYUMAN company, LAFIA, COLINA a subsidiary of the same company in Abidjan and Société Nouvelle d' Assurance Vie (SONA VIE). According to the data collected by the GRSF, INPS has an excess of liquidity: resources, which grew from about FCFA 12 billion in 1994 to about FCFA 18 billion in 1996, while expenses grew from FCFA 10 to 15 billion. On the other hand, CRM has a structural deficit, which grew from FCFA 1.2 billion in 1994 to FCFA 3.1 billion in 1997. Projections show that neither CRM nor INPS is viable in the long term. A 1996 study has shown that the former is plagued with deficits that go back to the early1980s, while the financial holdings of the latter would be able to provide only about a year and a third of pension expenditures, even though it has operated with annual surpluses. Under current conditions, their future operations could put a substantial strain on the Government budgetary resources. Collateral Deposit Company (CDC) is characterized by lack of transparency in its financial management and lacks operational autonomy.
17. Regarding the insurance sector, 1997 data show that, of the five insurance companies surveyed by the GRSF, three are posting losses varying from FCFA 40 million to 140 million. Figures for the year1998 supplied by the Insurance Division of the Ministry of Economy and Finance indicate that operations were profitable for all companies, largely due to the exceptionally low rate of claims experienced on automobile insurance business. Other shortcomings of these companies identified by a GRSF review are: (a) the narrowness of their product base, which is made almost exclusively of car insurance policies; as a result, their turnover amounts to about FCFA 8 billion only, as compared to FCFA 100 billion in Côte d'Ivoire, FCFA 30 billion in Senegal and FCFA 12 billion in Burkina Faso; and (b) weak management resulting in important arrears on the payment of insurance policies, insufficient technical reserves, and substantial losses to the point that the net-worth of some companies is negative.
18. The project would finance: (a) financial and institutional audits of INPS, CRM and CDC to identify immediate measures to improve their management and limit their losses and improve their accounting and procedures with a view to adequately prepare actuarial studies for INPS and CRM; (b)financial and institutional audits and to prepare action plans for insurance companies to address their shortcomings and advisory services to promote their participation in the integrated financial sector development and capital market; (c) management information systems and training of staff necessary to improve the efficiency of INPS, CRM, and CDC; (d) technical assistance to implement the recommendations of the actuarial studies; and (e) technical assistance to help insurance companies improve their management and prepare their strategic development plans.
19. The results expected from the implementation of this component are: (a) with regard to the existing social security and retirement funds: the identification, through, a financial and institutional audit, of immediate actions needed to improve their management and financial performance; the completion of actuarial studies and the identification of measures to be taken to ensure their long-term viability; and (b) with regard to other institutions (insurance companies and CDC): the preparation of conditions to ensure long-term viability and sustainable development of their activities through
5 improvement of their managerial capacities, improved portfolio management, and portfolio diversification.
Component 3 - Strengthening of the Microfinance Sector (US$20 million)
20. The microfinance sector in Mali consists of about 30 formal Microfinance Institutions (MFIs) with some 500 branches operating in both urban and rural areas, including some of the most remote regions in the country.
21. As of December 31, 1998, 24 of the largest MFIs had a total clientele of about 300,000 individuals, compared to about 230,000 in 1997. Women accounted for nearly half of the clients. Microfinance activity has grown rapidly in recent years. Total loans outstanding increased from FCFA 9.4 billion (approximately US$15.8 million) in 1997 to FCFA 11.7 billion FCFA (US$19.6 million) in 1998, an increase of 24 percent. In 1998, microfinance institutions mobilized FCFA 7.9 billion (US$13.2 million), representing a 22 percent increase over the previous year. The average loan size is FCFA 77,000 (US$117).
22. A 1997 World Bank/GTZ review indicated that although most microfinance institutions in Mali are experiencing rapid growth and posting high repayment rates averaging 95 percent, the vast majority of institutions are highly dependent on donor funding and are far from being financially sustainable. Most MFIs are characterized by weak institutional capacity, reflected in inadequate accounting and monitoring procedures, lack of management information systems, and poor financial management skills. Other key issues in the microfinance sector include: (a) the lack of an appropriate legal and regulatory framework, particularly with regard to non-mutualist institutions; and (b) inadequate Government capacity to supervise a rapidly growing number of microfinance institutions, in such a manner that does not hinder their development. However, there is a consensus that the key constraint to the development of an efficient microfinance sector in Mali is the limited capacity of MFI management.
23. In this context, the project would focus on institution building within the microfinance sector. It will finance technical assistance, consultancy services, and equipment to: (a) the Government microfinance supervisory unit, to improve its capacity to supervise and monitor MFIs; (b) to the newly created Professional Association of Microfinance Institutions (APIM), to assist it in becoming a sustainable advocacy group for MFIs through information sharing, dissemination of best practices, and networking; (c) to the National Consultative Group for Microfinance to ensure coordination among various stakeholders and monitor implementation of a supportive microfinance policy; and (d) to provide training to microfinance institutions with the aim of improving their financial and institutional performance.
24. The component would contribute to the improved institutional viability of MFIs in Mali, resulting in their capacity to deliver financial services to a large number of the poor on a financially sustainable and long-term basis. The improved financial performance of MFIs may also increase their ability to obtain commercial sources of
6 funding, leading to closer linkages between formal and informal financial institutions, and thus to a more integrated financial sector.
Component 4 - Legal and Regulatory Support for Financial Sector (US$3.5 million)
25. This project sub-component finances consultancy studies and technical assistance aimed at helping the Government identify in the regulatory framework constraints impeding the development of financial sector operations and new financial instruments or institutions, and effectively implement measures to remove them.
26. This component will support better understanding of the legal requirements for establishing valid loan/credit documents by the staff of financial entities (banks, MFIs and others); increase the access to credit facilities for Small and Medium Enterprises (SMEs) and potential rural clients; reduce the instances of intentional non-repayment of loans/credits by SMEs and private clientele of financial institutions; enhance competition; reduce fraud within the financial community and the judiciary, and reduce credit loss due to unreliable registers (commerce, land title and mining).
27. Specifically, the project will finance training for selected staff of financial institutions, and of the legal profession, in legal matters relevant to financial transactions. The project will also finance studies to identify weaknesses in the interface between the banking and the judicial sectors, and propose solutions.
28. Furthermore, the elaboration, printing and distribution of forms required for the implementation of valid financial transactions under the regional Uniform Acts of the Organization for the Harmonization of Business Law in Africa (OHADA) will be financed, and studies to propose means to better serve SMEs and rural clientele.
