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AFRICAN DEVELOPMENT BANK GROUP
CAMEROON
PUBLIC EXPENDITURE EFFICIENCY IMPROVEMENT
SUPPORT PROJECT (PAEDEP)
APPRAISAL REPORT
OSGE/GECL October 2016
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TABLE OF CONTENTS
I – Strategic Thrust and Rationale 1
1.1. Project Linkage to Country Strategy and Objectives .................................................. 1
1.2. Rationale for Bank Involvement ................................................................................. 1
1.3. Aid Coordination ......................................................................................................... 4
II - Project Description 4
2.1 Project Components .................................................................................................... 4
2.2 Technical Solutions Adopted and Alternative Solutions Considered ......................... 6
2.3 Type of Project ............................................................................................................ 6
2.4 Project Cost and Financing Mechanisms .................................................................... 7
2.5 Project Area and Beneficiaries .................................................................................... 8
2.6 Participatory Approach to Identification, Design and Implementation ...................... 8
2.7 Bank Group Experience and Lessons Reflected in Project Design ............................ 9
2.8 Key Performance Indicators ...................................................................................... 10
III - Project Feasibility 10
3.1 Economic and Financial Performance....................................................................... 10
3.2 Environmental and Social Impact ............................................................................. 11
IV – Implementation 12
4.1 Implementation Arrangements .................................................................................. 12
4.2 Monitoring ................................................................................................................. 14
4.3 Governance................................................................................................................ 14
4.4 Sustainability ............................................................................................................. 14
4.5 Risk Management ...................................................................................................... 15
4.6 Knowledge Development .......................................................................................... 15
V – Legal Framework 15
5.1 Legal Instrument ....................................................................................................... 15
5.2 Conditions Associated with the Bank’s Intervention ................................................ 16
5.3 Conformity with Bank Policies ................................................................................. 16
VI – Recommendation 16
Annex 1: Comparative Socio-economic Indicators of the DRC I
Annex 2: Analysis of the Bank’s Active Portfolio as of 30 June 2016 II
Annex 3: Summary Table of Donor Operations III
Annex 4: Justification of the Government Counterpart Contribution Amount V
Annex 5: Map of the Project Area VIII
Table 2.1-1 : Project Components and Cost Estimates .............................................................. 5
Table 2.4-1 : Estimated Project Cost by Component ................................................................. 7
Table 2.4-2 : Estimated Project Costs by Financing Source ...................................................... 7
Table 2.4-3 : Project Cost by Expenditure Category ................................................................. 8
Table 2.4-4 : Expenditure Schedule by Component .................................................................. 8
i
Acronyms and Abbreviations
ADF African Development Fund
AER Rural Electrification Agency
ADB (loan) African Development Bank (loan)
AfDB African Development Bank Group
ARMP Public Procurement Regulatory Authority
ARSEL Electricity Sector Regulatory Agency
CONSUPE Supreme State Control
CSFP Sectoral Committee on Public Finance
DGEPIP General Directorate for the Economy and Public Investment Programming
EDC Electricity Development Corporation
FEICOM Special Council Development Fund
GDP Gross Domestic Product
GESP Growth and Employment Strategy Paper
HDI Human Development Index
ICTs Information and Communication Technologies
IDEV Independent Development Evaluation
IMF International Monetary Fund
INTOSAI International Organization of Supreme Audit Institutions
MINEE Ministry of Energy and Water Resources
MINEPAT Ministry of the Economy, Planning and Regional Development
MINMAP Ministry of Public Contracts
MINTP Ministry of Public Works
PAP Priority Action Programme
PEFA Public Expenditure and Financial Accountability
PFMP Public Finance Modernization Plan
PIB Public Investment Budget
PPBME Planning, Programming, Budgeting, Monitoring and Evaluation
PSD Country Strategy Paper
RF Road Fund
RMF Road Maintenance Fund
SME Small and Medium-sized Enterprises
SONATREL National Electricity Transmission Company
TFP Technical and Financial Partners
UA Unit of Account
UNCTAD United Nations Conference on Trade and Development
WB World Bank
Currency Equivalents
July 2016
Monetary unit = CFA Franc (XAF)
UA 1 = XAF 826.499
UA 1 = EUR 1.25999
1 UA = USD 1.39884
Fiscal Year
[1st January – 31st December]
ii
Project Information Sheet
Client Information
BORROWER: Republic of Cameroon
EXECUTING AGENCY: Ministry of the Economy, Planning and Regional Development
(MINEPAT) through the Directorate General for the Economy
and Public Investment Programming (DGEPIP)
Financing Plan
Source Amount (UA) Instrument
ADF UA 11,210,000 Loan
ADB EUR 14,200,000 (UA 11,269,931) Loan
Government XAF 860,000,000 (UA 1,040,533)
TOTAL COST UA 23.520.464
Key ADB and ADF Financial Information (blend country)
ADB loan* ADF loan
Loan/Grant currency EUR UA
Interest Type Floating Fixed
Interest Rate Margin*
0.80% + Bank funding
margin + maturity
premium**
1%
Service commission Not applicable 0.75% per year of the disbursed
loan amount not reimbursed
Commitment fee Gradual from 0.25% to
0.75%
0.5% of the loan amount not
disbursed 120 days after signing
of the Loan Agreement
Other Expenses Not applicable Not applicable
Maturity 25 years 30 years
Grace period 8 years 5 years
Timeframe Half-yearly Half-yearly
FRR, NPV (baseline
scenario) Not Applicable Not Applicable
ERR (baseline scenario) Not Applicable Not Applicable
*PFT = Base rate + Funding margin + Lending spread + Maturity premium
**Maturity premium: The FFL introduces a maturity-based pricing structure and increases the maximum tenor of loans
and the grace period. Hence, for loans with Average Maturity above EVSL maximum Average Maturity, a maturity
premium is added to the applicable lending rate as follows:
If Average Maturity is < = 12.75, then No Maturity Premium is applied
If 12.75 < Average Maturity < = 15, then Maturity Premium = 10 bps
If 15 < Average Maturity < = 17, then Maturity Premium = 20 bps
iii
Duration – Milestones (projected)
Approval of the concept note
June 2015
Project appraisal August 2015
Project re-appraisal July 2016
Project approval November 2016
Effectiveness January 2017
Last disbursement 31 December 2020
Completion 30 March 2021
Last reimbursement / ADB loan December 2040
Last reimbursement / ADF loan December 2045
iv
Project Summary
General Project
Overview
Programme Title/ Number: Public Expenditure Efficiency Improvement Support Project (PAEDEP) /
SAP Code: P-CM-KA0-009
Geographical scope: National territory
Total Duration: 48 months (January 2017 – December 2020)
Funding: ADF loan: UA 11,210,000; ADB loan: EUR 14,200,000; Counterpart contribution: UA
1,040,533
Operational Instrument: Institutional support
Sector: Economic Governance
Project Outcomes
and Direct
Beneficiaries
The direct beneficiaries of project outcomes are the various Government services involved in planning,
budgeting and management of public investments (MINEPAT, MINFI, ARMP, MINMAP), as well as
technical structures tasked with the management of transport and energy infrastructure.
This project will improve the quality of projects designed under the Public Investment Programme and
consequently enhance the public investment budget implementation rate. These structures will benefit
from operational capacity building in strategic planning, project preparation and procurement.
Ultimately, the project will have an impact on economic growth, road maintenance and access to
electricity, by improving the quality of public investment expenditure in general, and in the
abovementioned two sectors in particular.
All beneficiaries contributed to the project’s design and are heavily involved in its implementation.
Needs Assessment
and Rationale
Over the past five years, Cameroon has embarked on an extensive public investment programme to
eliminate the main bottlenecks that hamper private sector development and economic growth. The
shortage of transport and energy infrastructure is indeed a major constraint to private sector development
and economic competitiveness. The poor level of project preparation is one of the main constraints to
the implementation of the public investment programme.
The Bank conducted a study on public investment management and expenditure reviews in the transport
and energy sectors. These studies revealed the institutional shortcomings that affect the quality of public
spending. Human and institutional capacity building needs were assessed based on these studies and
meetings with various structures.
Value-added of the
Bank
Over the past five years, the Bank has been the lead donor among the country’s technical and financial
partners meeting within the public finance sector committee. It has also been the lead donor for the
transport infrastructure sector since 2014. Studies conducted by the Bank on public investment
management and expenditure reviews have increased its knowledge of the areas covered by the project.
Consequently, the Bank has a comparative advantage in conducting reform dialogue in coordination
with the other TFPs. One of the major innovations of the project is support to the creation of a project
maturation fund and financing of the technical studies of backbone investment projects included in the
Government's emergency programme. Several departments within the Bank will be involved in
monitoring the project, namely the departments in charge of governance, transport, energy and the
Central Africa Region Department. The department in charge of fiduciary issues will also provide its
support.
Knowledge
Management
The project intends to conduct several studies, including a study on the privatization of road maintenance
management and the preparation of a renewable energy ATLAS. These studies will help to improve the
knowledge of the Bank and of all stakeholders. Moreover, they will be disseminated within the Bank
and at the national level and will form the basis for reforms and investments.
v
Project Implementation Schedule
Years
Activities / Months J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M
Prior to commencement
Board presentation
ADF loan effectiveness
ADB loan effectiveness
Recruitment of Coordinator and PMU
ExpertsEstablishment of PMU
Preparation of procedures manual
Project launching mission
Equipment and Supplies
Preparation of bidding documents
Launch of bidding process
Award and signature of contracts
Provision of assets and facilities
Consultancy services
Preparation of TORs and AMI
Preparation of short lists
Publication of requests for proposals
Procurement of consultancy services
Tech. assist.
Implementation of studies
Tech. assist.
