Document of The World Bank Public Disclosure Authorized Report No: 25705 IMPLEMENTATION COMPLETION REPORT (IDA-35630) ON A CREDIT Public Disclosure Authorized IN THE AMOUNT OF US$6 MILLION TO THE UNION OF THE COMOROS FOR A EMERGENCY ECONOMIC RECOVERY CREDIT Public Disclosure Authorized MAY 20, 2003 AFTP1 Africa Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective April 1, 2003) Currency Unit = Comorian Franc (KMF) KMF 1 = US$ 0.002183 US$ 1 = KMF F458 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS CURE Crédit d'Urgence au Redressement Economique EERC Emergency Economic Recovery Credit ICR Implementation Completion Report GDP Gross Domestic Product HIPC Highly Indebted Poor Country IMF International Monteray Fund ISS Interim Support Strategy KMF Comoros Franc QAG Quality Assessment Group MOP Memorandum of the President MTR Mid Term Review N/A Not Applicable OAU Organization of African Unity OP Operational Policy PC Personal Computer PCD Project Concept Document PDO Project Development Objective PID Project Information Document PIU Project Implementation Unit PNAC Pharmacie Nationale Autonome des Comoros PRSP Poverty Reduction Strategy Paper PSR Project Status Report SMP Staff Monitored Program TF Trusd Fund USD/US$ United States Dollar Vice President: Callisto Madavo Country Manager/Director: Hafez Ghanem Sector Manager/Director: Philippe Le Houerou Task Team Leader/Task Manager: Colin Scott COMOROS Emergency Economic Recovery Credit CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 8 6. Sustainability 8 7. Bank and Borrower Performance 9 8. Lessons Learned 10 9. Partner Comments 11 10. Additional Information 19 Annex 1. Key Performance Indicators/Log Frame Matrix 22 Annex 2. Project Costs and Financing 23 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 25 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 26 Annex 6. Ratings of Bank and Borrower Performance 27 Annex 7. List of Supporting Documents 28 Annex 8. Expenditure Table 29 Project ID: P074054 Project Name: Comoros Emergency Economic Recovery Credit Team Leader: Wolfgang Fengler TL Unit: AFTP1 ICR Type: Core ICR Report Date: May 20, 2003 1. Project Data Name: Comoros Emergency Economic Recovery Credit L/C/TF Number: IDA-35630 Country/Department: COMOROS Region: Africa Regional Office Sector/subsector: Central government administration (100%) Theme: Conflict prevention and post-conflict reconstruction (P); Macroeconomic management (P); Decentralization (S); Other social protection and risk management (S) KEY DATES Original Revised/Actual PCD: 05/09/2001 Effective: 09/18/2001 09/18/2001 Appraisal: 06/21/2001 MTR: Approval: 08/02/2001 Closing: 12/31/2002 12/31/2002 Borrower/Implementing Agency: GOVERNMENT/PLANNING COMMISSION Other Partners: None STAFF Current At Appraisal Vice President: Callisto E. Madavo Callisto E. Madavo Country Director: Hafez M. H. Ghanem Hafez M. H. Ghanem Sector Manager: Philippe H. Le Houerou Cadman Atta Mills Team Leader at ICR: Wolfgang Fengler Christos Kostopoulos ICR Primary Author: Colin S. Scott; Vincent Da Cruz 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: UN Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: Country background: The Union of the Comoros comprises the three Comoros Islands that declared independence from France in 1975: Moheli, Anjouan, and Grande Comore. The central government is located on Grande Comore. For many years, the situation in Comoros has been marked by poverty, poor governance and extreme political instability, including numerous coups and coup attempts. In 1997, conditions deteriorated further: military authorities in Anjouan, the poorest of the islands, attempted to secede and both the central government and the Organization of African Unity imposed a blockade, completely isolating the island. Differences over how to proceed sparked internal disputes on Anjouan, including outbreaks of violence, but negotiations and attempts to forcibly re-integrate Anjouan failed. This failure in turn increased tensions on the island of Grande Comore, leading to the overthrow of the central government by Colonel Azali Assoumane in March 1999. Subsequently, negotiations made progress and, in February 2001, all parties signed a Framework Agreement for National Reconciliation in the town of Fomboni. This agreement outlined a path to reunification and democratization of the country, including a transition period, a referendum on a new constitution, a government of