29. In particular, the following activities will be financed under the project:
* training for all staff in financial institutions on the changes brought about by the OHADA legislation - delivered according to the field of activity of staff;
* a study will define the regulation required to include a trained legal expert among the staff of every financial institution receiving training, in order to supervise and follow up on the application of the rules;
* studies will be carried out outlining the feasibility of: (a) establishing Islamic banking institutions; (b) acceptable credit approval processes, complying with all regional guidelines and laws, applicable to credit institutions according to loan/credit category; (c) establishing a mutual repayment conditionality among small business borrowers; (d) establishing a "quasi security" for loans/credits based on traditional values and socially accepted norms; (e) recruiting decentralized Government staff as agents for the financial institutions in collecting savings and dispensing loans/credits and identifying the legal requirements for such recruitment; (f) keeping accounts for selected entities in local languages; and (g) identifying changes required in the current regulatory or legal
7 framework, if any, to facilitate leasing; and carrying out tests of the recommendations of all such studies on a pilot basis;
* a review of existing anti-trust and unfair competition regulations, an assessment of their compatibility with the Actes Uniformes of OHADA, a proposal of the statutes for an 35 independent anti-trust regulatory body, the establishment of such a body, and the training of its staff;
* a review of the needs of the Cour de Comptes to function efficiently, the establishment of an action plan to answer such needs and to execute said plan;
* reorganization of the court-appointed legal experts - allowing access to court only for members of organized professional associations; and
* assessment of the efficiency, reliability and conformity with the law of the commercial, land title and mining registries, and proposition of remedial action, as warranted.
Component 5 - Project Implementation and Capacity Building in the Ministry of Economy and Finance (US$3.0 million)
This component was to finance two sets of activities:
*A significant portion of funds will go towards strengthening the capacity in the departments of the Ministry of Economy and Finance in charge of banking, insurance, pension funds and microfinance as well as the legal and regulatory environment for the financial sector. Technical assistance will be used to cover consultancy services to provide training to the different Ministry of Economy and Finance personnel in charge of banking, insurance, pension funds and microfinance issues. The main objective is to build capacity that will remain after the project implementation is completed in five years;
* The project will also finance the capacity building effort within the Ministry of Economy and Finance. Specifically, it will finance a Project Coordinator, Project Component Managers, an Accountant, an Administrative Assistant, a Driver, and one car assigned to the project. Necessary office equipment for the project implementation unit will be also financed under this component;
The result will be an effective implementation of envisaged activities to meet the specific development objective pursued by the project.
1.6 Revised Components
The components were not revised.
1.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations)
8 30. Based on the mid-term review of July 26, 2004, the project closing date was extended from April 2006 to April 2008. This extension was designed to allow time to implement recommendations of several studies which had been carried out under the project and to complete ongoing activities.
31. In addition, the World Bank agreed with the Government’s request to amend the Development Credit Agreement (DCA) by reconsidering the legal covenant related to bringing the Government’s participation in the capital of commercial banks to zero by the end of the project (Schedule 4.9). The achievement of another covenant (Paragraph 8 of Schedule 4) to reduce the Government’s stake in banks to 20 percent would ensure appropriate private involvement in the sector. As a result, on, the paragraph 9 of Schedule 4 to the DCA is amended to read as follows (letter of April 7, 2006):
32. “9. By April 30, 2008, the Borrower shall have taken all measures necessary to: (i) reduce the percentage of public shareholdings in all commercial banking institutions (including BDM but excluding BNDA and BHM) to twenty percent (20 percent) in terms of total shareholding by capital or voting rights; (ii) help implement CIMA’s recommendations concerning insurance companies operating on its territory; and (iii) implement the recommendations of the financial audit pertaining to INPS pursuant to Part B 1 (a) of the Project and caused INPS to comply, in due course, with CIPRES regulations”.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
33. This project was prepared at a time when the Government faced the challenge of implementing an ambitious macroeconomic reform program supported by the World Bank and International Monetary Fund (IMF), and when it sought to meet conditions for the Heavily Indebted Poor Countries (HIPC) decision point in November 1999. The restructuring and privatization program was an important part of these reforms. A consultative body consisting of representatives of financial sector (Groupe de Reflexion sur le Secteur Financier - GRSF) was created in August 1997 to address the specific issues in financial sector.
34. The design of the project drew from lessons learned from the delivery of technical assistance and in support of financial sector reforms in many countries including Mali. The main lesson learned from the ongoing Private Sector Assistance Project (PSAP) was the importance of a participatory approach in the preparation, as well as in the implementation of the project. Lack of ownership or consensus on the project’s objectives was one of the major problems of the PSAP. To avoid this problem, the Financial Sector Development Project was prepared with the full participation of the Consultative Group for the Financial Sector (GRSF). The working groups set up by the GRSF, in collaboration with the Government and the Bank, defined an action plan based on the recommendations of various studies financed with Bank assistance. The logical
9 framework sessions were attended by all concerned actors and served as the vehicle to develop a consensus on the activities to be financed under the project.
35. The project also drew two main lessons from the experience in technical assistance projects, namely: (i) the need to build a strong ownership as mentioned above; and (ii) the importance of providing technical assistance on the basis of real need instead of supply-driven programs.
36. The risks were clearly identified during the preparation. However, some of them were underestimated or have not been adequately mitigated. The risk linked to a weak commitment of the Government to take unpopular measures by implementing long term restructuring plans for the Pension Fund (Caisse de Retraite du Mali- CRM) and the social security institute (Institut National de Sécurité Sociale –INPS) was rated negligible at appraisal, but the delay in the implementation of parametric reforms was due to this weak commitment. To mitigate the risk linked to the lack of motivation of civil servants working in the implementation of project activities, it was decided to use independent consultants. Other options were not considered such as the alignment of the status of staff of working on the project to those performing similar functions in the ministry of finance (for instance the inspectors of Microfinance Supervisory Unit (CCS/SFD) with those of other inspectors in the Ministry of Finance (inspector of tax, inspector of Treasury).
2.2 Implementation
37. Two phases marked the life of the project. During the first one, the project funded many studies with little emphasis on implementation of recommendations of such studies. Under the second phase beginning after the mid-term review and particularly since 2004, the focus of the project changed from studies and training to clear results on the ground, under the impetus of a new team on the World Bank side. A concise action plan and a clear timetable were established.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
38. During preparation, a monitoring and evaluation system was designed and a Financial Sector Policy and Advisory Unit (FSPAU) consisting of a Project Coordinator, four Project Component Managers, an Accountant and Administrative Staff was established. The team was to provide quarterly progress reports. Many of the key project indicators are collected by the regional banking supervisory body and the Central Bank which facilitated monitoring.
39. However, in the early stages of implementation, the project faced problems to recruit a competent Project Coordinator. Quarterly reports were not delivered regularly in the scheduled timeframe. To strengthen the implementation unit, staff was assigned to the unit to take charge of the monitoring and evaluation aspects.
10 2.4 Safeguard and Fiduciary Compliance
40. As a technical assistance project the project environmental category was “C’.
41. Regarding fiduciary compliance, audit reports were delivered in a timely manner and their recommendations taken into account by the project implementation unit. The financial management reports were also provided in time and their quality was generally good.
2.5 Post-completion Operation/Next Phase
42. The Government and the World Bank agreed on the need to pursue the reforms carried out under the project, and to help financial sector development by supporting the implementation of the action plan for microfinance and the new financial sector development strategy prepared with support from the project.
