Document of The World Bank FOR OFFICIAL USE ONLY Report No 76230-GN INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY FOR GUINEA FOR THE PERIOD FY14-17 September 4, 2013 International Development Association West Africa 3 Country Management Unit, AFCW3 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Sub-Saharan Africa Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The previous Country Assistance Strategy for Guinea (Report no. 25925-GUI) was discussed by the Board of Executive Directors on June 10, 2003. CURRENCY EQUIVALENTS (Exchange rate effective as of Jan 1, 2013) Currency Unit = Guinea Francs (GNF) US$1 = 7,000 GNF GOVERNMENT FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory IDB Islamic Development Bank Activities IDF Institutional Development Fund APIP Investment Promotion Agency IFAC International Federation of APL Adjustable Program Lending Accountants AU African Union IFR Interim Financial Report Bac Baccalaureate ISN Interim Strategy Note BCRG Central Bank of Guinea JSAN Joint Staff Advisory Note BE Business Edge LSDP Local Supplier Development CAS Country Assistance Strategy Program CASA Conflict Affected States in Africa MDGs Millennium Development Goals CBG Guinea Bauxite Company NSDS National Strategy for the CNT National Transition Council Development of Statistics CPIA Country Policy and Institutional PAO Professional Accounting Assessment Organization DTP3 Diptheria-tetanus-pertussis PFM Public Financial Management EAPSP Second Emergency Agricultural PHRD Policy and Human Resources Productivity Support Project Development Fund ECOWAS Economic Commission of West PIU Project Implementation Unit African States PPD Public-Private Dialogue EDG Energy of Guinea PPPs Public-private partnerships EGTACB Economic Governance and PREMA Program for State Reform and Technical Assistance and Modernization of the Public Capacity Building Administration EITI Extractive Industries PRSP Poverty Reduction Strategy Transparency Initiative Program EPC Efficient Wood Cookers SIP Small Investment Products GDP Gross Domestic Product SME Small and Medium Enterprise HCREMA High Commission for State SOGUIPAMI Guinean Mining Heritage Society Reform and Administration TFR Total Fertility Rate Modernization UN United Nations HIPC Heavily Indebted Poor Countries WAAPP West Africa Agricultural HIV/AIDS Human Immune Deficiency Productivity Program Virus/ Acquired WAEMU West African Economic and Immunodeficiency Syndrome Monetary Union IDA International Development Agency ii IDA IFC MIGA Vice President: Makhtar Diop Regional Vice President: Jean Philippe Prosper Vice President: Michel Wormser Country Director: Ousmane Diagana Regional Director: Yolande Duhem Program Manager: Ravi Vish Country Manager: Cheick Fantamady Kante Regional Manager: Mary-Jean Moyo Task Team Leader: Conor Healy (Task Team Leader) ACKNOWLEDGMENTS The World Bank Group greatly appreciates the close collaboration of the Guinean authorities in the preparation of this Country Partnership Strategy. The preparation of the document involved extensive discussions with government representatives at all levels, as well as civil society, private sector, academia and development partners. The strategy is the result of a team effort that drew on knowledge, experience, and guidance from individuals across the World Bank Group. We thank them for their contributions. iii TABLE OF CONTENTS EXECUTIVE SUMMARY .......................................................................................................... 1 I. INTRODUCTION ...................................................................................................................... 3 II. COUNTRY CONTEXT ............................................................................................................. 4 A. Political and Institutional Context................................................................................................. 4 B. Economic Context ......................................................................................................................... 4 C. Poverty and Gender Profiles ......................................................................................................... 6 III. DEVELOPMENT CHALLENGES AND OPPORTUNITIES............................................. 10 A. Overcoming Fragility and Laying the Foundation for Long-term Stability................................ 10 B. Laying the Foundation for Good Governance ............................................................................ 10 C. Diversified and Inclusive Growth ............................................................................................... 12 D. Strengthening Human Capital ..................................................................................................... 14 IV. GOVERNMENT’S STRATEGY ............................................................................................ 15 A. Unlocking Diversified and Inclusive Growth: Guinea’s Development Agenda ......................... 15 PRSP-III .............................................................................................................................................. 15 B. Targeting Growth by Sector........................................................................................................ 15 C. Embracing Regional Integration ................................................................................................. 16 D. Promoting SMEs and an Enabling Business Environment ......................................................... 16 E. Developing Twenty-first Century Skills ..................................................................................... 17 V. WORLD BANK GROUP PARTNERSHIP STRATEGY FOR GUINEA (FY14-FY17) .. 17 A. The World Bank’s Role in the Current Landscape of Development Assistance in Guinea........ 17 B. Ongoing World Bank Group Portfolio........................................................................................ 18 C. Lessons from the Previous Country Strategies ........................................................................... 19 D. Proposed Program ....................................................................................................................... 19 VI. RISK ASSESSMENT ............................................................................................................... 30 VII. ANNEXES ................................................................................................................................. 32 Annex 1: Guinea CPS Result Framework .......................................................................................... 33 Annex 2: Guinea Country Assistance Strategy (2003-2006) .............................................................. 37 and Interim Strategy Note (FY11-FY12) Completion Report ............................................................ 37 Annex 3: Millennium Development Goals ......................................................................................... 58 Annex 4: The WBG’s Role in the Current Landscape of Development Assistance in Guinea .......... 59 Annex 5: Stakeholder Consultations................................................................................................... 60 Annex 6: Summary of Gender Portfolio Review................................................................................ 61 Annex 7: Summary of Client Survey Findings ................................................................................... 64 Annex 8: Addressing Fragility across World Bank Portfolio in Guinea ............................................ 66 Annex 9: IFC program status (portfolio and pipeline)........................................................................ 69 Annex 10: Summary of Guinea Conflict Analysis: a private sector perspective/ IFC ....................... 70 Annex 11: Overview of Main Trust Funds ......................................................................................... 75 Annex 12: Statistical Development in Guinea ................................................................................... 88 Current Status and Planned Activities over the CPS Period ............................................................... 88 Annex A2: Guinea at a Glance ........................................................................................................... 91 Annex B2: Selected Indicators of Bank Portfolio Performance and Management............................. 93 Annex B3-A: IBRD/IDA Program Summary ..................................................................................... 94 Annex B3-B: IFC and MIGA Program Summary .............................................................................. 95 Annex B4: Summary of Nonlending Services .................................................................................... 96 Annex B5: Social Development Indicators......................................................................................... 97 Annex B6: Key Economic Indicators ................................................................................................. 98 iv Annex B7: Key Exposure Indicators .................................................................................................. 99 Annex B8-A: Operations Portfolio (IBRD/IDA and Grants) ........................................................... 100 Annex B8-B: Statement of IFC’s Held and Disbursed Portfolio ...................................................... 101 LIST OF TABLES Table 1: Percentage of Economically Active Guinean Population in Different Areas of Work by Gender10 Table 2: Rates of Enrollment by Age, 2007 and 2012 ................................................................................ 14 Table 3: Guinea’s Progress towards achieving MDGs ............................................................................... 15 Table 4: Indicative Lending and Non-Lending Program ............................................................................ 21 Table 5: On-Going Lending and Non-Lending Program ............................................................................ 22 Table 6: Current Major Mining Sector Projects in Guinea ......................................................................... 27 LIST OF FIGURES Figure 1: Per capita incomes have stagnated in spite of high resource depletion ......................................... 5 Figure 2: Ratio of Female to Male Primary Enrollment (%) (WDI data) ..................................................... 8 Figure 3: Maternal mortality ratio (national estimate, per 100,000 live births) (WDI data) ........................ 9 Figure 4: Improvements in access to water and sanitation in Guinea (WDI data)...................................... 11 LIST OF BOXES Box 1: The data comparability and characteristics of poverty in Guinea ............................................. 7 Box 2: Guinea – Gender Policy .................................................................................................................. 8 Box 3: LPDSE: Energy Policy Letter ......................................................................................................... 12 Box 4: PNIASA – National Agriculture Strategy ....................................................................................... 13 v WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 EXECUTIVE SUMMARY Guinea has made considerable progress in stabilizing over the past two years. Emerging from political isolation, instability and military rule, Guinea adopted a new constitution, elected a President, and fully re-integrated into the international community. A reform of the security sector was vigorously engaged. Macro-economic stability was restored, and debt sustainability dramatically improved with the attainment of the enhanced Highly Indebted Poor Countries (HIPC) completion point in September 2012. Social, institutional and economic decline which had been ongoing for years was halted. In May 2013, the government endorsed a third poverty reduction strategy for the period 2013-15 around four main priorities: (i) governance and public sector reform; (ii) growth and economic diversification; (iii) service delivery; and (iv) reducing regional disparities through local development and decentralization. Building on its vast endowment of natural resources, Guinea has now embarked on a path of long term development. Yet, if protracted, poor governance and political instability will continue to hinder prospects to reduce poverty and achieve shared prosperity. A legacy of political instability, insecurity and pervasive poor governance prevents harvesting the benefits of Guinea’s natural wealth for the vast majority living in extreme poverty. “Shared prosperity�, for Guineans, primarily means the equitable distribution of the mineral rents. Guinea’s natural endowments, mineral resources, land, sun and water, are immense, but were not made available for poverty reduction. In the last decade, per capita incomes hardly grew, poverty rose sharply in recent years and the country’s mediocre economic and social performance exemplifies the paradox of plenty. The World Bank Group Country Partnership Strategy (CPS) for FY14-17 will support Guinea to implement a long-term development agenda of reducing extreme poverty and enhancing shared prosperity. It addresses poverty reduction and shared prosperity by supporting improved governance systems, fostering accelerated, equitable and diversified growth in Guinea and accompanying improvements in human capital. Building on a World Bank Fragility Assessment and on the Interim Strategy Note (ISN, 2011-12) which focused on human development and service delivery through decentralization, this CPS will help the country address long-term challenges of building a credible governance system to enable private sector investments, ensuring the transparent management of mineral resources, strengthening the efficiency of the energy and agriculture sectors and improving the human capital. A strong focus on governance, including transparency, public expenditure and investment management, and efficiency of key sectors, is intended to build the foundations for shared benefits and prosperity from mineral wealth governance. At the same time, with strong involvement from IFC and MIGA, the CPS aims to accompany the authorities’ increased efforts to lifting binding constraints to inclusive and private sector-led economic growth, focusing in particular on ensuring sustainability of energy services and developing modern agriculture. The Bank will continue to be a key partner in building systems to improve lagging human development indicators for absolute poverty reduction, through more efficient and transparent allocation of resources, and to build shared prosperity by aligning the business environment and education system with Guinea’s economy. Regional synergies are critical to unlock Guinea’s growth constraints. Guinea has the opportunity to use its strategic position, access and resources to become an important player in West Africa, and to use its potential to benefit all Guineans. Furthermore, a coordinated regional approach will enhance the Bank Group’s leveraging capacity with private and public partners and regional organizations to enable Guinea develop growth corridors, exploit its hydropower potential, and become an important player in power generation in the sub-region. This ambitious approach requires tailored government infrastructure investment plans, a productive dialogue with private sector partners and a strong commitment to the regional agenda. The Bank Group will tackle governance challenges and further leverage partnerships with the public and private sector. Effective and efficient use of financial resources has been a binding 1 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 constraint to progress in Guinea. The Bank Group’s focus on governance will contribute to expand domestic fiscal space and higher availability of donor resources in support of development programs. Uncertainties still surrounding Guinea’s political and economic environment warrant a flexible approach. A limited number of projects is therefore envisaged in the first years of the CPS, and the Progress Report on the CPS will offer the opportunity to fine-tune the CPS in its remaining years. The mix of instruments will be based on progress recorded in the first years of implementation, as well as on the lessons from ongoing projects. The upcoming closing of several operations provides the Bank with the opportunity to significantly renew its portfolio of projects, and exercise strategic selectivity. 2 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 I. INTRODUCTION 1. The Bank Group’s engagement builds on an Interim Strategy Note prepared in 2008 and a Country Assistance Strategy (CAS) which expired in 2006 in a context of a deteriorating political and social climate. During the previous CAS period, the economic landscape of Guinea worsened, economic growth slowed and the incidence of poverty grew from 49 percent in 2003 to 53 percent in 2007. A military coup in 2008 led to a suspension of Bank operations for nearly three years. The combined effects of regional insecurity, low international prices for Guinea’s main commodities, and political and social turbulence catapulted Guinea into a state of fragility comparable to that of post- conflict countries. 2. While continued political instability was the main obstacle to growth, other issues also contributed. The absence of infrastructure investment isolated large segments of the population, contributing to gender inequality as traditional cultural practices became more entrenched. In addition, an extremely difficult business climate prevented the development of a competitive private sector. The expansion of the mining sector also possibly led elites to compete for rents, rather than develop the economy and institutions, thus further fueling instability. 3. The adoption of a new Constitution in April 2010 marked the beginning of a new era for Guinea. The new constitution allowed the return to civilian rule through elections, and the reform of the security sector. Presidential elections were successfully organized in 2010, and the suspension of aid was lifted as the newly elected Government was recognized by the international community. In September 2012, Guinea achieved the highly indebted poor countries (HIPC) completion point. 4. The Third National Poverty Reduction Strategy Paper (PRSP3) approved by the Government in May 2013, aims to accelerate economic growth and progress toward the MDGs. The strategic vision of the PRSP3 is to use Guinea’s large mining rents to alleviate poverty and develop a competitive, employment-generating private sector. Stronger governance and transparency in the mining sector, reinforced by external anchors such as the Extractive Industries Transparency Initiative (EITI) and “Publish What You Pay�, aims to ensure that the mining sector fairly and openly contributes to fiscal revenues. A massive public investment program that prioritizes energy, transport and agriculture is envisaged to increase productive private employment and reduce spatial inequalities, while programs for education and health are targeted to benefit the poor. Continued monitoring and evaluation will inform policies and projects and help strengthen the re-established democratic institutions. Mitigating the risks of a mining economy is even more difficult in the context of Guinea’s political economy and the challenges posed by regional insecurity, drug trafficking, gender imbalances and climate change. 5. Following the democratic elections of 2010, the international donor community converged to support the newly elected Government of Guinea. In addition to the Bretton Woods institutions, the main development partners contributing substantially in financial support to the country are the African Development Bank, the European Commission, the Islamic Development Bank, and Agence Française de Développement. However, on specific issues other institutions and partners are crucial. The United Nations (UN) coordinates the interventions in the area of security reform, with contributions from bilateral aid, as well as from ECOWAS and the African Union. USAID plays a crucial role in establishing democratic institutions, complementing the work of the EU. The EU has led the work on support for the justice sector. Non-traditional development partners, including Arab countries, China, Brazil, Russia and India, have focused on areas closely linked to Guinea’s comparative advantage such as mining and agriculture, or where public private partnerships could yield rapid transfer to purely private activities. 3 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 II. COUNTRY CONTEXT A. Political and Institutional Context 6. Guinea is only gradually emerging from political isolation and instability, but tensions remain. Upon opting for independence, officially declared on the 2nd of October of 1958, Guinea almost immediately broke all ties with the French administration, but then lived under a succession of autocratic regimes, civilian or military. After a first long period of central planning, a new regime started a broad range of market oriented reforms in the late 1980s. Following initial stabilization gains (until mid-90s), macroeconomic performance weakened, structural reforms were halted – as confronting solid vested interests, and the repression of civil and political liberties, combined with widespread corruption, resulted in disastrous development outcomes and frequent urban social unrest. In late 2008, a military junta seized power with a coup, which prompted the international community to stop formal relationship with (and suspend aid to) Guinea. In 2009, the deadly repression of a mass opposition rally prompted the United Nations to investigate responsibilities with threats of prosecution through the international criminal court. Growing tension within the junta eventually led to its implosion and acceptance to renounce power in favor of civilians, against the promise of security services reform, as per the Ouagadougou Accord of January 15, 2010. 7. A transition process (led by the National Transition Council) with support from the Economic Commission of West African States (ECOWAS), the African Union (AU) and the international community, was organized and led to the successful election and investiture, through a fair and transparent process, of President Condé in December 2010. Yet, the parliamentary and local elections planned to be held shortly thereafter have since been repeatedly postponed, and in lieu of an elected parliament, a National Transition Council (CNT) composed of 155 persons handpicked from the Guinean society, serves as legislative body. The repeated delays and the surrounding negative political debate, which centered largely on ethnic division, continue to pose a serious challenge to the country’s transition to a stable democracy. The elections are currently planned for September 2013. B. Economic Context 8. Since 2011, the authorities promoted a macroeconomic stabilization program. Elected authorities inherited a precarious macroeconomic situation, characterized by rampant inflation, negative per capita economic growth, high deficits and arrears, and a highly unsustainable indebtedness situation. The Government responded by immediately suspending reliance on central bank financing and froze most investment contracts initiated by the military junta. An Extended Credit Facility program was signed with the IMF and Guinea received budget support from the World Bank and the African Development Bank. Arrears to external creditors were cleared and, in September 2012, Guinea reached the HIPC completion point, twelve years after having reached the decision point. US$2.1 billion worth of external debt (in net present value terms) vis-à-vis multilateral and bilateral creditors was written off, equivalent to annual savings of US$115 million in debt service for the next 20 years. External investors, mostly attracted by mineral resources, started to come back; economic growth rebounded and became positive in per capita terms, and inflation decelerated. 9. While necessary, macro-economic stability will nonetheless be largely insufficient to make a significant dent on poverty. During the last ten years, per capita GDP grew annually by 0.4 percent on average. Excluding the revenues of the mining sector (shared between foreign investors and the government), per capita incomes are believed to have stagnated in the last decade, or even decreased, as per capita private consumption decreased over the same period. Guinea’s economic growth has increasingly become dependent on resource extraction, and the computation of adjusted net savings suggests that Guinea’s wealth has been decreasing by the equivalent of more than 20 percent of GNI (that 4 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 is, US$1billion in 2012) every year since 2007. This indicates that investments have been greatly insufficient to offset mineral rents dissipation in Guinea. Private investments (including residential investments and maintenance) averaged only 15 percent of GDP between 2007 and 2012, and dropped to a low of 5 percent in 2010 when foreign investors in the mining sector fled the country, frustrated by frequent changes in the terms of contracts. Public investment averaged 5 percent of GDP over the same period, and its effectiveness was highly questionable -- in particular before 2011 when performance audits revealed ex-post that most ongoing investment programs did not comply with procurement rules and procedures. The deterioration of the investment climate is reflected in the evolution of the Country Policy and Institutional Assessment (CPIA) ratings between 2007 and 2012, which saw a strong decline in the sub-ratings (ranging from 1 to 6, worst from best) concerning the business regulatory environment (from 3.0 in 2007 to 2.5 in 2012) and transparency and accountability (from 2.5 in 2007 to 2.0 in 2012). Figure 1: Per capita incomes have stagnated in spite of high resource depletion 420 15 GDP per capita, PPP US$ Adjusted net savings, % of GNI 10 410 5 400 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 390 -5 -10 380 -15 370 -20 -25 360 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -30 10. Guinea’s large natural resource rents will continue to create pressures from elites and groups that aim to monopolize political and economic institutions in order to capture these rents. The country is among the world’s largest bauxite producers and has rich reserves of gold, iron ore and diamonds. Guinea is currently a candidate country under the EITI and has started implementing the principles of the initiative but has not yet met all the requirements. Given the significance of mining as a potential driver of growth, or fragility, enhancing the transparency and effectiveness of natural resource management could generate valuable resources and increase trust in, and legitimacy of, state institutions. 11. The main engine of growth in Guinea is the mineral sector, which in itself creates substantial risks. The extractive industry does not create many direct jobs, and can lead to increased income inequality. Secondly, strong investment and policies from the government are a condition to diversify the economy. Thirdly, the sector increases governance risks and the potential for corruption. There is a strong risk that Guinea’s economy, very natural-resource rich, could become subject to the “resource curse�. Such undesirable development can be avoided by increased investment in roads and energy that will allow for diversification through inclusive private sector development and improved agricultural productivity; measures to increase institutional capacities to manage government resources transparently and efficiently; and the development of human capital. 12. Estimates based on different poverty surveys suggest that accelerated, inclusive growth could have had a significant impact on poverty reduction. Growth could have a significant impact on poverty reduction in Guinea: current low level of inequality and the computation of the poverty elasticity between 1995 and 2012 suggest that one percentage point growth in per capita private consumption could result in one percentage point reduction in the poverty rate, should growth be equitably distributed across 5 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 households. In recent years, however, slow economic growth and the mismanagement of mineral rents prevented a significant reduction in poverty. 13. Mineral rents should be used primarily to support this investment program, but remain volatile. Guinea’s mining sector accounts for over a quarter of the country’s GDP and around 80 percent of its export earnings. In the forthcoming years, investments in the mining sector are projected to double, and mining revenues could significantly support the public investment program and the necessary diversification of the economy which could lead to shared prosperity. However, such a strategy bears important risks. On the one hand, possible delays in project implementation (with political instability and difficulties to develop and protect stable and open contracts between the Government and miners), and volatile world prices make revenue forecasts uncertain and call for continued prudent macro-economic policies. On the other hand, efforts need to be accelerated to (i) improve the business environment for prospective investors, and (ii) convert revenues into effective and cost-efficient public investments in infrastructure and human development. This puts programs to improve mineral governance and public financial and investment management at the center stage of the Government strategy. In addition, for small investors, a number of services need to be supplied to improve the regulatory business environment. Recent progress recorded in the 2013 Doing Business indicators are first steps for investors to secure land rights, access finance, simplify registration, and strengthen forward and backward linkages with the mining sector. C. Poverty and Gender Profiles Poverty 14. With elusive and volatile growth, the poverty rate increased from 53 percent in 2007 to 55 percent in 2012. Declining average per capita consumption contributed to the increase in poverty, but a mild reduction of inequality, notably in rural areas, somewhat contained the overall increase in poverty (see Box 1). Rural – urban migrations, and the sharp increase in food prices explain why rural areas fared better than urban areas in terms of poverty reduction, even if poverty rates remain higher in rural areas (65 percent of population in 2012) than in urban areas (35 percent of population in 2012). Meanwhile, extreme poverty (inability to satisfy basic food needs) increased from 12.2 percent to 18.0 percent. 15. The incidence of poverty significantly varies across regions. For example, 67 and 65 percent of the population living in Nzerekore (Forest Region) and in Labe (Middle-Guinea), respectively, live below the poverty line, while in Conakry (Lower-Guinea) the poverty rate stands at 27 percent. Only, Kankan (Upper-Guinea) saw its poverty rate reduced between 2007 and 2012, from 59 to 49 percent of the population. While average income is higher in Conakry, and poverty levels lower, inequalities (as measured by the Gini coefficient) are particularly wide, compared to Guinea’s other regions, see Box 1. 16. The most important determinants of poverty are location, gender and education of the head of household. Given the high regional disparities and rural-urban divide, geographic location is the primary determinant of poverty in Guinea. Male-headed households are poorer than their female counterparts. Concerning education, the level of education of the household head is a determinant of poverty of all household members. For example, the incidence of poverty in households where the head has not been to school at all is 2.5 times higher than that of a household headed by a university graduate. 