Assist. Tech. ARMP
Tech. assist. MINEPAT
National consultants
Training
Local training
Sub-regional training
Study trips
Management
Operating expenditure
Mid-term Review
Monitoring/Evaluation 0
CPP meeting
Annual accounts audit
Final accounts audit
20212016 2017 2018 2019 2020
vi
Results-based Logical Framework
Country and Project Title: Cameroon - Public Expenditure Efficiency Improvement Support Project (PAEDEP)
Project Goal: Help to improve fiscal management and public expenditure impact in the energy and transport sectors
RESULTS CHAIN
PERFORMANCE INDICATORS MEANS OF
VERIFICATION RISKS/ MITIGATION
MEASURES
Indicator
(including ISCs) Baseline situation Target
Imp
act
Growth acceleration
GDP growth rate
5.2% on average over the
2011-2015 period
5.5 % on average over the
2016-2020 period
GESP
implementation
report
OU
TC
OM
ES
Outcome 1: Improvement
in public investment
spending
Investment budget
implementation rate <50% in 2014 >70% in 2020
PIB implementation
report (MINEPAT)
Risk of a slowdown in
reform implementation:
Limited incentive for
political authorities to
adopt reforms in areas
covered by the project
Mitigation measure: Continued dialogue with
the authorities on various
reforms. The circular on
MTEFs is proof of the
authorities' commitment.
Outcome 2: Improved road
network maintenance
Annual execution rate
of the Road Fund budget
allocated for road maintenance
41.9% in 2014
>75% in 2020
Road Fund annual
report
Outcome 3: Improved
access to electricity
Electricity connection rate for
new customers in rural areas
35% in 2014
40% in 2020
Implementation
report of the Rural
Electrification Master
Plan
Component 1: Support to public investment project maturation and procurements
OU
TP
UT
S
1.1 Support to improve the
planning, monitoring and
implementation of public
investments
1.1.1 Methodological guide on
the maturation of investment
projects and PIB preparation
The Methodological Guide
adopted in 2010 is not
mastered by the sector
ministries on account of its
operational shortcomings (less than 50% of BIP
projects are mature)
Methodological guides
revised and adapted to the
needs of sector ministries
(Target: over 75% of BIP projects are mature as from
2017
Copy of the new
guide adopted by
DGEPIP
Risk pertaining to project
implementation capacity
due to dysfunction within
Government services
resulting from overlapping
duties. Average
Mitigation measure: One of the scheduled project
activities focuses on
clarifying the roles of
various stakeholders and
reviewing the institutional
frameworks.
Implementation of the
study findings will help to mitigate the dysfunction
risk within services that
benefit from the project.
Fiduciary risk: The low
level of governance in the
country could undermine
the efficient use of project resources.
Mitigation measure: An
accounting and financial
management system will be
instituted to ensure that the
management of project resources is consistent with
Bank rules and procedures.
1.1.2 Project data bank in
MINEPAT
No project data bank in
MINEPAT in 2015
Project data bank
operational in 2018
DGEPIP activity
report
1.1.3 Investment Projects
Maturation Fund
No Investment Projects
Maturation Fund in 2015
Investment Projects
Maturation Fund
operational in 2018
DGEPIP activity
report
1.1.4 Number of technical
studies, FDS and PDS conducted in the transport and
energy sectors through the
project maturation fund
0 studies in 2015
At least 6 complete studies
in the transport sector and 5 hydroelectricity site
studies before 2020
Copy of studies approved by MINTP
and MINEE
1.1.5 Monitoring and
evaluation system for the
public investment budget (PIB)
Monitoring and evaluation
system not operational in
2015
Revised monitoring system
that facilitates the
preparation of a
comprehensive report on
PIB implementation
DGE activity report
1.2 Support for
improvement of the public
procurement system
1.2.1 Public Procurement
Capacity Building Strategy No strategy in 2015 Strategy available in 2017
Copy of the strategy
adopted by ARMP
1.2.2 System for information
and archiving of public
procurement data and
documents
No integrated information
and archiving system
Archiving system
operational in 2018 ARMP activity report
1.2.3 Regular public
procurement audits (ARMP)
Irregular public procurement audits since
2010
Public procurement audits conducted on time from
2015 to 2019
ARMP activity report
Component 2: Support for strategic planning and management in the transport and energy sectors
2.1 Support for the strategic
planning of investments in
transport infrastructure and
road maintenance
management
2.1.1 Strategy for developing
infrastructure project maturation activities in MINTP
No strategy infrastructure
project maturation strategy
implemented in collaboration with other
sector ministries in 2015
Strategy prepared and
implemented as from 2018
Report of the MINTP
Department for Studies
2.1.2 Diagnostic study report
on road maintenance with a
view to reforming the sub-
sector
No holistic study on road
maintenance issues (assessment of road
maintenance through
privatization, road
maintenance under own
management; performance
of SMEs and their
contracting process ...)
Study report available in
2018 together with a
reform proposal
Report of the MINTP
Department for
Studies
2.1.3 SME database at MINTP
for better management of SME
stakeholders involved in road
maintenance
No SME database in 2015 Database operational in
2018
Report of the MINTP
Department for
Studies
vii
RESULTS CHAIN
PERFORMANCE INDICATORS MEANS OF
VERIFICATION RISKS/ MITIGATION
MEASURES
Indicator
(including ISCs) Baseline situation Target
2.1.4 Number of road sector SMEs trained in the following
areas: tendering, contract
management, further training
for drivers and mechanics
No training in 2015
At least 50 SMEs trained
per year from 2016 to
2020, of which 30% are
owned by women
MATGENIE progress
report
2.2 Support the
improvement of energy
sector management and
regulatory framework
2.2.1 Study report on the
review of the institutional
framework of MINEE to
clarify stakeholder roles and responsibilities
No study in 2015 Study with proposals
available in 2018
Report of the MINEE
Directorate for
Energy
2.2.2 National energy
efficiency plan and its
institutional framework
No up-to-date national
energy efficiency plan in
2015
Up-to-date plan available
in 2018
Report of the MINEE Directorate for
Energy
Report of the MINEE
Directorate for
Renewable Energy 2.2.3 Preparation of a
renewable energies ATLAS
No renewable energies
ATLAS in 2015 ATLAS available in 2019
2.2.4 Establishment of a
framework for facilities
management and audit of
electrical systems (EDC).
No reliable framework of
managing the country’s
electricity facilities in 2015
System available in 2017 EDC progress report
2.2.5 Number of EDC
employees trained in financial/legal engineering and
project preparation techniques
under a PPP in the energy
sector
No training conducted in
2015
At least 10 persons trained per year from 2016 to
2020, of which 30% are
women
EDC progress report
KE
Y A
CT
IVIT
IES
COMPONENTS RESOURCES
Components Foreign
Exchange L.C Total Percentage
1. Support for public investment project maturation and procurements 4.370,8 3.144,2 7.515,1 32%
1.1 Support to improve the planning and monitoring-execution of public
investments
1.926,1 1.597,9 3.524,0 15%
1.2 Support for improvement of the public procurement system 2,444.7 1,546.4 3,991.1 17%
2. Support for strategic planning and management in the transport and
energy sectors
9,775.1 2,890.6 12,665.7 54%
2.1 Support for the strategic planning of investments in transport infrastructure and road maintenance management
4,253.0 1,617.9 5,871.0 25%
2.2 Support for improvement of the energy sector management and regulatory framework
5,522.1 1,272.7 6,794.8 29%
Project Management 225.4 2,043.8 2,269.2 10%
TOTAL BASE COST 14,371.3 8,078.7 22,450.0 95%
Contingency costs 718.6 351.9 1,070.5 5%
TOTAL PROJECT COST 15,089.9 8,430.6 23,520.5 100%
ADF 6,258.6 4,951.4 11,210.0 47.7%
ADB 8,831.3 2,438.7 11,269.9 47.9%
GOV’T 0.0 1,040.5 1,040.5 4.4%
1
REPORT AND RECOMMENDATIONS OF BANK GROUP MANAGEMENT TO THE BOARD OF DIRECTORS
CONCERNING A PUBLIC EXPENDITURE EFFICIENCY IMPROVEMENT SUPPORT PROJECT (PAEDEP) IN
THE REPUBLIC OF CAMEROON
Management submits this report and its recommendation on a proposal to award an African
Development Fund (ADF) loan of UA 11,210,000 and an ADB loan of EUR 14,200,000 to the
Government of the Republic of Cameroon to finance the Public Expenditure Efficiency Improvement
Support Project (PAEDEP).
I Strategic Thrust and Rationale
1.1. Project Linkage to Country Strategy and Objectives
1.1.1. The country's priority development pillars are defined in the 2010-2020 Growth and
Employment Strategy Paper (GESP). These pillars seek to: (i) raise the average annual growth rate to
5.5% during the 2010-2020 period; (ii) cut underemployment from 75.8% to at least 50% by 2020; and
(iii) reduce the monetary poverty rate from 39.9% in 2007 to 28.7% by 2020. To achieve the above
objectives, the Government intends to adopt a coherent integrated approach by implementing a three-
pronged strategy comprising: (i) a growth strategy; (ii) a jobs strategy; and (iii) a State governance and
strategic management improvement strategy. PAEDEP falls under GESP implementation since it is
aimed at achieving the following fundamental national development strategy objectives: (i) gradually
raise the share of public investment in total State spending from 20% to 30% (by 2020); (ii) allocate
resources massively to major public investment projects; and (iii) significantly simplify procurement
procedures.
1.1.2. Similarly, the project is consistent with two of the five operational priorities of the Bank’s
2013-2022 strategy, especially those relating to “infrastructure development” and “governance and
accountability”. It also facilitates the attainment of two of the Bank’s High Five priorities, namely: To
industrialize Africa; and to light up and power Africa. Lastly, the operation is consistent with two pillars
of the Bank’s 2015-2019 Country Strategy Paper (CSP) for Cameroon, namely: (i) consolidating
infrastructure to ensure inclusive and sustainable growth, and (ii) strengthening sectoral governance
to ensure the effectiveness and sustainability of structuring investments. The second CSP Pillar is aimed
at strengthening governance, particularly in the transport and energy sectors which receive most of the
Government’s key investments (over 27% of the public investment budget in 2014), and are also the
focus of Bank operations (78% of the active portfolio). Finally, the consolidation actions supported by
the project are consistent with Pillar I (Public sector management and economic management) and Pillar
II (sector governance) of the Bank’s Strategic Framework and second Governance Action Plan (GAP
II) 2014-2018.