43. It was decided that the Mali Growth Support Project (approved in 2005) would support key measures financing: (i) the privatization process of the Banque Internationale pour le Mali (BIM); (ii) the costs of the validation workshop of the Code de Procedures Civiles et Commerciales, and (iii) the costs of a validation workshop of the feasibility study of the company which will manage the stabilization of commercial banks portfolios mainly the housing bank (Banque de l’Habitat du Mali - BHM). To assure the continuity of the supervision of microfinance institutions, the possibility that a proposed rural development project will support this important activity will be explored.
44. In the medium term, new activities included in the microfinance action plan and the financial sector development strategy is expected to be continued under the Growth Support Project in the framework of its planned restructuring. In addition, some recommendations of the Rural Finance Study could be supported by the Rural Development Project.
45. Other donors are also expected to play an important role in the stabilization and development of the financial sector. The Canadian-Danish Project will provide support to reforms to the microfinance sector, and the Government has included supervision of microfinance institutions in the 2007 budget. In addition, the component managers of the implementation unit will be integrated into their respective departments in the public sector to enhance the efficiency of these services.
46. A possible technical assistance from Financial Sector Reform and Strengthening (FIRST) could also in the future contribute to strengthen the results achieved by the project. In addition, the future Development Policy Loans (DPLs) should be a strong leverage to pursue the reforms in the sector.
47. To help all these actions, the Mali Financial Sector Assessment Program (FSAP) finalized in February 2008 brings a better and updated knowledge of Mali financial
11 sector. Also, Mali has been selected as one of the pilot countries in Africa to benefit from IMF and World Bank support to carry out a financial sector development strategy under the Lipksy-Daboub initiative. This development adopted by the authorities will guide the financial sector reform process in Mali by building on progress achieved under the project. It’s expected to act as a foundation to secure further assistance from development partners for the implementation of identified reforms and make the project reforms sustainable.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy)
48. The project aimed to address key problems of the Mali Financial Sector so that it would be able to support private sector growth. The objectives of the project were and remained relevant in the present context.
49. The sector was fragmented with weak institutions in the banking sector as well as in the non-bank financial sector. The banking sector was characterized by: (i) substantial Government ownership; (ii) non-compliance with BCEAO prudential requirements on risk concentration, portfolio structure, capital base and provisioning of non-performing loans. In the non-bank financial sector; (i) the insurance companies did not meet Inter- African Conference for Trade (CIMA) prudential requirements and due to the under- development of life insurance, they were obliged to maintain a high liquid position; (ii) the long term viability of the retirement and social security funds (CRM and INPS) were in question; (iii) the microfinance sector had advantages because of the knowledge of the environment and the willingness to adapt products and methodologies to client needs, but was fragmented, had a weak management capacity, depended on donor subsidies and was not adequately supervised by the Government agency in charge of this task because of the agency’s weakness.
3.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2)
50. Achievement of the project development objective is rated as moderately satisfactory even if this is a conservative rating. In fact, the project met almost all key performance indicators and generally went beyond them. Key indicators show an improvement of financial soundness and development, measured by the level of compliance with the Central Bank prudential ratios, the ratio of M2 to GDP, the level of Government intervention in the sector and the sector openness to foreign competition, the share of bank credit to the private sector).
51. The project helped financial institutions meet key prudential ratios (capital adequacy, risk concentration, liquidity) and substantially reduce the level of Non Performing Loans (NPLs). The compliance with prudential norms has improved over the
12 project life as follows: (i) compliance with the minimum capital requirement (from 75 percent of banks in 2001 to 82 percent in 2007); (ii) compliance with the solvency ratio (from 75 percent of banks in 2001 to 82 percent in 2007); (iii) compliance with the liquidity ratio (from 22 percent of banks in 2001 to 71 percent in 2007). For the ratio of non performing loans, all but one bank, the Bank for Housing of Mali (BHM) have NPL ratio less than the regional average of 18.9 percent in 2007. The Ratio of gross NPL, excluding BHM amounted to 11.97 in 2005. On a net basis all the banks but one bank (BHM) have NPL ratio less than the regional average of 7.4 percent in 2007. For all the banks including BHM, the ratio of NPL amounted to 9.28 percent in 2007 against 10.13 percent in 2001. About BHM, its non performing loans decreased by 20 percent between June 30, 2006 and December 31, 2007.
52. Financial intermediation has been broadened by the end of the project. The number of financial institutions increased from 12 to 17 and financial depth measured by the ratio of M2/GDP has increased above the regional average of 25 percent, from 22 percent in 2001 to 30 percent in 2007. In addition, ratio of credit to GDP increased from 15 percent in 2001 to 18 percent in 2007 and the leasing activity has increased by 146 percent from 2001 to 2007.
53. Beyond the indicators monitored by the project, a technical assistance has been provided to a local firm (SEMA) that raised CFA 5 billion in the regional capital market to have a demonstration effect on availability of alternative source of funding for corporations. Credit for productive activities developed as follow: (i) commerce and tourism increased from 27.1 percent in 2001 to 43.7 percent in 2007; (ii) agriculture/fishing decreased from 17.1 percent in 2001 to 7.7 percent in 2008; and (iii) various services from 14.8 percent in 2001 to 18.3 percent in 2008.
54. The Treasury deposits were only made with state owned banks and following a no competitive bidding process. During the project life, the Treasury opened several accounts in different banks, including private banks and make deposits based on efficiency.
55. The project helped Government to reduce its ownership in the banking sector. With the exception of the Housing Bank (BHM), the participation of the Government is limited at 20 percent maximum and seven of the 13 commercial banks in the country are fully private. The privatization of Mali International Bank (BIM) supported by the project was one of the most successful of its kind in the sub region, bringing in Mali a key Moroccan bank, totaling a total asset of over 18 trillion CFAF.
3.3 Efficiency
56. The Economic or financial Rate of Return (ERR) or Internal Rate of Return (IRR) was not calculated at project appraisal due to the impossibility to quantify the expected economic returns of a technical operation of this nature. However, proceeds from divestitures far exceeded the Credit amount, which is one indication of benefits
13 exceeding costs. In terms of the time dimension of efficiency, certain reforms took longer than planned. But, the ultimate goals were achieved.
3.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency)
Rating: Moderately Satisfactory
57. The technical assistance provided by the project generally helped bank and non bank financial institutions to strengthen their capacities through training, and assistance in the preparation of business plans and to improve internal procedures aiming to control their credit activities. The project also supported the successful divestiture of the Government from State owned banks.
58. Initially the project focused on studies and training, but the activities were not focused on outcomes. There were delays in the restructuring and privatization of BIM, and BHM, and in the legal and pension system reforms. After the mid-term review, a detailed action plan focused on outcomes was agreed, and this led to a strong commitment of all stakeholders and yielded good results. The project met substantially its objective of improving the soundness, performance and competitiveness of the financial sector to enable it to support broad-based private sector growth.