6 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Box 1: The data comparability and characteristics of poverty in Guinea There have been four household surveys implemented in Guinea since 1994. The two first surveys are Living Standard Measurement Surveys (LSMS) and the last two are Core Welfare Indicator Questionnaire Surveys (CWIQ). Consumption aggregates, used to compute poverty and inequality indicators, from these two types of surveys are not, strictly speaking, comparable. This is due to significant differences in questionnaire design and sampling method. Significant efforts have been made to make these four surveys comparable but questions linger. For example, the Gini coefficients for the two CWIQ surveys are drastically lower than that of LSMS surveys, a hallmark of incomparability of different questionnaires. With this caveat in mind, we present the poverty trend below between 1994 and 2012. It should be noted that the poverty trend between the same types of surveys should be robust (in this case, the comparison between 1994 and 2003, and between 2007 and 2012 are robust). The increase in poverty is due to both the economic downturn and the increase in urban poverty. Between 1995 and 2012, the incidence of poverty in urban areas has doubled. The evolution of poverty in Conakry is similar to the evolution of overall urban poverty, with a poverty rate that has almost tripled over the period. Despite the sharp increase in urban areas, poverty in Guinea remains a rural phenomenon. Inequality, measured by the Gini, Atkinson and Theil indexes, appears to have stagnated at the national level since 2007, following a strong decline since 1995. Overall stability of inequality in Guinea during the years 2007-2012 can be understood by the distribution of consumption. In 2007, 30 percent of people living in the poorest households represented 13.8 percent of consumption expenditures, while 30 percent living in the richest households represented 51.5 percent of consumer spending. These ratios were 13.9 per percent and 52 percent for the two respective categories in 2012. Poverty is also affected by gender, age and level of education. Controlling for other factors (education, age, family size, etc.), the poverty rate among households headed by men was more than 6 percentage points higher than the rate among those headed by women in 2012. However, households headed by women are worse off in absolute terms. The difference in per capita expenditure is about 20 percent, to the disadvantage of the women. The results of the 2012 ELEP show that poverty increases with the age of the household head. The incidence of poverty is lower in households where the head of the household is less than 30 years of age. It increases from 30 years up to the age group 40-49 years and remains constant until an advanced age. Poverty decreases with higher levels of education of the household head, with a more substantial effect in reducing poverty from upper secondary level onwards. The level of education of the spouse is also positively correlated with the well-being of the household from the secondary level education onwards. Source: 2012 Limited Poverty Assessment Survey (ELEP) 7 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 17. Guinea does not yet have an explicit social protection policy. As discussed above, Box 2: Guinea – Gender Policy Guinea is characterized by a high prevalence of poverty and high vulnerability to shocks. Food The Government of Guinea recognizes that in order to insecurity is widespread and varies significantly meet its development challenges it is critical that both across regions. The proportion of food insecure women and men are able to contribute to and benefit from rural households reached 32 percent in 2009, economic and social development. The Government’s latest affecting about 2.3 million people. As many as PRSP has a separate section on the promotion of gender one half of the households belonging to the equality and also mainstreams gender throughout much of the poorest quintile are considered chronically food rest of the document. Attention to gender issues is particularly insecure. Most of the urban population remains visible with regard to the following areas: education, social highly vulnerable to price fluctuations of basic protection, health (including reproductive health and women’s commodities. Existing safety nets mechanisms vulnerability to HIV/AIDS), and women’s agricultural are inadequate. Furthermore, the current limited productivity/contribution to household food security. The interventions are scattered among several PRSP sets out its commitment to gender issues, stating that institutions with very little or no coordination. “the promotion of women with a view toward full participation in decision-making processes at all levels is an integral part of Financing is small and largely funded by donors the government’s development policy and one of its priority on an ad-hoc basis. Most existing efforts are in areas�. The Government’s commitment to gender is also the form of assistance coming from NGOs and demonstrated with its publication of a national gender strategy religious organizations, at times with support (GoG, 2011), and a national strategy against gender-based from other development partners. As a result, violence (GoG, 2010). the vast majority of the population continues to be fully exposed to economic shocks and risks related to life events. They rely either on informal solidarity networks, which are ineffective in reducing poverty and tend to collapse during large-scale and generalized shocks. Gender 1 18. Considerable challenges remain for Guinean women with regard to the key areas Figure 2: Ratio of Female to Male Primary of the World Development Report 2012. In Enrollment (%) (WDI data) education, between 2003 and 2009, the adult literacy rate improved from 29 percent to 39 percent. While female literacy is lower than male literacy (28 percent versus 51 percent), there has been some progress with the ratio of female to male literacy rates increasing from 0.42 in 2003 to 0.55 in 2009. Significant absolute and gender-equality related gains have been made in primary education over the past decade. Between 1999 and 2010, the net primary enrollment rate increased from 43 percent to 77 percent. Over the same period the Source: World Bank Guinea Gender Portfolio Review 2013 1 The analysis presented in this section is based on the findings of the following works: Poverty Assessment, World Bank, 2008; Bardasi, E. and Wodon, Q., Working Long Hours and Having No Choice: Time Poverty in Guinea, Policy Research Working Paper 4961, World Bank, 2009; Reproductive Health at a Glance: Guinea, World Bank, 2011; World Bank Guinea Gender Portfolio Review, 2013 8 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 ratio of female to male enrollment rates increased from 0.64 to 0.84. While some progress has been made with enrollment rates, overall performance and gender-equality related performance are noticeably poorer at the secondary level. Access to tertiary education has expanded considerably over recent years and there have been notable gains in gender equality in the sector, though from a very low base. The overall enrollment rate for tertiary education went from just 2 percent in 2003 to 9 percent in 2008. While female enrollment is still lower than male enrollment (4.7 percent against 14.1 percent), the expansion in tertiary enrollment since 2003 has seen a greater relative increase in female versus male enrollment, with the ratio of female to male enrollment rates increasing from 0.19 to 0.33. Women are also underrepresented as teachers, making up only 5.8 percent of teachers in higher education and only 3.6 percent of doctoral level teachers (MAS, 2011). 19. While women’s health indicators have improved on a number of fronts (including access to health facilities, maternal mortality, access to Figure 3: Maternal mortality ratio (modeled water), significant challenges remain. The estimate, per 100,000 live births) (WDI data) maternal mortality rate was at 800 in 2005. This 1400 is high compared to the average for all African 1200 countries of around 500. A consistent decline needs to take place for the country to achieve its 1000 MDG target of 300 deaths per 100,000 live births 800 by 2015 (World Bank, 2011). The total fertility 600 rate (TFR) in Guinea is high, though it did 400 decline from 6 in 2000 to 5.2 in 2011. This is still high compared to the average for all of Africa of 200 around 4.5, and it compares favorably with many 0 of Guinea’s regional neighbors, such as Niger 1985 1990 1995 2000 2005 2010 2015 (7.1), Mali (6.3), Chad (6.0), and Burkina Faso Source: World Bank Guinea Gender Portfolio Review 2013 (5.9). Data from the 2005 DHS (ORC Macro, 2006) suggest that there were large differences between women in different wealth quintiles, with poorer women having higher TFRs. Access to water has improved in recent years, but is still a significant issue with regard to women’s health and time poverty, especially in rural areas. Progress on access to sanitation facilities has been much slower. In 2008, 71 percent of the population had access to an improved water source. This is approximately equal to the average level of access for all African countries and represents a moderate improvement from a level of 62 percent in 2000. However, the figure for 2008 masks a large variation between access in rural areas (61 percent) and urban areas (89 percent). In rural areas, women often have to walk long distances to collect water, and rural populations often resort to using rain water and water from wells which can have negative health impacts (MAS, 2011). 20. Women in Guinea appear to be more economically engaged than in many other countries in Africa, yet they still have fewer opportunities than their male counterparts to contribute to and benefit from productive participation in the workforce. Gender differences in labor force participation are not as wide in Guinea as they are in many other African countries, yet there is still a moderate gender gap. Women’s labor force participation rate was 79 percent in 2009, compared to a rate of 89 percent for men. This translates into a ratio of female to male labor force participation rate of 0.89, which has remained essentially unchanged over the past decade. Those women who are economically active are more likely to work in the informal sector and less likely to be wage employees than men. They are less likely to occupy senior and skilled positions, earn less income, and are less likely to have sufficient access to various inputs with which to improve their productivity. The reasons for women’s lower economic opportunities are numerous and may include greater time poverty due to their domestic responsibilities, lower levels of education, and cultural biases which accord a lower social standing to women. 9 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Table 1: Percentage of Economically Active Guinean Population in Different Areas of Work by Gender Function Percentage of women Percentage of men Agriculture 55.1 57.0 Sales/services 34.9 10.9 Skilled manual labor 5.8 19.6 Unskilled manual labor 1.9 1.6 Professional/technical/admin 1.5 8.6 Employee 0.1 0.3 Source: ORC Macro, 2006 III. DEVELOPMENT CHALLENGES AND OPPORTUNITIES A. Overcoming Fragility and Laying the Foundation for Long-term Stability 21. The underlying drivers of fragility (Annex 8: Addressing Fragility across World Bank Portfolio in Guinea) need to be addressed and present-day contributing factors resolved, in order to build a foundation for sustainable development and to secure developmental progress. Development gains will be at risk if the drivers of fragility are not addressed as an integral part of the country’s development program. These include intergenerational cleavages, youth exclusion and unemployment, breakdown in relations between civil society and the state, inter-ethnic tensions and the mismanagement of public expectations. Further, the present breakdown in political dialogue over the electoral process threatens stability. Sustainable development and economic growth cannot be achieved in a context where security is not guaranteed. This has been clearly demonstrated throughout Guinea’s history, most recently during the period 2008-2010, which saw heightened levels of insecurity, and political and social unrest. Rule of law in Guinea is limited, as personal, property, and contractual rights are not universally protected. 22. Governance indicators reflect Guinea’s fragility. Governance indicators have slightly improved in recent years compared to the period of extreme institutional instability prior to 2010. In absolute terms, however, Guinea’s scores remain low. The country’s overall score of 42.5 on the 2012 Mo Ibrahim Index of African Governance remains significantly below both the West Africa Regional average (51.9) and the continental average (51.2). Similarly, Guinea’s CPIA score of 3.0 for 2012 continues to place the country in the fragile category, while currently none of Guinea’s sub-indicators on the World Governance Indicators reaches the 25th percentile. The sub-indicators of “Rule of Law�, “Political Stability�, and “Control of Corruption� are ranked especially low, indicating particular challenges in these areas. B. Laying the Foundation for Good Governance 23. While external institutional anchors might help, strong democratic institutions supported by the population remain the main instrument for ensuring that Guinea benefits from its natural resources. The adoption of the new Constitution and subsequent elections in 2010 were a crucial first step in this direction. Unfortunately the next steps, parliamentary elections followed by local elections, have been repeatedly postponed. These delays demonstrate the difficulties in establishing strong institutions in an environment dominated by ethnic loyalties and other historical and regional issues. The commitment to strengthening judicial institutions and security reforms prioritized in the Government’s development program will only be viable if the institutions are supported by the population at large and across ethnic lines. 10 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 24. Enhancing economic governance and public financial management (PFM) is crucial to state effectiveness and hence economic growth. Recent PFM assessments identified a number of critical shortcomings in budget preparation and execution processes as well as internal and external controls. In response, the authorities have modernized the legal PFM framework with the adoption of a new organic law related to finance in August 2012 and accounting regulations in January 2013. These new regulations are expected to be fully implemented over a transition period of five years from 2013 to 2017. Their specific impacts are yet to be assessed, but should be significant, given the strong focus on program budgeting and the elaboration of Medium Term Expenditures Frameworks in key priority sectors. 25. The modernization of the National Statistical System under the purview of the Ministry of Planning must be prioritized to assess the impact of major policy reforms and investment projects. Reforms need to build on ongoing efforts to improve real sector and monetary statistics. A critical mass of economic and social information is available. However, the processing and analysis needed for design, monitoring and evaluation is being improved. Persistent weaknesses are noted in terms of regularity and timeliness of publications to better understand the impacts of macroeconomic policies at the micro level (on households and enterprises). Insufficient knowledge of the informal sector constitutes a handicap for its inclusion in the programs for poverty reduction, and in tax and employment policies. In addition, the lack of reliable statistics in tourism, transport and public works discourages investment. The quality of information on employment and births (the last census was held in 1996) is also major concern. In the rural sector, the lack of an integrated system of statistics hampers the authorities’ ability to target and monitor the implementation of policies. Further, the national statistical system is still confronted with the absence of methodological documents on standards, classifications, and procedures for the collection, processing, analysis and dissemination of data. All these constraints, combined with limited qualified human resources and deficiencies in equipment and financial resources, do not allow a good design of strategies and development programs as well as monitoring their implementation. To address such challenges, the authorities developed a National Strategy for the Development of Statistics (NSDS). This strategy is based on four pillars: (i) Strengthening the institutional and organizational framework; (ii) Improving the quality and the coverage of the statistical production; (iii) Capacity building to increase efficiency in statistical services delivery; (iv) Improving the archiving system, and the dissemination and use of statistical data, as well as improving research. There is a critical need to support Guinea in better implementing this strategy. This will contribute to the promotion of sound and regular statistical information that will allow the authorities to evaluate policies and adjust as needed. 26. The urban population has been growing Figure 4: Improvements in access to water from 28 percent of the total population in 1990 to and sanitation in Guinea (WDI data) 36 percent to date and continues to be confronted with the limited availability of potable water, a key ingredient for improving health outcomes. Over the recent years, urban poverty has increased both in absolute numbers and as a share of the population. Urban growth has not been accompanied by the infrastructure and basic services needed. The Government will need to augment the flow of resources to local governments, commensurate with the mandates set for the latter in the decentralization law. Together with appropriate capacity building at all levels of government, this is critical to improving Source: World Bank Guinea Gender Portfolio Review urban infrastructure and basic services delivery. 2013 Equally, improving water supply services would result in lower prices compared to what residents in 11 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Conakry and other major cities currently are obliged to pay to third parties and would thereby increase access to potable water. 27. Increasing the role of social accountability networks is key to improving local governance capacity for service delivery. Historically Guinea’s citizens have not been empowered to challenge public institutions that delivered poor service. The institutions themselves are frequently hampered by complex regulations. Further, the existing rules are not always applied, and it is not uncommon for citizens to face transaction costs when accessing public services. The limitations to service delivery in remote areas relate to lack of both financial and qualified human resources, which remain largely concentrated at the central level. The Government envisages strengthening local accountability networks that can challenge the public institutions and by enhancing local capacity through decentralization. As part of its development program, the Government foresees a two-phase process to strengthen decentralization over the next 10 years. A first phase is expected to put in place the necessary conditions and instruments for effective decentralization and de-concentration. A second phase plans to focus on strengthening local communities. 28. Further, reinforcing bottom-up social accountability efforts with the ongoing modernization agenda for the public administration will have a transformative impact. These efforts are supported by a broad coalition of government officials and politicians but efforts suffer from a lack of coordination. There are a number of initiatives and institutions with overlapping agendas and conflicting reporting structures. One of the most important initiatives is the Government’s “Program for State Reform and Modernization of the Public Administration� (PREMA) under which the High Commission for State Reform and Administration Modernization (HCREMA) was created. The HCREMA is charged with facilitating and coordinating public sector reform and creating a platform for participation and collaboration with civil society. The Strategic Framework envisages first the preparation and piloting of priority reforms, with a roadmap to clarify and confirm the role and mandate of public institutions in key sectors, and the creation of a broad base of support among both the civil and military side of public administration, civil society and local communities. C. Diversified and Inclusive Growth Box 3: LPDSE: Energy Policy Letter 29. Energy is prioritized as it is a major The Government’s energy strategy in the short- to medium constraint to economic growth and hence term, as expressed in its updated Energy Sector Policy Letter poverty alleviation (paragraph 12 above (LPDSE) of March 2012, consists of: (i) providing a high level discussed the link between growth and poverty of access and quality of service through the accelerated alleviation in Guinea). Key coordinated rehabilitation of existing capacities and development of institutional and investment improvements in additional generation capacity (thermal and hydro); (ii) key sectors are urgently needed to unlock achieving sector financial autonomy through a suitable tariff Guinea’s hydropower potential. Establishing structure and commercial management and implementation of an electricity supply in urban, densely populated Action Plan for EDG, endorsed by GoG and the main donors on January 15-16, 2012; (iii) supporting the participation of private areas is a key concern for the Government, but partners in generation, transmission and distribution in a fair the mining sector and agricultural productivity regulatory framework, relying in particular on partnerships with would also benefit. Despite the current status of the mining industry established in Guinea; (iv) redirecting the the sector, there are promising development role of the Government toward definition of policies and prospects. There is an enormous untapped strategies with a reinforcement of the energy sector Regulator; potential for hydroelectricity: out of 6000 MW and (v) accelerating the development of the country’s only 127.2 MW are installed capacity. The hydropower potential for increased energy security and lower Government has been particularly active in production cost. developing Guinea’s energy sector since 2006. This has been part of the implementation of the ECOWAS White Paper for a regional policy on access to energy services for rural and peri-urban areas to achieve the MDGs. Access programs involving the three 12 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 pillars of the White Paper (modern cooking fuels, power and electricity) have been progressively deployed despite an unsettled political climate. The approach to energy efficiency is two-fold: (i) a lighting component led by Energie de Guine -EDG aims to distribute 5 million energy-saving lamps in the country; and (ii) an efficient biomass use initiative, whereby the Government will promote efficient wood cookers (EPC) and improved stoves. The short- to medium-term energy policy is described in Box 3. 30. Agricultural growth is crucial for employment and poverty alleviation in Guinea where an estimated 80 percent of the population is sustained by agriculture. Agriculture has the potential to boost employment growth both directly and indirectly, as there are prospects for backward and forward linkages. Further, by reducing food prices, agriculture contributes indirectly to poverty alleviation. Guinea Box 4: PNIASA – National Agriculture has great potential for economic growth in this sector due to its excellent conditions for agriculture The National Agricultural Investment and Food and its strategic location that favors trade. With Security Plan 2012-2016 (PNIASA) was approved by about 64 percent of Guinea’s population living in the Government in December 2012. The PNIASA aims rural areas, including 88 percent of the poor and 90 for Guinea to achieve a 6 percent growth rate in the percent of the extreme poor, increasing agricultural sector and attain the MDGs. The Government intends to productivity is critical for providing jobs and higher successfully implement this plan, with a vision to: (a) ensure food security; and (b) ultimately position Guinea incomes. However, while agricultural potential is as an exporter of agricultural products. The PNIASA high, productivity remains low. Most land use is for identifies six priority investment programs: (i) subsistence farming on small family farms (1-3 ha), sustainable development of the rice sub-sector; (ii) which lack the technology and capital to pursue diversification for food security and the population’s intensive crop production. Increased production is nutrition improvement; (iii) promotion of agricultural primarily driven by area expansion and has often exports and agribusiness; (iv) integrated natural resource been at the expense of the environment, with erosion management; (v) institutional capacity building; and (vi) of mountain slopes due to clearing for rain-fed rice. coordination of PNIASA’s implementation. The dominance of subsistence production and the lack of market linkages have so far limited the value-adding potential of the sector. 31. Regional growth poles could be the starting point for building infrastructure for the processing and exporting of agricultural products, taking advantage of the transport infrastructure in place for resource extraction. The private sector should be considered, through IFC’s support, as a potentially strong actor, whether as a stand-alone investor in a direct agri-business enterprise, perhaps one that incorporates an out grower scheme, or as a participant enabling more effective functioning of the value chain, for example, through the provision of transportation services or warehousing and cold storage. MIGA’s guarantees could also be used for foreign investors looking to enter the market. In order to unleash the potential in this sector, immediate actions must focus on raising productivity and reducing factor costs, developing agricultural growth zones and infrastructure for export of fruits and cash crops, and developing coherent sectoral strategies for agriculture. Finally for fishery which remains a key sector of the Guinean economy, Guinea currently realizes far smaller economic benefits from its marine fish resources than could be the case mainly due to illegal, unregulated and unreported fishing. Rough estimates indicate that Guinea could recover the shortfall on catches of around 65 percent for an estimated US$20 million value. In 2012, the sector contributed about US$4.2 million to the annual budget from license fees and fines whereas in neighboring Liberia fines amounted to US$5.5 million. Governance reforms to reduce open access to resources has inevitably led to a ‘’tragedy of the commons’’ situation where overexploitation rises as economic returns decrease, and reduction of illegal fishing could rebuild the fisheries as a future source of growth. 32. Guinea’s mining sector is important for growth and fiscal revenues, but creates few jobs directly. The authorities aim to translate the country’s mineral resources into sustainable development 13 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 through developing the legal and institutional framework and increasing capacity of stakeholders to manage and oversee the sector. Measures relate to addressing social and environmental impacts, revenue collection, and management, distribution and investment of these revenues for the benefit of the mining communities and the country. The sector currently represents over 80 percent of exports, provides 20 to 25 percent of government revenues (an estimated US$210 million in 2012) and over 10,000 direct jobs (0.25 percent of the labor force). Guinea hosts some of the largest non-developed deposits of bauxite and iron ore in the world. Bauxite is the most exploited, including the deposits of Kindia Sangaredi and Fria. Local processing of alumina is still extremely low (about 4 percent of the production). There is significant scope for increasing the production capacity of bauxite and the capacity utilization rate. It is in this context that the Guinea Bauxite Company (CBG) is currently undertaking a capacity expansion that will increase its production by 18 percent by 2018. 33. The Simandou iron ore mining project could potentially play a transformational role. If properly developed, such large projects are expected to have an enormous long-term impact on Guinea, notably through spillover effects on community development (thousands of direct and indirect jobs and related revenues, SME development, associated social benefits, health and education), the infrastructure and power sectors, the agriculture value-chain and Guinea’s fiscal space. Such mining projects offer a unique opportunity for Guinea to grow substantially over a relatively short period of time and it is the role of the World Bank Group to support the Government of Guinea so that the project can be built and operated for the greater benefit of all Guineans. D. Strengthening Human Capital 34. Despite progress in education, there are still many challenges related to coverage, quality, and relevance. With a gross enrollment rate of about 80 percent in 2011 significant progress has been made in primary school attendance, including for girls, albeit not as quickly as planned. However, school enrollment rates by age levels continue to show an abysmal picture with approximately 60 percent of the age 8-14 student population out of school. This represents around one million children, many of whom live in remote and rural areas. Additionally, a learning assessment conducted in 2012 in grades 2, 3 and 4 suggests that the Government must do more to increase primary completion rates, achieve gender parity, improve learning outcomes, and make education more relevant to the needs of the labor market. A relatively low share of GDP is geared towards education (less than 3 percent) and a distribution of resources between the different education sub-sectors that is not aligned with MDG goals is not conducive to improvements in the sector. Table 2: Rates of Enrollment by Age, 2007 and 2012 Ages 5 -7 Ages 8 - 10 Ages 11 - 13 Ages 14 – 16 Ages 17 - 19 2007 2012 2007 2012 2007 2012 2007 2012 2007 2012 27.40% 36.70% 60.50% 60.90% 66.80% 64.50% 60.70% 54.60%. 48.80% 44.00% Source: ELEP 2007 and 2012 35. Progress towards achieving the health MDGs by 2015 hinges on improving the management and financing of the health care system. Health sector challenges are multiple with deteriorating trends in many health sector indicators. Access to prenatal care and to some child immunizations (DTP3) has significantly increased from 2000 to 2011. However, infant and maternal mortality rates (at respectively 67 per 1,000 and 980 per 100,000) are among the highest in Africa. This is the result of deteriorating access to many health services, particularly in the rural areas, low quality of health services, weakening in some child vaccinations since 2008 and inadequate and irregular budget allocation to the health sector. In relation to spending, the combination of very low allocation (less than 1 percent of GDP) and weak execution undermines the effectiveness of health sector policies. The Government will need to mitigate 14 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 the financial burden through the establishment of health insurance schemes and health mutual, raising significantly the share of the population covered by these beyond 4 percent. Health expenditures which are currently focused on secondary care, tertiary care, and central administration, need to be redirected towards primary care. Table 3: Guinea’s Progress towards achieving MDGs Indicator Year of Reference 2005-2007 2012 Income poverty rate 62.5% (1994) 53% (2007) 55.2% Proportion of underweight children 23% (1999) 26.1% (2007) 18% Net primary school enrollment rate 27% (1990) 56% (2007) 59.5% Literacy rate of 15-24 22.5% (1994) 32.9% (2007) 34% Boys and girls parity index in primary school 0.50 (1995) 0.89 (2007) 0.81 Under five mortality rate 229% (1992) 163% (2005) 122 Infant mortality rate 136% (1992) 91% (2005) 67 Number of maternal deaths per 100,000 live births 666 (1992) 980 (2005) NA Share of the population with access to safe water 62% (2002) 74.1% (2007) 68.1% Share of the population with access to improved sanitation facilities 23% (2002) 31.8%(2007) 30.7% Source: UNDP Guinea, 2013 36. The Government will need to take measures to extend social protection coverage and improve its quality in the short- to medium-term. It also needs to develop a coherent social protection strategy and an effective safety net system capable of reducing inequality and increasing resilience to shocks, such as a rise in basic commodities prices. These concerns can be addressed by improving the management and operation of subsidies by providing clear price information on such products, strengthening price and quality control institutions, and fostering better coordination between the central and local levels of such institutions. It is also fundamental that an educational conditional cash transfer approach be implemented in rural areas, as well as a non-contributory health insurance for the poor and the extreme poor. IV. GOVERNMENT’S STRATEGY A. Unlocking Diversified and Inclusive Growth: Guinea’s Development Agenda PRSP-III 37. Recognizing the challenges and issues at stake, the Government of Guinea, in its Third Poverty Reduction Strategy Paper, plans to foster inclusive and sustainable growth. Indeed, the poor economic performance over the last decade was inadequate for laying the basis for accelerated growth that would trigger job creation and reduce poverty sustainably. The new Government strategy focuses on the diversification of economic growth sources, the implementation of sector strategies and support for the social sectors. B. Targeting Growth by Sector 38. To mitigate the risk of a mineral economy, the PRSP focuses on economic growth in sectors that may drive overall economic growth. Economic policies are targeted to boost development in agriculture, mining, hydroelectricity, as well as construction and public works, information and communications technology (ICT), and tourism. These sectors are prioritized on the basis of Guinea’s comparative advantage, notably its resource endowment. The choice is strategic; not all sectors are chosen, for example the PRSP does not cover the manufacturing and urban sector in the same detail as it does the agricultural or electricity sectors. 15 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 39. Spatial inequalities will be addressed by a “growth corridor� approach to private sector development. Public infrastructure—transport, electricity and telecommunications—will be the backbone of the growth corridors. Such infrastructure can be linked directly to major mining sites, or financed indirectly by mining revenues but linked to hydroelectricity sites and trade opportunities with neighboring countries or targeted at regions with the highest levels of poverty. The infrastructure will be complemented by broader growth areas, defined as all land within two hours’ travel distance to the corridor, where clarification of land rights will be prioritized to provide investors with secure land property rights. Secure property rights and adequate infrastructure will be a condition to attract investments, including with support from IFC and MIGA. Potential large-scale project sponsors will be encouraged to contract local small-scale enterprises along their supply or distribution value chains. C. Embracing Regional Integration 40. Effective regional integration offers Guinea a great chance to diversify its economic base. The country’s hydro potential could be transformed into a sustainable source of export income, leveraging ongoing initiatives such as the West African Power Pool (WAPP). Equally, Guinea could realize its comparative advantage in promoting certain agricultural products, where the country’s geographical proximity to Senegal and Mali offers a real opportunity for export-led growth. Finally, broader regional, cross-border trade could benefit from ongoing reforms supported by the IFC Investment Climate Program working to improve Doing Business indicators. 