1.2. Rationale for Bank Involvement
1.2.1 Over the past five years, the Government has embarked on the implementation of a vast public
investment programme to close the country's economic infrastructure gap. The shortage of key
infrastructure and the resulting increase in the cost of production factors are some of the stumbling
blocks to Cameroon's development. In 2014, the Government developed an emergency programme,
endowed with significant financial resources and more flexible mechanisms to accelerate the
implementation of structuring projects. In 2015, the Bank awarded the country a partial credit guarantee
to help raise funds to finance the emergency programme. However, annual implementation rates of the
various public investment budgets (PIB) have remained low and fail to permit the optimal absorption
of resources. Poor project quality at entry and bottlenecks in the public expenditure chain are the main
constraints responsible for this situation. The poor sustainability of certain works and ineffective
regulation in key sectors, including energy, have also been cited as some of the factors that negatively
affect the development of infrastructure needed to improve the well-being of the people. In granting a
partial credit guarantee to the Government, the Bank undertook to support the country in the maturation
of the projects within the emergency investment programme.
2
1.2.2 This project constitutes the first phase in a series of future support initiatives to eradicate the
major institutional and organizational bottlenecks that the Cameroonian Government has to grapple
with in public finance management (PFM) as well as transport and energy sector governance. On the
whole, the project is aimed at strengthening the institutional framework as well as the maturation,
programming and implementation public investments, while supporting the modernization and
streamlining of the fiduciary framework to ensure a sustainable improvement in public spending
efficiency. At the sectoral level, it will improve the sustainability of investments and the regulatory
framework in the transport and energy sectors.
1.2.3 Public Finance Management (PFM): Following the public expenditure and financial
accountability (PEFA) review conducted in 2007, the Government adopted the Law on State Fiscal
Regime (LSFR) on 26 December 2007, thus introducing the concept of results-based management
(RBM). A public finance modernization plan, adopted in December 2009 and updated in 2012, led to
significant achievements in streamlining budget management in Cameroon over the last five years. It
focuses on: (i) the adoption of multi-year budgeting that includes the Medium-Term Expenditure
Framework (MTEF) and programme budgets from 2013; (ii) the creation of the Inter-Ministerial
Programme Review Committee (CIEP) and; (iii) the establishment of Planning-Programming-
Budgeting-Monitoring and Evaluation (PPBME) units in sector ministries. Despite these encouraging
developments, the PFM system is still undermined by several challenges.
1.2.4 Indeed, the legal framework remains incomplete, thus undermining the monitoring and control
of budget execution. In terms of strategic planning, the programme budget still lacks clarity since there
are no sectoral strategies and Priority Action Plans (PAPs) based on the GESP. As regards programming
and budgeting, almost half of the public investment projects fail to satisfy the maturity and technical
preparation conditions and criteria. Consequently, there is no control over the project cycle and this
leads to under-consumption of the PIB. There are no good quality projects within the PIB, primarily
due to the very limited budgetary resources allocated to project studies by various sector ministries, as
well as the weak capacity of the Departments of Studies in these ministries to design projects internally.
As regards expenditure execution, the sole major achievement is the devolution of payment
authorization powers. The expenditure flow remains characterized by: (i) its protracted nature,
complexity and excessive recourse to waivers; and (ii) the practice of budgetary over-regulation which
leads to low consumption of appropriations. Reform of the public procurements system, introduced in
2012 through the creation of a Ministry of Public Contracts, has also given rise to inefficiency thus
underscoring the need for clarification of responsibilities and stakeholder capacity building. Lastly, the
PFM information system, composed of several, often compartmentalized, elements, also undermines
integrated budget management. The Autonomous Sinking Fund (CAA), which manages the public debt
and especially disbursements for investment projects funded by TFPs, is undermined by the fact that
the main software (CSDRMS) used by its services is obsolete and cannot integrate with other
management tools. Cameroon’s governance performance under the Mo Ibrahim index has regressed
from 49.9% in 2008 to 45.9 in 2014, although it remains above the Central African average (40.9%).
1.2.5 To address these shortcomings, the Government decided to build the national capacity for
budget planning and programming, project preparation/appraisal and loans/disbursements management.
It also plans to set up a project maturation fund to finance studies that will guarantee the quality projects
under the PIB. As regards public procurement, the Government convened a team of national experts in
2015 to review the procurement code.
1.2.6 After consultation with other technical and financial partners meeting within the Public
Finance Sectoral Committee (CSFP), the Bank decided to focus its support under this project on the
following public finance modernization pillars: (i) improvement of the planning, programming and
budgeting of investment expenditure; (ii) improvement of the procurement system; and (iii)
strengthening of the monitoring and evaluation mechanism.
3
Other TFPs within the CSFP will support the Government to improve information systems used in fiscal
resource management, public accounting and control systems. In Phase II of this project, the Bank will
expand its operations to other areas of public spending that have not been adequately covered by other
TFPs.
1.2.7 Transport Sector: The road transport sub-sector accounts for approximately 25% of public
investments. While budget expenditure in this sector has increased in absolute terms in recent years, its
performance has remained below the performance targets set by the authorities. Over 90% of initiated
projects are not completed within the prescribed timeframe. Cumbersome expenditure initiation
procedures, a sluggish procurement process and a protracted payments system all account for this
situation. Consequently, public spending on the road sub-sector still has only a very limited impact on
economic competitiveness. Contrary to the trend in sub-Saharan Africa, transport costs decline rather
slowly, despite a demand increase of over 15% annually.
1.2.8 As regards road maintenance and contrary to the trend in many sub-Saharan African countries,
management of the classified road network has not yet been assigned to a specialized road agency.
According to Decree No. 2013/334 of 13 September 2013 to organize the Ministry of Public Works
(MINTP), road network management falls under the General Directorate for Infrastructure Works. The
Road Fund (RF) established in 1998 and operational since 1 January 1999 is tasked with (i) raising
funds; (ii) safeguarding resources earmarked for the maintenance of priority and urban roads; and (iii)
ensuring that companies are paid for their services. This special public administrative body is placed
under the technical supervision of the Ministry of Public Works and the financial supervision of the
Ministry of Finance (MINFI). From its inception until 2011, the RF has operated as a first-generation
road fund. On account of the single treasury account principle applied through the law governing the
State financial system, the RF lost the autonomy that is crucial to its status and optimal functioning. The
consequence of this new situation has sometimes been protracted payment delays, deterioration of the
financial situation of service providers, and the RF’s loss of credibility vis-à-vis commercial banks.
Hence, this principle has become a threat to the effective implementation of the road maintenance
program and the sustainability of road infrastructure. The Government is studying the options for
upgrading the RF into a second-generation road fund. In its dialogue with TFPs and following the
National Road Council (CONAROUTE) session of May 2015, the Government is considering a
proposal to develop a plan in this regard.
1.2.9 Apart from the abovementioned financial difficulties, the SMEs operating in the sub-sector
also face technical constraints in terms of access to road maintenance equipment and the low
qualification of the staff tasked with management and maintenance of such equipment. The project
seeks to improve transport sector governance in the areas of planning, monitoring and evaluation as
well as road maintenance management. It will help to establish a database for SMEs and to build their
capacity in partnership with MATGENIE training centres.1
1.2.10 Energy Sector: The energy sector accounts for approximately 12% of public investments in
Cameroon. Significant investments have been made in this sector which, together with the transport
sector, accounted for 78% of Bank investments in Cameroon in 2014. A public expenditure review in
the energy sector conducted in 2014 with Bank support, helped to identify several shortcomings that
undermine investment efficiency in the sector. These include: (i) ill-adapted planning and decision-
making tools; (ii) institutional and regulatory shortcomings stemming from the absence of enabling
instruments for the 2011 electricity law and a failure to clarify the roles, duties and responsibilities of
key stakeholders in the electricity sub-sector; and (iii) the ill-adapted institutional capacity of key sector
stakeholders, including: the Ministry of Energy and Water Resources (MINEE), the Electricity Sector
1 The National Civil Engineering Equipment Pool (MATGENIE) is an industrial and commercial public body (EPIC) whose mission is to: (i) procure,
maintain, renew and lease out equipment used by administrative services and local government structures for the construction and maintenance of the
national road network; (ii) provide the same services, for a fee, to the private sector; and (iii) train public sector staff and SMES in the maintenance and operation of construction machinery.
4
Regulatory Agency (ARSEL), the National Electricity Transmission Company (SONATREL), the
Electricity Development Corporation (EDC) and the Rural Electrification Agency (AER).
1.2.11 As regards planning and decision-making tools, although MINEE prepared a Sector Strategy
Paper in 2011, the electricity sub-sector has no master plan to date. A certain number of reforms have
been made in the legal, institutional and regulatory framework. These include the promulgation of the
electricity law in 2011 and the establishment of many entities to manage the facilities (EDC), manage
the electricity transmission network (SONATREL), develop rural electrification (AER), and develop
and regulate renewable energy (ARSEL).
1.2.12 Furthermore, this institutional mechanism is still fraught with constraints related to interference
among the various stakeholders, legal framework shortcomings and the fact that the entity managing
power transmission networks is not yet operational. Clarification of the roles, duties and responsibilities
of key stakeholders in the electricity sub-sector is crucial to optimization of the initiatives and
investments made. Meanwhile, ARSEL capacity and mechanisms need to be built in the areas of
consumer protection, service quality regulation and control, and information systems strengthening. The
specific support provided to the electricity sub-sector under this project is aimed at helping the country
address the abovementioned challenges by building stakeholder capacity to conduct studies, and
providing them with planning and decision-making tools.