59. As a result of the project, the financial system is stronger, as reflected in the improvement of compliance with prudential ratios by the banking sector. Also, financial services have improved.
Restructuring and Privatization of State owned banks
60. The banking sector has been restructured and opened to foreign competition. Five new banks have since entered the market and the sector is mostly privately owned.
61. BIM has been fully restructured: (i) the solvability ratio increased from 5.6 percent to 8.05 percent in 2007 (above the 8 percent norm), liquidity ratio increased from 56 percent to 91 percent (required minimum of 75 percent), profitability has improved from a loss in 2005 to a CFAF6 billion of net profit in 2007; (ii) the IT and information systems have been upgraded in 2007; (iii) Government stake have been divested to a strategic investor and reduced to 10.5 percent, in one of the most successful privatization in the sub region.
Government shares in BCS has been reduced from 50 percent to 3 percent in 2004
62. Malian Bank for Credit and Deposit (BMCD) and Development Bank of Mali (BDM) have been merged. In 2004, Government shares have been divested to Moroccan Bank of External Trade (BMCE), creating BDM.S.A, the 13th largest bank in WAEMU countries. The Government share in BDM.SA (merger of BDM and BMCD) has been reduced to 19.6 percent.
14 63. BHM has been recapitalized in October 2005 by the conversion of CFAF16 billion of Government deposits into capital. BHM improved its liquidity (FCFA 3.6 billion treasury in March 2008) and depositors have access again to their funds. New procedures have been introduced and the IT system has been upgraded. As a step in making the bank attractive for divesture, BHM has begun to put in place a plan to clean up its portfolio and to this end the Government and the parliament adopted a law granting BHM a special privilege to seed up the collection of its non performing loans, using extra judiciary and arbitration means. In addition, BHM has put in pace a loan recovery program with assistance from the project and expects to recover CFA 20 billion in the next six months. BHM has resumed lending activities and 4931 new accounts were opened in 2007 and 3845 as of July 2008. To help BHM to fully resume housing finance, the Government has agreed to transfer social houses to BHM, worth about CFA 40 billion. Given its improved financial position, BHM is now ready to reactivate the remainder of a credit line of CFA 1.5 billion from BOAD
Government share in all banks but BHM is below 20 percent
64. Following the recommendations of a study financed under the project, commercial banks have begun a process of improving the management of their credit and loan recovery functions. The Government also started the reimbursement of Government guaranteed debts and those due by public enterprises. To this end, it allocated CFA 3 billion in the budget. To solve this problem in the long term, the study suggested the creation of a company charged with loan recovery but the solution adopted was the creation of an asset management company which will be charged with both loan collection and the management of the seized buildings.
65. To provide alternative sources of financing to Malian enterprises, the project supported a brokerage company, General Brokerage and Intermediation Company (SGI- Mali), to define and put in place an action plan permitting the listing of three companies in the regional stock market. One of them, SEMA, issued bonds of CFA 5 billions CFA on April 2007 in the regional stock exchange. During the period, SGI Mali increased its advisory services. For example, it was involved in the privatization process of BMCD, BIM and Sotelma (Société Malienne de Télécommunications).
Strengthening of Social Security and Retirement Funds (CRM and INPS) and Insurance companies
66. CRM, the public pension scheme, has been restructured as planed. It has been spined off from the public treasury; functions as an autonomous institution and operates more efficiently (reduction in delay in processing claims). The project provided institutional support which helped CRM produce reliable accounts; prepare monthly statements and accelerate payments of pensions and to reduce 25 percent the delay of examination of files for new retired people. Pensions and benefits are paid monthly, using the banking system, from an inefficient quarterly cash payment. Based on the actuarial study financed under the project and following consultations with stakeholders, a new pension code was adopted by the Government on February 20, 2008.
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67. INPS improved its financial management, reduced claim processing time by 50 percent, and registered a global surplus (FCFA 10.26 billion as of Dec 2006) including a slight technical surplus in the retirement branch (FCFA 90.69 million as of Dec 2006). INPS comply with key CIPRES prudential norms: coverage of technical expenses (benefits) (99 percent against a minimum required ratio of 90 percent), ratio of personal expenses to total overhead (50 percent against a required maximum of 85 percent), claim processing time (45 days against a maximum 45 days required). Actuarial study of INPS has been conducted and finalized. Also with the support of the project, INPS has registered the debt due by the Government and has signed an agreement to recover this debt (CFA 8 billion). The Government respects the agreed payment schedule.
68. The insurance industry has improved between 2001 and 2007. (i) premium have increased by 25 percent; the ratio of claims to premium decreased from 54 percent to 46 percent; and (iii) investments by insurance companies increased by 32,9 percent. The National Insurance and Reimbursement Company (CNRA) which was under interim administration by CIMA has been recapitalized in 2006; Sabunynan has been recapitalized in 2007. Based on the institutional and financial audits of the six insurance companies financed by the project, companies took actions to meet CIMA’s recommendations.
Strengthening microfinance institutions and the Government supervisory unit
69. In the microfinance sector, as agreed, the activities of supervision and control and those of promotion have been effectively separated into two institutions: CCS/SFD (Cellule de Contrôle et de Supervision des Systèmes Financiers Décentralisés) and CPA/SFD (Cellule de Promotion et d’Appui aux Systèmes Financiers Décentralisés) which are now autonomous and have clearly defined functions and adequately staffed.
70. The supervisory unit is operational, well staffed (25 persons), receives budgetary allocations (FCFA 67 million in 2006, FCFA 150 million in 2007, FCFA 170 million in 2008) and has conducted 18 on site inspections in 2006, 35 missions in 2007 much higher than the 9 a year missions agreed to. With 464 microfinance institutions licensed, almost all institutions are licensed in Mali. Marginal institutions linked especially to project including credit component remain out of the regulatory framework. The improved capacities are expected to help in the supervision of microfinance institutions which should ultimately result in greater protection for the clients of these institutions.
71. APIM, the professional association of microfinance institutions, has been also assisted to improve the harmonization of technical assistance, procedures and management tools and the dialogue inside the microfinance sector. A joint bank and microfinance training center was created in 2006. It’s is now functional and partly managed by the MFI association (APIM). The center provides demand driven courses in management, credit risk assessment, banking and microfinance etc…14 courses have been provided on financial management issues and more than 600 microfinance institutions staff have been trained. In 2007, the association was able to finance 50
16 percent of its functioning costs, and has the objective of becoming self sustaining, which is important in strengthening the microfinance sector.
Improving Legal and Regulatory Framework
72. The project funded on a cost sharing basis, training to commercial banks staff. At least 36 training sessions have been provided to 1,051 persons including banks credit staff estimated at 220 persons. The other beneficiaries are especially from Justice (judges, lawyers, etc…). All but one bank experienced decrease in their NPL below the WAEMU average of 18.9 percent. For the ratio of non performing loans, all but one bank (the housing bank-BHM) have gross NPL ratio of 11.97 percent less than the regional average of 18.9 percent in 2007. On a net basis, all banks including BHM have a ratio of NPL of 9.28 percent in 2007 against 10.13 percent in 2001.