41. The construction of rail, port and airport infrastructure will contribute to sustainable and diversified growth in Guinea. Current infrastructure projects mainly focus on rail and port developments and are linked to the large mining developments: (i) corridor Nord-Ouest (North-West corridor) will imply the extension of the infrastructure to access the bauxite deposits up to the northern area of Gaoual; (ii) Corridor Sud-Est (South-East corridor or Trans-Guinéen), to be developed as part of the Simandou project, will have to accommodate the transport of 150+ megatons per annum (mtpa) of iron ore production from the Simandou deposits, and possibly some of the bauxite and iron production of the Central area. Outside the mining sector, four other projects are currently in the Government’s plans: two of them are related to ports (Conakry and Benti), one is a new international airport, and one is the rail link to Mali. Conakry is a small port, which has reached the limits of its handling capacity. Two port extensions have been planned, and one is to be completed in 2013 (extension of the container terminal), while the other, which includes an extension of the oil terminal, is still at a project stage. D. Promoting SMEs and an Enabling Business Environment 42. Guinea plans to broaden the country’s small and medium enterprise (SME) base through investment climate reform, solutions to improve access to finance, and the establishment of SME growth corridors. Severely limited access to finance (especially for SMEs), inadequate supply of infrastructure, deficiencies in logistics and trade facilitation, corruption and low capacity of the Government, inflation, and poor education of the workforce, combined with one of the weakest legal enabling environment for business in Africa and a history of poor governance, erratic policy, and inconsistent regulatory enforcement, has seriously undermined investor confidence in Guinea’s institutions. As a result, private participation in the economy remains low and firms’ productivity measured by value added is one of the lowest in Africa. Firms’ links with the financial sector are weak; only 6 percent of firms surveyed in the 2006 Enterprise survey have a bank loan. Credit to the private sector is low as well, at around 5 percent of GDP for much of the last decade (against a Sub-Saharan African average of 59.6 percent). By end 2012, the formal banking sector consisted of the Central Bank and 14 commercial banks (with 3 more having received an agreement and getting ready to start). The banking sector is highly concentrated, not up to date technologically and banks tend to favor short-term lending at high interest rates. While the microfinance sector grew strongly from a small base, 16 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 microfinance institutions are loss making and need capacity and technology upgrading. Finally, it is important for the efficiency and the use of payment services by all potential users to be improved, in a context of financial inclusion. 43. Cross-border financial activities with neighboring countries will further strengthen regional ties between Guinea and its neighbors. Financial service activities in Guinea are based largely on trade, especially with neighboring countries; this offers an opportunity to undertake a feasibility exercise of integrating retail financial services between Guinea and other WAEMU countries to facilitate cross- border payments and support small-scale trade. Ensuring interoperability of financial infrastructure through integration of the country with the WAEMU financial platform, will contribute to harmonizing the country’s financial sector regulatory framework with the one governing WAEMU member states. E. Developing Twenty-first Century Skills 44. Education needs to equip Guineans with the right skills for the emerging export-oriented activities such as agriculture, mining, and tourism. The lack of relevant vocational programs in secondary and tertiary education has led to an excessive emphasis on general education with a focus on humanities. Promoting SMEs and an enabling business environment will help deliver the diversification agenda, and mitigate the sensitive issue of youth unemployment. Guinea needs to focus on scientific and technological skills and core competencies required by the vast majority of economic sectors and technical skills relevant to the key priority sectors. 45. Investors providing on-the-job training should find local competencies more widely available in Guinea. The government plans to open training and vocational education centers, while also creating higher education offer by introducing mining universities. Defining and implementing support programs for skills development and higher education will be critical to generate local jobs from large mining investments. V. WORLD BANK GROUP PARTNERSHIP STRATEGY FOR GUINEA (FY14-FY17) A. The World Bank’s Role in the Current Landscape of Development Assistance in Guinea 46. A key and longstanding partner of Guinea, the World Bank will leverage its strategic position. The Bank will convene the other development partners to support Guinea’s development agenda, especially around the key sectors of energy, agriculture and human capital development. In addition to its financial contribution to supporting the Government’s PRSP, the Bank Group will contribute its large knowledge base and provide advisory leadership to help Guinea formulate and implement sound and results-based development solutions. 47. The World Bank Group CPS for the period FY2014-FY2017 focuses on: (i) improving governance and service delivery, (ii) stimulating growth and economic diversification, and (iii) strengthening human capital. The delivery approach of proposed interventions under the CPS the Bank will be by (i) leading in a small number of selected areas where the World Bank has a well-established track record; (ii) complementing the activities of other development partners on issues for which the Bank Group shares a common vision and development objectives with such partners; and (iii) keeping the Bank Group informed on developments on issues where the Bank Group does not intervene directly. From a sectoral perspective, proposed operations are mainly focused on agriculture and energy, using the full spectrum of instruments at the World Bank’s disposal: economic sector work (ESW), technical assistance (TA), investment financing and policy lending, given the potentially high synergies between them. IFC and MIGA will contribute, each based on their respective areas of expertise. 17 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 48. The focus areas of the World Bank Group CPS were selected based on an assessment of the World Bank Group’s comparative advantage. Consistent with the Africa Regional Strategy, this CPS focuses on areas where the Bank can contribute directly to (a) inclusive growth through better governance and diversification and (b) strengthening of human capital, with a strong focus on regional synergies. The CPS draws on a Fragility Assessment conducted by the Bank’s Global Center on Conflict Security and Development and feedback received via the Client Survey, and integrates considerations related to addressing fragility and building lasting stability across the portfolio. Finally, this CPS has benefited from an extensive stakeholder consultation process, which involved civil society, NGOs, Government, the business community, parliament, and the donor community, both in Conakry, as well as throughout the country. 49. In the Client Survey, stakeholders identified energy sector development as the key development priority in the country. Education, public sector governance, and security/stabilization/reconstruction emerge as priority areas as well. Under the umbrella of poverty reduction, respondents recognized rural and agricultural development (along with the energy sector) as critical to reducing poverty in Guinea. Within this context, respondents are keen to see the Bank focus its financial resources and knowledge work in these particular areas. Clients also perceive the World Bank as a trustful guardian of sound and transparent governance practices and pro-poor reforms in Guinea. B. Ongoing World Bank Group Portfolio 50. The proposed CPS builds on strengths and lessons learned from the current portfolio. The national IDA portfolio consists of 6 approved operations for a total of US$116.15 million, including a Village Community Support that has disbursed its IDA component entirely and continues to disburse donor funds, and a recently approved Micro and Small Enterprise operation. About US$66 million remains to be disbursed. Since the Bank’s re-engagement with Guinea in April 2011, several projects have been restructured to allow for rapid service delivery without overburdening the limited institutional capacity. Disbursements have picked up and most projects are being upgraded to satisfactory status. Guinea has ended Fiscal Year 2013 with a 28.5 percent (as of the end of June) disbursement ratio, above both the IDA 25 percent target and the 16 percent AFR trend disbursement rates (annualized at 19.2 percent). In addition, the E-signature disbursement procedures are being applied to the entire active portfolio, projected to boost the disbursement rate further. Guinea also benefits from four regional operations amounting to US$68.1 million: the Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (US$9 million), West Africa Regional Communications Infrastructure Project APL-1B (US$34 million), Senegal River Basin Multi-purpose Water Resources Development Project (US$18 million), and the West and Central Africa Air Transport Safety & Security Project (US$7 million). 51. The fiduciary performance of the current portfolio is, to some extent, hampered by capacity constraints, especially in the procurement processes. As a result, some initiatives have been taken to overcome systemic procurement issues; for example, a focal point has been designated at the Ministry of Finance to follow up on administrative clearances. Financial Management performance has generally been good, as almost half of the Project implementation supervision reports (ISRs) are rated as satisfactory with a moderate financial management (FM) risk rating. Most interim financial reports (IFR) are being submitted on time to the Bank and the quality of reports appears acceptable. In 2012, Guinea achieved 80 percent fiduciary compliance of audited reports submitted within the fiscal year. Most of the opinions of the audit reports were unqualified and there were no significant FM issues 18 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 C. Lessons from the Previous Country Strategies 52. The previous CAS and the 2011-12 ISN provide the following lessons for the 2014-2017 CPS, as detailed in the CAS Completion Report: a. Sector policy dialogue needs to be integrated into the macro policy dialogue and elevated to the highest level, reflecting the increasingly centralized nature of the policy dialogue. This approach may also require the Bank to focus on supporting key reforms, wait for policy decisions to materialize at the preparation stage, before committing funding for investments even if investment levels are relatively modest. Positive examples of these lessons were acquired by the education and governance projects, as well as the analytical work on trade issues. b. Development Policy Operations can provide an effective framework for Government entities to focus on the implementation of a selected and time-bound set of critical reforms, as it was observed in the 18 months prior to the attainment of the HIPC completion point. Enabling conditions for success include complementary technical assistance, harmonized budget support from partners, as well as an adequate macro-economic framework. c. In choosing lending instruments, consideration should be given to the specific sector objectives and the overall institutional environment of the sector. While certain instruments (such as APLs) were seen as innovative in addressing previously identified weaknesses in traditional project lending, financing was not always adequate to complete all activities planned in each phase. Without presumed recourse to the subsequent phase, triggers become less meaningful and there’s a risk of incomplete activities. d. The design of the operations should be simple and focused on the Government’s priorities and commitment. Consistent with the Government’s strategy discussed above, local authorities and communities should play a crucial role in the design and implementation of such projects and be represented in the oversight committee. e. Implementation arrangements and staffing need to be well-embedded in existing administrative and political structures. Pro-active project supervision (and effective management) should aim to identify opportunities and take action where they occur. The background is that while almost all Bank- funded projects are led by project implementation units (PIUs), experience shows management responsibility should be entrusted to suitable Government units, equipped for the task. f. M&E systems should set realistic targets and be established prior to project launch, including arrangements for collecting and analyzing data. As always, the timetable for project activities should be consistent with borrower implementation capacity. g. Given the anticipated and unanticipated risks associated with working with fragile countries in general, close coordination with other development partners is indispensable for mitigating risks, realizing synergies, and increasing leverage in such important areas like policy dialogue. D. Proposed Program 53. The CPS addresses poverty reduction and shared prosperity by supporting improved governance systems, fostering accelerated, equitable and diversified growth in Guinea and accompanying improvements in human capital. The proposed program of activities is grouped under the following Strategic Areas of Engagements: (i) Improve governance, (ii) Stimulate growth and economic diversification, and (iii) Strengthen human capital. The IDA resources allocated for Guinea for the CPS, are indicative and subject to: (i) total IDA resources available; (ii) the country’s performance rating, GNI per capita, and population; (iii) the terms of IDA assistance (grants/credits) and the allocation 19 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 deductions associated with debt relief; (iv) the performance, other allocation parameters, and IDA assistance terms for other IDA borrowers; and (v) the number of IDA-eligible countries. The FY15 allocation will depend on the above factors, as well as on the overall size of the IDA 17 replenishment. 2 54. The WBG’s twin goals of reducing extreme poverty and boosting shared prosperity will be pursued through existing and new investment and technical assistance instruments. For example the Bank’s Productive Social Safety Nets project which aims to provide income support to vulnerable groups and lay the foundations of a social safety net strategy by testing some of the building blocks necessary for a larger system, will contribute to the poverty goal. The project plans to support a labor intensive public work program in urban areas with a focus on youth and life skills trainings. For example in Conakry, the capital, the number of beneficiaries for this component is expected to reach 162,000 urban poor people, including 33,000 temporary jobs, with the person/days of work reaching 2,700,000. 55. The Bank will pursue governance and public sector reform in order to alleviate administrative constraints and improve social service delivery to the poor. To spearhead economic growth, employment creation, and poverty reduction, the Bank Group’s support will focus on boosting private sector development, with a specific focus on agriculture and energy. Finding a sustainable solution to Guinea’s current energy crisis will be central to boosting shared prosperity for all. With the ongoing Electricity Sector Efficiency Improvement Project and its follow-on operation, the Bank will work with the Government to replace across-the-board subsidies with a sustainable price structure envisaging lower rates for small consumers. This will target subsidies at low income households and reduce subsidies from the budget to the power generating and distribution company (Electricité de Guinée). Liberalization of the electricity price for large consumers will also help to develop Guinea as a hub for regional power generation and distribution. Furthermore, a legal framework for public private partnerships would attract private investors. In parallel, a poverty-oriented power strategy could focus on sustainable biomass harvesting and more efficient stoves. 56. In the course of CPS implementation, the Bank will build the foundations for shared growth generated by mining and diversified activities in agriculture. The Bank will fine tune ongoing activities, improve the knowledge base and launch new programs to introduce transparency in linking revenues with priority public investments and pro-poor expenditures. This will entail public expenditure management, public investment planning, budget transparency with citizen monitoring mechanisms, as well as improving the governance structure and capacity of key sectors, mainly mining, energy, agriculture, but also health and education. At the same time, the Bank will contribute to setting up systems for skills development to meet the demands of Guinea’s economy, as well as in basic and higher education and in health. 2 Also, IDA allocations are made in SDRs based on performance. While the US dollar equivalent amount is provided at the exchange rate of USD1.50233/SDR, the final exchange rate for each operation depends on the applicable prevailing rate at the time of approval. 20 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Table 4: Indicative Lending and Non-Lending Program Operations planned by Fiscal Year (FY) Source of Financing CPS Strategic Area/s of Engagement and (USD million) Foundation Priority Priority Priority IDA TF IFC 3 Area I Area II Area III FY14 Skills for Growth and Employability $16.6 X Agricultural Productivity $10 X Sustainable Energy for All $1.8 X GPE $37.8 X Sub-Total FY14 $26.6 $39.6 FY15 Results Based TA Reform $22 X Electricity support $30 X Sub-Total FY15 $52 FY16 Health $10 TBD 4 X Agriculture sector support $30 X Regional Trade and Growth Corridor $13 X Sub-Total FY16 53 FY17 PFM/Governance $15 X Higher Education $12 X Sub-Total FY17 $27 Regional Program FY14 Senegal River Basin Multi-Purpose Water $15.5 X Resources Development Project 2 FY15 Regional Hydropower tbc WARF $3 X Sub-Total $18.5 Overall Indicative Lending $177.1 39.6 AAA&ESW CPS Strategic Area/s of Engagement and Foundation Priority Area I Priority Area II Priority Area III FY14 ICT TA X Development of Accounting Profession X Financial Sector Development Roadmap Study X Access to Finance for MSMEs (urban and rural) Policy Note. X FY15 Transport Sector TA X X X 3 IFC Investment program is not yet available 4 Will be complemented by the RBF TF. 21 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Table 5: On-Going Lending and Non-Lending Program Ongoing Program by Fiscal Year (FY) Source of Financing (USD million) CPS Strategic Area/s of Engagement and Foundation Priority Priority Priority IDA TF IFC Area I Area II Area III On-going program Economic Governance TA and Capacity Building $11.35 2.7 X Mineral Governance Support Project $20 X Productive Social Safety Net Project $25 X Education for All FTI $40 X Development of Inclusive Education $2.86 X Second Emergency Agricultural Productivity Support $20 X Project) (PUAPA 2) MSME Development Project $10 X Electricity Sector Efficiency Improvement Project $25.5 $4.5 X Health Sector Support $25 Coastal Marine Biodiversity Management $5 Community-based Land Management $7 Sub-Total On-going projects 116.15 $82 Regional on-going Program WARCIP-Guinea $34 X Niger Basin Water Resources $9 X West & Central Afr Air Tran TAL (FY06) $7 X WAAPP-PHRD $9 X Senegal River Basin $18 Sub-Total On-going regional $68 $9 AAA&ESW CPS Strategic Area/s of Engagement and Foundation Priority Area I Priority Area II Priority Area III Ongoing PER X Health and Education PER X Higher Education and Skills X Agriculture PER X 22 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Strategic Areas of Engagement 1: Improve Governance 57. The Bank expects to contribute to improving transparency and efficiency in public resource management, as well as specifically contributing technical expertise and resources to improve the governance framework of the mineral sector. Outcomes Indicators 1. Improved mining governance Mineral sector governance decree structure and transparency EITI membership process 2. Improved transparency of the Public procurements efficiency public sector including HR system Civil Service human resource system management 3. Budget reform introduced New budget law and public accounts law including citizen monitoring Citizens participation in budget preparation and monitoring 58. As indicated in the poverty analysis above (see Section II. C on Poverty and Gender Profiles), elusive and volatile growth have led to an increase in poverty rates in recent years. The World Bank Group will continue to support the Government in maintaining macroeconomic stability and economic governance for equitable growth. Efforts will continue to focus on reforms in public expenditure and public investment management, including the improvement of fiscal policy and the pursuit of prudent fiscal and monetary policies that helped to break the spiral of inflation and the depreciation of the exchange rate. This will also entail supporting effective monitoring of the state owned enterprise portfolio and public investment management. The Bank will support the Government’s program for further structural reforms to reduce barriers to the realization of the country’s full economic potential. Regarding administrative governance, the Bank’s support will focus on supporting the Government’s ongoing reform and modernization program (PREMA). 59. Bank support to Public Sector Management and Governance will be comprehensive and include a variety of ongoing and new instruments. A technical assistance project, the Economic Governance and Technical Assistance and Capacity Building (EGTACB) project, became effective only recently, yet it reflects the priorities of a more uncertain political transition. The project will continue to provide support for strengthening basic capacities in budget management and public administration, while initiating support for public investment management, but its design will be fine-tuned to the new context of longer term governance priorities. A GPF Trust Fund complements this program in support to the establishment of an investment fund for revenues from natural resources. New activities will include: (i) an SPF Trust Fund further supporting public administration leadership and reform; and (ii) on the basis of the performance of EGTACB, a new IDA Credit, in the form of a Results-Based Technical Assistance project, ensuring sustainable support to public investment management, as well as to the implementation of reforms to improve the investment climate, in agriculture and energy sectors. The CPS program also envisages a follow-on operation that will likely address specific executive governance constraints in public financial management. 60. The Bank Group will continue to support reforms, initiatives, and short- to medium-term capacity building to enhance the efficiency and governance systems for institutions involved in the management of the mining sector. Reforms will be supported all along the Extractive Industries Value Chain, with the exception of revenue management. The World Bank Group will also support the development of a framework that promotes regional and local development of mining areas and “demand for good governance�. In light of the recently adopted policy to increase state ownership of mines and associated infrastructure (rail and road), this recently approved Mining Sector Governance and TA project will provide the following: (a) Support to the Société Guinéenne du Patrimoine Minier (SOGUIPAMI) to clarify its mandate and role vis-à-vis the Ministries of Mining, Transport and Finance; and (b) Transaction 23 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 advisory to relevant government entities regarding available options for financing, ownership, access fees and operating costs of mines and infrastructure to enable informed decision-making; and to provide relevant technical, legal and financial advisory services related to potential financing and management of mining assets. The project will also strengthen the government’s capacities to license, control and monitor technical, environmental, and financial compliance of mining operations. 61. The Bank will continue to support improvements to the governance of the mining sector through the Mining Sector Technical Assistant Project, which became effective in FY13, to support the capacity of the Ministry of Mines and Geology in contract negotiation, implementation of the new mining code and coordination with relevant ministries. The Bank will also support progress towards the EITI. Further support to the governance of the sector will be provided through a new operation which will address key policy actions in mining, energy and agriculture. 62. To improve capacity to collect, analyze and use poverty data and statistical information in key sectors, the Bank will prepare a Country Statistical Brief and seek resources from the Statistical Capacity Building Trust Fund to support the National Statistical System. The Country Statistical Brief will include: (i) an evaluation of existing statistics for all sectors; (ii) an assessment of the main constraints to statistical development; (iii) a review of the implementation of NSDS (National Strategy for the Development of Statistics), including existing and planned programs; (iv) a review of partners’ activities including the Bank; and (v) an identification of activities that the Bank could support (financing, knowledge, partnership). It is envisaged that the Bank’s support will focus on the collection of household statistics that will allow the authorities to assess the welfare impact of specific policies and investment projects (see Annex 12). 63. The Report on the Observance of Standards and Codes-Accounting and Auditing of Guinea (ROSC) highlighted serious weaknesses of the Professional Accounting Organization (PAO) in Guinea. The Government has therefore recognized the need for support in strengthening the capacity of the PAO to be more active in the process of regulation and making financial information transparent. An Institutional Development Funds (IDF) will support the development of the accounting profession in line with the International Federation of Accountants (IFAC) requirements. The improvement in the use of IFAC standards would contribute to bolstering overall quality of the accounting and audit profession in Guinea and enhance the country’s financial accountability arrangements and governance practices with a real impact on private sector development. Strategic Areas of Engagement 2: Stimulate Growth and Economic Diversification 64. Under this area of engagement, the Bank Group’s program will focus on addressing key constraints to growth, diversification and employment creation, in particular by playing a catalytic role in energy, agriculture, private and financial sector development, and regional integration. 24 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Outcomes Indicators 1. Improved commercial and Increase bill collection rate in Kaloum operational efficiency of electric Decrease total electricity distribution losses in Kaloum company 2.Improved agricultural productivity Increased irrigated rice yield Increased rainfed rice yield 3.Improved ICT connectivity and Increased International Communications transformation Reduced retail price of internet services 4. Enhanced technical skills to boost Increased trained entrepreneurs in basic business modules private sector development Established SME sector focused technical centers 5. Improved institutional framework New Leasing Law to broaden investment opportunities PPP transactions in key sectors 6. Enhanced regional integration and Civil aviation code revised and approved improved regulation of transport sub- Transport sector strategy (TSS) defined and adopted sectors Hydroelectricity 65. The hydroelectricity sector could provide the basis for Guinea’s modernization and also supply regional markets. Guinea’s large hydropower potential is estimated at over 6000 MW, which could make it an important exporter of power to neighboring countries. The overall electrification rate is estimated at 17 percent, with rural electrification at 3 percent only. In 2011, the urban power generation capacity in Guinea was 130 MW, against an estimated peak demand of 230 MW, thus resulting in widespread load shedding. Hydropower contributed 55 percent of generation, versus 45 percent for oil-based thermal power. The urban electricity sector, managed by the state-owned utility Energie de Guinée (EDG), is in a critical situation resulting in widespread power shortages; dilapidated infrastructure due to lack of investment and maintenance; high system losses and electricity theft; low bill collection; and increasing financial losses. Given the current level of subsidies to the sector and the persistent inefficiency of the utility, there is a need to improve the company’s financial and technical performance before extending the grid or expanding hydropower. In its action plan for EDG, the Government has included signing a performance contract between EDG and the Government and an external assistance contract with a private operator for the management of EDG. To address the rural- urban divide (see Section II. C above) the Bank will support the Government address the off-grid needs, and the Government has committed to the creation of a Rural Electrification Agency. In the longer term, Guinea needs to shift gradually away from thermal power generation to hydropower as its main source of generation for all customers (including mines) and become an exporter of power to other West African nations. Public-private partnerships (PPPs) constitute the best opportunity for Guinea to develop its hydropower potential. 66. Despite the current state of the sector, the development prospects of Guinea’s energy sector are extremely positive. There is an enormous untapped potential for hydroelectricity: out of 6000 MW only 127.2 MW are installed capacity. Flagship projects of hydroelectric development include the Kaléta project for an installed capacity of 240 MW (in progress) and Souapiti, a 515 MW hydropower project. There are also several rehabilitation projects of the electrical network underway, initiated with the support of donors (World Bank, African Development Bank, Islamic Development Bank), as well as interconnection projects with neighboring countries (Côte d'Ivoire-Liberia - Sierra Leone - Mali and Senegal), which received the support of the WAPP. The Government has a 20-year plan to realize the full potential of the sector, covering the supply and demand of energy and incorporating the concerns of energy efficiency and renewable energy development. In the medium term, a three-year action and investment plan to improve EDG’s performance includes: (i) an investment plan of over US$1 billion over the next three years, of which almost US$300 million are yet unfunded. This plan includes the 25 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Kaléta hydropower plant (US$527 million) to be funded and built through support from China. Other investments cover power generation, and transmission and distribution, including meters for low-voltage customers; (ii) a sector recovery plan, which includes modifying the legal framework for the sector and for PPPs, the restructuring of EDG, and signing a performance contract between EDG and the Government and an external assistance contract with a private operator for the management of EDG. Complementary progress on the reform front to ensure adequate regulatory capacity will be supported through the multi-sectoral (governance, agriculture, energy) Results-based Technical Assistance Project. 67. The Bank will continue to be engaged in Guinea’s energy sector primarily through the Electricity Sector Efficiency Improvement Project, with an overall financing of US$30 million. The project is focused on improving the technical and commercial efficiency of the distribution network in the city center of Conakry; it also includes actions to rehabilitate power generation and improve EDG’s management. The Bank Group will provide timely advice to the Government for appropriate approaches for institutional, technical, and economic design and implementation of access expansion programs, in consultation with other donors. In addition, the World Bank’s engagement with the energy sector in Guinea is well aligned with the Government’s priorities, in particular, the development of its large untapped hydropower potential through public-private partnerships with the mining sector and through regional projects that will enable Guinea to export part of its hydropower to neighboring countries. In addition, the Bank brings a number of comparative advantages (e.g. global knowledge, convening power, expertise for policy advice related to access, etc.) that position it strongly to lead this Technical Assistance. MIGA’s product could also be used on its own, or alongside other Bank products, to support a PPP process or more generally to encourage private investors into the sector. Agriculture 68. To reduce the high levels of poverty in rural areas, the Bank will support efforts to increase agricultural productivity. To this end, the Bank’s future efforts will initially focus on food crop productivity in FY13 and FY14, with built-in support for market access, commercialization and non-food export crops in FY15, as part of a sector-wide program supporting Guinea’s inclusive National Agricultural Investment Program. The Emergency Agricultural Productivity (PUAPA) Project and the Second Emergency Agricultural Productivity Support Project (EAPSP) will empower farmer organizations in the distribution of government goods and services as a transition to a more market-based mechanism through the Government’s agricultural sector investment plan (PNIASA). The two ongoing agriculture sector operations: the EAPSP and the WAAPP, complement each other by focusing on providing producers with inputs to increase food crop production (inputs for rice, maize, cassava and vaccination of traditional poultry). The Bank will work with the Government of Guinea to draw from the lessons from these two ongoing projects to inform the design of the proposed follow-on operation. A new agricultural operation (IDA, $10 million) will support the diversification of activities beyond traditional rice farming, and contribute to the rebuilding of Guinea's agricultural research and technology transfer capabilities. The project is expected to help identify commodities with the highest potential for export and contribute to increase productivity for these commodities selected by the PNIASA, which have the potential to increase food security, reduce poverty and increase rural income. Complementary progress on the reform front to develop an enabling investment climate will be supported through the multi-sectoral (governance, agriculture, energy) Results-Based Technical Assistance Project. 