1.3. Aid Coordination
1.3.1 Aid coordination and cooperation with donors is the responsibility of the Ministry of the
Economy, Planning and Territorial Development (MINEPAT). The Bank's focal point is the Department
for Regional Integration (DIR) within MINEPAT. In compliance with the Paris Declaration’s alignment
principle, TFPs strive to align their operations on the GESP and contribute to the achievement of its
priorities. The Bank is an active member of the Multi-Partner Committee (CMP), and thus participates
in the thematic working groups that serve as a forum for discussion and coordination of the activities of
development partners in the country. After serving as the lead donor of the Public Finance Sector
Committee (CSFP) from 2009 to 2014, the Bank assumed chairmanship of the Transport Sector
Committee in December 2014. Bank operations in the public finance sector are prepared in consultation
with other CSFP members, including the World Bank, IMF, European Union, France and GIZ. Annex
3 presents the focus areas of each TFP and their respective positions under the various public finance
reform pillars.
1.3.2 Almost all projects in the transport and energy infrastructure sectors are co-financed with the
other development partners (World Bank, Japanese International Cooperation Agency (JICA), French
Development Agency and the Development Bank of Central African States). A new platform for
dialogue with MINEPAT was established in early 2016 on issues relating to public procurements,
exemptions/compensation and procedures for the use of the budget support instrument in Cameroon.
Annex 5 presents the respective positions of various TFPs in Cameroon. During the identification,
preparation and appraisal missions of the project, the Bank team held discussions with these key TFPs.
These discussions led to a harmonization of views on, inter alia, the project components and road
maintenance financing. All these partners recognized the importance and relevance of this project which
is perfectly consistent with the operations of other partners.
II Project Description
2.1 Project Components
2.1.1 The general objective of the project is to improve fiscal management and enhance the impact
of public spending in the energy and transport sectors. Specifically, the project seeks to achieve the
following outputs: improve public investment planning and programming in general and within the
5
energy and transport sectors in particular; improve the maturation and budgeting of public investments;
improve the public procurement control and audit system; improve the public investments monitoring
and evaluation system; improve road maintenance management; and improve quality regulation and
control in the energy sector.
2.1.2 The project has 3 (three) components, namely: (i) support the maturation of public investment
projects and procurements; (ii) support strategic planning and regulation in the transport and energy
sectors; and (iii) project management. The table below summarizes the project components, sub-
components and the main activities to be implemented.
Table 2.1-1
Project components and cost estimates (in UA million)
Components Description of Components
Component 1 – Support the maturation of public investment projects and procurements UA 7.51
million
Support project
maturation and
monitoring and
evaluation of the
execution of public
investments
UA 3.52 million
Revise the methodological guidelines and the investment project maturation framework;
Provide training in project development and ex-ante assessment of the economic and financial impact of projects;
Establish a project databank at DGEPIP, endowed with project maturation monitoring features; Conduct a study on and establish a project maturation fund;
Provide an initial endowment to operationalize the project maturation fund;
Ensure the maturation of transport and energy sector projects: FDS and PDS for road projects under the emergency program; comprehensive studies on 5-10 hydroelectric sites;
Establish mechanisms and a system for monitoring and evaluation of the PIB;
Provide the CAA with technical assistance in translating the debt management software (CSDRMS) into French and staff training.
Support improvement
of the public
procurement system
UA 3.99 million
Develop a capacity-building strategy on public procurements at the ARMP and support of its implementation
(arrangements for setting up a training centre at the ARMP; publication and dissemination of collections of public
procurement texts and standard documents);
Establish an information and archiving system for public procurement data and documents at the ARMP and MINMAP;
Assess the performance of independent observer missions and assist in the optimization of public procurement audits
conducted by the ARMP; Support the ARMP to engage in routine public procurement audits (technical assistance and funding of audits at least
for the years 2015 to 2017);
Build the capacity of ARMP/MINMAP staff and stakeholders involved in the award and control of public contracts.
Component 2: Support strategic planning and regulation in the transport and energy sectors
Support strategic
planning and
regulation in the
transport sector
UA 5.87 million
Institutional framework:
(i) Formulate a strategy to develop the activities of the Directorate General for Technical Studies within the process of infrastructure project maturation and implementation support;
(ii) Conduct a diagnostic study on the road maintenance framework with a view to engaging in sub-sector reform
(assessment of road maintenance privatization, Road Fund performance evaluation; road maintenance under own
management; SME performance and contracting process; road maintenance planning and programming performance;
reform proposal).
Management tools and systems
(i) Procure software for Interactive Mapping of Infrastructure Projects;
(ii) Update the project management and budget programming software (STRATEGIC);
(iii) Development an SME database at MINTP for better management of SME stakeholders involved in road maintenance.
Training
(i) Provide training in RBM; planning and development of MTEFs/ programme budgets; monitoring and evaluation;
(ii) Build stakeholder capacity in the management of road maintenance by service level (GENIS);
(iii) Build the capacity of SMEs involved in road maintenance (training in tendering procedures, contract management, mechanics and maintenance of technical equipment in MATGENIE training centres).
6
Support strategic
planning and
regulation in the energy
sector
UA 6.79 million
Institutional framework: Support in revising the institutional framework of MINEE in order to clarify the roles and
responsibilities of stakeholders: MINEE; ARSEL; AER; FEICOM; SONATREL, EDC (study and proposal of a new
institutional framework).
Strategic Planning: Development of an electricity sub-sector master plan; Update of the National Energy Efficiency
Plan and its institutional framework (MINEE); Capacity building in project planning and maturation, preparation of MTEFs and monitoring and evaluation for MINEE, ARSEL, SONATREL, EDC, AER (training and technical assistance
to these structures).
Management tools and systems: (i) Establish a system for facilities management and audit of electrical systems at EDC (technical assistance and
training);
(ii) Establish a modern electricity regulation system covering the following domains: (i) consumer protection and service quality regulation; (ii) mechanisms for controlling concessionaires in the performance of their public service tasks and
rate payment aspects; (iii) strengthening of the information systems (technical studies, procurement of technical
equipment, software, training); (iii) Prepare of a renewable energy ATLAS in Cameroon (studies, technical assistance, field surveys, publication of the
ATLAS, training in renewable energy development); and
(iv) Conduct a study on modelling of the electricity transmission network and procure specialized software for planning and modelling of electricity transmission structures, including staff training on the use of such structures;
Technical training of stakeholders in the following areas: electricity generation tools for rural areas not connected
to the national grid; quality standards in the evaluation of energy efficiency; financial/legal engineering and project design techniques under a PPP in the energy sector.
Component 3 Project management UA 2.26 million
TOTAL BASE COST UA 22.45 million
2.1.3 Technical Annexes C and B2 present the activities and detailed costs per component as well as
a comprehensive list of the goods and services to be procured under the project.
2.2 Technical Solutions Adopted and Alternative Solutions Considered
2.2.1 During project preparation and appraisal, the Bank explored several options relating to areas
of intervention, the number of institutions or beneficiaries to be supported and the type of capacity
building to be provided. One of the options pertaining to the key issue of project maturation was to fund
only the establishment of the institutional framework and capacity building for various stakeholders.
This option was rejected because of its limited impact. It was agreed that, in addition to capacity
building, consideration should also be given to the establishment of a project maturation fund and the
conduct of a certain number of technical studies with a view to developing mature projects for the
emergency programme. The project maturation fund will be established through a participatory process
with the support of technical assistance financed by the project. The fund will initially be provisioned
with national counterpart funds and an endowment provided for under the project. Operating
mechanisms and the fiduciary framework for management of the Fund must be deemed satisfactory by
the Bank and other PTFs. Ultimately, the Fund will receive resources from the other TFPs and the
national budget to ensure its sustainability.
2.3 Type of Project
2.3.1 PAEDEP is an institutional support project funded by an ADF loan and an ADB loan.
Cameroon has not yet fulfilled the criteria for programme-based operations, which are the ideal
framework for conducting reforms. Dialogue is ongoing with the Government and other TFPs to ensure
that the country benefits from such an instrument. In the meantime, institutional support remains the
best instrument for improving governance in public finance management and in the key economic
sectors (energy and transport). Through such support, the Bank also intends to consolidate the capacity
building already provided through investment projects in the energy and transport sectors.
7
2.4 Project Cost and Financing Mechanisms
2.4.1 The total project cost, net of taxes and customs duties, is estimated at UA 23.52 million (or
CFA.F 19.43 billion2), comprising UA 15.8 million in foreign exchange (64%) and UA 8.43 million in
local currency (36%). These costs include a 2% provision for physical contingencies and a 3% provision
for price increase, for expenditures in both foreign exchange and local currency. The ADF contribution
to project funding is UA 11.21 million, and covers the financing of equipment, training and technical
assistance, as well as a part of the operating costs. ADB funding amounts to EUR 14.2 million
(approximately 11.26 million) and principally covers the cost of equipment and feasibility studies of
energy and transport sector projects. The Government counterpart contribution is UA 1.04 million (or
4.4% of the total project cost3) and essentially covers financing of an initial provision for the project
maturation fund and operating costs. The tables below provide more details on the overall project costs
by component, expenditure category and funding source. The table of detailed costs is presented in a
technical annex.