73. Besides the measures targeted in the Project Appraisal Document (PAD), the project helped the Government in drafting a Commercial Procedures Code and a Land Tenure code. The Government should organize a discussion of the proposed Land Tenure Code to ensure the synergy between it and other codes regulating mine, breeding, and water. Also a Code on Judiciary Experts’ which defines standards and requirements for better accountability and probity has been adopted by the Government. A one stop shop for converting temporary land tiles into permanent deed has been opened and allowed the issuance of 1,897 new land titles.
3.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above)
(a) Poverty Impacts, Gender Aspects, and Social Development
74. By strengthening the capacity of microfinance institutions and their viability, the project has increased access of the poor to financial services, including credit.
75. The support provided to the two pension schemes will make it easier for retired persons to receive regular revenue in their old age. The project will also contribute to develop the habit of using insurance products to reduce risks. By strengthening the insurance companies, the project is assisting customers to recover the money due to them by the companies.
76. By helping to put in place an efficient land tenure code, the project could help to reduce the conflict in land matters and should increase access to credit to poor people by providing a source of collateral.
17 (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development)
77. The project provided considerable technical assistance to institutions associated with it and thus strengthened their capacities, improved the technical quality of their staff and contributed to improve their sustainability.
78. Some actions remain to be implemented to strengthen this sustainability. It is especially the case of CRM and INPS where the new information systems and electronic management are not yet in place. In addition, because of poor salaries, project institutions tend to loose trained staff. Institutions will have problems ensuring sustainability unless this problem is addressed. This is especially the case of CCS/SFD, the supervisory/control body for the microfinance institutions.
(c) Other Unintended Outcomes and Impacts (positive or negative)
79. Studies and projects started after the launching of the project but part of the World Bank strategy in support of private sector development, increase the impact of the project. These include the Investment Climate Assessment (ICA), the Diagnostic Trade Integrated Study and the Mali Rural Finance Study carried out by the World Bank in cooperation with the Government. The Sources of Growth project can help deepen and extend the reforms initiated under the project.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes)
NA
4. Assessment of Risk to Development Outcome
Rating: Moderate
80. As a result of actions already taken by the Government and the project team, the risk is moderate.
81. In the short term, the Sources of Growth Project will support: (i) the remaining actions for the privatization of the BIM; (ii) the validation workshop of the commercial code; and (iii) the validation workshop of the feasibility study of the asset management company to be created. When the Sources of Growth project is project restructured, it could support: (i) the development of new products of CRM; (ii) reforms aiming the domiciliation of insurance contracts and the taxation of insurance products; (iii) the implementation of a new CCS/SFD by the creation of a Supervision Directorate in the ministry of finance which would help with staff retention; (iv) action plans for the microfinance sector and in the new financial sector development strategy.
82. The rural development project could support actions financed by the project and those from the Mali Rural finance study.
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83. The Government has also planned budget resources to: (i) help BHM to resume the housing financing with CFA 40 billion allocated to it; (ii) reimburse debt from public domain (CFA 3 billion) in the framework of debt collection by the commercial banks; (iii) reimburse Government debt due to INPS of CFA 8 billion; (iv) ensure the financial needs of the key institutions providing supervision and advise to microfinance institutions (CCS/SFD and CPA/SFD) with a view to substitute progressively the project support.
84. Other donors are also committed to bring their support especially in the microfinance sector with the support already planned by the Canadian-Danish Project.
5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues)
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase)
Rating: Moderately Satisfactory
85. Mali was a country with a large presence of the Government in key sectors and particularly in the financial sector. This resulted in large budgetary deficits and bad governance. To address these problems, the Government requested the World Bank and IMF to assist in defining a program of structural reforms. The Government efforts enabled it to access HIPC and reach the decision point in November 1999. The project which accompanied an adjustment operation, addressed the key issues affecting the financial sector.
86. Reforms in the financial sector began with studies and consultation between all the financial sector stakeholders which were members of a consultative body. By supporting these consultations, the World Bank helped to define the issues which would improve financial sector performance and to design a project which addresses sector needs. The action plan and the logical framework sessions were strongly participative and helped develop a consensus on the activities to be financed under the project.
87. The design of the project drew from the lessons learned from experience in delivery technical assistance and in support of financial sectors reforms in many countries. The risks were identified. Risks linked to weak commitment of Government to take unpopular measures about new pension schemes was considered negligible but the implementation has shown this risk was high and this weakness was a source of delay in the implementation of pension schemes reforms. The measures scheduled to minimize the risks of weak motivation of civil servants working in the project activities didn’t include other institutional possibilities like the alignment of status of CCS/SFD inspectors on the status of other inspectors in the Ministry of Finance. Quality at entry was assessed by the
19 Quality Assurance Group (QAG) in 2006 which judged it satisfactory. The Implementation Completion and Results Report ICR rates the quality at entry as moderately satisfactory. In retrospect, risks in some of the project components were underestimated and the institutional arrangements did not take into account options to strengthen the Government structures, particularly in the area of microfinance.
(b) Quality of Supervision (including of fiduciary and safeguards policies)
Rating: Satisfactory
88. The supervision missions were done regularly but, during the first phase of the project, the team was slow to follow-up on the conclusions of the mission and to focus on results. In this context, a strong team took in charge the restructuring of the project and focused on client needs and results-orientation and supervision work improved sharply. A quality of supervision assessment was carried out by the Quality Assurance Group in 2006 and confirmed this judgment. The QAG rated supervision highly satisfactory. The overall quality of supervision is rated satisfactory to take into account the difficulties in the early years of implementation.
89. The participative process in the identification of the action plan and the system of follow-up by the Government and the World Bank helped the project present quick results. The presence of a project team member in Bamako has also been a major factor in improving client orientation and the quality of supervision. Issues relating to financial and procurement management and recommendations resulting from audits and other evaluations were addressed in a timely manner by the team.
90. With respect to the contract relating to portfolio audit, some commercial banks expressed concern about the decision made by the Government with the approval of the World Bank to have only one firm to carry out the portfolio work of all commercial banks. The banks indicated that this presented risks with respect to the confidentiality of the data. The Central Bank and Banking Commission are the only institutions with access to all information.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
91. The project was well designed and its objective remained relevant. Some risks were underestimated or not sufficiently mitigated. During the implementation of the project, following problems at startup, the team took the required actions to improve its results. The project remained an important tool for the policy dialogue on the Mali financial sector.
20 5.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
92. During the preparation phase of the project, the Government was committed to take actions aiming to stabilize and to develop the financial sector. It was a key member of the identification process and helped establish a consultative group to assist in preparing the project (GRSF).
93. During the implementation and especially after the restructuring of the project, the Government translated its commitment by budgeting and disbursing adequate resources to help BHM to resume the housing financing, to reimburse its debt due to commercial banks and INPS, and to support the functioning of the two key institutions in the microfinance sector (CCS/SFD and CPA/SFD). It also played a major role to advice and follow-up the implementation of reforms in the sector.