69. With regard to Analytical and Advisory Activities (AAA), an agricultural public expenditure review (FY13) and a Sources of Growth (FY14) Study will help lay the foundation for new investment lending in FY14 and FY17 as part of a sector-wide program supporting the National Agricultural Investment Plan. While the Agriculture Public Expenditure Review (PER) is under implementation, the analytical work on sources of growth still needs to be funded. Furthermore, IFC and MIGA will pursue agribusiness investment opportunities in Guinea where potential exists. 26 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 70. The Bank’s strategy for the agriculture sector (including the fisheries sector) will support the fourth pillar of the PRSP3: Strengthen fight against hunger and malnutrition, with a view to halting high rates of rural poverty and worsening poverty trends linked to increase in food prices in in urban areas (see Section II. C above). Enhanced food production would reduce vulnerability to global price spikes, and potential to address to poor production of a wide range of crops for export can generate both incomes from peasant farming and employment opportunities in commercial agriculture. Guinea’s diverse climatic zones allow production of a range of products from rice to fruits (for example, mango, pineapple, and banana) and cash crops (for example, coffee, cocoa, palm oil). Mining 71. Guinea is poised to receive massive amounts of foreign direct investments in mining and related infrastructure projects. The pipeline of proposed large FDI inflows in mining and related infrastructure is estimated at above US$20 billion, which is about 4-5 times the country’s GDP in 2010. On the other hand, the Guinean economy is still relatively weak, with a poor investment climate likely to face a massive exogenous shock with the discovery and exploitation of natural resources. The Bank Group will help lay the foundation for a sustained growth path based on these natural resources and for economic diversification by helping this economy to face the upcoming changes. Table 6: Current Major Mining Sector Projects in Guinea Company Stage Production Quantities (mtpa) Rusal Fria Production Alumina 0,7 Compagnie des Bauxites de Guinée Production Bauxite 13 Compagnie des Bauxites de Kindia Production Bauxite 2 SociétéAurifère de Guinée Production Gold 8 - 12 t SEMAFO Production Gold 1,5 - 3,5 t SociétéMinière de Dinguiraye Production Gold 1,5 - 2,5 t Guinée Alumina Corporation Production Alumina 2,8 - 3,9 International Mining Development Development Alumina 3 Kabata Development Alumina 1,5 - 4,5 AMC Kombia Development Bauxite 10 Helalin Development Bauxite alumina 1,2 - 2,4 Dian Dian Development Bauxite alumina 1,2 - 2,4 Henan Chine Construction Bauxite alumina 10 bauxite, 1,2 alumina Société des Bauxites de Dabola-Tougue Development Bauxite alumina 4 BellzoneKalia Development Iron ore 50 Simfer construction Iron ore 95 SMFG Construction Iron ore 30 VBG Simandou Development Iron ore 50 VBG Zogota Construction Iron ore 30 Forecariah Mining Construction Iron ore 4 - 10 Alufer Development Bauxite 8 CPIC Development Bauxite alumina 4-8 Source: UNDP Guinea 72. The Simandou mining project. The iron ore deposits have historically been the subject of intense competition among global mining conglomerates, including Rio Tinto (Simandou blocks 3 and 4 in which the IFC holds a 5 percent interest). The Simandou deposit is under development, with an investment representing almost three times the GDP of Guinea in 2011, and it is projected that it will contribute on average about US$1.2 billion in royalties and taxes during the operation phase (more than doubling Government revenues). The development of the project is however facing a number of challenges, and the World Bank Group has a key role to play in overcoming these. There are other major iron projects in different phases of development. Guinea is also endowed with other mineral resources (nickel, limestone, copper, gold, diamond, among others). Hence, the establishment of the appropriate 27 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 investment conditions could enable the development of the proposed large projects with resulting significant economic and poverty alleviation impacts for Guinea and its neighboring countries. MIGA’s product could also be used to support investors into the sector. 73. In order to expand the benefits of large investments in the mining sector in Guinea, IFC has developed a strong Advisory Services (AS) program. Guinea was selected as the 8th country under the IFC Conflict Affected States in Africa (CASA) Program in 2012 and since then CASA has contributed to further informing IFC’s interventions and strategy in Guinea, to focus on: (i) improving the business environment through regulatory reforms; (ii) strengthening SMEs and supporting institutions; (iii) rebuilding financial markets, banks and other financial institutions; and (iv) increasing private sector involvement in providing and rebuilding infrastructure. 74. IFC will continue its efforts to promote the development of the Guinean private sector through investment climate (IC) and SMEs development programs. The investment climate program which was recently restructured to better focus on top priorities of the private sector reform agenda will continue to aim to improve the competitiveness of, and maximize the economic opportunities for, SMEs in the mining sector. Concerning SME development, the 3-year Local Supplier Development Program (LSDP), which was launched in 2012, aims to enhance the development and transformational impact of the Simandou project through increasing local content, creating sustainable local supply chains, and developing local skills using the Business Edge™ (BE) product, an IFC training program in management and financial skills. 75. IFC will continue to develop a strong AS pipeline to ease access to finance for SMEs in Guinea. IFC plans to establish a risk sharing facility with a local bank that will ease/expand access to finance for local SMEs. In parallel, following enactment of a new leasing law in early 2012, IFC is working with the Central Bank of Guinea (BCRG) to develop a leasing finance framework aimed at promoting leasing as an alternative financing solution for medium- to long-term financing needs. Other activities planned in the rest of the pipeline include a regional venture program and the establishment of a PPP program to support potential investments opportunities in energy, agribusiness and tourism. 76. There has been encouraging progress in business regulation reforms as measured by the 2013 Doing Business Report, which ranked Guinea as 178th out of 185 countries. Through the MSME Development Support Project recently approved, the Bank will help create new technical centers in different regions in support of local MSMEs. 77. Guinea plans to broaden the country’s small and medium enterprise (SME) base through investment climate reform, solutions to improve access to finance, and the establishment of SME growth corridors. In 2012, IFC supported the creation of an Investment Promotion Agency (APIP) and a one-stop shop to facilitate enterprise creation. Two other reform measures were implemented and preparation of five other reform measures is currently underway. A Public-Private Dialogue (PPD) framework is envisioned, among others, but there is still a long way to go. An IFC supported Local Supplier Development Program (LSDP) was launched in September 2012, building upon the results of a pilot phase conducted under the “Guinea Linkages Program�, to improve SME capacity. The next phase of LSPD aims to expand scope and coverage, as part of the new IFC strategy that will help improve access to financial services for SMEs through microfinance and innovative mechanisms such as leasing. 78. MIGA continues to offer in Guinea all of its core political risk insurance product lines (transfer restriction, expropriation, breach of contract, and war and civil disturbance). These product lines can be used along with other World Bank products, such as IFC loans to directly support government PPPs or IPPs, as has been the case elsewhere in the region. Moreover, through reassuring foreign investors with concerns about governance and political risk, MIGA’s product can support the 28 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 strategic priority of stimulating growth and promoting economic diversification. As a post-conflict and IDA country, Guinea is a strategic priority country for MIGA, and MIGA’s strategic goal of supporting complex projects in areas such as infrastructure is also consistent with the overall CPS approach. Finally, MIGA's Small Investment Products (SIP), which has streamlined procedures for smaller projects, targeting SMEs, is also available to investors into the country. MIGA’s currently has an exposure US$51.9m in Guinea, supporting a key investment in the telecoms sector. 79. Using the Bank’s competitive advantage and to support the growth of mining related investment in the sector, the Bank will propose an instrument toward building a sustainable partnership and fostering coordination in sector interventions to achieve greater efficiency and effectiveness in the Guinean transport sector. It will provide Guinea with a platform for maintaining collaboration with development partners and sustaining the ongoing productive dialogue in the transport sector. The proposed operation will address, inter alia: (i) the capacity issues of the ministries in charge of transport in terms of the coordination, management, and the legal and regulatory framework of transport sub-sectors; (ii) the integration of non-mining freight and passenger services into the on-going mining infrastructure developments; and (iii) the design of a sustainable solution for the current transport bottleneck issues of the port and the town of Conakry. In addition, the Bank’s support will complement EU and AfDB support, as well as support from IDB and Arab states, which is currently largely focused on investment projects. Strategic Areas of Engagement 3: Strengthening Human Capital 80. Under the third area of engagement, the Bank expects to improve access to basic social services, long term improvement in technical skills to meet the demand of Guinea’s diversifying economy, while continuing to create short-term support to the vulnerable population through safety nets. 81. The Bank Group will intensify efforts to promote not only quantity but also quality of human capital development to tackle education disparities as one of the main determinants of poverty (see Section C). The Bank is currently preparing a comprehensive tertiary education strategy and skills assessment to address skills needs for growth and competitiveness focusing on supply and demand issues, governance and program diversification to meets the needs of the labor market. The results will be used to inform the design of the new skills development project supported by the Bank during the proposed CPS period. Outcomes Indicators 1.Improved access to basic service Transition rate from primary to lower secondary school delivery Teachers deployed using the “barême de mutation� Deliveries assisted by trained health personnel Health centers applying Results Based Financing 2.Improved skills for job creation Established relevant training and education programs Graduation rates/certification 3.Functional social safety net system Beneficiaries reached through public works established Beneficiaries reached through conditional cash transfers 82. The Bank plans to support the Government improve human capital, with a specific focus on upgrading skills to meet the demands of the Guinean economy. The recent Baccalaureate (Bac) results show that only 3,190 students passed the scientific Bac and 6,146 passed in mathematics, with an overall success rate of 23 percent nationally across all subjects. This highlights a serious problem for a country which needs technical and scientific manpower, knowledge and competencies to fully maximize its natural resource potential. Predictions indicate that between 52,000 and 100,000 workers will be required for the construction phase of the mining sector alone. These figures do not include indirect job creation 29 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 and depend on the number of projects considered (59,500 to 73,500 workers for 7 projects and 85,000 to 100,000 if all the projects were to be implemented) and the time horizon (52,000 workers for the next 6 years only). Guinea will need to upgrade the skills of youth, including the large number of unemployed as well as recent graduates, to meet the demand of the private sector and extend the benefits of investments in natural resources to the population. During the first year of implementation of the CPS, the Bank plans to finance a Skills Development operation in support of youth employability in key sectors. During the final year of the CPS, emphasis will be given to higher education with a focus on systemic governance reforms. Basic education will be a second priority, focusing on equity and quality of learning. 83. To strengthen the lagging human development indicators in Guinea, the Bank will continue to be the leading partner in basic education, social protection and health. In basic education, the Bank will start the preparation of a new Basic Education project, funded by the Global Partnership for Education for which the Bank has been elected as the supervising entity. The Social Safety Nets project will continue to be implemented to provide the government with a clear social protection strategy. At the same time, the Bank plans to build on its experience and comparative advantage to support the health sector. Health targets will aim at strengthening prevention and capacity to provide services and quality care accessible to the entire population to reduce infant and maternal mortality, malnutrition and fight against communicable and non-communicable diseases. At the same time, the introduction of Results Based Financing (RBF) will support higher cost-effectiveness in the sector contributing to the broader governance agenda. The human development program will enable the Bank to contribute to poverty reduction through improved basic services, in response to a demand from government and in close coordination with partners. VI. RISK ASSESSMENT 84. Political uncertainty and weak governance may negatively affect the CPS implementation. With repeated delays in the organization of legislative and local elections, the political situation remains tense, with frequent urban and communal riots sparking out of every minor incident. The risk that political uncertainly, social tensions and a weak governance framework may spill over and impact the reform agenda and implementation of the CPS program remains high. To mitigate this risk, the Bank will have a hands-on approach to project management and monitoring. In addition, the Bank’s Economic Governance TA and Mineral Governance TA operations will help provide needed institutional development support to strengthen governance in the mining sector and the public administration. 85. Economic management remains a challenge. Post-HIPC Completion Point, the authorities need to improve and sustain the quality of debt management, strengthen their capacity to evaluate Government liabilities, maintain sound macroeconomic policies, and transform the business environment. The recurrence of external shocks and/or policy slippages as in the past and the resumption of non- concessional borrowing could lead to the reemergence of unsustainable debt. Further, populist actions such as the agreement with the unions in December 2012 over a 50 percent salary increase will be difficult to manage before further stabilizing the overall macroeconomic environment. Improving the quality of debt management, strengthened capacity to evaluate potential Government liabilities in PPP agreements, sound macroeconomic policies, and improvement in the business environment are crucial to achieving and maintaining a sustainable debt level. Borrowing by all Government-owned entities must remain strictly under control of the Ministry of Economy and Finance to ensure debt-sustainability. For the same reason, possible Government participation in mining sector projects is envisaged to be financed only by project revenue without recourse to the budget. 86. Exogenous factors (economic shocks and commodity prices). Guinea is exposed to many exogenous factors, which include the continued instability in the sub-region and the country’s heavy dependence on mining products for export revenue. Historically, such volatility was managed by long- 30 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 term contracts at fixed prices for bauxite exports. Exports of gold and iron ore are increasingly important export commodities and are less likely to be managed by long-term contracts (such contracts are more expensive). The current Bank strategy aims to help Guinea minimize the risks of external shocks by strengthening and diversifying its export base. The liberalization of trade, particularly the strengthening of regional trade with the ECOWAS is expected to be an important component of this strategy. The current regional integration strategy adopted by the Bank through the rising number of regional projects is a good way to reduce or contain exogenous shock on a particular country. Furthermore, countries can gain from shared experience and reduce potential heavy costs related to those external shocks. For Guinea, integrating Bank’s project within the Mano River Union is a viable strategy to encourage regional integration and increase the role of the country in the sub-region. 87. Finally, the financing risk linked to the availability of IDA resources should be considered. While the anticipated allocation is based on a conservative estimate, which is based on Guinea’s current CPIA rating of 3.0, the inability to secure the anticipated amounts would necessitate scaling down the overall level of engagement or changing program priorities proposed in the CPS. 31 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 VII. ANNEXES 5 5 Data in tables will be updated as needed before the Board discussion 32 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Annex 1: Guinea CPS Result Framework Overarching Goals: Reduce Extreme Poverty and Boost Shared Prosperity Strategic Areas of Engagement to reach Goals: Governance and Service Delivery * Shared Growth * Economic Diversification High level country outcomes Low income country (Population: 10.3 million) Baseline (2012) GDP per Capita: US$487; Percent Poor: 55.2% CPS RESULTS MATRIX Country Issues and Obstacles CPS Outcomes and Indicators World Bank Group Program Development (Ongoing and Indicative) Goals Strategic Areas of Engagement 1: Improving governance Weak capacity and governance 1.1 Improved mining governance On-going Lending: systems of key institutions structure and transparency • Mineral Governance managing the minerals sector • A new decree is signed which aligns FY13/18 US$20m (P122916) SOGUIPAMI’s structure with international Indicative TF: Lack of oversight of best practice by FY17 • Second EITI grant autonomous agencies and state- • Guinea has completed its EITI membership US$350k and Mineral Governance TA. owned enterprises by the process by FY16 Ministry of Finance Public procurement does not 1.2 Improved transparency of the public On-going lending: Improve follow standard, transparent sector including HR system • EGTACB US$10m FY12/FY16 institutional procedures. management (P125890) governance and • Timeframe for public procurements Ongoing ESW/AAA: capacity (PRSP- Civil service is ineffective due to financed by the national budget is reduced • PER (P144401) III Pillar 1) lack of an HR management from 65days in 2011 to 10 days by FY17 system. • Audit of all active SOEs conducted by FY17 6 • One single HR system is established for the Guinean Civil Service by FY17 Inefficient and non-transparent 1.3 Budget reform introduced including On-going Lending: budget process and budget citizen monitoring • EGTACB US$10m FY12/FY16 management • A budget law and a public accounts law (P125890) are adopted by FY16 • SPF US2.7m FY13/15 • Citizen participation in budget preparation 6 Source: DNMP and ARMP annual reports 33 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 and monitoring is institutionalized by FY15 Strategic Areas of Engagement 2: Stimulating growth and economic diversification Develop access to High level of technical and non- 2.1 Improved commercial and operational Ongoing Lending: energy and technical losses in distribution efficiency of electric company • Electricity Sector Efficiency improve impact financial viability and • Increase bill collection rate in Kaloum Improvement Project, US$7.2m + infrastructure quality of service delivery. from 66% in 2006 to 95% by FY14 18.3m+$4.5m from GEF (PRSP-III Pillar 3) • Decrease total electricity distribution Indicative Lending: losses in Kaloum from 26.5% in FY12 to • Electricity Sector Support Project 16% by FY14. US$30m FY15 • [OMVG regional project] 7 Strengthen fight The agricultural sector lacks 2.2 Improved agricultural productivity Ongoing Trust Fund: against hunger access to technology required to • Irrigated rice yield increased from 2.5t/ha • WAAPP–(PHRD_ grant)US$9m and malnutrition increase productivity. in year FY13 to 3.6t/ha by FY 17 • PUAPA2 – (GRFP grant) US$20m (PRSP-III Pillar 4) • Rainfed rice yield increased from 1.0t/ha (P128309) in FY 13 to 1.6t/ha by FY17 Indicative Lending: • WAAPP FY14US$10m (possibility to leverage US$20m with GAFSP) • Agriculture Sector Support US$27m FY16 Indicative-Lending: • [WARFP US$3m] 8 Develop ICT Cost of communications services 2.3 Improved ICT connectivity and Ongoing Lending infrastructures is very high. transformation • WARCIP US$ 34m (P122402) (PRSP-III Pillar 3) • Retail price of internet services (per Indicative TA: Inadequate geographical reach of Mbit/s per month, in US$) reduced from • ICT programmatic TA US$0.2 broadband networks. $1,200 in FY10 to $500 by FY16. Ongoing MIGA support: Foreign investors are reluctant to • International Communications (Internet, • US$51.9m in guarantees supporting invest due to lack of guarantees. Telecom, and Data) bandwidth per person telecom infrastructure (Kbit/person) increase from 5 in FY10 to 11 by FY16. Accelerate, Lack of technical and managerial 2.4 Enhanced technical skills to boost On-going lending: 7 Amount TBD 8 Operation planned, design and outcomes TBD 34 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 diversify and skills in the private sector, private sector development • Business environment and MSME promote private notably in agri-businesses • 5.000 entrepreneurs trained in basic Support Project FY13 $10.0m sector-led long impedes growth business modules by FY17 including 500 On-going IFC Advisory: term growth women • Investment climate program-IC: (PRSP-III Pillar 2) • Established 3 SME sector focused FY12/16; US$ 3,140,000 technical center. • TA & Local Supplier Development Project FY13/15; US$ 4,661,500 Indicative Lending: • [MRU Trade, Land and Economic Growth FY15 US$ 10m] 9 • [Transport Sector TA US$5m FY17] 10 Limited access of MSMEs to 2.5 Improved institutional framework to On-going lending: financial services including broaden investment opportunities • Business environment and MSME savings and finance • Implementation decrees of the new Support Project in partnership with Leasing Law are published and IFC’s Entreprenant initiative Leasing as an alternative to bank disseminated by FY15 On-going IFC Advisory: loans does not exist • At least 2 PPP transactions are completed • Leasing US$450,000 FY13/16 in key sectors such as energy, Indicative IFC Advisory: Lack of a public- private agribusiness and services. • PPP Project TF US$3,300,000 FY13- partnership framework boosting 16 private sector investment in key economic sectors Guinea is not realizing its export 2.6 Enhanced regional integration and Ongoing lending: potential and integration to improved regulation of transport sub- • West and Central Africa Air Transport regional and global market is sectors US$7m (P083751) stunted by inefficient policies • Civil aviation code revised and approved by FY14 Strategic Areas of Engagement 3: Supporting Human development Improve delivery Majority of deliveries not 3.1 Improved access to basic service On-going ESW/Lending: of social services supervised by trained personnel. delivery • PER in Health (PRSP-III Pillar 4) Immunization rates are low. • % of deliveries assisted by trained health • Health Sector Support Project personnel in targeted areas increased from US$25m (P065127) 9 Operation planned, design and indicators TBD. 10 Operation planned, design and indicators TBD. 35 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Low transition rate from primary 24% in 2012 to 28% by FY17 On-going ESW/Lending: to lower secondary school • Health centers applying RBF increases • PER Education from 0 in 2013 to 10% by FY17 • IE on teachers incentives Ineffective teacher deployment • Transition rate from primary to lower • GPE Basic Education US$ 40m strategy secondary school increase in targeted • APL Education For All US$ areas from 28% in 2012 to 36% by FY17 70m+10m • % of teachers deployed using the “barême Indicative Lending de mutation� approach increased from • GPE US$37.8 m FY14 92% in 2013 to 95% in FY17 • Health sector support $US10m FY16 Promote youth Lack of relevant skills from 3.2 Improved skills for job creation On-going ESW/lending: and youth schools, tertiary institutions or • Established relevant training and • PER in education employment company-based vocational education programs to train 8,000 youth • Towards a Tertiary Education (PRSP-III Pillar 4) training programs. by FY17 Strategy (P133417) • At least 70% graduation Indicative ESW/lending • Skills Development project US$15m rates/certification at the end of the Bank- supported training programs by FY17 FY14. • Higher Education project US$12m FY17 • Youth employment TA Build resilience Existing safety nets mechanisms 3.3 Established functional social safety net On-going ESW/lending: for the most are inadequate and limited system reaching those below the Social protection TA vulnerable (PRSP- poverty line • Productive Social Safety net project III Pillar 4) • 24,000 beneficiaries reached through US$25m (P123900) public works by FY17 • 10,000 beneficiaries reached through conditional cash transfers by FY17 36 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Annex 2: Guinea Country Assistance Strategy (2003-2006) and Interim Strategy Note (FY11-FY12) Completion Report Context and Objectives of the CAS 1. The World Bank’s 2003-2006 Country Assistance Strategy (CAS) for Guinea was designed to anchor on the country’s First Poverty Reduction Strategy Paper (PRSP) pillars of fostering sustainable and equitable growth, improving access and quality to basic services, and strengthening governance and institutional and human capacity. The CAS focused on supporting selected economic and sector work, a structural adjustment operation, and second phases of existing adaptable program loans to foster growth, improve access to social services, and strengthen capacity and governance. 2. The initial 2003-2006 CAS-period was going to be a period of transition required mainly to strengthen Guinea's fiduciary arrangements in public finance management and institutional framework for service delivery. The Bank’s Program was to move gradually towards more programmatic support by assisting Guinea to reform its institutional and policy framework, build its capacity for service delivery, and improve the management of public finances so that the country’s national institutions are able to effectively implement its development programs. To support this transition, the Bank and other donors planned to gradually move away from projects, to prepare the various sectors for a more programmatic approach. To the extent that satisfactory public expenditure and fiduciary arrangements would be in place, the Bank also considered moving towards future support through poverty reduction support credits. 3. The political instability which afflicted Guinea during the 2000s thwarted the authorities’ efforts to implement the First Poverty Reduction Strategy covering 2002-2006 (PRSP-I), the basis of the Bank’s CAS under review. As a result, the government issued a second PRSP (PRSP-II) covering 2007-2010 in August 2007, building on the lessons learnt from the unsuccessful implementation of the PRSP-I. In 2010, the authorities decided to extend implementation of the PRSP-II to allow more time for progress on key indicators, especially as the period 2008-10 had been affected by numerous adverse shocks, chief among which is continued political instability. 4. The Bank’s 2003-2006 CAS period was never closed, owing partially to a suspension hiatus from December 2008 to April 2011 following a military coup. The resumption of the Bank’s activities in 2011 was guided by an Interim Strategy Note (ISN) for FY11-12 which outlined a Bank re-engagement strategy in Guinea with the aim to support the Government’s plan for the period. The Bank pledged to support macroeconomic stabilization and help Government to reach the HIPC completion point rapidly by providing budget support and technical assistance, with a special focus on the areas of public financial management, public administration, the security sector, and mining. The Bank also committed to support a major push to boost the delivery of social services and the creation of jobs to help deliver tangible quick wins to the citizens. This was to be done by using the existing portfolio, creating a few select new projects, and leveraging new sources of finance. The Bank’s emphasis was going to be placed on strengthening civil society and social accountability mechanisms and on accelerating regional integration. Significant progress under the ISN was expected to lead to a full Country Assistance Strategy, at the end of the ISN period. 5. The Bank’s performance is considered to be moderately unsatisfactory because, while some of the Bank supported programs achieved results, many were not successful, with a few are still under implementation for more than 8 years. 37 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Progress towards Guinea’s Long-term Development Outcomes 6. In tracking progress towards fostering sustainable and equitable growth, it is notable that Guinea’s performance has been erratic with economic growth strongly decelerating since 2008, to become negative in per capita terms. Cumulatively, GDP per capita declined by 4.6 percent between 2008 and 2010. While agriculture continued to grow modestly, the mining sector - historically a major driver of growth contracted in real terms by 6 percent between 2008 and 2010 in spite of rising world commodity prices. The regulatory business environment worsened with the cancellations of contracts in the mining sector, changes of license terms and conditions in the telecommunications sector, on the one hand and political uncertainty in the context of deteriorated security situation on the other. In contrast, the construction sector benefited from the large fiscal expansion recorded in 2009-10. The incidence of poverty also increased, from 49 percent in 2002 to 58 percent in 2010. Recent poverty data from the 2012 Core Welfare Indicators Questionnaire survey show that 55 percent of the population continue to live below the poverty line, compared to 53 percent in 2007 when a similar survey was conducted. 7. Second, during the review period the delivery of access and quality to basic services suffered as a result of the budget crunch, under-paid civil servants, and faltering decentralization. Health services are in a serious state of decay. Government spending on health (excluding external assistance) is dismally low, having decreased from less than 1 percent of GDP in 1993 to 0.2 percent in 2010. Chronic malnutrition in 2007 was 36 percent up from the previous survey in 2002. Less than 16 percent of the population consulted health care workers even though 56 percent had access to services according to the same survey. Malaria remains the leading cause of morbidity and mortality among children. The infant mortality rate is 101 per 1,000 (2004) and the maternal mortality rate is one the highest in Africa at 740 per 100,000. Among those accessing services, only slightly over half expressed satisfaction. The HIV prevalence rate is low relative for the region, estimated at 1.6 percent. The government is pursuing a policy of free access to anti-retroviral drugs but so far, public resources were not in place to finance this policy. 8. The recent crisis also had negative effects on education. The gross enrollment rate has stagnated at around 79 percent since 2007 (86 percent was expected in 2010), and for girls, at around 70 percent. In the rural areas, the rate has remained at around 60 percent over the same period. Dropout rate however shot up from 5.9 percent in 2007 to 11.6 percent in 2010, and as a result, the primary completion rate fell to 57 percent in 2010. Enrollment in secondary schools has also remained flat at about 44 and 25 percent GER respectively for secondary 1 and 2 since 2007. The Technical and vocational education and training including post-primary cycle is very weak: in 2008, the overall enrollment in this sub-sector was less than 6,000 students. Sector inefficiencies seem to have risen, especially in expenditure management and planning with more than 90 percent of primary and secondary education recurrent expenditures spent on salaries. It is widely suspected that public employment, especially in education, is rife with ghost workers and double dippers. 