Table 2.4-1
Estimated project cost by component
Components/Sub-components
Amounts (in CFA.F billion) Costs (in UA million)
%
Total Foreign
exchange
Local
currenc
y
Total Foreign
exchange
Local
currency Total
1. Support for the maturation of public
investment projects and procurements 3,612.5 2,598.7 6,211.2 4,370.8 3,144.2 7,515.1 32%
1.1 Support for improvement of the planning and monitoring and execution of public investments
1,592.0 1,320.6 2,912.6 1,926.1 1,597.9 3,524.0 15%
1.2 Support for improvement of the public
procurement system 2,020.5 1,278.1 3,298.6 2,444.7 1,546.4 3,991.1 17%
2. Support for strategic planning and
management in the transport and energy
sectors
8,079.1 2,389.1 10,468.2 9,775.1 2,890.6 12,665.7 54%
2.1 Support for the strategic planning of
investments in transport infrastructure and road
maintenance management
3,515.1 1,337.2 4,852.3 4,253.0 1,617.9 5,871.0 25%
2.2 Supporting the improvement of the energy sector management and regulatory framework
4,564.0 1,051.9 5,615.9 5,522.1 1,272.7 6,794.8 29%
Project Management 186.3 1,689.2 1,875.5 225.4 2,043.8 2,269.2 10%
TOTAL BASE COST 11,877.9 6,677.0 18,554.9 14,371.3 8,078.7 22,450.0 95%
ADF 4,926.4 3,897.4 8,823.9 5,960.6 4,715.6 10,676.2 48%
ADB 6,951.5 1,919.6 8,871.0 8,410.7 2,322.5 10,733.3 48%
GOV’T 0.0 860.0 860.000 0.0 1,040.5 1,040.533 5%
Provision for physical contingencies (2%) 237.6 116.3 353.9 287.4 140.8 428.2 2%
Provision for price increase (3%) 356.3 174.5 530.8 431.1 211.1 642.3 3%
TOTAL PROJECT COST 12,471.8 6,967.9 19,439.6 15,089.9 8,430.6 23,520.5 100%
Table 2.4-2
Estimated project costs by component and financing source (in UA thousand) Financing source Cost in
foreign
exchange
Cost in
local
currency
Total cost
in UA
%
ADF 6,258.63 4,951.37 11,210.00 48%
ADB 8,831.26 2,438.67 11,269.93 48%
Government 0.00 1,040.53 1,040.53 4%
Total cost 15,089.89 8,430.57 23,520.46 100%
2 At the exchange rate prevailing at appraisal in July 2016 (UA 1 = CFA.F 826.499) 3 Annex 3 presents the rationale for the relatively low level of Government contribution.
8
Table 2.4-3
Project cost by expenditure category (in UA million)
Expenditure categories
Cost in
foreign
exchange
(UA)
Cost in local
currency
Total cost
in UA %
A. Goods 2,044.1 546.4 2,590.4 11%
B. Services 11,937.7 4,572.5 16,510.2 71%
Technical assistance 10,476.6 3,217.4 13,694.0 59%
Training 1,461.1 1,355.1 2,816.2 12%
C. Operating costs 33.9 1,984.6 2,018.4 9%
D. Miscellaneous (maturation
fund) 355.7 636.4 992.1 4%
Total baseline cost 14,371.3 7,739.9 22,111.2 95%
Provision for physical contingencies
287.4 140.8 428.2 2%
Provision for price escalation 431.1 211.1 642.3 3%
Total project cost 15,089.9 8,091.8 23,181.7 100%
Table 2.4-4
Expenditure schedule by component (in UA thousand) Components/Sub-components 2017 2018 2019 2020 Total
1. Support for the maturation of public investment projects and
procurements 549.6 3,136.5 2,452.3 1,376.7 7,515.1
1.1 Support for the improvement of the planning and monitoring
and execution of public investments 157.3 1,397.0 1,247.5 722.3 3,524.0
1.2 Support for improvement of the public procurement system 392.3 1,739.5 1,204.9 654.4 3,991.1
2. Support for strategic planning and management in the
transport and energy sectors 1,766.2 4,887.7 3,296.4 2,715.5 12,665.7
2.1 Support for the strategic planning of investments in transport
infrastructure and road maintenance management 677.9 1,775.9 1,679.5 1,737.6 5,871.0
2.2 Supporting the improvement of the energy sector management
and regulatory framework 1,088.3 3,111.9 1,616.8 977.8 6,794.8
Project Management 721.8 515.8 515.8 515.8 2,269.2
TOTAL BASE COST 3,037.5 8,540.0 6,264.5 4,607.9 22,450.0
2.5 Project Area and Beneficiaries
2.5.1 The project area is the entire national territory of Cameroon. The direct project beneficiaries
are: the Ministry of the Economy, Planning and Territorial Development (MINEPAT), the Ministry of
Finance (MINFI), the Ministry of Public Contracts (MINMAP), the Ministry of Public Works (MINTP),
the Ministry of Energy and Water Resources (MINEE), the Public Contracts Regulatory Agency
(ARMP), the Electricity Sector Regulatory Agency (ARSEL), the National Electricity Transmission
Company (SONATREL), the Autonomous Sinking Fund (CAA), the Road Maintenance Fund (RMF),
the Rural Electrification Agency (AER), the Electricity Development Corporation (EDC), and the
National Civil Engineering Equipment Pool (MATGENIE). The indirect beneficiaries are: the
contracting agencies of the national public procurement system; PPBME units and programming-
budgeting officers in sectoral ministries; electricity production and distribution entities; and private
companies, especially those operating in the domains of public works, road maintenance and energy.
The final beneficiaries of the project are the national population, particularly women and the youth
whose concerns are better addressed through more effective budget management aligned on sector
strategies and focusing on job creation, with due consideration for equity, gender balance and inclusive
growth.
2.6 Participatory Approach to Identification, Design and Implementation
2.6.1 During project preparation, broad-based consultation was organized with stakeholders from
the public sector, private sector, Cameroonian civil society as well as technical and financial partners
represented in Cameroon. Consultations were held during meetings between the Bank team and the
officials from these structures. Most of the structures made detailed requests to the Bank in form of a
project information sheet. These requests formed the basis of discussions during project appraisal. This
9
approach, as well as the findings of public finance management diagnostic studies (PEFA, Public
Finance Modernization Plan) and the study on public expenditure efficiency, enabled the appraisal team
to better understand the constraints and challenges faced by the beneficiary structures of the project and
to factor their real needs into the design of project components. Most project sub-components provide
for capacity-building activities for non-State actors (civil society and private sector) especially on the
public procurement system (training, awareness-raising on the themes of transparency) and on the
development of an SME database for better management of SME stakeholders involved in road
maintenance etc.
2.7 Bank Group Experience and Lessons Reflected in Project Design
2.7.1. In the area of governance, the Bank’s sole ongoing operation is the Support Project for
Modernization the Land Registration System and the Business Climate (PAMOCCA) approved in
November 2010.4 This project which focused on four cities of the country, received additional support
in 2013 to expand its activities to several other regions of the country. The commitment rate of ADF
resources under the project is estimated at approximately 80%, with a disbursement rate of 33%. The
excessively protracted nature of the procurement process in general, especially for the two largest
technical assistance contracts of the project, is primarily responsible for the low disbursement rate.
Thanks to increased monitoring and dialogue with the main contracting authority in the country, namely
the Ministry of Public Contracts (MINMAP), these two contracts and almost all other contracts have
now been signed, and activities have started. Apart from PAMOCCA, the Bank has funded several past
operations that have now been completed. The last operation was a governance reform support project
(GRSP) implemented in 2006-2012. The objectives of this project were to: (i) improve the efficiency
of public administration and the judicial system; (ii) improve public finance management (capacity
building for internal and external budget control structures and procurement system); and (iii) intensify
corruption control. The GRSP yielded mixed results, with an implementation rate of approximately
35%, after three years of extension. The completion report (ADF/BD/IF/2012/220) prepared in
November 2012 awarded a total score of 2/4 for the implementation of activities. According to the
report, the weak ownership of the project at the national level, the overly broad range of areas covered,
and the weak capacity of the project implementation unit were the main stumbling blocks to the
achievement of results.
2.7.2. These poor results were corroborated by the assessment conducted by IDEV in 2014 on the
implementation of the Bank's strategy and programme in Cameroon during the 2004-2013 period. In
addition to the above shortcomings, the IDEV report noted weak ownership of scheduled reforms by
the political authorities, and the Bank’s failure to factor the country's actual absorption capacity into the
design of operations. The report recommended better orientation of policy dialogue through targeted
analytical studies and proper consultation with other TFPs and civil society to generate strong demand
for enhanced internal governance. These recommendations were factored into the design of the current
operation. Indeed, the Bank, in consultation with other TFPs, has intensified dialogue with the
authorities on various development issues covered by the project. These include the maturation of
investment projects, reform of the procurement system, road maintenance efficiency, as well as
regulation and stakeholder capacity building in the electricity sector. This dialogue, which is conducted
within the Multi-Partner Committee (CMP), is underpinned by diagnostic studies carried out by the
Bank and other TFPs, namely the public expenditure efficiency study and the energy and transport
sector expenditure review. The project is based on the authorities’ firm commitment to implement
reforms in the various areas covered, namely: (i) public finance reform; (ii) revision of the public
procurement code; (iii) Road Fund and road maintenance management reform; and (iv) the
improvement of electricity sub-sector regulation. The project intends to support the Government in the
implementation of these key reforms.
4 Annex 2 presents an analysis of the Bank’s portfolio performance in Cameroon.
10
2.7.3. To accelerate project implementation, it was decided that focal points be designated in each
beneficiary structure and tasked with coordinating the drafting of terms of references and other technical
specifications of the studies to be conducted or of the equipment to be procured. During the project
preparation process, several beneficiary structures prepared preliminary terms of reference which were
submitted to the Bank. This will enable the commencement of procurements as soon as the loans become
effective.
2.8 Key Performance Indicators
2.8.1. The key performance indicators identified to measure expected outcomes at project completion
are presented in the results-based logical framework. These are essentially:
Project impact: GDP growth rate maintained at an average 5.5% from 2016 to 2020.
Project outcomes: (i) Investment budget implementation rate of at least 70% in 2020
compared to less than 50% in 2014; (ii) road maintenance budget implementation rate of
at least 75% by 2020 compared to 41.9% in 2014; and (iii) new customers’ electricity
connection rate of 40% in rural areas in 2020 compared to 35% in 2014.
Component 1 outputs: (i) All sectoral Priority Action Plans prepared by the end of 2017;
(ii) project data bank operational at DGEPIP in 2017; (iii) project maturation fund
operational in 2018; (iv) at least six comprehensive road project studies and five
comprehensive hydroelectricity site studies conducted between 2016 and 2016; (v)
exhaustive reports on monitoring and evaluation of the PIB from 2018; (vi) public
procurement audits conducted on time between 2016 and 2020; and (vii) public
procurement information and archiving systems operational in 2018.