national unity and finally elections in early 2002. Hopes that real change was possible were high, including among much of the World Bank country team. In Comoros, per capita GDP has fallen throughout much of the past decade and now is below US$400. Social services delivery, never very good, deteriorated further during the secession, particularly in Anjouan. In 1998, the Bank suspended disbursements due to non-payment of arrears, but by January 2000, the new central government cleared arrears to the Bank, leading to the resumption of Bank disbursements and a review of the country’s portfolio. World Bank strategy: In November 2000, the Bank adopted an Interim Support Strategy (ISS) with three scenarios: in case of renewed violence, the Bank would suspend its activities; if there was no change to the situation, the Bank would only carry out an infrastructure project, capacity building and assist the government to define a development vision; and in the high case scenario, the Bank would go ahead with an Emergency Recovery Credit, eventually leading to a PRSP and debt relief under HIPC. The high case would be triggered by (i) substantial progress in public management on all three islands, (ii) agreement on an integrated budget for the three islands, and (iii) evidence of Government transfers to, and Government expenditures in, Anjouan. This would imply tangible and decisive progress towards national reconciliation. High case scenario: A Bank mission to the Comoros in March 2001, just after the Framework Agreement was signed, concluded that there had been sufficient progress to warrant the high case scenario. At an informal donors’ conference in July 2001, the government presented a US$12.8 million Emergency Reconstruction and National Reconciliation Program of which the Bank was to fund about half. The Bank’s country team showed strong support for the government’s reconciliation strategy and rapidly prepared a US$6 million Emergency Economic Recovery Credit (EERC) under OP 8.50. This credit was approved by the Board of Directors in August 2001. Six days later the local government in Anjouan was overthrown in a coup. The Bank sent a verification mission which concluded that the new authorities in Anjouan would continue to support the Framework Agreement and went ahead with the implementation of the credit. EERC objectives: The Memorandum of the President states that the credit's main objective was to finance the critical transition out of the secessionist crisis. The credit would do this by supporting a government economic recovery program which intended to alleviate distress among the poor and support the process of national reconciliation. This corresponded to the view of the government that the secession was the result of poverty on the islands concerned. Therefore, in the government’s program, (i) a poverty-reduction component was to address the root causes of the conflict, (ii) a decentralization component was to pave the way for the outcome of the transition, allowing the country to function as three islands with largely autonomous governments, and (iii) a national reconciliation component was to pay for meetings, travel and seminars, thereby supporting the transition process itself. The MOP also - 2 - states that credit was intended to signal that the international financial institutions were willing to help the Comoros and to leverage additional donor funding. Consistency with strategies: The Emergency Recovery Credit was a central element of the Bank's Interim Support Strategy for the Comoros, which stated that there “can be no sustainable growth and poverty reduction in Comoros without a solution to the separatist crisis and a move to a broadly accepted government.” Its objectives complemented the Framework Agreement and corresponded to the government’s Policy for National Reconciliation. The Bank’s Interim Support Strategy was therefore “closely aligned with the objectives and sequencing of priorities of peace accords and rehabilitation plans agreed to by parties to the conflict” (OP 2.30 ‘Development Cooperation and Conflict’). High risk: In practice, the credit was to allow the Bank to back a largely political transition process that seemed to offer the best chance in years to pull the country out of an ever-worsening crisis. Even though this process was supported by the military rulers and opposition of both Comoros and Anjouan, the Bank was well aware that investing in it meant taking a high