9. Third, progress towards strengthening governance and institutional and human capacity fell short of expectations, as a result of years of institutional neglect, authoritarian rule, predatory behavior on the part of senior government officials and civil servants alike and ethnic tensions. The Ibrahim Index on African Governance ranks Guinea 42nd out of 52 African countries, reflecting a judicial system that has been weakened by political interference and corruption. Transparency International reports that Guinea, over the past several years, ranked at the bottom of the scale in terms of perceptions of corruption - in 2011, it was ranked 164 out of 178 countries. A central component of this state of affairs is the weakness of the state. The decaying public administration has lost many of its core skills. After years of under-investment and institutional neglect, the public administration requires significant attention in order to become an effective agent for the country’s rebirth. Serious inconsistencies between the payroll and 38 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 personnel data plague the public service pointing to the existence of large abuse and irregularities in the payroll. Program Performance 10. The CAS Completion Report focuses on the core CAS benchmarks identified for assessing Bank’s performance. However, the review period spans from 2003 to 2012, therefore including the FY11- FY12 ISN period as well. At the ISN stage and to align the interim strategy with Guinea’s new political and economic context, three projects were dropped from the previous CAS program, including the Structural Adjustment Credit, the Water Support Program, the First PRSC and the Second CBSD; as well as the Investment Climate Policy note. This was in line with the Bank’s new focus devoted to stabilization and economic governance, and the need to clear US$74 million of arrears, a precondition to resuming Bank activities as well as that of the IMF and other donors. Furthermore, program Results missing any supporting instrument during the period have been dropped. Promoting Sustainable and Equitable Growth 11. To support sustainable and equitable growth, the Bank planned to carry out analytical work and contribute to (a) fostering macroeconomic stability; (b) improving the investment climate through assistance for establishment of minimum infrastructure services required for growth; (c) supporting policy reforms in fisheries, agriculture, mining, and trade; and (d) improving rural services. These actions were expected to help Guinea achieve an annual GDP growth rate of 5.8 percent (8 percent rural areas) by 2005. 12. Macroeconomic stability. The Bank delivered only partially on supporting this first pillar of the Government’s PRSP. The structural adjustment operation (FY04) which was planned to cover policy reforms in tax administration, mining and trade, and including various activities to strengthen Guinea's public expenditures and fiduciary framework did not materialize. However, in 2011 as part of the re- engagement effort and to contribute to one of the two objectives of the ISN, namely the consolidation of national reconciliation through building state capacity and increasing accountability, the Bank prepared a Reengagement and Reform Program which was rated moderately satisfactory at completion. It aimed to strengthen financial management, efficiency and accountability in the public sector and to increase transparency in the mining. 13. Improving rural services. The Bank also delivered on the planned rural infrastructure program (FY04) and the second phase of the Urban Program (FY05) in the CAS. However, both projects (P065127 and P091297) are still under implementation following restructuring. The former, which closes on June 30, 2013, is currently rated moderately unsatisfactory in overall implementation progress, with a disbursement lag of 37.83% or 62 months. The two Global Environmental Facility-supported projects in support of the sustainable management of natural resources were delivered and are still under implementation. Both are rated moderately satisfactory in overall implementation progress. Improving Access and Quality to Basic Services 14. To support increasing equitable access to social services, the CAS planned to strengthen the Bank’s analytical base in support of (a) empowering urban and rural people, their local governments, and their organizations; and (b) strengthening service delivery in specific priority sectors (health, education, fight against HIV/AIDS, and water resource management). To that end the proposed efforts in the CAS anticipated a second phase of the then existing health program (FY04). Hypothetically, the Bank also suggested provision of budget support to complement the ongoing support to social sectors (the Education for All program, and the Multisectoral HIV/AIDS program). 39 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 15. Service delivery. The Multisectoral AIDS Program (P073378), designed to increase HIV/AIDS knowledge and low risks behaviors and to improve the coverage and the use of HIV/AIDS prevention, care treatment and support services, scored a moderately satisfactory rating at closing. The Education for All program which is still ongoing, is currently rated moderately satisfactory. It aims to establish a stable framework for good quality universal primary education. Strengthening Governance and Institutional and Human Capacity 16. In support to governance strengthening and institutional and human capacity building, the CAS planned to build capacity in its broadest sense, creating conditions for effective use of existing capacity (public and private sectors, and civil society) to deliver basic services to the poor in rural and urban areas. To achieve this, the CAS planned to focus on cross-sectoral generic issues relating to institutional transformation, with the ultimate goal of transforming the public sector agencies from organizations focusing on bureaucratic control-which hinders service delivery and provides opportunities for rent seeking, patronage, and corruption-to organizations supporting public and private service delivery to the poor. Through the CAS, the Bank planned to focus on: (a) establishing the analytical base to support the government's actions to strengthen governance; (b) transforming cross-cutting national institutions and service delivery agencies; and (c) strengthening mechanisms of accountability to ensure that local government is accountable to citizens, and operates in a transparent and participatory way. In addition, the Bank planned to support developing statistical capacity to allow adequate monitoring and evaluation of the PRSP implementation. 17. Programs such as the Community Support Program and the Urban Program that involved strong participation of beneficiaries have done somehow well in improving the quality of services and poor people's access to these services. Such programs have also promoted gender equity, since many of the community-identified priorities have involved measures improving the quality of women's lives, such as maternal health services, better access to drinking water and agricultural services. These efforts also allowed the Bank to have a decisive impact on governance at the local level. The Bank’s close relationship with civil society was also helpful in creating the momentum for change which ultimately led to the first free and peaceful elections in Guinea. Results Rating 18. The CAS Completion report rates the achievement of results foreseen in the CAS as moderately unsatisfactory. In the absence of a proper results framework, the team proposed core CAS benchmarks to assess Bank’s performance. Factoring in the limited context of limited information the Bank had pledged, during the CAS period, to support the strengthening of the knowledge base and of statistical capacity, which was going to allow establishing a stronger baseline of the various benchmarks, especially in the area of strengthened governance and institutional capacity, and measuring the progress over the CAS implementation period. Guinea’s statistical system continues to face major shortcomings including poor coordination between producers and users. Persistent weaknesses are noted in terms of regularity and timeliness of publications, modeling tools for forecasting and simulation tools for impact to better understand the impacts of macroeconomic policies at the micro level (on households and enterprises). In addition, the national statistical system is still confronted with the absence of methodological documents on standards, classifications, procedures for the collection, processing, analysis and data dissemination. Bank Performance, Design and Relevance 19. To reach its objectives, the 2003-2006 CAS proposed a three pronged-program, comprising (a) ongoing activities; (b) new analytical work, building on the existing knowledge base; and (c) new lending operations. At the time the portfolio comprised eight projects representing a total commitment of US$215.6 million in IDA allocations and US$20.3 million in grants. 40 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 20. The design of the CAS was in sync with the Government’s poverty reduction strategy, in that the CAS’s pillars were mirrored against those of the PRSP. It was inspired by lessons learned from what worked and what did not work under the previous CAS, feedback from consultations (Government and civil society) and the client feedback survey completed a few years before. The CAS was designed to ease the transition required mainly to strengthen Guinea's fiduciary arrangements in public finance management and institutional framework for service delivery. To support this transition, the Bank (and other donors) planned to gradually move away from projects, to prepare the various sectors for a more programmatic approach. To the extent that satisfactory public expenditure and fiduciary arrangements would be in place, the Bank also considered moving towards future support through poverty reduction support credits. 21. Several years through the period of the 2003-2006 CAS and many years afterwards, it is hard to attribute the poor performance of the Bank’s program to design failings more than it is to the gradual weakening of the state, weak institutional environment, and political instability in Guinea. 22. Concerning the Bank’s reengagement activities, they were sequenced in time, with the more urgent areas receiving more support in the early period in 20011. This included 9 projects that supported improved service delivery in maternal health and basic education, and stimulating agriculture and rural development. Re-activating the portfolio involved overall 11 retroactive extensions of closing dates and six level 1 or 2 restructurings. The restructurings were devised in ways to improve disbursement rates, tighten fiduciary controls, make the projects more participatory, and more generally, more adapted to the current circumstances at the time. Following a comprehensive fiduciary review of the portfolio, existing operations were assessed as being ready for a resumption of activities. All projects were also submitted to the required audit reports. During the ISN period, the portfolio was simplified and organized around the three key clusters of economic governance, jobs, and decentralized services. Implementation 23. The Bank’s support to Guinea’s the PRSP implementation was manifested through its lending program and analytical and advisory services proposed in the CAS. By supporting the PRSP implementation, the Bank also aimed to support Guinea in achieving the Millennium Development Goals (MDGs), which are consistent with the PRSP objectives. Hence, the Bank’s support to the implementation of the PRSP was to focus on governance, transformation of country institutions, and empowerment of beneficiaries. 24. The delivery of AAA activities followed neither the planned timeline, nor the sector focus the AAAs were originally designed for. Only three non-lending activities were delivered during the original CAS period: Integrated trade framework diagnostic, Guinea integration and competitiveness study, and strengthening public procurement. The IDF grant for accountancy was started, but did not complete. However, additional analytical and/or advisory services activities were carried during the broader span of time subject to the current review. They are: Strengthening fiduciary framework : support to the finance committee of the national assembly and the chamber of accounts; Building institutional capacity for improved management and transparency of Guinean mining sector; Scaling up SME participation in Rural Electrification; Re-engagement technical assistance. 41 WBG COUNTRY PARTNERSHIP STRATEGY FOR GUINEA: FY2014-17 Bank Performance Rating 25. The Completion Report ranks the Bank’s performance as moderately unsatisfactory. Summary Findings and Recommendations 26. A favorable political environment that provides the power base, incentives and commitment to implement difficult reforms is paramount. Understanding the political economy of reform and anticipating opposition needs to inform project planning. In a country where policy decisions are highly centralized, the Bank should be prepared to elevate sectoral policy dialogue at the highest level and to integrate sectoral reforms in the macro policy dialogue. The Bank should also be prepared to wait for policy decisions to materialize at the preparation stage, before committing funding for investments even if investment levels are relatively modest. 27. Strengthening accountability mechanisms has been a key element of ensuring some level of impact to donor financed activities in an environment where traditional institutional counterparts revealed themselves to be unresponsive. Those initiatives whose reach went beyond the traditional institutional partners fared better than those who did not. 28. Community participation is central to reaching tangible results. Programs which involved participation of beneficiaries (e.g. the Community Support Program and the Urban Program) that tend to do better in terms of improving the quality of services and poor people's access to these services. Such programs also seem better fitted for promoting gender equity, better access to drinking water and agricultural services. 29. Choosing lending instruments, consideration should be given to the specific sector objectives and the overall institutional environment of the sector. While certain instruments (such as adjustable program lending (APLs)) were seen as innovative in addressing previously identified weaknesses in traditional project lending, financing was not always adequate to complete all activities planned in each phase. Without presumed recourse to the subsequent phase, triggers become less meaningful and there’s a risk of incomplete activities. 30. Regarding design and preparation assessment of some Bank financed projects has shown that engagement with the borrower during preparation should ensure that those involved are motivated by providing the best assessment of the country’s needs and the likely capacity of the implementing agencies to take on the responsibilities of executing the project. Also, there tend to be clear advantages from keeping the design of the operations simple and well-focused on the Government priorities. Of equal importance in this chapter are representation and voice of prime beneficiaries: local authorities and communities should play a crucial role in the design and implementation of such projects and be represented in the oversight committee. 31. The involvement of the private sector, including beneficiary and producer organizations, in service delivery helps increase the quality of services. For example, in one survey, beneficiaries of the Community Support Program have expressed increased satisfaction with services. Garbage collection in Conakry has improved under the Urban Program through subcontracting of the services to private organizations. Working with the private sector will be particularly important in the future given the very low level of capacity in the public sector. 42 Annexes to Guinea Country Assistance Strategy (2003-2006) and Interim Strategy Note (FY11-FY12) Completion Report 1. Annex 1: Summary of CAS Program and ISN Self-Evaluation 2. Annex 2: Planned Lending Program and Actual Deliveries 3. Annex 3: Planned Non-lending Services and Actual Deliveries 43 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and lending activities that Status and Evaluation Summary(with Lessons and Suggestions for new CAS indicators contributed to the milestones and additional indicators ) outcome PILLAR 1: FOSTERING SUSTAINABLE AND EQUITABLE GROWTH A- Fostering macroeconomic Dropped Lending: 1. Political instability reduces chances to meet the stability and increasing Fifth structural requirements for a DPO. fiscal revenues adjustment credit (FY04) 2. The new CAS should take into account the fragility Outcome: help Guinea achieve dimension throughout the Bank’s program. an annual GDP growth rate of 5.8 % (8 % rural areas) by 2005. B- Improving investment Dropped AAA: 1. This did not help in the design of adequate reforms for climate Guinea Investment private sector development. climate policy note 2. Prior to preparing projects to support private sector development, it will be important to undertake a policy note. C- Supporting policy reforms Partially Achieved AAA: 1. Clearance of arrears to IDA facilitated. Outcome: strengthen financial • The Government made good Reengagement and 2. Recruitment of civil servants and improvement of management, efficiency and progress in restoring basic fiscal Reform Program efficiency need substantial work. accountability in the public discipline. 3. Government needs assistance to implement mining code sector and increase • The government has also launched and should correct basic flaws in older contracts. transparency in the mining an in depth reform of the legal and sector. regulatory framework for public finances. D- Improving rural services Partially Achieved Lending: 1. Legal and regulatory framework of the sector needs to Outcome 1: increasing incomes • 330 km of labor based road works National Rural be improved to promote private sector involvement in and improving health and (two out of the three planned stages) Infrastructure Project infrastructure (ports and railways). education, by improving • 98 km additional spot improvement (FY05) 2. Despite Government’s efforts and donors’ involvement physical access to market road works (one of the two main in the sector, effective road management has been opportunities and administrative spot improvement road works) stymied by the lack of an overall network management and social service facilities. • Construction of 3 rural bridges plan, and inadequate and irregular maintenance funding. The Government will need to raise its game in order to regulate significant investments (Roads, Rail, and Ports) which are expected over the next 10 years from the mining sector. 44 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome Outcome 1: improve Guinea’s Partially Achieved Lending: 1. A strong and continuous political will is as essential for urban and rural water resource • About one million people benefit Third Water Supply and consolidating and deepening reforms, as for initiating management (WRM) from the sludge treatment facilities Sanitation Project them. In a country where policy decisions are highly Outcome 2: build institutional and more than 200,000 people are centralized, the Bank should be prepared to elevate capacity by strengthening the connected to the sewerage network sectoral policy dialogue at the highest level and to National Directorate of in the Kaloum area. integrate sectoral reforms in the macro policy dialogue. Hydraulics (Direction • The Supplemental Credit introduced 2. The Bank should also be prepared to wait for policy nationale de l’hydraulique, additional specific objectives as decisions to materialize at the preparation stage, before DNH), developing activities in follows: (i) improve sanitary committing funding for investments even if investment urban water distribution and conditions in the Kaloum district of levels are relatively modest. increase coverage in Conakry Conakry by increasing access to 3. Donor coordination in supporting and deepening reforms by 100 percent and to increase sewer services; and (ii) Reduce in the water sector is critical for the Government to metered connections by 100 pollution of the marine ecosystem remain on track and sustain commitment to reform. Lack percent. from wastewater discharge and of co/parallel financing and ability for donors’ action in Outcome 3: rehabilitate and septage dumping. the country to support the deepening of the previous extend Conakry’s sewerage and reform in the water sector didn't help cement the contribute to improvements in development of a strengthened partnership in the environmental quality through Guinean's urban water supply that culminated with construction, rehabilitation and performances that were lower than during the previous extension of the existing project. network, training to private 4. The Bank's supplemental financing did not help to local contractors for pit strengthen the reform process and actually gave the emptying and sewage wrong signal to the Government. The concept of management. Supplemental Financing put too much emphasis on technical aspects and cost control and failed to address the bigger picture of sector development and sustainability. 45 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome Outcome 1: test institutional, Partially Achieved Lending + GEF-TF: • Renewable energy sub-projects, which are supported by financial and delivery • Out of a target of 30 villages, the Decentralized Rural GEF, are behind schedule as they require international mechanisms to promote better Project has already electrified 24 Electrification Project tender processes. access to electricity in rural and villages, but only 60% of • One of the contracts ($1m) financed by GEF to purchase peri-urban areas. households originally targeted for solar PV equipment, although signed, is on hold pending Outcome 2: promote the electrification have been reached so further Bank/INT due diligence as the head of the adoption of renewable energy far on average. supplier is wanted under an international arrest warrant technology by removing • In 4 villages (out of the 24), power issued by his home country, Senegal. barriers and thus mitigate CO2 is not being supplied due to either • Overall, this LIL has met its primary objective of emissions social conflicts related to the project "testing institutional, financial and delivery mechanisms or to management deficiencies by to promote better access to electricity in rural and peri- the private operator. urban areas". • The decentralized rural electrification model, based on SME participation, has proven viable and undoubtedly superior to the business as usual scenario (relying on the state-utility EDG to provide electricity in rural and peri-urban areas). Outcome 1: The Project seeks Partially achieved (on-going project) Lending + GEF-TF: 1. In the longer term, Guinea needs to shift gradually away to improve the electricity • Project implementation has resulted Guinea Electricity Sector from thermal power generation to hydropower as its sector's commercial and in providing improved infrastructure Efficiency Improvement main source of generation for all customers (including operational efficiency. services to about 95,100 people Project. mines) and become an exporter of power to other West Outcome 2: The project against a target of 249,000 people African nations. contributes to reduction of direct beneficiaries. 2. Guinea’s hydropower potential could be developed best carbon dioxide (CO2) • Among the eleven (11) works sites through PPPs emissions by addressing the that were opened in September 2011 large inefficiencies in the for schools rehabilitation, five have distribution sector and reducing been completed while three were energy losses expected to be completed in late June 2012 and the remaining three in late September 2012, i.e. just before the new academic year. • Fifteen (15) other infrastructure works are expected to be completed, 46 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome by project closing. E- Protecting the Partially achieved (on-going project) Trust Fund: 1. Given the significance of mining as a potential driver of Environment • (i) All 11 rural communities GEF-Coastal Marine growth or fragility, enhancing the transparency and Outcome 1: support of the participating in the projects are now and Biodiversity effectiveness of natural resource management could sustainable management of implementing IGAs and MPs in line Management Project generate valuable resources and increase trust and natural resources with their Communal Development legitimacy of state institutions plans with the project support; (ii) a training plan for the Ministry of Environment employees, including academic training in Universities in the sub-region, has been developed and is under implementation. Outcome 2: reduce land Partially achieved (on-going project) Trust Fund: 1. The results section of the ISR indicates that progress on degradation through the • All 26 Communes Rurales (CRs) GEF-Community-Based all agreed performance indicators, including integration of SLM practices targeted by the project have local Land Management intermediate performance indicators, needs yet to be into the overall development development plans that include Project measured notwithstanding the fact that the project planning process of natural resource effectiveness dates back to 2006. This raises questions communities and local management/sustainable land about the performance of the M&E system of the governments in selected pilot management concerns. Of these CRs, project. sub-watersheds 21 have received financing for their 2. There is a need to ensure that as part of the next annual investment program (AIP) and supervision mission the results framework of the project the remaining 5 will be financed by is updated with the latest progress on agreed the end of the year. performance indicators so as to have an objective • The financed AIP’s contain 64 benchmark to measure progress towards achieving the NRM / SLM micro projects totaling PDO and to assess the quality of the project's M&E USD 1.1 million. Micro-projects system. financed include rock bunding, communal forest creation/protection, and sustainable intensification of bas- fonds, reforestation, and improved pasture management. PILLAR 2: ACCESS TO AND QUALITY OF BASIC SOCIAL SERVICES A. Empowering urban and Partially Achieved Lending: 1. Involving private sector especially SMEs in basic urban rural people, their local • All 26 Communes Rurales (CR) Urban III - Phase II service provision is a necessary condition to improve governments, and their targeted by the project have efficiency and sustainability in the delivery of such 47 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome organizations developed and submitted their annual services, but government championship is essential. Outcome 1: (a) improve the investment programs (containing a 2. Municipal contracts being agreed between the Central provision of infrastructure and total of 42 micro-projects); 9 have government and participating municipalities can work services in Conakry and been financed (for a total of about and enhance the performance in decentralization process secondary cities; and (b) USD 435,000. even in a country where municipalities have been improve the financial and traditionally weak organizational management of municipalities in support of the decentralization process. Outcome 2: local rural Achieved Lending: 1. As part of its development program, the Government governments (CRDs) are • 258 'Communes Rurales' received Village Community foresees a two-phase process to strengthen enabled to fulfill their mandate capacity building support, 207 local Support Program- Phase decentralization over the next 10 years. A first phase is by planning and implementing development plans were prepared, 44 1 expected to put in place the necessary conditions and inclusive local development annual investment programs instruments for effective decentralization and de- activities, and improving (representing over 400 micro-projects Village Community concentration. A second phase plans to focus on revenue performance to sustain in the sectors of education, health, Support Program - strengthening local communities. Among others, recurrent costs. water and natural resource Phase 2 UNCDF and UNDP are currently supporting the management) were financed , and an decentralization process. additional 130 annual invest 2. The project has identified a need for additional financing programs were approved for to complete phase II activities (related in large part to financing. the additional costs incurred as a result of the suspension). B- Strengthening service Achieved Lending: 1. Government needs to mitigate the financial burden delivery in specific priority • Access to prenatal care and to child Multi-Sectoral AIDS through the establishment of health insurance schemes sectors (health, education, immunizations (DTP3) has Project (MAP) and health mutual, raising significantly the share of the fight against HIV/AIDS, and significantly increased from 2000 to population covered by health mutuals and insurance water resource management). 2011. beyond the 4 percent. Outcome 1: increase HIV/AIDS 2. Health expenditures which are currently focused on knowledge and low risks secondary care, tertiary care, and central administration behaviors and to improve the need to be redirected towards primary care. coverage and the use of HIV/AIDS prevention, care treatment and support services. 48 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome Outcome 2: improve the Partially achieved (on-going project) Lending: 1. The project objectives remain achievable and are coverage and quality of • Strengthened flow of care for at-risk Second phase of existing relevant and consistent with the Government's poverty maternal and child health deliveries, improved norms and health program (FY04) reduction strategy and the Bank's country Assistance services in targeted districts and adherence to the norms for basic as strategy. targeted health centers in the well as emergency birth delivery in 2. A project economic analysis will be carried out in peri-urban areas of Conakry public health centers; improved August to appreciate its efficiency before the last ISR. emergency birth delivery care at all 3. In 2012, the scarcity of public resources (1.8 % of the levels of health centers trough the national budget) has impacted on all health indicators. project zone, Improved IMCI Health financing went so low that the Government was activities. able only to pay salaries leading, for the first time, the • Steady supply of drugs, vaccines, country to go into vaccines shortage -- not to mention bed nets, equipment, purchased drugs. This will be discussed again after the PER study ambulances, supervision vehicles, with the Guinean authorities. motorcycles and bicycles. • Improved access to care by improving the referral system via radio and ambulances (free service for pregnant women) • Recruitment of 490 nurses to address the shortage of midwives in the project zone. Outcome 3: establish a stable Partially Achieved Lending: 1. Learning assessment conducted in 2012 in grades 2, 3 framework for good quality • With a gross enrollment rate of about Education for All and 4 suggest that the Government must do more to universal primary education 80 percent in 2011 significant program increase primary completion rate and achieve gender progress has been made in primary parity, improve learning outcomes, and make education school attendance, including for girls, Trust Fund: more relevant to the needs of the labor market. albeit not as quickly as planned. Education for All Fast 2. A relatively low share of the government budget geared • Increase in the primary cycle Track Initiative towards education and a distribution of resources completion rate from 56 percent in between the different education sub-sectors which is not 2010 to 59 percent in 2011 as well as aligned with MDG goals is not conducive to an increase in the girl/boy parity improvements in the sector. index in primary school from 0.81 in 2010 to 0.85 in 2011. • School enrollment rates by age levels continue to show an abysmal picture with approximately 60 percent of the 49 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome 8-14 student population out of school. C- Mitigate the impact of Partially Achieved Lending: 1. Adequate Government’s response to the crisis given its international rice price • The food price crisis led to a Food Crisis Response limited capacities. increases and contribute to temporary restoration of an inter- Development Policy 2. Longer-term sustainability of the Government’s food the Government’s efforts to ministerial committee, the National Grant price crisis program and overall economic reform efforts continue basic service Consultative Permanent Committee was weakened by the military coup of late 2008, which delivery for vulnerable for Price Competitiveness, which undermine the ability of the Government to address groups. main mandate was to ensure the future food price shocks effectively. Outcome: reduction of customs welfare of consumers through the 3. Given the (anticipated and unanticipated) risks to this duties on imported rice (25 maintenance of market operation in the country’s fragile context, close percent broken) from 12.75 competitiveness. coordination with other development partners has been percent to • Dialogue did not go beyond initial indispensable to mitigate risks, realize synergies, and 2.75 percent to mitigate the conceptual thinking and was taken improve the leverage in the policy dialogue. impact of rapidly rising over by the political events of late Collaboration with the IMF has also been important. international prices of food, and 2008 which shifted the political 4. In the context of Guinea, the Government M&E system by strengthening the focus. worked reasonably well during the crisis but its efforts Government’s stance on weakened after the emergency period. maintaining an open trade regime for food and agricultural products, thereby supporting producers in their plans to meet the rising demand for food and helping ameliorate food security. PILLAR 3: GOVERNANCE AND INSTITUTIONAL AND HUMAN CAPACITY A- Establishing the analytical Not Achieved Lending: 1. The comparable public sector reform projects hold that base to support the • Crédits délégués (fiscal transfers Capacity Building for three factors are crucial to the successful implementation government's actions to through sector ministries) to Service Delivery Project of reforms: First and foremost, a favorable political strengthen governance prefectures very low; do not affect environment that provides the power base, incentives Outcome 1: strengthen local communities. and commitment to implement even difficult reforms. centralized and decentralized • 88% of budgeted resources for Second, implementation arrangements and staffing need system to provide effective education, health and agriculture to be well-embedded in existing administrative and public services to the rural allocated to decentralized level political structures. Third, program components need to population. (excluding development budget) but be appropriately tailored to the country context, and its Outcome 2: Empower local actual implementation lags far readiness for reform must be technically sound and 50 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome institutions to take charge of behind. strategically sequenced. In the case of the CBSDP, none their needs. of these conditions were met. 2. The lessons learned from this project can be divided into issues relating to design, especially for decentralization projects, and management and supervision of such projects in weak fiduciary environments. Outcome 3: To (a) continue Achieved Lending: 1. Addressing governance challenges and restoring supporting Guinea • Procurement Code and related Strengthening Public confidence will be critical in establishing a lasting implementing its reform of the procurement documents are updated Procurement stability in the country. Public Procurement System; and operational. and (b) improving its • Procurement officers, private sector, procurement systems and civil society have been trained, efficiency, quality, and and are operational in using the transparency, and (c) updated procurement code and strengthening its institutional related documents. procurement management capacity. B- Transforming cross- Achieved Lending: 1. Specific impacts in the financial management system cutting national institutions • Impact on MP capacity has been Strengthening Fiduciary and procedures are yet to be assessed, but are expected and service delivery agencies limited to those participating in Framework: Support to to be significant, given the strong focus on program Outcome: contribute towards conferences and joint training with the Finance Committee budgeting, the elaboration of Medium Term improving Guinea’s fiduciary journalists. of the National Assembly Expenditures Frameworks in key priority sectors, the framework by rendering more • Developed draft communication and the Chamber of introduction of risk based approach and the use of the effective the Finance strategy with limited implementation. Accounts country system for donor financed projects. Committee of the National • Developed website with little 2. The country needs strong support to implement these Assembly and correcting documentation. Citizens’ guides to reforms dysfunctions of the Chamber of the budget were not prepared. Accounts. • Both decrees drafted and adopted by Cabinet but not yet signed effective by President. 