Component 2 outputs: (i) Upgrade of the Road Maintenance Fund into a second-
generation fund; (ii) establishment of a database for SMEs involved in road maintenance
and training of SMEs; (iv) electricity sector master plan prepared in 2017; (v) renewable
energy ATLAS prepared by 2019; and (vi) modern systems established in 2018 for the
regulation and management of electricity sector facilities.
2.8.2. Progress towards the achievement of outcomes will be measured at regular intervals, using
various means, including: regular supervision missions from the Bank, submission of quarterly progress
reports, and the study of some outputs such as audit reports and minutes of focal point meetings held
under the guidance of sector experts, which will also serve as an important tool for coordinating
beneficiary structures and the executing agency. Objectively verifiable evidence of progress towards
achievement of the main targets will be obtained from reports, and quarterly portfolio monitoring
meetings organized by CMFO with the implementing units of Bank projects in Cameroon.
III Project Feasibility
3.1 Economic and Financial Performance
3.1.1. This project does not generate direct revenue that makes it possible to get a financial return on
investment. Its performance evaluation, therefore, focuses on the direct and indirect effects of its
economic and social achievements in the medium and long terms. In terms of its impact on economic
performance, it should be noted that PAEDEP implementation will provide Cameroon with greater
capacity and modern management tools across sectors and in the management of public investments.
Indeed, the project is expected to sustainably improve the quality of the State’s economic and financial
management, the efficiency of the expenditure process and the quality and relevance of public
investment projects.
11
3.1.2. Furthermore, enhanced capacity to develop MTEFs will make it possible to have a global
vision of the budget in the medium term and guarantee optimal allocation of resources to priority areas.
Besides, consolidation of the expenditure process through better project maturation and monitoring
should have a positive impact on the achievement of GESP development objectives. Indeed, more
rational use of the resources allocated to investments enhances macroeconomic and sectoral
management efficiency, leading to greater efficiency in economic and social programmes designed to
combat poverty. The resulting streamlined management will be an advantage for the Government in its
dialogue with TFPs that will be more likely to support economic programmes that are better designed
and consistent with national priorities. Ultimately, the expected outcome should be the consolidation of
economic growth thanks to a greater multiplier effect generated by public investments.
3.2 Environmental and Social Impact
Impact on the Environment and Climate Change
3.2.1 Project activities will have no negative impact on the environment. Consequently, the project
is classified in environmental category 3. Furthermore, the project is expected to finance the
environmental impact assessments for transport and energy sector projects. Besides, its activities on
human and institutional capacity building have no negative impact on climate change.
Social and Gender Aspects
3.2.2 Social Impact: The objective of the project is to increase the Government's capacity to
implement reforms and manage public resources efficiently and effectively. Hence, it will strengthen
and leverage the impact of the national budget on the provision of services and improve implementation
of the investment budget in priority areas, in accordance with GESP strategic pillars. Sound public
finance management is necessary to ensure that budget planning is conducive to macroeconomic
stability and the existence of a solid foundation for the provision of high quality services to the public.
The project will also yield positive externalities through the procurement of goods and services from
local small and medium-sized enterprises (SMEs), thus boosting business in these entities. Similarly,
the use of a significant number of supervisors, investigators and local data entry operators should boost
incomes and stimulate domestic consumption. Improvement of the situation of SMEs and electricity
sub-sector operators should, in turn, benefit the State budget in terms of the VAT and taxes that these
economic operators are expected to pay. Project implementation will therefore have a positive economic
and social impact.
3.2.3 Impact on Gender: Women constitute 50.6% of Cameroon's population estimated at 22.8
million inhabitants in 2014. They are moderately represented in political institutions such as the Senate
(21%), the National Assembly (31.1%), and the Government (14.5%). This notwithstanding, the
situation of women and the youth is far from favourable. From the economic standpoint, women
dominate the informal sector. In fact, they constitute 75% of the agricultural workforce and only 20%
of the formal sector workforce. The constraints to women's emancipation in Cameroon are numerous;
apart from their limited access to productive assets (less than 4% of women are landowners and only
25% them, compared to 60% of men, have access to credit in Cameroon) they dominate the mostly
informal economic sector, operating as business owners (30%). The gender inequality index resulting
from inequalities in three human development dimensions (reproductive health, empowerment and job
market) was unfavourable at 0.628 in 2012 (with 1 representing total inequality).
3.2.4 Gender issues remain topical in the transport and energy sectors. The lack of transport and
energy infrastructure significantly undermines women’s advancement and empowerment. On account
of these constraining circumstances such as the lack of highways and farm-to-market roads, women and
the youth, and particularly children, have difficulties transporting farm produce, sometimes having to
carry it on their heads. This situation limits access to health services and makes it difficult to provide
12
proper care because pharmaceutical products cannot be delivered easily. As regards energy, the lack of
electricity in rural households leads to deforestation of the available biomass to satisfy energy needs.
Furthermore, women and the youth are primarily responsible for fetching and transporting firewood to
satisfy household energy needs.
3.2.5 Cameroon's commitment to the effective implementation of women's rights has led it to ratify
most of the international and regional instruments that promote and protect fundamental human rights,
including those that specifically protect women's rights. In 2014, the Government adopted the National
Gender Policy developed with the support of the United Nations system, with the following major
strategic pillars: (i) promotion of equal economic and employment opportunities for both women and
men; (ii) increased women's participation and representation in public life and decision-making; and
(iii) strengthening of the institutional framework. The Multi-Sectoral Action Plan for implementing this
policy is being developed and should be operational in 2016. As regards public finance management,
the finance law prescribes the adoption of gender mainstreaming in budgets and programmes. However,
the legal provisions that guarantee effective gender mainstreaming in budget management are not yet
effective due to the lack of financial means to train stakeholders and conduct the awareness campaigns
needed to give these concerns the required focus during implementation of the public finance reform
strategy.
3.2.6 The Bank already supports infrastructure projects, especially in the transport sector. Bank-
financed transport sector projects in Cameroon include activities aimed at promoting the economic
empowerment of women through programmes that focus on training, dissemination of skills, facilitation
of access to land and financial systems in a bid to eliminate the bottlenecks to the improvement of their
incomes. These include: (i) the distribution of farming kits; (ii) the construction of multipurpose
facilities for processing and marketing of local produce; (iii) the construction of market-shed structures
and drying areas along the road; and (iv) strengthening of the financial and managerial capacities of
women by establishing a support fund for income-generating activities.
3.2.7 This project will help to address these constraints by effectively mainstreaming gender into
budget management. Support will be provided through technical assistance and capacity building in
gender-responsive budgeting, as well as gender mainstreaming in the PPBME (Planning-Programming-
Budgeting and Monitoring and Evaluation) processes of each ministry, which are tasked with the
development of PAPs (Priority Action Plans), MTEFs (Medium-term Expenditure Frameworks), APRs
(Annual Performance Reports), and APPs (Annual Performance Projects). Moreover, PAEDEP will
ensure that training is open to all women in the middle and senior levels of beneficiary institutions.
Hence, at least 30% of SMEs run by women in the transport sector will benefit from the training that
will be provided. Similarly, in the energy sector, at least 30% of female EDC staff will be trained in
financial/legal engineering.
IV Implementation
4.1 Implementation Arrangements
4.1.1 Institutional Arrangements: The implementation of project activities will involve several
beneficiary structures (BS) mainly in the ministries in charge of planning, procurement, finance, public
works, transport and energy. Moreover, given the multi-sectoral nature of the project, activities will be
coordinated by MINEPAT, which is responsible for the preparation and monitoring of public
investments in Cameroon. The Directorate General for the Economy and Programming of Public
Investments (DGEPIP) in MINEPAT was selected as the implementing agency of the project. Indeed,
this Directorate coordinates the preparation of MTEFs, the drafting of the public investment budget and
monitoring of its implementation, in coordination with line ministries and the Ministry of Finance. The
assessment of financial management capacity within MINEPAT, the wide range of activities to be
implemented under the project, and the multitude of stakeholders involved in its implementation, have
13
necessitated: (i) the establishment of a Project Management Unit (PMU) within DGEPIP; and (ii) the
recruitment of 3 (three) sector experts to ensure the technical coordination of activities related to the
public finance, energy and infrastructure sectors. Focal points designated by the beneficiary structures
will be coordinated by sector experts and will serve as interfaces between the PMU and beneficiaries.
The PMU will be responsible for the overall coordination and financial management of the project. Its
key personnel will comprise: a Coordinator, an Administrative and Finance Officer (AFO), a
Procurements Officer (PO), an Accountant, a Monitoring and Evaluation Officer and three sector
experts, all recruited on a competitive basis. A project steering committee composed of representatives
of project implementation structures will be responsible for validating and monitoring the project’s
strategic direction. The technical secretarial duties of the Steering Committee will be performed by the
Director General for the Economy. Technical Annex B.3 provides a detailed presentation of the
institutional mechanism.
4.1.2 Procurement Arrangements: The project procurement arrangements will be handled by the
Project Management Unit whose staff shall include an experienced procurements expert. Given the
findings of the public procurement framework assessment and in light of the risks identified and the
agreed mitigation measures, the procurement rules applicable to this project will be: (i) the procurement
policy for AfDB-financed operations approved on 14 October 2015 using the appropriate standard
bidding documents of the Bank; and (ii) national laws governing public procurements (including Decree
No. 2004/275 of 24 September 2004 to define the public procurement code and other subsequent
instruments) through use of the country’s standard bidding documents as well as the provisions of the
financing agreement. The procurement provisions are detailed in Technical Annex B.5 and in the
procurement plan (PP). This plan will be regularly updated during the project implementation phase.