94. However, the Government was slow to adopt new texts such as the pension scheme code, and reform of the social security and pension systems remain to be carried out. In addition, the land tenure code and the commercial code have not yet adopted.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
95. The project was implemented by a unit under the overall supervision of the Ministry of Economy and Finance -- FSPAU (Financial Sector Policy and Advisory Unit). The unit was charged with coordinating the implementation of the various project components and monitoring its implementation and reporting to the Minister of Economy and Finance and to the Bank
96. In general, the implementation unit was well run. Except for the first coordinator, which was charged with the project during the early stages of implementation, the other coordinators were committed to manage the project efficiently and to meet commitments in a timely manner. Training was provided to the unit staff on the various aspects of project management including on their role of liaison between the Government, the project beneficiaries and the Bank.
97. The unit has been especially proactive in the implementation of the 10 benchmarks selected after the restructuring of the project. The preparation of terms of reference was singled out by the unit as a problem because beneficiaries had difficulties expressing clearly their needs. This was due in part to their limited qualifications.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
21
98. Work by the Government and the implementation unit and their ability to develop a strong dialogue with the beneficiaries and with the World Bank facilitated the implementation and accomplishments of the project. However, weak Government commitment resulted in delays in the adoption of important legislation in for the reform of the social security system and the land tenure, and commercial codes which are important in improving the business environment.
6. Lessons Learned (both project-specific and of wide general application)
(i) Strong commitment of Government is a major condition for the successful and timely implementation of a program. Without Government support, difficult reforms would be delayed or never implemented.
(ii) Technical assistance should take into account the political constraints prior to planning the implementation of certain reforms. By example, experience has shown that pension reforms take two electoral cycles
(iii) To accelerate reforms, technical assistance should be associated to a development policy loan which is able to provide a high leverage to the technical assistance support.
(iv) The ownership of Government and different beneficiaries, from preparation to implementation, helps increase the impact of the project.
(v) The Government, the implementation unit and the World Bank need to share and agree on the management of the monitoring and evaluation system of the project from its launching.
(vi) The location of a member of the project team and preferably the TTL in the field contributes strongly to improving the policy dialogue as well as the efficiency and timely implementation of the project
(vii) Concerning the projects in the financial sector, it is important to pay attention to confidentiality especially in the collection of bank financial data. The banks associated with World Bank financed projects need to be confident that their data will stay confidential or they will not be committed to the project.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
99. In the context of exchanges on the financial sector and the points of view expressed during the ICR mission, the authorities have indicated their broad agreement
22 with the ICR conclusions. Inputs to the ICR from the borrower have been expected but were not achieved at the time the ICR was finalized.
(b) Cofinanciers
(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)
23
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) RESTR/PRIVATIZATION OF 8.8 6.1 69.3 COMM BANKING SEC. STRENGTHEN NON-BANK 3.7 5.2 140.5 FIN. INSTITUTIONS STRENGTHENING 2.0 5.1 255.0 MICROFINANCE SECTOR REGULATORY + LEGAL 3.5 3.9 111.4 ENV. OF FINANCIAL SECTOR PROJ.IMPL.+STRENGTHEN 3.0 6.6 220.0 MIN.ECON/FINANCE
Total Baseline Cost 21.0 26.9 128.1 Contingencies 2.1 0.00 0.00 Total Project Costs 23.1 26.9 Front-end fee PPF 0.00 0.00 .00 Front-end fee IBRD 0.00 0.00 .00 Total Financing Required
(b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) International Development 21.00 0.00 .00 Association (IDA)
24
Annex 2. Outputs by Component
Component 1: Restructuring and Privatization of the Commercial Banking Sector
This component aimed: (i) to help the disengagement of Government from the financial sector by restructuring and privatizing of viable state owned banks; (ii) to strengthen the capacity of the Malian Professional Bankers Association; and (iii) to diversify financial products by assisting the capital market development.
Under this component, the project would finance: (i) the assistance of legal advisors and privatization advisors to the Government; (ii) specialized bank diagnostics or audits, as needed, to support the Government in its efforts to restructure and/or privatize banks; (iii) provide, on cost-sharing basis, consultant services to help banks prepare strategic business development plans, identify needs for staff training, and implement a training program; (iv) heightening public and companies on the financial markets issues
(i) Disengagement of Government from the Financial Sector and Strengthening of Commercial Banking Sector
With the support of the Project, BMCD and BDM have been merged. Government share in BDM-SA (merger of BDM and BMCD) has been reduced to 19.6 percent.
The project helped Government to reduce its share in BCS from 50 percent to 3 percent
To support the restructuring of BHM, the project financed the audit of the credit portfolio, the manual of procedures, the implementation of new business data processing and staff training. As result, the BHM had a better knowledge of its portfolio which permitted it to obtain support for its recapitalization by the conversion of FCFA 16 billion of Government deposits into capital. BHM also improved its operational and financial management by implementing new procedures in the areas of credit and internal control. The project also helped to put in place a loan recovery program and financed the services of consultant to supervise recovery actions.
The project also supported the restructuring and privatization of BIM by financing legal and privatization advisors to carry out the privatization including, an assessment of the value of the Bank; definition of a the privatization strategy; development of the list of potential investors, preparation of the prospectus and bidding documents, the organization of a data room, the assessment of bids and the selection of investors. In addition, BIM befitted from support in strengthening its financial and operational management. BIM has been fully restructured and Government stake has been reduced to 10.5 percent
In general, the project helped commercial banks increase their capacities by financing training, the preparation of business plans and manuals of procedures, introduction of modern management tools including business data processing which resulted in a more
25 efficient corporate governance framework. An important action supported by the project was the audit of non performing loans. As a result of the audit, the banks agreed to create a company to continue loan recovery and manage the goods seized.
Other benefits were assistance to implement the new compensation system of the Central Bank (SICA-UEMOA). Mali was the first country to launch this new process aiming to reduce delays in compensation. A study on banking in Mali has been financed and helped the banks identify the opportunities for opening new agencies.
(ii) Assistance to the Bankers Association
To improve the skills of bank and non-bank financial institution staff and to harmonize the implementation of activities of common interest, the project helped strengthen the capacity of the Malian Professional Bankers Association by financing materials, training courses on a cost sharing basis (50-50), and the refurbishment of the local bank training center. About 300 agents have attended training sessions on banking matters.
(iii) Diversifying Financial Products
The project also supported the brokerage firm (SGI Mali) by increasing its technical capacity through training and by helping it to identify companies suitable to be listed in the regional stock market or to issue bonds in this market. For SGI Mali as well as the regional stock exchange branch, programs have been implemented to inform and heighten the interest of the regional stock market. Leasing activity has also increased by 146 percent from 2001 to 2007
Component 2: Strengthening of Non-Bank Financial Institutions including the Social Security and Retirement Funds
Under this component, the project supported activities aiming to strengthen the non-bank financial institutions. In this framework, this component aimed: (i) to improve the management and financial performance of the existing social security and retirement funds and to ensure their long-tern viability; (ii) to improve the managerial capacity and to ensure the long-term viability and the sustainable development of the activities of insurance companies.