51 Annex 1: Summary of CAS Program and ISN Self-Evaluation Lending and Non- CAS/ISN Outcomes and Status and Evaluation Summary(with lending activities that Lessons and Suggestions for new CAS indicators milestones and additional indicators ) contributed to the outcome C- Strengthening mechanisms Partially Achieved Lending: of accountability • Only one planned activities has been Accountancy Profession Outcome: introduce a system to implemented. At the closing date, the Project allow l’Ordre des Experts disbursement rate was 4 %. 1. Although the proposal was based on a strong request Comptables et Agréés de from the Accounting profession, it was not underpinned Guinée (OECA-G) to monitor by a proper analytical work that would have highlighted and improve the quality of the the main areas of focus to strengthen private sector accountancy and auditing accounting and auditing in Guinea. services provided by private 2. A comprehensive assessment such as the ROSC A&A Guinean firms and significantly would have provided a better action plan and sequence reduce quality control issues. of the reforms, taking into account the implementation capacity of key local actors. 3. Given the volatile political situation in FCS countries, it is important to design the implementation arrangements in such a way that political instability does not prevent smooth implementation of the activities. One solution could be to be very opportunistic and take advantage of period of stability to fast track implementation. Outcome 2: build capacity of Partially achieved (on-going project) Lending +TF: 1. Period characterized by a high level of political the Guinean Government and • At least one contract negotiated using Building institutional instability and uncertainties in Guinea. The struggle for key stakeholders to improve the newly drafted standard capacity for improved power within the old regime resulted in frequent changes governance and transparency in agreement. management and of Ministers of Mines (4 in the course of the the management of the • Supervision committee formed and transparency of Guinean implementation of the grant). This impacted on country’s mineral resources in a EITI templates adapted to Guinean mining sector continuity and resulted in added needs for supervision participatory way. This would conditions. and dialogue to ensure that each Ministers is aware of be achieved through the • Guinea surpassed this indicator and past achievements strengthening of Government’s was expected to produce its second ability to negotiate stable and report by June 2008. fair investment agreements, which would contribute to economic development at the national, regional and local levels; and through the development of a sound and transparent revenue management framework. 52 Annex 2: Planned Lending Program and Actual Deliveries CAS PLANS 2003 STATUS US$ million US$ million IDA TF IDA TF 1997 Third Water Supply 50 Completed FY05 60.8 Population and 11.3 Completed FY03 12.4 Reproductive Health 1999 Urban III-Phase I 18 Completed F05 18 Village Community 23.5 22 Completed FY07 Support- Phase I Capacity Building for 2000 19 Closed FY05 16.31 Service Delivery 2002 Education For All 70 Actual 70 Decentralized Rural 5 2 Actual 5 2 2003 Electrification Multisectoral HIV/AIDS 20.3 Completed FY08 21.73 Program Structural Adjustment 20.4 Dropped Credit Second Health Adaptable Modified into a SIL Program Loan (Health 15 and moved to FY05 25.0 Sector Support Project) (see Second Rural 2004 20 Actual 30.3 Infrastructure GEF Coastal Zone 0 Actual 5 management project GEF community Ecosystem Management 0 Actual 7 Project Second community 22 Actual 17 Support program Second Urban Program 20 Actual 15 2005 Electricity support 15 Actual 7.2 program Water support program 15 Dropped First PRSC 20 Dropped 2006 Second CBSD Program 8 Dropped 53 Annex 2: Planned Lending Program and Actual Deliveries PROGRESS REPORT PLANS 2003-2012 STATUS US$ million US$ million IDA TF IDA TF Decentralized Rural 2003 5 2 Actual 5 2 Electrification Second Rural 2004 30.3 Actual 30.3 Infrastructure Second community 2005 17 Actual 17 Support program Electricity Sector Efficiency Improvement 7.2 4.5 Actual 7.2 4.5 Project Regional project- 3A-West 2006 &Central Afr Air Tran 7.1 Actual 7.1 TAL (FY06) Regional project- 3A-SRB M. Water Res. Dvpt. APL 18.04 Actual 18.04 (FY06) Second Urban Program 15 Actual 15 Village Community Support- Phase I – 7 Completed 7.5 Additional financing Regional project- 3A- Niger Basin Water 9 Actual 9 2007 Resources Coastal Marine and Biodiversity Management 5 Actual 5 Project Community-Based Land 7 7 Management Project Education For All - 10 Actual 10 Additional Financing 40 Education For All – Fast Actual 40 Track Initiative Program 2.857 Development of Inclusive 2.857 Education in Guinea Actual 2008 Food Crisis Response 2.5 Completed 2.5 Development Policy Grant Additional Financing to 2.5 Actual 2.5 the Third Urban Development Project Emergency agricultural Productivity Support 5 Completed 5 Project 54 Annex 2: Planned Lending Program and Actual Deliveries Development Policy Loan 78 Actual 78 (DPL) 1 West Africa Regional 2011 Communications 34 Actual 34 Infrastructure Project – APL-1B Additional Financing- Electricity Sector 18.3 Actual 18.3 Efficiency Enhancement Project Economic Governance 2012 Technical Assistance and 10 0.647 Actual 10 0.647 Capacity Building Productive Social Safety 25 Actual 25 Net Project Mineral Governance 20 20 Actual Support Project Second Emergency Agricultural Productivity 20 Actual 20 Support Project Business Environment and 1.6 1.6 MSME Support Project 55 Annex 3. Planned Non-lending Services and Actual Deliveries CAS PLANS STATUS 2001 Rapid Fiduciary Assessment Not delivered CPAR Not delivered 2002 Governance and anti-corruption diagnostic surveys Not delivered Completed Integrated trade framework diagnostic FY2003 Completed in Country Financial Accountability Assessment -CFAA FY04 2003 Strengthening fiduciary framework : support to the finance committee of the national Completed FY07 assembly and the chamber of accounts Completed in CPPR FY06 Gender assessment Not delivered Public Expenditure Review-PER Completed Legal and Judicial Sector Assessment Not delivered 2004 IDF grant to support institutions with governance related mandates in the judicial and Not delivered legislative branches of government Trust fund grant to support statistical capacity building Completed FY07 Strengthening public procurement Completed FY09 Integrated fiduciary assessment Not delivered 2005 Private sector assessment Not delivered Education Sector Review Not delivered Country Economic memorandum Not delivered Institutional and Governance Review Not delivered 2006 Poverty Assessment Not delivered CAS PROGRESS REPORT PLANS 2003-2012 2003 Guinea-Integration & Comp. Study Completed FY03 2005 Building institutional capacity for improved management and transparency Completed FY08 of Guinean mining sector 2006 Idf grant for accountancy profession project Completed FY2010 CFAA- Implement follow-up Completed FY06 Sources of Agricultural Growth & Competitiveness Actual (to be completed FY 2013) 2007 Scaling up SME participation in Rural Electrification Completed FY 2010 2009 Re-engagement technical assistance Completed FY2011 2011 Extractive Industries Technical Advisory Facility Actual Guinea Social Protection Strategy Actual Guinea Energy Note Completed FY2012 ROSC A&A Actual 2012 Policy Dialogue and donor collaboration for national backbone Underway (to be completed development FY2013) DTIS Update Underway (to be completed FY2013) 56 Annex 3. Planned Non-lending Services and Actual Deliveries CAS PROGRESS REPORT PLANS 2003-2012 Towards a Tertiary Education Strategy Actual (to be completed in FY 2014) Assessment of linkages and clusters in the Mining sector Underway (to be completed FY 2013) Guinea Mining Ancillary Infrastructure Actual Policy Dialogue and donor collaboration for national backbone Underway (to be completed development FY2013) Investment Climate Change Dialogue Underway (to be completed 2013) 57 Annex 3: Millennium Development Goals Millennium Development Goals Guinea With selected targets to achieve b etween 1990 and 2015 (estimate closest to date shown, +/- 2 years) Guinea Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2011 Poverty headcount ratio at $1.25 a day (PPP, % of population) 92.6 63.8 .. 43.3 Poverty headcount ratio at national poverty line (% of population) .. .. .. 53.0 Share of income or consumption to the poorest qunitile (%) 3.1 5.2 .. 6.4 Prevalence of malnutrition (% of children under 5) .. 21.2 29.1 20.8 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) 27 .. 47 81 Primary completion rate (% of relevant age group) 21 20 32 64 Secondary school enrollment (gross, %) 11 14 19 42 Youth literacy rate (% of people ages 15-24) .. 28 .. 63 Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 44 51 64 79 Women employed in the nonagricultural sector (% of nonagricultural employment) .. .. 24 29 Proportion of seats held by women in national parliament (%) .. 7 9 19 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 228 202 175 126 Infant mortality rate (per 1,000 live births) 135 120 105 79 Measles immunization (proportion of one-year olds immunized, %) 35 61 42 58 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 1,200 1,100 970 610 Births attended by skilled health staff (% of total) 31 .. 35 46 Contraceptive prevalence (% of women ages 15-49) .. 2 6 9 Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 15-49) 0.7 1.2 1.5 1.4 Incidence of tuberculosis (per 100,000 people) 247 249 234 183 Tuberculosis case detection rate (%, all forms) 14 19 28 61 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 51 58 63 74 Access to improved sanitation facilities (% of population) 10 12 14 18 Forest area (% of total land area) 29.6 .. 28.1 26.5 Terrestrial protected areas (% of land area) 6.8 6.8 6.8 6.8 CO2 emissions (metric tons per capita) 0.2 0.2 0.2 0.1 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) .. .. .. .. Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.2 0.1 0.3 0.2 Mobile phone subscribers (per 100 people) 0.0 0.0 0.5 44.0 Internet users (per 100 people) 0.0 0.0 0.1 1.3 Households with a computer (%) .. .. .. 1.5 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 100 100 50 75 40 75 50 30 50 25 20 25 0 10 2000 2005 2010 0 0 1990 1995 2000 2011 2000 2005 2010 Primar y net enrollm ent ratio Fixed + mob ile subscr iber s Ratio of girls to boys in pr ima ry & secondar y Guine a Sub-Sah aran Afr ica education Inter net users Note: Figures in italics are for years other than those specified. .. indicates data are not available. Development Economics, Development Data Group (DECDG). 58 Annex 4: The WBG’s Role in the Current Landscape of Development Assistance in Guinea Sector of Focus WBG 11 AfDB EU AFD Other major donors Democracy reform X USAID Governance and decentralization X X X Public Finance Management X X IMF Judicial reform X X Security reform X X ECOWAS, UN, AU Electricity X X IDB Telecommunications X Transport X X Private sector development X Basic and Lower Secondary Education X (GPE financed) X Health X X X Social safety nets X UN Youth Employment/skills training/ higher education X X UN Integrated Urban X X X Agriculture X X Mining X X X UN Fisheries X X 11 World Bank Group ongoing and proposed interventions 59 Annex 5: Stakeholder Consultations Stakeholder Consultations 12 Facilitate entrepreneurship, strengthen Youth capacity, Valorize Guinean degrees, Promote judiciary protection, Improve governance and transparency, Civil Society promote decentralization and regional integration, support performance and leadership within the civil society, improve access to credits, monitor projects, stimulate agricultural sector. Strengthen professional training and capacity building, strengthen primary education, create a dialogue framework between the private and the public Private Sector sectors (PPP), improve payment systems, facilitate access to credit, lower interest rates, explore hydroelectricity potential, promote teachers training. National Counsel for Encourage synergy of consultations, promote training and information delivery Transition (equivalent at all levels, take into account and ensure strict application of country was and to National Assembly) regulations, find the ways to preserve and promote peace. Align CPS with Government PRSP priorities, reduce number of small projects Government and reallocate funds into bigger projects with greater impact potential. Harmonize donor’s interventions and strengthen coordination with the World Development Partners Bank group. Account for fragility and political governance, consider informal sector, take into account diaspora potential for the country, promote economic Cross-cutting diversification, promote food security and develop agriculture by promoting messages agro-industries, promote environmental sustainability, guarantee adequate access to energy services, promote gender equality, implement appropriate infrastructures. 12 Consultations were held in Conakry, Labe and Kindia, from February 16th to March 1st, with Civil Society, Private Sector, Donors and Government. 60 Annex 6: Summary of Gender Portfolio Review 1. The Government of the Republic of Guinea recognizes that in order to meet its development challenges it is critical that both women and men are able to contribute to a benefit from economic and social development. The government’s latest PRSP has a separate section on the promotion of gender equality and also mainstreams gender throughout much of the rest of the document. Attention to gender issues is particularly visible with regard to the following areas: education, social protection, health (including reproductive health and women’s vulnerability to HIV/AIDS), and women’s agricultural productivity/contribution to household food security. The PRSP sets out its commitment to gender issues, stating that “the promotion of women with a view toward full participation in decision-making processes at all levels is an integral part of the government’s development policy and one of its priority areas�. The government’s commitment to gender is also demonstrated with its publication of a national gender strategy (GoG, 2011), and a national strategy against gender-based violence (GoG, 2010). Table 1: Percentage of economically active Guinean population in different areas of work, by sex (ORC Macro, 2006) Function Percentage of women Percentage of men Agriculture 55.1 57.0 Sales/services 34.9 10.9 Skilled manual labor 5.8 19.6 Unskilled manual labor 1.9 1.6 Professional/technical/admin 1.5 8.6 Employee 0.1 0.3 2. The World Bank believes that the integration of gender objectives and indicators into the CPS and its Results Framework is the most effective way to maximize the accountability of the Bank for achieving gender outcomes and to highlight and learn from those outcomes. The start of a new CPS period now presents the Bank with the opportunity to put this strategy into practice. Integrating gender into the CPS, particularly into the Results Framework, will allow the Bank to: (1) ensure clarity of purpose in the overall gender-related objectives of the country portfolio; (2) ensure alignment with the priorities of the Government of Guinea; (3) highlight progress; and (4) ensure effective accountability of the CMU for achieving such progress. 3. The main focus of this review is the portfolio of 11 IDA projects 13 – the review finds that 45 percent (5 out of 11) of the IDA portfolio is gender-informed in at least one of the following dimensions: (1) analysis; (2) actions; (3) M&E. This review also looks at a number of trust-funded and AAA activities and finds that 25 and 43 percent of these respectively are gender-informed (see annex 1 for a matrix of key project review comments). The portfolio is supporting the following gender-related outcomes: improved access to basic infrastructure and services; reduced gender inequalities in education; improved understanding of the impact of cash transfers as a tool for increasing girls’ school enrollment/attendance; improved life skills and knowledge of essential family practices (EFP); improved delivery of maternal health care; increased productivity, incomes, and food security for rural women; increased representation of women in teaching positions; Increased employment 13 The focus of the review is on IDA because the World Bank’s corporate targets and guidelines on the integration of gender are specific to IDA projects (i.e. not including AAA or Trust Funds). 61 opportunities for women through public works; Increased representation of women in local rural governments; and increased participation of women in demand for good governance in the mining sector. 4. This review proposes the following gender vision for the CPS: The vision of the FY14-17 CPS is to increase the proportion of IDA projects that are rated as gender-informed from 45 percent to at least 60 percent (the IDA16 minimum target) and to make the same commitment to the portfolio of AAA activities. The CPS will demonstrate the country team’s commitment to achieving these objectives by specifically including the proportion of gender-informed IDA projects as an indicator in the CPS Results Framework. The specific actions that the CMU will focus on in order to achieve greater gender integration in the portfolio will include: (1) Increasing the use of gender analysis to inform operations and encouraging project teams to be more explicit in illustrating how gender analysis/an understanding of the relevant gender issues influenced the design of project activities; (2) Improving the availability of existing country level gender analysis (in order to achieve objective 1) by encouraging greater attention to gender in AAA work . Any gender-focused AAA work could take advantage of new data from the 2012 Core Welfare Indicators Questionnaire (CWIQ) survey; (3) Improving the explicit integration of gender into infrastructure sector operations, so that activities take account of women’s and men’s specific and differing infrastructure needs and vulnerabilities and maximize positive gender synergies between different sectors (e.g. in the case of transport - access to health care, access to markets, access to employment through public works, access to schools, and reduced time poverty); (4) Ensuring that projects which use participatory approaches are more specific in outlining the exact mechanisms to be used to ensure that both women and men are able to participate effectively (both in terms of numbers and in terms of the qualitative level of their engagement) – and ensuring that projects also recognize that women’s participation alone is not sufficient to ensure that activities are gender sensitive. 5. The CPS will focus on the following broad objective areas, drawn from the gender objectives highlighted in the latest PRSP and the National Gender Policy, and based on the review of the Bank’s current portfolio of activities in Guinea - these objectives will be reflected (in line with PRMGE’s step 3 for integrating gender into the CPS) with relevant indicators in the CPS results framework (see annex 3): (1) Improved basic infrastructure and services, creating cross-sector synergies and lifting barriers to women’s and men’s economic participation, access to health care, and access to education. (2) Reduced gender inequalities in education (3) Improved maternal and reproductive health and improved knowledge for women and men of HIV/AIDS and other life-skills issues (4) Improved agricultural livelihoods for women through improvements in productivity, food security, and livelihoods diversification (5) Improved participation of women in local governance and in the governance of the mining sector Figure 1 (see below) presents a brief overview of the Guinea portfolio in the form a SWOT analysis. However, it should be pointed out that the points listed here, along with the analysis provided in the remainder of this review, should be discussed with project TTLs and other key staff. This review was conducted with only minimal input from TTLs and project documents cannot provide as complete and accurate a picture as consultation with implementing staff. 62 Figure 1: SWOT Analysis of Guinea Gender Portfolio Strengths Weaknesses • Strong attention to gender in health and education sectors • Only 45 percent of current IDA operations are gender- • Three projects have plans to conduct gender-sensitive informed impact evaluations, which will provide valuable • Low integration of gender in infrastructure projects knowledge on the effectiveness of interventions related to • Low use of gender analysis across most projects. the health sector, the mining sector, and cash transfers. Where gender analysis is included, it is often cursory and without clear links between the analysis and project actions. • No attention to gender issues in legal rights and their implementation • No attention to GBV • Attention to women’s economic opportunities could be strengthened Opportunities Threats • In the absence of a recent Country Gender Assessments, a • Lack of clarity in the government’s gender strategy will gender-sensitive analysis of 2012 CWIQ survey results require the Bank team to be especially focused and could provide useful inputs for operations. well-informed if it is to successfully identify and • With better attention to gender issues, the portfolio’s address the most critical gender issues. infrastructure projects offer an excellent opportunity to make significant contributions to women’s economic opportunities, health, and time-poverty. • Many projects attempt some form of participatory process, yet there is a lack of attention to gender. Participatory mechanisms could be easily adapted to ensure that women are specifically identified as a target group. • The Community-Based Land Management Project and the Second Emergency Agricultural Productivity Support Project present opportunities to improve the inclusion of women in the management of water, land and other natural resources. • Given the Bank’s previous experience of integrating gender in extractive industries work, there should be plenty of lessons that could be used to further strengthen the Mineral Governance Support Project • The pipeline Integrated Growth Centers project (not included in this review) should increase the gender rating of the portfolio, will add to the body of impact evaluations, and could provide useful inputs to inform work related to women’s economic opportunities - it plans to test the effect of the project on the incomes of women- owned SMSEs. 63 Annex 7: Summary of Client Survey Findings The FY 13 Country Survey in Guinea demonstrates that the World Bank is highly valued for much of the work that it does in the country, and stakeholders believe that there is great opportunity for the Bank in supporting priority development areas. Percentage of Respondents (N=382) Education 40% Energy 36% Poverty reduction 25% Public sector governance/ reform 22% Agricultural development 21% Transport 19% Health 16% Security/stabilization/reconstruction 16% Domestic private sector development 15% Rural development 11% Job creation/employment 10% Basic infrastructure 9% Water and sanitation 8% Anti corruption 7% Local governance and institutions 6% Food security 6% Economic growth and diversification 6% Law and justice 4% Natural resource management 4% Social protection 3% “When thinking about how the World Bank can have the most impact on development results Guinea, in which sectoral areas do you believe the World Bank should focus most of its attention and resources in Guinea? (Choose no more than THREE)� (Respondents chose from a list. Responses combined.) 1. Overall alignment with perceived development priorities: Stakeholders are very clear on what they perceive to be the most critical development priorities in Guinea. These include energy (nearly sixty percent of respondents reported that this is the most critical contributor to growth while forty percent noted that it is the country’s top development priority), education, and public sector governance. Rural and agriculture development are also seen as vitally important in reducing poverty in the country. Stakeholders report that the development areas that would benefit most from Bank involvement in terms of resources (and knowledge) are aligned with the expressed priorities, and include education; energy and governance are identified as key areas for Bank emphasis. 2. Perceptions of how the Bank operates on the ground: Stakeholders appear quite satisfied with many aspects of the Bank’s work in Guinea. These include monitoring and evaluations, using country systems when available, follow through over time, increasing institutional capacity, and collaboration with government and donors. In addition, research suggests that the Bank is viewed as very relevant and aligned with development priorities on the ground, with a very well prepared staff. 64 As we see in surveys conducted in other fragile and conflict affected states, the Bank’s speed is of greatest concern to stakeholders in Guinea. This appears to be related to disbursement of funds. Related to this, when asked what the Bank’s greatest weakness is, respondents point equally to the speed of processes, bureaucracy and technocratic approach in the face of political realities. In addition, as in other FCS countries, ratings for the Bank’s responsiveness are relatively low (when compared to all other ratings of the Bank’s work). This may be worth further discussion and exploration. 3. Increasing the value of the Bank in Guinea: One message that emerges clearly from the data is the perceived need for the Bank to reach out to greater groups in an environment where stakeholders report (a full fifty percent) that in the greatest obstacle to reform is inadequate levels of citizen participation. In fact, nearly fifty percent (a plurality) of respondents say that the top way to increase the value of the Bank on the ground in Guinea is to reach out beyond government to other groups. There is also significant room for the Bank to work more actively in the area of capacity development in Guinea (seen in other FCS countries as well). Nearly half of respondents note that the primary obstacle to reform is government inefficiency. Nearly forty percent of stakeholders say that capacity building/training are the Bank’s greatest or second greatest value in the country (financial resources are of greatest value). In addition a majority of respondents say that the most effective instrument in Guinea is capacity development (equal to those who identify investment lending as the Bank’s most effective instrument). Finally, research indicates that stakeholders believe that the Bank’s clear comparative advantage is related to building capacity (in particular of state institutions), and related, strengthening public financial management. This aligns well with stakeholders’ view that the most important area for the Bank to emphasize in its knowledge is governance/reform (in contrast, stakeholders believe other donors are best positioned to lead in stimulating dialogue to promote peace and stability). 4. Communication: In a country where half of the respondents report that they are still using dial up for access to the internet, it is not surprising that workshops and conferences are the preferred source of information from the Bank (55%) followed by direct contact. This will evolve, most probably, as technology improves, but for now it is important to recognize that substantive interaction is a critical aspect of outreach in Guinea in terms of information and knowledge sharing. 65 Annex 8: Addressing Fragility across World Bank Portfolio in Guinea 1. Fragility as a cross-cutting issue Fragility can be addressed through the projects of each sector of the portfolio by adapting program design and implementation. At a minimum, project design should take a ‘do no harm’ approach, recognizing the potential drivers of fragility in localities or faced by beneficiaries of the projects. The country portfolio as a whole can be leveraged to address the drivers of fragility by embedding a conflict-sensitive, peace-building approach into project design and management. Specific design and management elements could include the following: • Generating tangible and visible outputs and outcomes: to address the short-term drivers of conflict related to a breakdown in citizen-state relations, projects should be designed in such a way that they generate tangible results that can be seen by all levels of society. • Labor intensive project design and management: o For public works this would mean using methods that use laborers for building, road, bridges, drainage and infrastructure. In urban environments this could also include municipal services such as waste management and repair and maintenance of urban facilities. The same can be said for the development of infrastructure in other sectors such as Health and Education. o Projects that use participatory and consultative processes can generate livelihood opportunity by generating the need for local level facilitators o Labor intensive methods for survey and other data collection as well as third party monitoring of projects should also be considered. • Participatory and consultative decision making processes for decisions related to projects: Where appropriate, projects implemented at local level need to be designed to be participatory, consultative and transparent as possible. In practice, this would mean budgeting for an increased number of public consultations throughout the projects as well as in a high-visibility public information campaign. • Complaints handling: projects should have extremely robust systems to receive and manage complaints from all levels of society. Systems would need to take into account literacy levels in areas of implementation and should also consider having a local ombudsman. • Conflict risk monitoring and management: project design should include regular monitoring of the social impact of the project and mechanisms to respond immediately to any potential risk of conflict generated by the project • Maintaining flexibility to respond to situation on the ground: the design of projects should include the ability to respond quickly. Examples could include a zero budget line item for emergency response that can be triggered if conflicts arise, distribution of work amongst multiple implementing agencies in order that work can be shifted between them if situations arise that affect implementation • Embed learning and knowledge transfer into project design: By ensuring the trajectory of project implementation includes activities to capture lessons innovative practices can be transferred to other projects. • Increasing visibility of state actors: In areas where fragility is driven by an acute lack of confidence in the state, projects should consider how state involvement in the project is communicated as a means to re-establish confidence. 2. Dedicated Program for Supporting the CT to Address Fragility As well as implementing an approach to building stability that cuts across all sectors, a standalone program could be developed. This would introduce interventions specifically targeted at peace-building 66 and increasing stability. The program would also put in place dedicated experts and resources within the Country Management Team to support other sector teams to address the drivers of fragility. The basic outline of such a program is provided below for illustrative purposes. 1. Program Objective: Increased stability is achieved by reconciliation between state and citizens and the establishment of platforms for peaceful public and collective expression. 