4.1.3 Financial Management: The PMU will be responsible for the overall coordination and
financial management of the project. Its financial management staff will comprise: a Coordinator, an
Administrative and Finance Officer (AFO), a Procurements Officer (PO), a Monitoring and Evaluation
Officer and an Accountant, all recruited on a competitive basis. The provisions and
arrangements/conditions pertaining to financial management, disbursements and audit of the project are
detailed in Technical Annex B.4.
4.1.4 Disbursements: Disbursements under the project will be governed by the applicable provisions
in the Bank's disbursements manual. The disbursement methods proposed for the project are: (a) the
special account method (for small operating expenses and management of agreements); (b) the direct
payment method for payment of goods and services contracts; and (c) the reimbursement method in
case of pre-financing, by the national counterpart, of expenditures reserved for, and approved
beforehand by, the Bank. Nevertheless, counterpart funds will be disbursed annually in one instalment,
after promulgation of the Finance Law and presentation of expenditure records. In Cameroon, opening
of the special account is the responsibility of the CAA, which shall open the following special accounts
in the name of the PAEDEP, in local currency (XAF) and in a commercial bank deemed acceptable to
the Bank: (i) a special account to receive ADB resources. (ii) a special account to receive ADF resources
and; (iii) a special account to receive the counterpart contribution of the State of Cameroon.
4.1.5 Audit: Considering: (i) the limited human and financial resources of the Audit Bench of the
Supreme Court of Cameroon; (ii) the delay by this institution in auditing State accounts; and (iii) the
deadline constraints in submitting the external audit reports of the projects to the Bank, it is
recommended that, no later than 6 (six) months after project commencement, a private audit firm
acceptable to the Bank should be recruited on a competitive basis and in accordance with the AfDB-
approved terms of reference. The audit will cover all project activities funded with ADB, ADF and
counterpart resources. The audit report and management letter will be forwarded to the Bank annually,
no later than six months after closure of the fiscal year concerned.
14
4.1.6 The overall financial management risk was deemed to be substantial because financial
management measures will be implemented through and during the creation of a new PMU, and also
because the draft management and operating procedures of the project maturation fund are not available
at this stage, and will be available only after the study which will be conducted during project
implementation. The main risks identified and their mitigation measures are summarized in the table of
fiduciary risks found in Technical Annex B4.
4.2 Monitoring
4.2.1 The physical implementation of the project is expected to cover a period of 48 months, from
January 2017 to December 2020. The PMU will establish a software-driven monitoring and evaluation
system. The Monitoring and Evaluation Officer at the PMU will assist the Project Coordinator with
monitoring and evaluation activities. He will be responsible for real-time monitoring of project
execution using the logical framework indicators and relying on the focal points from the various
beneficiary structures. The monitoring and evaluation system will include performance indicators,
collected baseline situation data and measurements of project progress towards attainment of
intermediate targets and impacts. The monitoring system will also include monitoring of the
performance of the Coordinator and PMU experts to determine the level of achievement of their
indicators at contract renewal.
4.2.2 As soon as the loan agreements become effective, a launch mission will be organized to train
PMU officials on Bank procedures. Supervision missions will be organized at least twice a year.
Quarterly progress and annual reports will also be prepared and submitted to the Bank.
4.3 Governance
4.3.1 Project implementation could be affected by governance risks (fraud, corruption, misuse of
funds, ineligible expenditure, etc.) especially in the award and execution of contracts, financial
management, and the selection of trainees. These risks will be mitigated by: establishing a mechanism
for controlling procurement activities, which could be a project management manual that defines the
roles and responsibilities of various stakeholders; developing a detailed procurement plan that is results-
oriented and consistent with the project implementation schedule; and instituting rules as well as
selection and tendering processes that are adapted to project goals. As concerns financial management
of the project, the executing organ shall keep separate project accounts. This will make it possible to
identify expenditure by component, category and financing source. Project accounts will be audited
annually by a firm recruited for that purpose. Financial statements and audit reports will be submitted
to the Bank within six months following the close of the accounting period. Regular project monitoring
and supervision mainly through the Bank office in Cameroon will enhance the verification of project
governance and performance.
4.4 Sustainability
4.4.1 The first project sustainability factor is the willingness of the Government to meet challenges
that relate to continuous improvement of the institutional and regulatory framework for programming
and implementation of the public investment programs to ensure the acceleration of the public projects
maturation process and the sustainability of their impact and beneficial effects on the population’s well-
being. Indeed, the Government introduced programme budgets in 2013 and made it mandatory for all
ministries to prepare MTEFs in 2014. It also embarked on an in-depth reform of the public procurement
management and control system. The Government is also increasingly concerned with road maintenance
in the transport sector and regulation in the electricity sector. As regards road maintenance in particular,
the Government has set up a committee to review the upgrade of the current Road Fund to a second-
generation fund. The second sustainability factor is the mechanism that will be established under
PAEDEP to ensure the sustainable and effective transfer of knowledge and skills, through technical
15
assistance and training. This includes high-level training of trainers and local capacity building. The
project will ultimately build local capacity in training, planning, programming, budgeting and
monitoring and evaluation (PPBME) of investment programmes and policies by establishing
partnerships with national research and training structures.
4.4.2 Finally, the future project maturation fund will include a funding mechanism to ensure its
sustainability, with a view to developing quality projects for the investment budget.
4.5 Risk Management
Risks Magnitud
e Mitigation measures
Risk of a slowdown in
reforms: Limited incentive
for political authorities to
pursue reforms in areas
covered by the project.
Low
The project will engage in dialogue with the authorities on various
reforms at a fairly advanced stage. The adoption of a circular on
MTEFs by the Prime Minister and the Committee set up to review
the road fund are proofs of Government commitment. Dialogue
will be maintained under the CMP, with the involvement of other
TFPs in the implementation of the public finance modernization
programme, public procurement reform and reform of the RF and
road maintenance.
Risk related to project
implementation capacity,
resulting from a dysfunction
within Government services
due to overlap in duties.
Average
One of the scheduled project activities is to clarify the roles of
various stakeholders and review the institutional frameworks.
Implementation of the study findings will help to mitigate the risk
of dysfunction within services that benefit from the project.
Fiduciary risk: The
country’s low governance
level could undermine the
efficient use of project
resources, especially for the
project maturation fund.
Average
An accounting and financial management system will be
instituted to ensure that the management of project resources is
consistent with Bank rules and procedures. As regards the project
maturation fund, a study will be conducted on its establishment
procedures, and its technical, administrative and financial
management mechanisms. The Bank and other TFPs will
contribute to the terms of reference of the study so that fiduciary
aspects will be included under this project. Studies for eligible
projects will be funded through direct payments.
4.6 Knowledge Development
The types of knowledge that will be generated from project implementation include: (i) revision of the
macroeconomic forecast model; (ii) preparation of a renewable energy ATLAS for Cameroon; (iii) best
practices in implementing the PPBME chain across and within sectors (transport and energy); (iv) the
study to establish regulatory and assets management systems in the electricity sub-sector. The studies
will be disseminated within the administration and among non-State stakeholders through distribution
of the documents produced, procedures manuals and training sessions that will be organized under the
project. This knowledge will be generated through processes that involve production of the following
reports: reports of technical assistants, progress reports prepared by beneficiaries and the executing
agency, supervision reports and the project completion report. The knowledge and lessons learnt will
be disseminated within the Bank and in Cameroon through seminars and IDEV reports.
V- Legal Framework
5.1 Legal Instrument
The following two instruments will be used to finance the Public Expenditure Efficiency Improvement
Support Project:
- A loan agreement for ADF resources, not exceeding UA 11.21 million, signed between
the ADF and the Republic of Cameroon;
16
- A loan agreement for ADB resources, not exceeding EUR 14.2 million, signed between
the Bank Group and the Republic of Cameroon.
5.2 Conditions Associated with the Bank’s Intervention
Each loan agreement shall become effective subject to the Borrower’s fulfilment of the conditions
provided for in Section 12.01 of the Bank’s General Conditions for Loan and Guarantee Agreements.
Conditions precedent to consideration of the appraisal report by the Boards:
Review of the appraisal report by the Boards shall be subject to fulfilment by the Borrower of the
following conditions:
(i) Adoption of instruments to set up the project steering committee and the project
implementation unit; and
(ii) Recruitment of the PMU Coordinator, the Financial Management Officer and the
Procurements Officer. The experience and qualifications of the Coordinator and Experts
must be deemed acceptable to the Bank.
Implementation status of preconditions: (i) the draft text establishing the Steering Committee and the
Project Implementation Unit has been reviewed by the Bank. The final text was brought to the signature
of MINEPAT; (ii) the recruitment of members of the PIU is ongoing. The evaluation report of the
applications will be submitted to the Bank before the end of October, 2016.
Conditions precedent to first disbursement of the two loans:
First disbursement of ADF and ADB loan resources shall be subject to fulfilment of the following
conditions by the Borrower:
Provide proof of the opening of two bank accounts to receive ADF and ADB loan resources; and
Provide the Bank with proof of the opening of a special CFA.F account in the name of the project at a
commercial bank acceptable to the Bank, to receive counterpart contributions exclusively earmarked
for operating expenses.
5.3 Compliance with Bank Policies
This project is in compliance with all the Bank’s applicable policies.
VI Recommendation
Management recommends that the Boards of Directors should approve the proposal to grant an ADF
loan of UA 11.21 million and an ADB loan of EUR 14.2 million to the Republic of Cameroon, to finance
the Public Expenditure Efficiency Improvement Support Project under the conditions set out in this
report.
I
Annex 1
Comparative Socio-economic Indicators of the DRC
Year Cameroon Africa
Develo-
ping
Countries
Develo-
ped
Countries
Basic Indicators
Area ( '000 Km²) 2016 475 30 067 94 638 36 907Total Population (millions) 2016 23,9 1 214,4 3 010,9 1 407,8Urban Population (% of Total) 2016 55,1 40,1 41,6 80,6Population Density (per Km²) 2016 50,6 41,3 67,7 25,6GNI per Capita (US $) 2014 1 360 2 045 4 226 38 317Labor Force Participation *- Total (%) 2016 76,1 65,6 63,9 60,3Labor Force Participation **- Female (%) 2016 71,1 55,6 49,9 52,1Gender -Related Dev elopment Index Value 2007-2013 0,872 0,801 0,506 0,792Human Dev elop. Index (Rank among 187 countries) 2014 122 ... ... ...Popul. Liv ing Below $ 1.90 a Day (% of Population) 2008-2013 29,3 42,7 14,9 ...