The project would finance: (i) financial and institutional audits of CRM, INPS and CDC with a view to adequately prepare actuarial studies for CRM and INPS; (ii) financial and institutional audits and action plans for insurance companies to promote their participation in the integrated financial sector development and capital market; (iii) management information systems and training of staff necessary to improve the efficiency of CRM, INPS, and CDC; (iv) technical assistance to implement actuarial studies; and (v) technical assistance to help insurance companies improve their management and prepare their strategic development plans.
26
(i) Improving the Social Security and Retirement Funds
Financial and accounting audits of CRM were carried out in 2001 and 2003 and the accounts of the last five last years (2003-2007) have been recorded on the accounting and financial plans. Based on the improved financial data, an actuarial study has been carried out. To keep all stakeholders involved in the identification of parametric reforms, the project financed the workshop hold to discuss the various scenarios. A new parameters law for CRM has been approved by the Council of Ministers on February 20, 2008. The project also supported the implementation of a new business data process which makes possible monthly payments to pensioners and reduction of the time taken to process documents. Other actions strengthening operational and financial management of CRM covered the preparation of a manual of procedures, an annual statistical report, training, especially on the CIPRES procedures. Some actions as the design and execution of the communication and heighten plan and the acquisition of an integrated software package remained not yet implemented at the closing of the project.
INPS also received support in improving its accounts and operational processes, computerization, training and actuarial studies. These activities helped INPS to comply with key CIPRES prudential norms.
With respect to CDC, two studies have been realized: one relative to the financial and institutional audit of CDC and the second one on the viability of this institution. The second study concludes that it is necessary to create a new CDC more able to collect and transform the resources of the territorial collectivities.
(ii) Improving the Insurance Sector
The project helped to stabilize and develop the insurance sector by financing: (i) institutional and financial audits of six companies permitting them to meet the CIMA requirements; (ii) office automation and computer equipments; (iii) training of 150 agents; (iv) studies on the diversification of insurance products, the domiciliation of insurance contracts and the taxation of insurance polices; (v) information programs aiming to encourage the public to purchase insurance polices. These activities financed by the project strengthened the financial, institutional and operational capacities of insurance companies and improved the results of the sector in the period 2001-2006. Insurance company: (i) premiums increased by 25 percent; and (ii) damage/premium decreased from 54 percent to 46 percent; and (iii) the increasing of the companies investments of 32.9 percent. Two companies, CNRA and Sabunynan, has been recapitalized in 2006 and 2007 respectively. The project financed the institutional and financial audits of the six insurance companies that took actions to meet CIMA’s recommendations.
27 Component 3: Strengthening of the Microfinance Sector
This component sought to increase financial services delivered to the poor on a financially sustainable and long-term basis by improving the institutional viability of microfinance institutions. To this end, the project would finance technical assistance, consultancy services and equipment to strengthen: (i) the Government microfinance supervisory unit (CCS/SFD); (ii) the Government microfinance promotion unit (CPA/SFD); (iii) the Professional Association of Microfinance Institutions (APIM- Mali), (iv) microfinance institutions.
(i) Improving Microfinance Supervision and Promotion Units
The project helped CCS/SFD to be more efficient by strengthening its capacity. It financed (i) an inventory of microfinance institutions; (ii) the acquisition of equipments and computer materials including a business data system to able monitoring microfinance institutions, (iii) supervision missions, and (iv)training. CCS/SFD is now staffed adequately with 25 persons and carried out 18 on-site control missions in 2006 and 35 missions in 2007, much higher than the 9 a year missions agreed to. Concerning control, there was also an increase of the number of institutions which sent their annual reports: from 72.7 percent in 2001 to 89.8 percent in 2006.Licenses issued by CCS/SFD increased from 64 in 2002 to 261 in 2008. The Government supported the activities of this structure by allocating: CFA 67 million in 2006; CFA 150 million in 2007 and CFA 170 million in 2008. With the training provided to inspectors, CCS/ SFD has increased its capacity to carry out its mission. However, due to poor salaries, there has been some staff rotation. The solution envisaged is to give to inspectors the same status that those of finance inspectors or to increase the status of the supervision unit to a Directorate under the Ministry of Finance.
Regarding the promotion unit (CPA/SFD), it is now fully staffed with six agents; the Government funded the unit (CFA 118 million in 2006) to launch its activities (investments and studies) and then its operations (CFA 60 million and CFA 89.6 millions in 2007 and 2008, respectively). The unit received support from the project for (i) equipment and furniture, (ii) 13 missions including 8 aiming especially to encourage the grouping of microfinance institutions, (iii) 5 meetings of the National Consultative Group for Microfinance (GCNM) to follow-up the implementation of the national microfinance action plan, (iv) training and (v) the salaries of support staff during one year.
(ii) Professional Association of Microfinance Institutions
The project supported the Professional Association of Microfinance Institutions (APIM- Mali), by financing its operations costs in the initial years (Executive Director, the training coordinator and the accounting staff). This support is decreasing with the increased financial contribution of member institutions. Member institutions financed 50 percent of APIM’s operating costs in 2007. The project also helped finance: (i) equipment and computer materials; (ii) coordination weeks, meetings of the General Assembly and the management and workshops on studies prepared; (iii) the
28 implementation of a data base on microfinance institutions and a web site; (iv) the business plan of APIM-Mali and other studies like the computer development plan and studies relative to the framework and the action plans of microfinance sector; (v) the production of three quarterly news bulletins.
The joint bank and microfinance training center created in 2006, is now functional and partly managed by APIM. The center provides demand driven courses in management, credit risk assessment, banking and microfinance, etc.
Microfinance institutions have been supported by the project through the financing of the design and implementation of business plans for 12 institutions, the training of more than 600 staff, the development of business information and management systems and the rating of three institutions.
Component 4: Legal and Regulatory Support for Financial Sector
This component includes activities aiming to identify and to remove the regulatory framework constraints impeding the development of financial sector operations and new financial instruments or institutions. In this framework, the project supported studies and provided training for staff in financial institutions and various ministries as those in charge of land and justice.
Under this component, the project was to finance consultant services and technical assistance required to prepare a new land tenure code and a new civil and commercial code.
The new land tenure code has been prepared. Studies have been done to help with the revision of this code. In addition, the project contributed to finance the implementation of the urban land registry (Registre Foncier), equipment for the unit charged with the cadastre for the district of Bamako and training relative to the cession capital gains. A one stop shop for converting temporary land titles into permanent deed has been opened and allowed the issuance of 1897 new land titles.
The project helped to draft a new civil and commercial code.
A national registry has been created to centralize loan guarantees. A Code on judiciary experts has also been adopted.