2. Program Activities: • Projects targeted at building stability o Creating platforms for public debate – working to build capacities of CSO to act as a channel for public expression – this work is already addressed in the Public Sector Governance project but could be expanded. The INGO, Search for Common Ground, that is contracted by the Government’s reform agency (HCREMA) could be engaged for work beyond the scope of the project, to include general public outreach. Alternatively, the scope of the project could be increased with additional funds from the State and Peace- building Fund SPF. • Country Team Support: Support to sector teams for addressing fragility and conflict in sector work – provision of expertise to task teams to support better integration of stability activities in a cross-cutting manner across the portfolio. • Fragility monitoring – liaison with other partners, data collection and monitoring to understand fragility and conflict dynamics across the country and consider their implication for the portfolio • Regular coordination with development partners 3. Management of the Stability Program • Oversight by TTL (Suggest TTL of Public Sector Accountability Project, Alexandre Arrobio) • Daily management by ETC with specialist knowledge on Guinea and state and peace-building expertise, supported by an ETT (to be hired) • Regular coordination meetings with peace-building focal point from each sector team • Regular coordination meetings with CMU 4. Funding the Program Sources of funding: • Korean Trust Fund: Operational budget to fund TTL time, ETC and ETT and analytical work, including fragility monitoring, impact evaluation and development of a baseline. This could also fund further consultations with government and civil society actors for project design (maximum budget US $450,000) • State and Peace-building Fund (SPF): Funds to support task teams to adapt projects and TA for the Government where necessary • Bank budget – it will be necessary to identify Bank budget for supervision of projects 67 Figure 1: Suggestions for integrating mechanisms to address fragility into projects Recent Drivers Possible means to address through projects Breakdown in Build beneficiaries’ capacities to engage in public dialogue democratic process Increased ethnic division Robust consultation processes and open decision making processes, target diversity in PIU, oversight and steering bodies Work with other dev partners to see how WB analysis can provide Role of the security forces govt the information and data needed to make decisions Unmet public Design highly visible public outreach and communications expectations campaigns highlighting govt’s role in delivery of projects Lack of inclusion of youth Labor intensive works within projects based on demographic analysis Underlying Drivers Possible means to address through projects Lack of confidence in Build solid communications campaign that highlights roles of state institutions govt in projects, provide govt with data and info on progress Challenges of access Design robust complaints handling in each project and promote to justice widely Politicization of inter- Robust consultation processes and open decision making ethnic tensions processes, target diversity in PIU, oversight and steering bodies Re-division of state Provide sound analytical and technical powers underpinning 68 Annex 9: IFC program status (portfolio and pipeline) - CASA Program: Established presence on the ground in October 2012 to strategically manage AS interventions in Guinea, providing cross business line strategic support and AS portfolio supervision. In this context, the Guinea Conflict Analysis Report, under finalization, will inform our interventions moving forward to support the IFC Guinea strategy. - Investment Climate Program (IC): Aims to establish an enabling environment for SMEs to grow through two components: (i) Business regulatory reform program and (ii) Investment policy and tax reform program. The program will make it easier and less costly for firms (especially SMEs) to start and operate their businesses formally; establish and support an “Investment Climate Reform� operating Committee; develop an effective investment policy letter that will drive an attractive investment code, rationalize the investment incentives regime to benefit strategic investments, and support the development of an SME taxation system and an effective tax appeal system that is conducive to encouraging economic activities, especially for the mining value-chain. - Local Supplier Development Program: Support mining related supplier linkages, community development, ensuring that concession activity around mining contributes positively to broadening and deepening the domestic Guinean private sector, and that the capacity of local suppliers (SMEs) is strengthened in order to participate in the supply chains of international mining companies. IFC will build capacity of 100 SMEs in Conakry, Forecariah and Beyla during the period from January to June 2013. IFC has trained around 300 SMEs to date and over 1000 participants through IFC Business Edge and other activities. - Leasing Program (Pipeline): Activities aim to promote the leasing market as an alternative financing solution in Guinea. The leasing law was promulgated in February 2012 and a launching mission of program implementation is planned in May 2013, starting with the development of a leasing finance framework. - Public-Private Partnerships (PPP/Pipeline): The program aims to increase private sector participation in providing and rebuilding infrastructure. In conjunction with the WB, the IFC team conducted a mission in October 2012 to assess PPP opportunities, with a particular focus on the transport, water, tourism, health and education sectors. The PPP team is in discussions with the GoG on the establishment of a PPP unit, which will implement institutional and regulatory frameworks to build an environment conducive to PPP activity. - Simfer: Support the development of the Simandou project and Simandou-related transport infrastructure while the WB supports sector governance. - Semafo: Support independent power projects (e.g. Semafo’s Poudalde hydropower). However, at this stage they have decided to wait for the outcome of the legislative elections to proceed prior to firming up potential interest. - SGHI: IFC is currently considering additional investment in the hotel for the renovation project, however, issues pertaining to the nature of the renovation and the GoG and Accor’s contribution to the financing of the hotel need to be resolved as a prerequisite. - Palma Guinea (Pipeline): This is a Greenfield 303-room US$61 million 5-star Sheraton hotel project in the district of Kipé in Conakry. IFC is considering a loan package of up to US$26 million with a US$15 million-A loan and US$11 million-B loan. The project was presented to the IFC Credit Committee on April 19, 2013; the Transaction team is actively working towards a closing by the end of this fiscal year. - Agribusiness project (Pre-Pipeline): IFC is interested in developing agribusiness investment opportunities in Guinea where high potential exists and a scoping mission was conducted in end of April 2013. - Ecobank Guinea: The Global Trade Finance Program (GTFP) Guarantee Facility for Ecobank Guinea (FY2012) was designed to assist Ecobank Guinea’s trade operations by providing guarantees that cover the payment risk in trade transactions, thus enabling the continued flow of trade credit into the Guinean market. 69 Annex 10: Summary of Guinea Conflict Analysis: a private sector perspective/ IFC The democratic elections of 2010 brought Guinea back into donors and investors' radars, after five decades of political turbulences. This renewed interest in Guinea is justified by its strategic value in a world hungry of natural resources, energy and agricultural supplies. The country has an enormous mineral potential, including the second world reserves of bauxite, gold, cobalt and Iron ore, just to name a few. Offshore oil prospects are also tantalizing. Yet, the business climate is still recovering from the deep effects of the country's troubled history but it could also fall into chaos if the current political stalemate is not resolved. Restoring business confidence and the conditions of growth is the challenge faced by the new government in a context of high expectations for social change, justice, jobs and better livelihoods. The reform cliff is inevitable in order to mitigate conflict risks on the fragile future. This study attempts to understand the main drivers without which conflicts would not exist, or their impact on the private sector would be less deterrent to investors. While looking at the drivers of political and social tensions in Guinea, the study also examines the levers of an enabling environment for doing business with confidence and a sustainable impact in lifting up the society from poverty. I. Determinants of conflict and instability and their consequences Guinea has successfully avoided large scale civil or military conflict in the past fifty four years. However, political uncertainty has remained the most prevalent factor of conflict analysis and risk to business development in the country. Generally, five key periods and political regimes delineate the timeline of the post-colonial history of Guinea, each with polarized figures, political turmoil and uncertainty affecting private sector development: 1958-1984: President Ahmed Sékou Touré's socialist experience and totalitarism; 1984-2008 Military rule of Colonel Lansana Conté, failed hope for reforms, established the laissez-faire and a legacy of military repression and impunity; 2008-2009 Captain Dadis Camara’s interlude of accelerated social turmoil and confusion; 2009-2010 General Sékouba’s handover of power to civilians; 2010-2013 Professor Alpha Condé, winner of the free and fair elections heads the Fifth Republic and comes with great expectations from people. However he faces a difficult question: “Is it possible to change Guinea?� The extreme expectations for reform and social justice might be perilous for the new civilian regime. It still has to negotiate its way through the complex meanders of a sixty year old political dynamics of power, dependency and survival, particularly the ethnic elites and the military. The political timeline of Guinea constitutes the backdrop of conflicts and social tensions which can be grouped into five sensitive bubbles or vicious circles of conflict drivers that are in turn closely interwoven with ten main business risks mapped in this study. These bulbs are reviewed with their consequences as follow: Political governance; Social expectations and grievances; Natural resources and the notion of a national cake; Regional and external factors and finally Asymmetric factors which are still not fully understood but critical. 1. Political Governance 1. Institutional Power Sharing and lack of counter powers. For over fifty years, the Presidency and the army have consistently dictated on the legislature and the judiciary with deep consequences on the volatility of the business climate, affecting particularly big businesses. 2. Ethnic cleavages. The country has successfully resisted ethnic persecution. However, the 2010 Presidential election revealed major cleavage between the main candidates along ethnic lines. The dangerous effects have persisted into today's tensions and social violence bringing fear and causing losses to businesses. 3. Polarization of the Presidency. The excessive concentration of power at the Presidency has characterized all Guinean regimes. 70 4. Impoverished and Predatory State. Since independence in 1958, the State has been the main source of jobs in Guinea. But it does not pay. In the streets, people say: “The State pretends to pay Guineans. Guineans pretends to work.� The impoverished State has developed numerous predatory strategies to compensate low wages through corruption and extortion. 5. The military. Guinea has a long history of military coups and military involvement in government and business, similar to South East Asia. 6. The culture of impunity. The dominance of the Presidency and the military over the judiciary has created an entrenched culture of impunity. 2. Social expectations and grievances 7. Poverty and social insecurity. Despite vast mineral resources, a great potential in agriculture and fisheries, Guinea remains poor, ranking 178 out of 187 countries in the UNDP’s Human Development Report, with an HDI of 0.344, well below the sub-Saharan African average of 0.463 and the world average of 0.682. 8. Inequalities and Social injustice. Sharp contrasts are traditionally part of the Guinean social landscape. However, the polarized political system has generated a deep gap between the have and have not. The Gini index in Guinea is still around 40%, much higher than Norway’s 26% but better than the 56% found in Central African Republic 14. The loss due to inequalities in income is estimated at 31.1%, putting Guinea similar to Burundi respectively ranked 178 amongst 186 countries in the world1. Real unemployment is very high, hidden by the informal sector. Only 49% among women and 58% among men are actively employed 15. However about 70% of the active population is involved in informal sector activities. Finally the bank services cover less than 20% of the informal sector’s estimated demand 16. 9. Lack of Basic Social Services. A few indicators describe the acute lack of access to basic social services: in education, health, housing, water and sanitation. Infant mortality is too high, 130 per thousand in 2010. The combined public expenditure on health (0.6%) and education (2.4%) is just 3% of GDP 17. 10. Regional disparities. Most development in Guinea has taken place in the coastal ecological region around Conakry, Kindia and Boke. Central, Upper and Forest Guinea regions have received less investment and are typically rural. The dry savannah Upper Guinea is the poorest region. Deep disparities continue to exist between urban and rural Guinea. About 69% of Guineans live in rural areas which are also the poorest. 3. Nationalistic approach to natural Resources and the economic cake 11. Nationalistic approach to natural resources. The Guinean elite and patronage network have maintained a nationalistic view of controlling natural resources. 12. Polarization on Mining & Oil Sector. Minerals are by far the largest exports of Guinea. The control or access to mining and oil resources has continued to polarize Guinean elites, civil and military. 13. Sharing the economic cake. Like in other African countries with a large indigenous trading sector, the control of importations and the transport services polarized the business elite and is a source of conflicts. 4. Regional and External factors 14 UNDP, Human Development Report, 2012 15 UNIDO, 2007 16 BizClim, 2012 17 UNDP, Human Development Report, 2012 71 14. External conflicts and internal dynamics. Strategically, Guinea has been able to contain the effect of political instability and war affecting its neighbors, but it has paid a high cost for it. Monitoring regional stability remains a priority. 5. Asymmetric factors 15. The informal sector and political actors. The unprepared transition from Socialism to a liberal economy led to a ballooning informal sector, the laissez-faire and impunity. 16. The cash economy. The economy is mainly driven by trade, agriculture and the informal sector, which all rely on cash transactions, out of the banking system. 17. Relations between State and business leadership. Traditionally, the Strong State in Guinea has seen key private business leaders as “partners� or “opponents II. Hotspots of political and social risks to business development The ongoing increased polarization of the Presidential role is a traditional trend justified by the need to secure guarantees at the most senior political level for the large investment at stake. But it comes with the risk of political uncertainty. The notion of risk here relates to the level of uncertainty induced by the drivers of political conflicts and social unrest that may reduce performance predictability of the private sector’s investments and projects or drive markets down. 1. Political instability Four major trends should be monitored in priority in 2013: 18. Confidence in the Presidential leadership and the governance system. Despite tangible achievements in just two years, key challenges are still ahead: 1. The legislative elections have repeatedly been delayed since 2011, leaving the country without an elected Parliament. The Conseil National de Transition (CNT) cannot play the role of a legislature. 2. Continued delay of the establishment of an independent judiciary which is the foundation of the rule of law. 3. Lack of resolve in fighting corruption. The President is expected to move on the fight against corruption and limit the power of patronage networks so deeply entrenched in Guinea. 19. Social expectations: After long negotiations with trade unions threatening the mining sector, the government reached an interesting deal at the end of 2012 for a phased 50% increase of salaries in 2013, but tensions will continue. 20. Political tensions and clashes. With the backdrop of expected reforms, social hardship, the fight for political power and the role of the military, exacerbated rivalries and clashes are likely to make the overall issue of political stability a major risk. 21. Transforming the army. This will remain a major challenge. 2. Conflict risks for IFC The magnitude of IFC’s investment in the mining sector in Guinea makes it inevitable to face the broader reality of conflict risks in Guinea. Three risks appear in priority: reputation; slow or no delivery of social dividends from investments and a limited flexibility for an exit strategy. Working in conflict 72 affected countries put investors, the private sector and even humanitarian and development actors at risk if targeted populations perceive them as a substitute to government social responsibilities. A well-planned exit strategy is a mitigation tool that helps visualize and manage when to get involved, when to exit and how to do so in transferring a sustainable capacity to people. In the Context of the lack of clarity on accompanying infrastructures, business and social services around major investments, an exit strategy will identify the challenges and opportunities for a handover to receiving societies. In Guinea, IFC will continue to face the combined expectations of the government and people around its investments, particularly Simandou, in a dynamic and unpredictable way. Added to this nationalistic sentiment may encourage the “right to ask� attitudes. 3. Top ten risks in Guinea for business in 2013 In general, the business and investment climate in Guinea faces ten top risks identified through the analysis of the drivers of political and social conflicts. 1. Political volatility. There will be increased uncertainty in predicting performance variability for long term investment and projects, particularly in the Oil & Mining sector. Being able to maintain a dialogue between investors, business and the country's governance system will be essential. 2. Rule of law. The judiciary vacuum is likely to persist with short term impact on the ability to protect deals depending on national laws. 3. Resource nationalism. Like in many resource-rich countries, the increased opportunities and demand for deals will also increase the complexity of negotiating with the government. Some existing deals might be at risk. The pressure for enticements will increase along with the request for free infrastructures and social services to people. 4. Social license to operate. Recent trends of social expectations will continue to grow with a culture of “right to ask� or social license obligations. A reactive approach to such demand could be very costly as both government and communities feel it legitimate to adopt such attitudes. 5. Skills shortages. The shortage of skills is one of the major consequences of four decades of failure in the education system in Guinea. In the short and medium term, business and projects will continue to face a cliff to find qualified labor. 6. Infrastructure access. For companies operating in Guinea, the lack of infrastructure with high impact on supply chains will remain a great challenge particularly transportation, power, water and telecommunications. The size of the funding requirements to address these gaps indicated the need for a concerted approach between government and stakeholders, whereby economies of scale could be made in sharing infrastructures. 7. Cost inflation. The increased demand of supply for projects is likely to initially push up importations in Guinea. Conflicts may appear in relation to who will control that market. Ultimately, this added to other structural factors such as the increasing oil prices will put a burden on companies to control costs. 8. Fraud and corruption. Progress in the fight against corruption is likely to be slow. Companies will continue to face red tape and negotiate their ways in a complex environment. 9. Sharing the benefits. Locally, this is understood as sharing the cake, particularly in a context where communities have rarely seen a successful job creating venture for the past forty years. Associated risks of high costs of suppliers, labors and social license obligations could be a real threat. 10. Finance and credit risk. The high level of capital involved in Guinean projects is associated with proportional risks. Further, it is likely that the country and stakeholders will need more funds to move 73 projects forward. The local private sector and banking industry will face enormous challenges in mobilizing capital for Guinea given the existing regulations. Finally, the size of the informal economy, the opacity of transactions will continue to make it difficult to measure credit risk or use traditional credit risk decision-making tools, for lack of reliable data. 4. Win-win Conflict Mitigation Levers and Sustainable Opportunities for Business A substantial level of uncertainty will continue to affect business predictability in the medium term. Therefore donors and stakeholder support to political dialogue, institutional reforms and the transformation of the army will pave the way to a greater business confidence. The main challenge facing the government is how to establish the conditions for the emergence of a sustainable business ecosystem in Guinea. In the context of a stable and reforming Guinea there are many opportunities for IFC as a catalyst of increased investment and sustainable growth in Guinea, working with the government, the private sector and financial institutions. The challenge is targeting priority interventions and keeping a focus on multipliers of sustainable change that are tangible to the demanding society for jobs and better living conditions. The following sectors offer great growth opportunities to the private sector in Guinea for both local and international investments: Mining and Oil; Banking; Building and Infrastructure, Agriculture and Food Processing; Manufacturing Industries; Retail Distribution; Transport and Logistics Services; Mobile Telecommunications; Tourism; Technical Training and Education; Technical Support Services and Security Services. IFC intervention could contribute help Guinea avoid the conflict trap through its risk mitigation tools. In this context, CASA completed recently the Guinea Conflict Analysis Report which will inform interventions moving forward to support the IFC Guinea Strategy that focuses on (i) improving the business environment through regulatory reforms, including supporting a strong Public- Private Dialogue (PPD) framework; (ii) strengthening SMEs and supporting institutions; (iii) rebuilding financial markets , banks and other financial institutions; and (iv) increasing private sector involvement in providing and rebuilding infrastructures, especially through Public-Private Partnership (PPP) business models. 74 Annex 11: Overview of Main Trust Funds As of 7/29/2013 1.IBRD, IDA and RETF Approvals and Disbursements , FY11 - FY13 Amounts in $million GRAND IBRD IDA RETF TOTAL Fiscal Year Total Total Disb Commit Disb Commit Disb Commit Disb Commit FY11 0.00 88.86 78.00 4.05 0.00 92.91 78.00 FY12 0.00 23.71 53.30 22.47 3.50 46.18 56.80 FY13 0.00 27.02 30.00 26.20 22.93 53.22 52.93 192.3 Grand Total 0.00 139.59 161.30 52.72 26.44 0 187.74 TF Country Report FY11 - FY13 Guinea 2. BB and BETF Disbursements, FY11 - FY13 Amounts in $million Fiscal year BETF BB Grand Total FY11 0.19 2.19 2.38 FY12 0.75 2.97 3.72 FY13 1.42 2.94 4.36 Grand Total 2.36 8.10 10.46 IBRD/IDA Trust Funds (Bank & Recipient Executed Grants) Disbursements, approvals and pending requests 3. Disbursements (BETF, RETF) by Managing Unit, FY11 - FY13 Amounts in $million The Managing Unit of the disbursing grant or, if the several units are making changes to the grant, the managing unit of the cost object (WBS or I/O)under which the disbursements are made BETF RETF Grand Total Managing Unit FY11 FY12 FY13 FY11 FY12 FY13 FY11 FY12 FY13 AFTA1 0.14 0.06 2.40 2.73 3.79 2.40 2.87 3.86 AFTEW 0.15 0.18 0.36 17.05 17.24 0.15 17.22 17.61 AFTFW 0.05 0.05 AFTG2 0.64 3.07 0.64 3.07 AFTHW 0.04 0.10 0.04 0.10 AFTN2 0.55 1.89 1.55 0.55 1.89 1.55 75 AFTP4 0.21 0.40 0.61 AFTSW 0.12 0.08 0.12 0.08 AFTU2 1.23 0.02 1.23 0.02 DECIE 0.01 0.01 SEGOM 0.03 0.27 0.70 0.06 0.13 0.03 0.33 0.83 Grand Total 0.19 0.75 1.42 4.22 22.47 26.20 4.41 23.22 27.62 4. Disbursements (BETF, RETF) by Grant Type, FY11 - FY13 Amounts in $million Grant Execution Grant Type Description FY11 FY12 FY13 Type BETF BEA Project/activity support 0.19 0.75 1.33 Partnership - Project Umbrella BEU 0.09 RETF Stand-alone Recipient Executed Project REP 17.11 20.87 IBRD/IDA Cofinancing REB 0.04 0.10 0.39 REO Other Recipient Executed Project 4.01 5.26 4.93 Grand Total 4.24 23.22 27.62 5. Disbursements (BETF, RETF) by TF Program, FY11 - FY13 Amounts in $million Program Type Program Program Name FY11 FY12 FY13 Free Standing AFR POVERTY REDUCTION AND AFRPRE ECONOMIC MANAGEMENT 0.40 Programmatic BNPP REFORM PROGRAM BNPPRF 0.01 STRATEGIC IMPACT EVALUATION SIEF FUND(S)--HD 0.03 ENHANCED INTEGRATED EIF FRAMEWORK TRUST FUND 0.04 EFA FTI EDUCATION PROGRAM FTIE DEVELOPMENT FUND 0.04 ENVIRONMENTALLY & SOC. TFESSD SUSTAINABLE DEV. 0.02 0.03 GOVERNANCE PARTNERSHIP FACILITY GPF 0.08 JAPANESE SOCIAL DEVELOPMENT JSDF FUND 0.04 0.10 RAPID SOCIAL RESPONSE PROGRAM RSR 0.10 0.05 NORWEGIAN POST- PRIMARY NPEF EDUCATION FUND 0.03 0.26 PUBLIC-PRIVATE INFRASTRUCTURE PPIAF ADVISORY FUND 0.05 0.27 EXTRACTIVE INDUSTRIES EITI TRANSPARENCY INITIATIVE 0.03 0.14 0.21 EXTRACTIVE INDUSTRIES TECH ETAF ADVISORY FAC. 0.19 0.34 76 PHRD FUND-TECHNICAL ASSISTANCE PHRD TF 0.54 GLOBAL FOOD CRISIS RESPONSE GFCRP PROGRAM 3.13 1.13 2.54 GEFIA GEF-IBRD AS IMPLEMENTING AGENCY 1.05 4.27 5.96 EDUCATN FOR ALL-FAST TRACK EFAFTI INITIATIVE 0.10 17.20 16.87 Grand Total 4.41 23.22 27.62 6. Disbursements (BETF, RETF) by Freestanding/Programmatic Funds, FY11 - FY13 Amounts in $million FY11 FY12 FY13 Type Free Standing 0.40 Programmatic 4.24 23.22 27.22 Sum: 4.24 23.22 27.62 7. Disbursements (BETF, RETF) by Single Donor/Multi Donor, FY11 - FY13 Amounts in $million Type FY11 FY12 FY13 Multi-donor 1.23 22.09 27.41 Single-donor 3.01 1.13 0.21 Grand Total 4.24 23.22 27.62 8. RETF Disbursements by Sector, FY11 - FY13 Amounts in $million Share of Share of Share of FY11 FY12 FY13 Sector FY11 FY12 FY13 Disbursem Disbursem Disbursem ent ent ent Agriculture 2.50 61.85% 3.08 13.68% 4.12 15.71% Education 13.98 62.21% 14.22 54.28% Energy & mining 0.00 0.02% 0.55 2.45% 2.50 9.54% Finance (0.05) -1.23% 0.01 0.04% 0.03 0.11% Health & social service 0.48 11.82% 0.27 1.19% 0.16 0.61% Industry and trade Info & communication 0.05 1.14% 0.16 0.71% 0.12 0.46% Public admin, Law 0.33 8.19% 4.43 19.71% 5.04 19.24% Transportation 0.74 18.20% 0.01 0.05% Grand Total Actuals 4.05 22.47 26.20 77 9. Grant Funding Request Approvals By Managing Unit, FY11 - FY13 Amounts in $million FY11 FY12 FY13 Managing Unit Amount No. Amount No. Amount No. AFTA1 0.60 1 20.00 1 AFTEE 3.15 3 AFTEW 0.28 2 AFTFW 0.06 1 AFTG2 2.03 2 AFTP4 3.62 3 AFTPR-HIS 0.82 2 AFTSE 0.40 1 0.20 1 C3PAF 0.17 1 CAFSB 0.09 1 GEFVP 0.03 1 SEGOM 1.04 3 Grand Total 0.40 1 5.89 12 26.19 10 10. Grant Funding Request Approvals By Grant Type, FY11 - FY13 Amounts in $million Gran FY11 FY12 FY13 t Grant Type Description Amo Type Amount No. Amount No. No. unt BEA Project/activity support 0.40 1 2.35 9 2.34 4 Processes (I/O & Transfers) not for BEP BES purposes 0.03 1 BET IBRD/IDA Transfers to IFC 0.17 1 IFC Grants managed by IFC 0.09 1 REB IBRD/IDA Cofinancing 0.65 1 3.59 3 Stand-alone Recipient Executed REP Project 2.86 1 20.00 1 Grand Total 0.40 1 5.89 12 26.19 10 78 11. Grant Funding Request Approvals By Program, FY11 - FY13 Amounts in $million FY11 FY12 FY13 Program Program Name Amo Amount No. Amount No. No. unt AFR POVERTY REDUCTION AND AFRPRE ECONOMIC MANAGEMENT 0.65 1 EDUCATION FOR ALL SUPERVISING EFASE ENTITY 0.25 1 ENHANCED INTEGRATED EIF FRAMEWORK TRUST FUND 0.27 1 ENERGY SECTOR MANAGEMENT ESMAP ASSISTANCE PROGRAM 1.80 1 EXTRACTIVE INDUSTRIES TECH ETAF ADVISORY FAC. 0.55 2 GEF SECRETARIAT IMPLEMENTING GEFSIA AGENCY 0.03 1 GLOBAL FOOD CRISIS RESPONSE GFCRP PROGRAM 0.60 1 20.00 1 GOVERNANCE PARTNERSHIP GPF FACILITY 0.17 1 IFCTFI IFC'S TRUST FUNDS CONSOLIDATED 0.09 1 NORWEGIAN POST- PRIMARY NPEF EDUCATION FUND 0.15 1 PHRD FUND-TECHNICAL PHRD ASSISTANCE TF 3.00 2 PUBLIC-PRIVATE INFRASTRUCTURE PPIAF ADVISORY FUND 0.55 2 0.40 2 RSR RAPID SOCIAL RESPONSE PROGRAM 0.40 1 STRATEGIC IMPACT EVALUATION SIEF FUND(S)--HD 0.03 1 SPBF STATE AND PEACE BUILDING FUND 3.36 2 ENVIRONMENTALLY & SOC. TFESSD SUSTAINABLE DEV. 0.20 1 Grand Total 0.40 1 5.89 12 26.19 10 79 12. List of Grant Funding Request Approvals in FY11 - FY13 Amounts in $million Grant FY11 FY12 Child Grant Name Execution Project VPU Approval Date FY13 Approvals Type Approvals Approvals Fund TF010470 Social Safety Nets Bank Executed BEA P126757 AFRVP 08/18/2011 0.20 TF010628 Extractive Industrie Bank Executed BEA P127264 SDNVP 09/13/2011 0.50 TF010629 Guinea: Supervision Bank Executed BEA P127264 SDNVP 09/13/2011 0.05 TF011065 GUINEA - DEVELOPMENT Recipient Executed REP P129210 AFRVP 11/02/2011 2.86 TF011066 GUINEA - DEVELOPMENT Bank Executed BEA P129210 AFRVP 11/02/2011 0.14 TF011371 Bank executed grant Bank Executed BEA P128309 AFRVP 12/07/2011 0.60 TF011518 National Portfolio F Bank Executed BEP # WBG1/Not assigned 01/03/2012 0.03 TF011665 PPIAF GUINEA: Mining Bank Executed BEA P130405 SDNVP 01/23/2012 0.49 TF011942 PPIAF (GUINEA): PPP Bank Executed BEA P130920 AFRVP 03/01/2012 0.06 TF012070 Guinea - Re-Engagement Bank Executed BEA P050046 AFRVP 03/19/2012 0.15 TF012433 W4.2- Rapid Response Bank Executed BEA P125890 AFRVP 05/15/2012 0.17 TF012640 Establishment of the Recipient Executed REB P125890 AFRVP 06/18/2012 0.65 TF012755 Second Emergency Agriculture Project Recipient Executed REP P128309 AFRVP 07/11/2012 20.00 TF013565 Guinea - Education I Bank Executed BEA P143102 AFRVP 11/05/2012 0.03 TF013748 GUINEA: Energy Sector Recipient Executed REB P077317 AFRVP 12/03/2012 0.23 TF014085 Guinea Public Sector Recipient Executed REB P125890 AFRVP 01/28/2013 2.70 TF014366 Public Sector Governance Recipient Executed REB P125890 AFRVP 03/04/2013 0.66 TF014449 GN-Education For All Bank Executed BEA P111470 AFRVP 03/18/2013 0.25 TF014497 Guinea DTIS Update Bank Executed BEA P143176 AFRVP 03/26/2013 0.27 IFC- TF014948 Rio Tinto TA & Local IFC IFC 00598587 IFC 06/04/2013 0.09 IFC- TF015017 GUINEA: PPP Diagnostic Bank Executed BET 00599737 IFC 06/19/2013 0.17 TF015026 SE4ALL TA for Guinea Bank Executed BEA P145846 AFRVP 06/20/2013 1.80 TF099952 GN- Social Safety Nets Bank Executed BEA P126757 AFRVP 06/16/2011 0.40 Grand Total 0.40 5.89 26.19 80 13. List of all Active Grants in, FY11 - FY13 Amounts in $million Fund Grt Grt Agrmt Fund Fund Name TTL Progm Mng Unit Project Status Clsng Date Fund Bal FY11 FY12 FY13 Type Date Name TF010470 Social Safety Nets for Mr TFESSD AFTSW P126757 ACTV BEA 08/29/2011 12/31/2013 0.00 0.02 0.03 Social Inclusion and Azedine Distributional E Ouerghi TF010628 Extractive Industries Mr ETAF SEGOM P127264 ACTV BEA 09/05/2011 12/31/2013 0.38 0.16 0.31 Technical Advisory Boubacar Facility (EI-TAF) Bocoum TF010629 Guinea: Supervision of Mr ETAF SEGOM P127264 ACTV BEA 09/05/2011 12/31/2013 0.05 0.02 0.03 EI-TAF Grant Boubacar Bocoum TF011065 Guinea - Development of Ms PHRD AFTEW P129210 ACTV REP 03/08/2012 08/31/2014 2.41 0.45 Inclusive Education Nathalie Lahire TF011066 GUINEA - Ms PHRD AFTEW P129210 ACTV BEA 03/08/2012 08/31/2014 0.14 DEVELOPMENT OF Nathalie INCLUSIVE Lahire EDUCATION IN GUINEA-BANK S TF011371 Bank executed grant for Mr GFCRP AFTA1 # ACTV BEA 12/06/2011 05/29/2015 0.00 PREP, SPN & ICR of Haccandy Guinea Second Eme Yao Alexis TF011371 Bank executed grant for Mr GFCRP AFTA1 P128309 ACTV BEA 12/06/2011 05/29/2015 0.39 0.14 0.06 PREP, SPN & ICR of Haccandy Guinea Second Eme Yao Alexis TF011665 PPIAF GUINEA: Mining Mr PPIAF SEGOM P130405 ACTV BEA 01/24/2012 12/31/2013 0.22 0.27 Ancillary Infrastructure Boubacar Bocoum TF012433 W4.2- Rapid Response To Mr Samba GPF AFTP4 P125890 ACTV BEA 05/16/2012 10/31/2013 0.04 0.08 Help Guinea Establish a Ba Special Inve TF012621 PHRD Staff Grant Mr PHRD AFTP4 P125890 ACTV BEU 06/01/2012 05/31/2014 0.09 Support for Shiho Nagaki Alexandre Arrobbio TF012640 Economic Governance Mr Samba AFRPRE AFTP4 P125890 ACTV REB 04/23/2012 12/31/2013 0.25 0.40 Technical Assistance and Ba Capacity Buildi 81 TF012755 Second Emergency Mr GFCRP AFTA1 P128309 ACTV REP 08/22/2012 12/31/2014 16.50 3.50 Agricultural Productivity Haccandy Support Project Yao Alexis TF013565 Guinea - Education Ms Marie- SIEF AFTEW P144047 ACTV BEA 10/16/2012 04/30/2015 0.22 0.03 Impact Evaluation Helene Cloutier TF014449 GN-Education For All Ms EFASE AFTEW P111470 ACTV BEA 03/18/2013 03/28/2014 0.25 FTI Program Nathalie Lahire TF014497 Guinea DTIS Update Mr Jean- EIF AFTP4 P143176 ACTV BEA 03/25/2013 03/31/2014 0.14 0.04 Christophe Maur TF015017 GUINEA: PPP Diagnostic Mr Elan PPIAF C3PAF IFC-00599737 ACTV BET 05/12/2013 12/31/2013 0.17 and Capacity Building Cusiac- Barr TF015026 SE4ALL TA for Guinea Mr Moez ESMAP AFTG2 P145846 ACTV BEA 05/27/2013 08/31/2017 0.10 Cherif TF051249 GEF2-GUINEA : Mr Moez GEFIA AFTG2 P042055 ACTV REO 07/08/2002 06/30/2013 1.27 0.10 0.30 DECENTRALIZED Cherif RURAL ELECTRIFICATION PROJECT TF054299 NORWEGIAN TRUST Mr Paul SPTF PRMED P114748 ACTV BEA 01/27/2005 12/31/2013 FUND FOR DEBT Moreno- SUSTAINABILITY, Lopez VOLATILITY AND TF054664 EXTRACTIVE Mr Paulo EITI SEGOM P098844 ACTV BEA 01/24/2005 02/28/2016 INDUSTRIES De Sa TRANSPARENCY INITIATIVE - CHILD TF TF056981 GEF FSP-REPUBLIC OF Ms GEFIA AFTN2 P070878 ACTV REO 11/07/2006 12/31/2013 0.40 0.55 1.89 1.55 GUINEA: COASTAL, Salimata MARINE AND D. Follea BIODIVERSITY TF056982 GEF FSP-REPUBLIC OF Ms Jane GEFIA AFTA1 P081297 ACTV REO 11/07/2006 12/31/2013 2.61 0.50 1.74 1.34 GUINEA: C. COMMUNITY-BASED Hopkins LAND MANAGEMENT TF090446 BANK EX.SUPPORT Mr Paulo EITI SEGOM P098844 ACTV BEA 06/09/2007 02/28/2016 0.03 0.08 0.08 FOR EITI IN COUNTRY De Sa IMPLEMENTATION TF092364 EFA FTI CF GRANT Ms EFAFTI AFTEW P111470 ACTV REP 08/13/2008 12/31/2013 6.16 17.05 16.79 FOR GUINEA Nathalie Lahire 82 TF092930 GUINEA EMERGENCY Mr Zie GFCRP AFTU2 P113608 ACTV REO 10/04/2008 06/30/2013 0.00 1.23 0.02 FOOD CRISIS Ibrahima RESPONSE PROGRAM Coulibaly - LABOR INTENS TF093404 GEF FSP-GUINEA: Mr Moez GEFIA AFTG2 P098742 ACTV REO 09/02/2011 12/31/2014 1.19 0.54 2.78 ELECTRICITY SECTOR Cherif EFFICIENCY IMPROVEMENT PR TF096325 Guinea - EFA FTI Ms EFAFTI AFTEW P111470 ACTV BEA 02/28/2010 06/30/2014 0.03 0.10 0.15 0.08 Catalytic Fund Nathalie Supervision Grant Lahire TF099952 GN- Social Safety Nets in Mr RSR AFTSW P126757 ACTV BEA 07/01/2011 12/31/2013 0.25 0.10 0.05 times of crisis Azedine Ouerghi Grand Total 33.15002351 2.41 21.98 28.29 83 14. List of all Active BETF Grants in, FY11 - FY13 Amounts in $million Fund TTL Mng Grt Grt Agrmt Fund Fund Name Progm Project Status Clsng Date Fund Bal FY11 FY12 FY13 Name Unit Type Date TF010470 Social Safety Nets Mr Azedine TFESSD AFTSW P126757 ACTV BEA 08/29/2011 12/31/2013 0.00 0.02 0.03 for Social Inclusion Ouerghi and Distributional E TF010628 Extractive Industries Mr Boubacar ETAF SEGOM P127264 ACTV BEA 09/05/2011 12/31/2013 0.38 0.16 0.31 Technical Advisory Bocoum Facility (EI-TAF) TF010629 Guinea: Supervision Mr Boubacar ETAF SEGOM P127264 ACTV BEA 09/05/2011 12/31/2013 0.05 0.02 0.03 of EI-TAF Grant Bocoum TF011066 GUINEA - Ms Nathalie PHRD AFTEW P129210 ACTV BEA 03/08/2012 08/31/2014 0.14 DEVELOPMENT Lahire OF INCLUSIVE EDUCATION IN GUINEA-BANK S TF011371 Bank executed grant Mr Haccandy GFCRP AFTA1 # ACTV BEA 12/06/2011 05/29/2015 0.00 for PREP, SPN & Yao Alexis ICR of Guinea Second Eme TF011371 Bank executed grant Mr Haccandy GFCRP AFTA1 P128309 ACTV BEA 12/06/2011 05/29/2015 0.39 0.14 0.06 for PREP, SPN & Yao Alexis ICR of Guinea Second Eme TF011665 PPIAF GUINEA: Mr Boubacar PPIAF SEGOM P130405 ACTV BEA 01/24/2012 12/31/2013 0.22 0.27 Mining Ancillary Bocoum Infrastructure TF012433 W4.2- Rapid Mr Samba Ba GPF AFTP4 P125890 ACTV BEA 05/16/2012 10/31/2013 0.04 0.08 Response To Help Guinea Establish a Special Inve TF012621 PHRD Staff Grant Mr Alexandre PHRD AFTP4 P125890 ACTV BEU 06/01/2012 05/31/2014 0.09 Support for Shiho Arrobbio Nagaki TF013565 Guinea - Education Ms Marie- SIEF AFTEW P144047 ACTV BEA 10/16/2012 04/30/2015 0.22 0.03 Impact Evaluation Helene Cloutier TF014449 GN-Education For Ms Nathalie EFASE AFTEW P111470 ACTV BEA 03/18/2013 03/28/2014 0.25 All FTI Program Lahire 84 TF014497 Guinea DTIS Update Mr Jean- EIF AFTP4 P143176 ACTV BEA 03/25/2013 03/31/2014 0.14 0.04 Christophe Maur TF015017 GUINEA: PPP Mr Elan Cusiac- PPIAF C3PAF IFC-00599737 ACTV BET 05/12/2013 12/31/2013 0.17 Diagnostic and Barr Capacity Building TF015026 SE4ALL TA for Mr Moez Cherif ESMAP AFTG2 P145846 ACTV BEA 05/27/2013 08/31/2017 0.10 Guinea TF054299 NORWEGIAN Mr Paul SPTF PRMED P114748 ACTV BEA 01/27/2005 12/31/2013 TRUST FUND FOR Moreno-Lopez DEBT SUSTAINABILITY, VOLATILITY AND TF054664 EXTRACTIVE Mr Paulo De Sa EITI SEGOM P098844 ACTV BEA 01/24/2005 02/28/2016 INDUSTRIES TRANSPARENCY INITIATIVE - CHILD TF TF090446 BANK Mr Paulo De Sa EITI SEGOM P098844 ACTV BEA 06/09/2007 02/28/2016 0.03 0.08 0.08 EX.SUPPORT FOR EITI IN COUNTRY IMPLEMENTATIO N TF096325 Guinea - EFA FTI Ms Nathalie EFAFTI AFTEW P111470 ACTV BEA 02/28/2010 06/30/2014 0.03 0.10 0.15 0.08 Catalytic Fund Lahire Supervision Grant TF099952 GN- Social Safety Mr Azedine RSR AFTSW P126757 ACTV BEA 07/01/2011 12/31/2013 0.25 0.10 0.05 Nets in times of Ouerghi crisis Grand Total 2.3768 0.14 0.67 1.16 85 15. List of all Closed Grants in, FY11 - FY13 Amounts in $million Fund TTL GrtTy Grt Agrmt Fund Fund Fund Name Progm MngUnit Project Status Clsng Date FY11 FY12 FY13 Name pe Date Bal TF011518 National Portfolio Ms Susan GEFSIA GEFVP # LCLS BEP 01/03/2012 06/29/2012 0.00 Formulation Exercise for Wangui the Republic of Matindi Waithaka TF011942 PPIAF (GUINEA): PPP Ms Katharina PPIAF AFTFW P130920 LCLS BEA 02/28/2012 06/29/2012 0.00 0.05 Training Workshop B. Gassner TF012070 Guinea - Re-Engagement Ms Nathalie NPEF AFTEW P050046 LCLS BEA 03/14/2012 12/31/2012 0.01 0.03 0.26 in Tertiary Education Lahire TF051249 GEF2-GUINEA : Mr Moez GEFIA AFTG2 P042055 ACTV REO 07/08/2002 06/30/2013 (0.40) 0.10 0.30 DECENTRALIZED Cherif RURAL ELECTRIFICATION PROJECT TF054879 NORWEGIAN Mr DOEDC AFTEW P050046 LCLS BES 03/09/2005 08/31/2010 EDUCATION TRUST Christopher J. FUND Thomas TF054879 NORWEGIAN Mr DOEDC AFTEW P073378 LCLS BES 03/09/2005 08/31/2010 EDUCATION TRUST Christopher J. FUND Thomas TF055811 JSDF- Mr Haidara JSDF AFTHW P073378 LCLS REB 02/27/2006 03/31/2012 (0.33) 0.04 0.10 (0.01) GUINEA:INTEGRATING Ousmane REPRODUCTIVE Diadie HEALTH WITH THE ONCHOCE TF056637 SUPPORT TO THE Mr Boubacar EITI SEGOM P098844 LCLS REP 05/12/2006 10/22/2012 (0.33) 0.06 0.13 EXTRACTIVE Bocoum INDUSTRIES TRANSPARENCY INITIATIVE TF057647 GUINEA: IDF GRANT Mr Kolie IDF AFTME P100958 LCLS REO 09/05/2007 09/05/2010 (0.25) (0.05) FOR ACCOUNTANCY Ousmane PROFESSION PROJECT Maurice Megnan TF090255 IMPACT EVALUATION Ms Arianna TFESSD DECIE P117070 LCLS BEA 06/05/2007 12/31/2010 OF LOCAL Legovini DEVELOPMENT AND GOVERNANCE 86 TF092917 GUINEA EMERGENCY Ms Jane C. GFCRP AFTA1 P113268 LCLS REO 10/04/2008 06/30/2012 (3.00) 1.90 0.99 (1.04) FOOD CRISIS Hopkins RESPONSE PROGRAM - AGRICULTURAL TF092930 GUINEA EMERGENCY Mr Zie GFCRP AFTU2 P113608 ACTV REO 10/04/2008 06/30/2013 (1.25) 1.23 0.02 FOOD CRISIS Ibrahima RESPONSE PROGRAM - Coulibaly LABOR INTENSIVE TF094397 GUINEA - EARLY Ms Nathalie FTIE AFTEW P111470 LCLS BEA 05/13/2009 06/30/2011 (0.05) 0.04 CHILDHOOD CARE Lahire AND DEVELOPMENT PROGRAM TF096570 BNPP-FRAGILITY & Ms Arianna BNPPRF DECIE P117070 LCLS BEA 04/01/2010 12/31/2011 0.01 CONFLICT: CAN Legovini LOCAL GOVERNANCE PROGRAMS IMP Grand Total (5.60) 3.17 1.33 (0.35) 16. List of Grants in pipeline as of, FY11 - FY13 Amounts in $million GFR Status Execution Amount No. Draft Bank Executed 0.47 3 Draft Recipient Executed 18.30 4 Grand Total 18.7672 7 87 Annex 12: Statistical Development in Guinea Current Status and Planned Activities over the CPS Period 1. The Guinea National Statistic Development Strategy (Stratégie Nationale de Développement de la Statistique, SNDS) was prepared in 2008 for the period between 2009 and 2013. The diagnostics of the statistics sector and the vision for the sector development have not been updated since, nor is there a review prepared to evaluate SNDS implementation. 2. The 2008 SNDS envisioned a coherent national statistical system, well-coordinated with a capacity to produce and disseminate reliable statistics to meet the growing data demands of all users. The action plan of the NSDS was based on five strategic pillars: (1) improvement of the institutional and regulatory framework for the national statistics system; (2) improved coverage and quality of statistics produced; (3) strengthening of the personnel, material, and financial resources of the national statistics system; (4) improved dissemination and archiving of data through the use of new information and communication technologies; and (5) mobilization of resources from technical and financial partners for implementation of the SNDS. 3. SNDS had prioritized 7 areas of improvements for the National Institute of Statistics (INS), including: (1) improving the institutional and organizational arrangements for better coordination of statistical activities; (2) improving the coverage and quality of statistical production in accordance with international standards; (3) improving working conditions in the statistical system (infrastructure, equipment, furniture, logistics); (4) promoting statistical training, including training in specialized schools of statistics, demography and applied economics, on-job learning opportunities, and recruitment and retention of a large number of statisticians with professional status; (5) improving processing capabilities, archiving, analysis, and dissemination of statistics by adopting ICT; (6) strengthening analytical and research skills; and (7) promoting statistical literacy. It is well recognized, however, little has been accomplished in these seven strategic areas by INS since the implementation of SNDS. 4. Five years after launching SNDS, lack of reliable and relevant statistics for timely inputs to policy making remains one of the fundamental development challenges in Guinea. The World Bank CPS identified many gaps in statistics production and their impact on development. These include the delay in the publication of the national accounts and weak economic analysis tools (no publishing industry statistics, index of industrial production and lack of predictive model short-term). Insufficient knowledge of the informal sector is a serious handicap especially since it contributes more than 60 percent of GDP and provides most jobs. The weakness of the structures responsible for producing statistical information in key sectors such as mining is a serious handicap in achieving sectoral policy objectives such as Extractive industries Transparency Initiative (EITI). It is the same in growth sectors such as tourism, transport and public works where the lack of a reliable information system does not encourage investment. In the field of demographic and social statistics, production statistics of employment and treatment of vital events remain a concern. Health statistics remain the weakest link in social statistics because of their incomplete coverage and the irregularity of their publication. In the field of water, energy and the environment, there is a lack of an integrated statistical system in the rural sector and the existence of a multitude of projects on to systems information causing duplication and permanent contradictions. With the last annual agricultural survey dating from 1997, it is impossible to carry out regular monitoring of food production in a context of food crisis. There is also an imbalance in the collection of fisheries data, essentially limited to sea fishing. Finally, the availability of statistics on the environment remains largely insufficient. 5. There are low standards of statistical production, marked by the absence of methodological documents relating to standards, classifications and procedures for collecting, processing, analyzing and disseminating data. Additionally, low skilled human resources, material and financial resources are characteristic of the statistical system. Chronic underinvestment in infrastructure is also a major handicap 88 for statistical production. There is a real gap between user needs and supply of disaggregated data at sub- national and micro levels. This gap seems to be widening with the revitalization of decentralization. 6. Given the scope of statistical capacity deficit in Guinea and limited resources, the strategy of the World Bank statistical support will be focusing on limited areas where differences could be made independent of the low in-country capacity and limited financial resources. These supports could serve as catalytic activities, paving the road for future support when opportunities present. 7. First, the Bank will take a lead in preparing a review on the status of the institution, capacity, financing, production, and dissemination of statistics in Guinea, as well as the implementation of the NSDS 2009-2013 and donor coordination in statistics support. Based on the review, recommendations will be made for targeted strategic statistics support for INS with suggestion of possible areas coordination with other development partners and highlight government’s role in financing of statistics and internal use. 8. Second, the Bank will prepare an analytical work aiming at recovering the comparability of the four household surveys conducted in 1994, 2002, 2007 and 2012. Because the first two household surveys were LSMS and the last two were Core Welfare Indicator Questionnaire (CWIQ) surveys, the reliability of poverty trend based on these four surveys is currently in question. The analytical work will examine possible sources of incomparability, including questionnaire design, prediction error, and sampling error of LSMS and CWIQ. In addition to examining the incomparability issues in consumption aggregates, the analytical work will also examine the comparability of other variables critical to shared prosperity, including employment and access to services. Recommendations will be made for the future household surveys in Guinea in regard to sampling and survey instrument design. Attention will also be paid to the fragile political balances of the country, exploring the relevance and feasibility of using recently proposed micro-level surveys to measure conflicts. 9. Third, based on the review described above, the government’s priority initiatives and World Bank areas of engagement, there would be a focused effort to develop the statistics requirements to support decision–making in one particular policy area that the CPS is supporting. Bank could provide support in producing, analyzing and disseminating statistics in this area. Other possibilities would be to focus on improving human development indicators collected through household surveys or complementing the ongoing public expenditure review analysis by strengthening the administrative data that would be used for public investment decisions. If the effort is successful, it would be possible to then build on that success in other areas. 89 Table 1: Inventory of Guinea Micro-Surveys Surveys Year/Period Remarks/Source Small-Scale Survey for Poverty YR2012 Poverty Reduction Strategy (PRS III) Evaluation/Assessment (ELEP) or Enquête Légère pour l'Evaluation de la YR2007 Pauvreté (ELEP) Enquête Démographique et de Santé et a YR2012 RAPPORT PRÉLIMINAIRE, Décembre 2012 Indicateurs Multiples (EDS-MICS-IV) Revue externe du programme élargi de YR2011 WHO and UNICEF estimates of immunization coverage: 2012 vaccination de la Guinée revision Global Financial Inclusion (Global Findex) YR2011 Central Microdata Catalog, World Bank. Database Enquête nationale sur l'état nutritionnel YR2008 République de Guinee, Rapport provisoire 2008 et le suivi des principaux indicateurs de http://www.stat- survie de l'enfant guinee.org/nada/index.php/catalog/15/overview Enquête Nationale Sur L'état Nutritionnel YR2007 The National Survey on Nutritional Status and Tracking Key et le suivi des principaux indicateurs de Indicators of Child Survival (ENENSE) was conducted by the Survie de l'Enfant National Institute of Statistics, at the request of the Government and, with funding from UNICEF and WFP Enterprise Survey YR2006 Central Microdata Catalog, World Bank. Micro-enterprise Survey YR2006 Demographic and Health Survey - EDSG-I, Feb - June 2005 Updates the health and demographic indicators EDSG-II, and EDSG-III YR1999 collected during the two previous DHS surveys in 1992 and 1999 YR1992 Multiple Indicator Cluster Survey (MICS) YR2003 République de Guinée, Ministère du plan, Direction nationale de la statistique, (2004) Enquête intégrale sur le budget et Oct 2002 - Oct DIRECTION NATIONALE DE LA STATISTIQUE l'évaluation de la pauvreté (EIBEP QUIBB 2003 (Integrated Core Survey for Poverty Assessment – EIBEP 2002-2003) EIBEP/2002-2003 Basic Well-Being Indicator Questionnaire YR2002 Guinea: Poverty Reduction Strategy Paper, Jan 2008 (QUIBB) Core Welfare Indicators Questionnaire YR2002 Guinea: Poverty Reduction Strategy Paper, Jan 2008 (CWIQ) Revue du Programme Elargi de YR2000 Guinée : Rapport de mise en oeuvre de la stratégie de Vaccination croissance et de réduction de la Pauvreté, Décembre 2012. General Census of Population and YR1996 Central Microdata Catalog, World Bank. Housing African Integrated Microdata, UNECA. Enquête intégrale sur le budget et YR1994 DIRECTION NATIONALE DE LA STATISTIQUE l'évaluation de la pauvreté (EIBEP QUIBB) General Census of Population and YR1983 Central Microdata Catalog, World Bank. Housing 90 Annex A2: Guinea at a Glance As of 7/26/2013 Guinea at a glance Sub- Key Development Indicators Saharan Low Guinea Africa income Age distribution, 2011 (2011) Male Female Population, mid-year (millions) 10.2 875 817 75- 79 Surface area (thousand sq. km) 246 24,244 16,584 60- 64 Population growth (%) 2.4 2.5 2.1 Urban population (% of total population) 35 36 28 45- 49 30- 34 GNI (Atlas method, US$ billions) 4.4 1,101 466 15- 19 GNI per capita (Atlas method, US$) 430 1,258 571 GNI per capita (PPP, international $) 1,020 2,225 1,378 0-4 10 5 0 5 10 GDP growth (%) 3.9 4.7 6.0 percent of total population GDP per capita growth (%) 1.5 2.1 3.7 ( most recent estimate , 2005 – 2011) Poverty headcount ratio at $1.25 a day (PPP, %) 43 48 48.4 Under-5 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 70 69 74.3 Life expectancy at birth (years) 54 55 59 250 Infant mortality (per 1,000 live births) 79 69 63 Child malnutrition (% of children under 5) 21 21 23 200 Adult literacy, male (% of ages 15 and older) 52 71 70 150 Adult literacy, female (% of ages 15 and older) 30 54 56 100 Gross primary enrollment, male (% of age group) 105 103 108 Gross primary enrollment, female (% of age group) 91 96 103 50 0 Access to an improved water source (% of population) 74 61 65 1990 1995 2000 2011 Access to improved sanitation facilities (% of population) 18 31 37 Guine a Sub-Sah aran Afr ica Net Aid Flows 1980 1990 2000 2011 (US$ millions) Net ODA and official aid 89 292 153 218 Growth of GDP and GDP per capita (%) Top 3 donors (in 2010): European Union Institutions 21 33 16 72 6 France 9 87 20 36 4 United States 8 0 26 22 2 Aid (% of GNI) .. 11.6 5.2 5.1 0 Aid per capita (US$) 20 51 18 22 -2 Long-Term Economic Trends -4 95 05 Consumer prices (annual % change) .. 23.3 6.8 21.4 GDP implicit deflator (annual % change) .. 17.3 6.3 19.6 GDP GDP per capita Exchange rate (annual average, local per US$) 19.0 660.2 1,746.9 6,620.8 Terms of trade index (2000 = 100) .. 145 100 106 1980 – 90 1990 – 2000 2000 – 11 (average annual growth %) Population, mid-year (millions) 4.4 5.8 8.3 10.2 2.7 3.7 1.8 GDP (US$ millions) .. 2,667 2,995 5,089 .. 4.2 2.6 (% of GDP) Agriculture .. 23.8 22.4 22.1 .. 4.5 3.3 Industry .. 33.3 33.5 44.9 .. 4.7 2.9 Manufacturing .. 4.6 4.0 7.3 .. 3.8 1.8 Services .. 42.9 44.2 33.0 .. 3.0 1.5 Household final consumption expenditure .. 66.9 76.9 89.7 .. 5.2 1.6 General gov't final consumption expenditure .. 11.0 7.1 10.6 .. -0.5 16.3 Gross capital formation .. 24.5 20.5 17.6 .. 0.1 4.3 Exports of goods and services .. 31.1 24.5 30.3 .. 0.3 -0.8 Imports of goods and services .. 33.4 29.0 48.2 .. -1.1 7.9 Gross savings .. 14.6 13.8 1.3 Note: Figures in italics are for years other than those specified. .. indicates data are not available. Development Economics, Development Data Group (DECDG). 91 Guinea Balance of Payments and Trade 2000 2011 Governance indicators, 2000 and 2011 (US$ millions) Total merchandise exports (fob) 250 807 Voice and accountability Total merchandise imports (cif) 583 703 Net trade in goods and services -417 -1,484 Polit ical stability Current account balance -484 -1,404 Regulat ory quality as a % of GDP -16.2 -27.6 Rule of law Personal transfers and compensation of employees (receipts) 1 65 Control of corruption Reserves, including gold .. .. 0 25 50 75 100 2011 Country's percentile rank (0-100) Central Government Finance higher values imply better ratings 2000 (% of GDP) Source: Worldw ide Governance Indicators (w w w .govindicators.org) Current revenue (including grants) 11.4 16.9 Tax revenue 7.5 11.5 Current expenditure 9.6 16.3 Technology and Infrastructure 2000 2011 Overall surplus/deficit -3.3 -1.2 Paved roads (% of total) 16.5 .. Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 100 people) 1 44 Corporate .. .. High technology exports (% of manufactured exports) 0.1 0.1 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 3,083 3,139 Agricultural land (% of land area) 55 58 Total debt service 157 171 Forest area (% of land area) 28.1 26.5 Debt relief (HIPC, MDRI) 799 862 Terrestrial protected areas (% of land area) 6.8 6.8 Total debt (% of GDP) 102.9 61.7 Freshwater resources per capita (cu. meters) 26,264 22,110 Total debt service (% of exports) 20.6 10.8 Freshwater withdrawal (% of internal resources) 0.7 0.7 Foreign direct investment (net inflows) 10 896 CO2 emissions per capita (mt) 0.15 0.13 Portfolio equity (net inflows) 0 0 GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) .. .. Composition of total external debt, 2011 Energy use per capita (kg of oil equivalent) .. .. Short-term, 91 IBRD, 0 Private, 18 World Bank Group portfolio 2000 2011 Bilateral, 917 IDA, 1,166 (US$ millions) IBRD Total debt outstanding and disbursed 0 0 Disbursements 0 0 Principal repayments 0 0 Other multi- IMF, 199 Interest payments 0 0 lateral, 748 US$ millions IDA Total debt outstanding and disbursed 982 1,166 Disbursements 29 10 Private Sector Development 2000 2011 Total debt service 18 113 Time required to start a business (days) – 40 IFC (fiscal year) Cost to start a business (% of GNI per capita) – 118.0 Total disbursed and outstanding portfolio 5 32 Time required to register property (days) – 59 of which IFC own account 5 32 Disbursements for IFC own account 0 3 Ranked as a major constraint to business 2000 2011 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 1 0 Electricity .. 61.0 Transport .. 9.5 MIGA Gross exposure 43 54 Stock market capitalization (% of GDP) .. .. New guarantees 40 0 Bank capital to asset ratio (%) .. .. Note: Figures in italics are for years other than those specified. .. indicates data are not available . – indicates observation is not applicable . Development Economics, Development Data Group (DECDG). 92 Annex B2: Selected Indicators of Bank Portfolio Performance and Management Selected Indicators* of Bank Portfolio Performance and Management As Of Date 7/26/2013 Indicator 2011 2012 2013 0 Portfolio Assessment Number of Projects Under Implementation a 12 11 9 0 b Average Implementation Period (years) 6.0 7.1 4.8 0.0 a, c Percent of Problem Projects by Number 66.7 9.1 11.1 0.0 a, c Percent of Problem Projects by Amount 66.5 10.7 13.4 0.0 a, d Percent of Projects at Risk by Number 91.7 81.8 66.7 0.0 a, d Percent of Projects at Risk by Amount 70.9 84.3 80.2 0.0 e Disbursement Ratio (%) 13.4 33.3 34.9 0.0 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 57 1 Proj Eval by OED by Amt (US$ millions) 1,335.3 79.9 % of OED Projects Rated U or HU by Numbe 40.0 0.0 % of OED Projects Rated U or HU by Amt 36.1 0.0 a.As shown in the Annual Report on Portfolio Performance (except for current FY). b.Average age of projects in the Bank's country portfolio. c.Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d.As defined under the Portfolio Improvement Program. e.Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 93 Annex B3-A: IBRD/IDA Program Summary CAS Annex B3 - IBRD/IDA Program Summary Guinea As Of Date 7/26/2013 Proposed IBRD/IDA Base-Case Lending Program a Strategic Implementation Fiscal Proj ID US$(M) Rewards b b Risks year (H/M/L) (H/M/L) 2014 Tertiary Education and Skills Reform 0.0 Agricultural Productivity 10.0 Skills for growth and Employability 16.6 2015 Results Based TA Reform 22.0 Electricity Support 30.0 Senegal River Basin 15.5 West Africa Regional Fisheries 3.0 (WARF) 2016 Health 10.0 Agriculture Sector Support 30.0 Regional Trade and Gowth Corridor 13.0 2017 PFM/Governance 15.0 Higher Education 12.0 Overall Result 177.1 94 Annex B3-B: IFC and MIGA Program Summary Guinea: IFC Investment Operations Program As of 7/26/2013 2011 2012 2013 2014* Original Commitments (US$m) IFC and Participants 151.00 15.98 IFC's Own Accounts only 151.00 15.98 Original Commitments by Sector (%)- IFC Accounts only FINANCE & INSURANCE 0.66 100 OIL, GAS AND MINING 99.34 Total 0 100 100 0 Original Commitments by Investment Instrument (%) - IFC Accounts only Guarantee 0.66 100 Quasi loan 99.34 Total 0 100 100 0 * Data as of July 01,2013 95 Annex B4: Summary of Nonlending Services As of 7/26/2013 Completion Cost Product FY (US$000) Audiencea Objectiveb Recent completions Public Reform in Security Sector 13 106,401.58 Government Guidance on strategy Underway Investment Climate Change Dialogue TA 13 99,288.49 Government Policy guidance Ag. Growth & Competitiveness 14 78,670.14 Government Knowledge generation Policy Dialogue and Collaboration 14 41,232.13 Government Policy dialogue Social Protection Strategy 14 279,302.76 Government Capacity building PER 14 162,560.58 Government Policy guidance Assessment of Mining 14 113,229.83 Government Knowledge generation Towards a Tertiary Education Strategy 14 135,174.60 Government Policy guidance Planned ICT TA 14 Development of Accounting Profession 14 Financial Sector Development Roadmap Study 14 Access to Finance for MSMEs (urban and rural) Policy Note. 14 Mining Sector TA 16 ____________ a. Government, donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving. 96 Annex B5: Social Development Indicators As of 7/26/2013 Guinea Social Indicators Latest single year Same region/income group Sub- Saharan Low - 1980-85 1990-95 2005-11 Africa incom e POPULATION Total population, mid-year (millions) 4.9 7.6 10.2 874.8 816.8 Grow th rate (% annual average for period) 2.2 5.5 2.0 2.5 2.1 Urban population (% of population) 26.6 29.5 35.5 36.5 28.0 Total fertility rate (births per w oman) 6.9 6.4 5.2 4.9 4.0 POVERTY (% of population) National headcount index .. 62.6 53.0 Urban headcount index .. 17.5 30.5 Rural headcount index .. 82.1 63.0 INCOME GNI per capita (US$) .. 480 430 1,258 571 Consumer price index (2005=100) .. .. 287 .. .. INCOME/CONSUMPTION DISTRIBUTION Gini index .. 44.9 39.4 Low est quintile (% of income or consumption) .. 5.2 6.4 Highest quintile (% of income or consumption) .. 50.8 46.2 SOCIAL INDICATORS Public expenditure Health (% of GDP) .. 1.1 1.6 2.9 2.2 Education (% of GDP) .. 1.9 3.1 4.3 4.2 Net prim ary school enrollm ent rate (% of age group) Total 31 29 81 76 80 Male 42 38 86 78 82 Female 20 19 76 73 78 Access to an im proved w ater source (% of population) Total .. 58 74 61 65 Urban .. 88 90 83 86 Rural .. 45 65 48 57 Im m unization rate (% of children ages 12-23 months) Measles 29 61 58 74 77 DPT 15 54 59 71 79 Child malnutrition (% under 5 years) .. 21 21 21 23 Life expectancy at birth (years) Total 41 46 54 55 59 Male 40 44 53 54 58 Female 42 47 56 56 60 Mortality Infant (per 1,000 live births) 149 120 79 69 63 Under 5 (per 1,000) 253 202 126 109 95 Adult (15-59) Male (per 1,000 population) .. .. 347 374 292 Female (per 1,000 population) .. .. 298 343 255 Maternal (modeled, per 100,000 live births) .. 1,100 610 500 410 Births attended by skilled health staff (%) .. 31 46 48 47 Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series betw een 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one year of age or at any time before the survey. World Development Indicators database, World Bank - 17 April 2013. 97 Annex B6: Key Economic Indicators Guinea - Selected economic and financial indicators, 2003-2016 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (Annual percentage change, unless otherwise indicated) National accounts and prices GDP at constant prices 1.2 2.7 3.3 2.2 1.5 4.9 -0.3 1.9 3.9 4.8 5 5.2 19.9 19.7 GDP at current prices 13.7 24.9 32.9 37.6 21.6 14.1 6.9 20.2 19.6 14.7 6.3 7.4 5.2 5 GDP deflator 12.3 21.7 28.6 34.7 19.8 19.7 6.5 22.5 24.3 20.2 11.7 13 26.1 25.7 Consumer prices Average 12.9 17.5 31.4 34.7 23.4 18.4 4.7 15.5 21.4 14.7 10.3 7.3 6 5.9 End of period 14.8 27.6 29.7 39.1 15 13.5 7.9 20.8 19 12 8.7 6.2 5.9 5.9 External sector Exports, f.o.b. (in U.S. dollar terms) 3.3 1.6 12.4 20.2 6.8 32 -22.1 13.6 12.1 3 2.2 5.8 77.5 55.3 Imports, f.o.b. (in U.S. dollar terms) -3 22.4 4.7 24.8 27 19.6 -21.2 26.2 38.3 48.3 7.2 1.7 13.4 8.8 Terms of trade Percentage change -2.4 -16.8 -6.8 5 -6.1 -11.3 5.5 -0.7 Average effective exchange rates (depreciation -) Nominal index -11.7 -17.3 -38 -0.33 0.19 -0.14 0.00 -0.17 -0.18 Real index -4.3 -5.7 -0.21 -0.12 0.42 -0.03 0.04 -0.07 -0.03 (Percent of GDP) Money and credit Net foreign assets 1/ -15.2 10.1 5.2 10.4 0.7 14.3 4.7 -5.5 40.1 -11.6 -1.2 ... Net domestic assets 1/ 50.5 26.9 32 49 5.1 24.7 21.2 79.9 -30.7 16.9 11.4 Net claims on government ( net) 1/ 34 22.2 7.9 42.7 5.6 20.8 28.7 70.2 -44.8 17.7 7.6 Credit to nongovernment sector 1/ 14.2 3.2 15.2 12.8 3.3 1.9 3.1 8.9 15 2 7 Broad money 35.3 37 37.2 59.4 5.8 39 25.9 74.4 9.4 5.3 10.2 Reserve money 27.4 33 25 84.1 11.9 13.8 81.7 73 -4.9 -6.2 8.3 Treasury bill rate (end of period) 14.1 14.7 23.4 Velocity (GDP relative to average M2) 7.7 7 6.9 6.8 6.8 6.7 Central government finances 3/ Total revenue and grants 13.2 11.4 13.7 14.7 14.9 16.1 16.5 15.7 20.3 22.9 24 24.9 27.5 28.2 Revenue 13.1 13.3 12.9 15.6 16.2 15.3 16.8 19.2 20.2 20.8 24.1 26.3 Of which: nonmining revenue 9 8.5 9.9 9.2 9.5 12.1 12.9 11.5 13 15 16.2 16.4 16.7 17.9 Grants 0.6 1.4 2 0.5 0.4 0.4 3.4 3.7 3.8 4.1 3.4 1.9 Current expenditure 13 11.3 11 13.4 10.8 13.4 16.5 20.5 16.3 15.6 15.8 15.6 15.2 15 Of which: interest payments 2.8 3.3 2.1 2.6 2.1 2 2 1.4 0.9 1.3 1.2 1.1 Capital expenditure and net lending 2/ 6.3 5 4.3 4.2 3.9 4 7.2 9.1 5.2 12.4 10.3 10.5 13.2 14.6 Overall budget balance Including grants (commitment) -6.1 -4.9 -1.5 -2.9 0.3 -1.3 -7.1 -14 -1.3 -5.2 -2.1 -1.3 -0.9 -1.5 Excluding grants (commitment) -8.9 -5.9 -2.1 -4.3 -1.7 -1.8 -7.5 -14.4 -4.7 -9 -5.9 -5.4 -4.3 -3.4 Primary balance -2.6 -0.4 3.2 1.3 3 1.6 -5.6 -12.6 -1.6 -3.6 -1.4 -0.6 -0.6 0.6 Gross investment 9.9 10.9 14.1 13.7 15 17.5 11.4 10.6 17.6 37.3 44.1 43.9 33.7 19.1 Government (fixed capital formation) 4.4 3.9 3.4 3.3 3.1 Nongovernment 5.5 6.9 10.7 10.4 11.9 Domestic savings 7.5 6.8 10.9 9.1 6.1 7.2 1.6 -1.8 1.3 -1.7 4.4 4.8 Government -0.4 1.6 4.7 3.4 4.2 Nongovernment 8 5.2 6.2 5.7 1.9 External current account balance Including official transfers -3.4 -5.5 -4.5 -5.9 -9.5 -10.3 -9.9 -12.4 -16.3 -38.8 -39.2 -39.2 -21.3 -5 Excluding official transfers -4.1 -5.8 -4.9 -6.5 -10 -10.8 -9.9 -12.4 -18.6 -39.6 -40.2 -40.3 -22.3 -5 Overall balance of payments -3.8 -2.5 -0.9 -2.7 -1.3 -0.9 5.3 -3.6 10.1 -7.2 -0.8 -0.2 2.3 1.3 External public debt 419.6 396.9 346.1 290.6 249.9 Memorandum items: (US$ millions, unless otherwise indicated) Exports f.o.b. 731.7 743.2 841.4 1011.1 1079.5 1578.1 1229.9 1397.3 1566 1613.7 1648.5 1743.6 3095.1 4745.7 Imports f.o.b. 578.5 707.9 754.9 942 1195.8 1810.4 1427.2 1800.4 2490.8 3693.8 3958.3 4026.6 4564.8 4745.7 External current account (including official -123.2 -219.4 -146.6 -184.7 -431.6 transfers) Overall balance of payments -138.2 -99.8 -30.2 -85.6 -60.2 -42.4 245.9 -177.8 520.6 -410.8 -48.2 -13.7 171.5 117.1 Net foreign assets (central bank) -33.4 -29.6 -38 -31.4 -22.2 -14.1 97.9 39.6 637.6 265.7 214.8 260.8 460.6 577.7 Gross official reserves (in months of imports) 1.2 0.8 0.5 0.6 0.4 0.6 0.8 0.7 4.6 2.9 2.9 3 3.1 3.7 Gross reserves (in percent of broad money) 4/ 20.9 15.8 9.3 Nominal GDP (in billions of Guinean francs) 7,210 9,004 11,869 16,330 19,852 20,780 22,133 27,118 33,697 40,494 45,219 51,114 64,439 80,983 Sources: Guinean authorities; and IMF staff estimates and projections. 1/ In percent of broad money stock at beginning of period. 2/ Includes expenditure for restructuring. 3/ Figures in 2015-16 are in percent of GDP excluding th elarge iron ore project of Simandou. 4/ In months of the following year's imports excluding imports of large foreign-financed mining projects 98 Annex B7: Key Exposure Indicators Guinea - Key Exposure Indicators As of 7/26/2013 Actual Estimated Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 3234 3175 3128 3135 3139 2965 2871 2759 2623 disbursed (TDO) (US$m)a Net disbursements (US$m)a -89 -65 -49 -77 -48 -83 -62 -57 -60 Total debt service (TDS) 263 303 197 232 281 252 127 135 142 (US$m)a Debt and debt service indicators (%) TDO/XGSb 270.4 202.6 242.9 218.5 193.8 177.2 169.9 155.5 143.4 TDO/GDP 77.8 70.3 67.5 63.6 61.3 52.6 45.8 43.5 38.6 TDS/XGS 22.0 19.3 15.3 16.2 17.3 15.1 7.5 7.6 7.8 Concessional/TDO 83.2 82.7 84.1 82.4 83.2 83.9 84.1 84.3 84.4 IBRD exposure indicators (%) IBRD DS/public DS .. .. .. .. .. .. .. .. .. Preferred creditor DS/public .. .. .. .. .. .. .. .. .. DS (%)c IBRD DS/XGS .. .. .. .. .. .. .. .. .. IBRD TDO (US$m)d .. .. .. .. .. .. .. .. .. Of which present value of guarantees (US$m) Share of IBRD portfolio (%) .. .. .. .. .. .. .. .. .. IDA TDO (US$m)d 1305 1288 1269 1248 1166 1134 1099 1061 1020 IFC (US$m) Loans 2.0 1.8 0 0 0 1.0 2.2 Equity and quasi-equity /c 1.3 8.4 8.4 28.7 32.0 89.4 161.6 MIGA MIGA guarantees (US$m) 51.9 51.9 51.9 51.9 51.9 51.9 51.9 51.9 51.9 a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short term capital. b. “XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 99 Annex B8-A: Operations Portfolio (IBRD/IDA and Grants) Operations Portfolio (IBRD/IDA and Grants) As Of Date 7/26/2013 Closed Projects 68 IBRD/IDA * Total Disbursed (Active) 46.77 of which has been repai 0.00 Total Disbursed (Closed) 322.38 of which has been repai 294.83 Total Disbursed (Active + Clos 369.15 of which has been repai 294.83 Total Undisbursed (Active) 86.32 Total Undisbursed (Closed) 9.86 Total Undisbursed (Active + C 96.18 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementatio Frm Project ID Project Name Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Objectives n Progress Rev'd P070878 GN-GEF Coastal Marine & MS MS 2006 5 0.395608 0.3956079 -1.45739 P123900 GN Productive Social Safe S MS 2012 25 22.86603 P065129 GN-APL2 Village Comm S MS S 2008 17 2.033625 1.1858449 P077317 GN-Elec. Sec. Eff. Impr. SMS MS 2006 25.5 16.85138 -1.542578 P098742 GN-Electricity Sec Eff ImpMS MS 2008 4.5 1.187143 P081297 GN-GEF CB Land Mgmt S MS MS 2006 7 2.609562 2.6095624 P065126 GN-Health Sec Supt SIL ( MS MS 2005 25 6.445806 5.9685688 -0.28773 P125890 GN: Economic GovernanceMS MS 2012 10 8.664602 P122916 GN:Mineral Governance S MS MU 2013 20 19.3813 1.0247001 P128443 MSME Development Proje# # 2013 10 10.07653 Overall Result 132.5 16.5 90.51159 3.7454554 -1.74512 100 Annex B8-B: Statement of IFC’s Held and Disbursed Portfolio Guinea Committed and Disbursed Outstanding Investment Portfolio As of 6/30/2013 (In USD Millions) Committed Disbursed Outstanding **Quasi Partici **Quasi Partici FY Approval Company Loan Equity Equity *GT/RM pant Loan Equity Equity *GT/RM pant 8/12/2006 Simfer 0 1.27 183.73 0 0 0 1.27 160.32 0 0 Total Portfolio: 0 1.27 183.73 0 0 0 1.27 160.32 0 0 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. 101 To To 14°W Tambacounda Tambacounda 12°W 10°W 8°W This map was produced by the Map Design Unit of The World Bank. SENEGAL To To The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Kayes To To Group, any judgment on the legal status of any territory, or any To To Kayes endorsement or acceptance of such boundaries. 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