In addition, the project provided: (i) a library for the magistrates; (ii) equipment and vehicles for the Inspection of Judiciary Services to help it carry out inspection missions; (iii) computer equipment for the National Judiciary Training Institute and the Commercial Courts.
29 Component 5: Project Implementation and Capacity Building in the Ministry of Economy and Finance
This component aimed to strengthen the capacity in the Coordination Unit and the Departments of the Ministry of Economy and Finance in charge of banking, insurance, pension funds, microfinance, legal and regulatory environment for the financial sector to achieve an effective implementation of envisaged activities.
The project financed consultancy services, training and office equipment for the Coordination Unit and the departments of the Ministry of Economy and Finance involved in its implementation. In the area fiscal policy, the project helped to finance two studies: the first one on the tax applicable to the leasing (the conclusion of this study has been taken into account in the General Fiscal Code) and the second one on the fiscal aspects of the costs linked to the execution of the guarantees.
30 Annex 3. Economic and Financial Analysis (including assumptions in the analysis)
NA
31 Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members Responsibility/ Names Title Unit Specialty Lending
Supervision/ICR Hugues Agossou Sr Financial Management Specia AFTFM Nestor Coffi Sr Financial Management Specia AFTFM Aissata Diop Diallo Team Assistant AFMML Maimouna Mbow Fam Financial Management Specialis AFTFM Guillemette Sidonie Jaffrin Financial Sector Specialist AFTFP Korotoumou Ouattara Sr Financial Economist AFTFP Andre Ryba Lead Financial Sector Speciali AFTFP Josephine Ngou Program Assistant AFTFP Aoua Toure Sow Program Assistant AFMML Diame Youssouf Thiam Senior Economist AFTFP Cheick Traore Senior Procurement Specialist AFTPC
(b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY92 0.63 FY93 2.25 FY94 0.10 FY95 1.23 FY96 32.14 FY97 67.24 FY98 102.30 FY99 164.78 FY00 85 302.31 FY01 0.00 FY02 0.00 FY03 0.00 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00 FY08 0.00 672.98 Total: 85
32 Supervision/ICR FY92 0.00 FY93 0.00 FY94 0.00 FY95 0.00 FY96 0.00 FY97 0.00 FY98 0.00 FY99 0.00 FY00 1 1.00 FY01 36 95.36 FY02 23 73.30 FY03 39 137.50 FY04 36 92.95 FY05 36 111.55 FY06 35 124.48 FY07 37 145.76 FY08 27 139.79 FY09 0.00 Total: 270 921.69
33 Annex 5. Beneficiary Survey Results (if any)
NA
34
Annex 6. Stakeholder Workshop Report and Results (if any)
NA
Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR
The Government has indicated that it was organizing the preparation of the report by using a consultant service. Due to the public procurement procedures, the recruitment process of the consultant took a long time. At present, a consultant has been already selected and he has begun his work. As today, the report is not yet achieved. The Government has mentioned that he will send the report to the Bank as soon as it will be finalized.
35 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders
36 Annex 9. List of Supporting Documents
- Project Appraisal Document and Development Credit Agreement - Aide Memoires - Implementation Status Report - Seventh Quality of Supervision Assessment (QSA7) - Rapports de Suivi Financier (Cellule de gestion du PDSF) - Rapport Revue à mi-parcours (Cellule de gestion PDSF) - Rapports d’activités (Cellule de gestion PDSF) - Plans d’actions (Cellule de gestion PDSF) - Apercu sur le Bilan du PDSF (Cellule de gestion du PDSF) - Rapports sur le système bancaire, le secteur de la protection sociale, le secteur des Assurances (GRSF) - Rapports annuels du marché malien de l’assurance (Ministère des finances ; 2005 et 2006) - Note sur les activités du CCS/SFD (CCS/SFD) - Note sur les activités du CPA/SFD (CPA/SFD) - Note sur l’APIM - Note sur la CRM - Note sur l’INPS - Tableaux statistiques sur le secteur bancaire et le secteur de la microfinance (Direction Nationale BCEAO-Mali) - Rapport annuel 2007 de la Commission Bancaire
37 ° ° ° FORMER 5 0 5 Atlantic SPANISH ALGERIA SAHARA The boundaries, colors, denominations and any other information Ocean shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.
MAURITANIA 0 150 300 KILOMETERS
MALI
SENEGAL NIGER THE GAMBIA Bamako BURKINA NIGERIA GUINEA- FASO BISSAU GUINEA BENIN ALGERIA GHANA TOGO CÔTE D'IVOIRE
10°
MALI TOMBOUCTOU
Tessalit SELECTED TOWNS AND CITIES 20° CERCLE CAPITALS Ti-n-Zaouâtene 20° Aquelhok REGION CAPITALS KIDAL NATIONAL CAPITAL Araouane REGION FLOOD AREA REGION Kidal RIVERS Aéfis CERCLE BOUNDARIES REGION BOUNDARIES INTERNATIONAL BOUNDARIES Bourem Niger GAO Tombouctou Gourma-Rharous Goundam REGION Dire Gao MAURITANIA Doro Niafounké Menaka Gossi Gogui Banbara-Maoundé Ansongo Korientzé Kersani Andéramboukane Ballé Nagara Nioro Nampala Youvarou Hombori Youri Nara Boré Tanal 15° Aourou Labbezanga Yélimané MOPTI Boni 15° Goumbou Douentza Senegal R. Maréna Sandaré Sokolo REGION Kona NIGER Diéma KOULIKORO Sevare Ségala Mourdiah Tenenkou Mopti Kayes Diagounté Kamara Bandiagara Gangonteri Séfeto Niono Diamou REGION Koro KAYES Baoulé Boron Didiéni SEGOU Macina Djenné Bankass Sadiola Bafoulabé Kourouninkoto Toukoroba SENEGAL REGION Say Mahina REGION Namala Kolokani Dialafara Markala Kersedougou Oualia Tafassadaga Banamba Niger Djiboura Toukoto Massantola Segou Falémé Madina Bani San Bafing Bati-Makana Faladyé Tamani Tominian Manantali Badinko Sirakorola Kita Nossombougou Sanando Bla BURKINA FASO Bakoye Négala Kéniéba Kati Falo Kimparana Tambaga Barouéli Satadougau Kourokoto Sirakoro Koulikoro Diaramana BAMAKO Faladié Banifing Kourague Galé Siby Koutiala Yorosso Faraba Baléya Sanankoroba Dioila Naréna Kouri Kangaba Kourémalé Dogo Massigui Faramana Sélingué Bamankoro Sido NIGERIA BagoéSIKASSO Bougouni BaouléKouale CAPITAL AREA Faragouran Niena Sikasso Niger Kébila
AUGUST 1995 OF BAMAKO Badogo Yanfolila REGION IBRD 27217 Kolondieba GUINEA Yorobougoula Kadiana TOGO Kalana BENIN Kadiolo Manankoro Zegoua GHANA ° ° ° 5° 10° 10 5 0