Demographic Indicators
Population Grow th Rate - Total (%) 2016 2,5 2,5 1,9 0,4Population Grow th Rate - Urban (%) 2016 3,5 3,6 2,9 0,8Population < 15 y ears (%) 2016 42,3 40,9 28,0 17,2Population >= 65 y ears (%) 2016 3,2 3,5 6,6 16,6Dependency Ratio (%) 2016 83,6 79,9 52,9 51,2Sex Ratio (per 100 female) 2016 100,0 100,2 103,0 97,6Female Population 15-49 y ears (% of total population) 2016 24,0 24,0 25,7 22,8Life Ex pectancy at Birth - Total (y ears) 2016 56,4 61,5 66,2 79,4Life Ex pectancy at Birth - Female (y ears) 2016 57,6 63,0 68,0 82,4Crude Birth Rate (per 1,000) 2016 35,7 34,4 27,0 11,6Crude Death Rate (per 1,000) 2016 10,9 9,1 7,9 9,1Infant Mortality Rate (per 1,000) 2015 57,1 52,2 35,2 5,8Child Mortality Rate (per 1,000) 2015 87,9 75,5 47,3 6,8Total Fertility Rate (per w oman) 2016 4,6 4,5 3,5 1,8Maternal Mortality Rate (per 100,000) 2015 596,0 495,0 238,0 10,0Women Using Contraception (%) 2016 30,0 31,0 ... ...
Health & Nutrition Indicators
Phy sicians (per 100,000 people) 2004-2013 7,7 47,9 123,8 292,3Nurses and midw iv es (per 100,000 people) 2004-2013 43,8 135,4 220,0 859,8Births attended by Trained Health Personnel (%) 2010-2015 64,7 53,2 68,5 ...Access to Safe Water (% of Population) 2015 75,6 71,6 89,3 99,5Healthy life ex pectancy at birth (y ears) 2013 50,3 54,0 57 68,0Access to Sanitation (% of Population) 2015 45,8 39,4 61,2 99,4Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2014 4,8 3,8 ... ...Incidence of Tuberculosis (per 100,000) 2014 220,0 245,9 160,0 21,0Child Immunization Against Tuberculosis (%) 2014 99,0 84,1 90,0 ...Child Immunization Against Measles (%) 2014 80,0 76,0 83,5 93,7Underw eight Children (% of children under 5 y ears) 2010-2014 15,1 18,1 16,2 1,1Daily Calorie Supply per Capita 2011 2 586 2 621 2 335 3 503Public Ex penditure on Health (as % of GDP) 2013 0,9 2,6 3,0 7,7
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total 2010-2015 113,6 100,5 104,7 102,4 Primary School - Female 2010-2015 106,9 97,1 102,9 102,2 Secondary School - Total 2010-2015 56,4 50,9 57,8 105,3 Secondary School - Female 2010-2015 51,9 48,5 55,7 105,3Primary School Female Teaching Staff (% of Total) 2010-2015 52,7 47,6 50,6 82,2Adult literacy Rate - Total (%) 2010-2015 75,0 66,8 70,5 98,6Adult literacy Rate - Male (%) 2010-2015 81,2 74,3 77,3 98,9Adult literacy Rate - Female (%) 2010-2015 68,9 59,4 64,0 98,4Percentage of GDP Spent on Education 2010-2014 3,0 5,0 4,2 4,8
Environmental Indicators
Land Use (Arable Land as % of Total Land Area) 2013 13,1 8,6 11,9 9,4Agricultural Land (as % of land area) 2013 20,6 43,2 43,4 30,0Forest (As % of Land Area) 2013 40,7 23,3 28,0 34,5Per Capita CO2 Emissions (metric tons) 2012 0,3 1,1 3,0 11,6
Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :
UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports.
Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+)
** Labor force participation rate, female (% of female population ages 15+)
August 2016
0
10
20
30
40
50
60
70
80
90
100
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Infant Mortality Rate( Per 1000 )
Cam eroon Africa
0
500
1000
1500
2000
2500
20
00
20
05
20
08
20
09
20
10
20
11
20
12
20
13
20
14
GNI Per Capita US $
Cam eroon Africa
0,0
0,5
1,0
1,5
2,0
2,5
3,0
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Population Growth Rate (%)
Cameroon Africa
01020304050607080
20
00
20
05
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Life Expectancy at Birth (years)
Cam eroon Africa
II
Annex 2
Analysis of the Bank’s Active Portfolio as of 30 June 2016
The Bank’s active portfolio in Cameroon as of 30 June 2016
comprised 20 projects worth a total commitment of UA
723,479 million (USD 1.012 billion), with a substantial
regional component (29.4%), broken down as follows: UA
602.977 million (USD 843.468 million) for the public sector
(10 national and 6 regional projects) and UA 120.501 million
(USD 168.561 million) for the private sector (4 projects). The
Congo Basin Forest Fund (CBFF) portfolio in Cameroon
comprises 2 ongoing projects that will end on 12/31/2016,
namely the IUCN Project and the Wildlife School Project in
Garoua. The public projects portfolio is divided among the
following sectors: transport and ICT (68%), water and
sanitation (12%), energy (13%), agriculture and the
environment (5%), and governance (2%).
The national public sector portfolio performance is deemed to be satisfactory with a score of 2.36 on 3
in 2014 and is on an upward trend. In the last four reviews, this score was 2.06 (in 2011), 2.15 (in 2012)
and 2.3 (in 2013). The actions taken by the Bank and the Borrower have resulted in a steady rise in the
value of this indicator since 2009 (see graph). The Bank’s actions include high-level dialogue with
national authorities, capacity-building for project management units and very close monitoring of the
files pending at the Bank. The Borrower’s actions essentially relate to the organization of regular
quarterly project monitoring meetings.
Rating of Active National Public Sector Projects Based on 2011-2014 Reviews
Projects
Satisfa
ction
of
conditi
ons
Procurements
performance
Financial
performance
Activities and
outcomes
Progress
status
Impact on
development
Overall
score Risk rating
Multi-sector
PAMOCCA 2.50 2.00 2.00 2.00 2.09 2.00 2.10 NON-PP/NON-PPP
Water and Sanitation Sector
PAEPA –MSU 2.00 1.50 2.40 2.00 2.00 2.00 1.98 NON-PP/NON-PPP
PAEPA –MRU 2.66 2.50 2.20 2.25 2.36 3.00 2.50 NON-PP/NON-PPP
Energy Sector
PRERETD 2.33 2.50 2.60 2.00 2.36 2.00 2.30 NON-PP/NON-PPP
LOM PANGAR 3.00 2.00 2.00 2.00 2.00 3.00 2.33 NON-PP/NON-PPP
Transport Sector
NUMBA-BACHUO 3.00 3.00 2.75 2.00 2.55 3.00 255 NON-PP/NON-PPP
BATCHENGA STUDY 3.00 2.00 2.75 2.00 2.55 3.00 2.55 NON-PP/NON-PPP
Agricultural Sector
GRASSFIELD II n/a n/a n/a n/a n/a n/a n/a
2014 review average 2.64 2.21 2.39 2.07 2.29 2.57 2.36
COMPARISON WITH PREVIOUS REVIEWS
2013 review average 2.49 1.92 2.50 2.00 2.25 2.35 2.30
2012 review average 2.15 2.15 2.14 1.93 1.92 2.38 2.15
2011 review average 2.19 2.03 1.92 1.81 1.79 2.33 2.06
KEY: PP = problematic project PPP = Potentially problematic project
Non-PP = non-problematic project Non-PPP = non-potentially problematic project
Excellent Performance (2.2 - 3.0)
Average Performance (1.6 - 2.1)
Poor Performance (0 - 1.5)
Source: SAP-PS and 2012 Portfolio Review Report. This table does not include the IRAD Support Project funded by the NTF and
2,04 2,06
2,15
2,3
2,36
1,8
1,9
2
2,1
2,2
2,3
2,4
2009 Review 2011 Review 2012 Review 2013 Review 2014 Review
Figure 3: Portfolio Performance Scores from 2009 to 2014
III
Annex 3
Summary Table of Donor Operations
Matrix of Donors in
Cameroon
2014
EU ** ** ** ** ** ** ** ** ** ** ** ** ** ** 4
Germany ** ** ** ** ** ** ** ** 4
Belgium
Denmark
Spain
France-AFD
France-SCAC
Italy
Luxemburg
United Kingdom ** ** ** ** ** ** ** ** ** ** 7
Other Bilateral Partners
Canada
United States
Japan ** ** ** ** ** ** ** ** ** ** 6
Switzerland
Multilateral Partners
IAEA
AfDB ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** 5
World Bank
** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** **
7
BDEAC
ECA
FAO
UNCDF
IFAD ** ** ** 1
IMF ** ** ** ** ** 1
UNFPA
OCHA/CERF
WHO ** ** ** ** 1
UNAIDS
WFP
UNDP ** ** ** ** ** ** ** ** ** ** ** ** 5
UNESCO
UNICEF
UNIFEM
Active TFPs 2 2 3 4 3 2 4 5 5 3 5 4 4 4 3 4 1 2 4 2 4 2 8 7 6 5 3 1 1 4 0
RURAL SECTOR SOCIAL SECTOR
NA
TIO
NA
L S
OL
IDA
RIT
Y A
ND
SO
CIA
L J
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mb
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art
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EDUCATION SECTOR HEALTH SECTOR GOVERNANCE SECTOR INFRASTRUCTURE SECTOR INDUSTRY AND SERVICES SECTOR
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Areas of Intervention by Cameroon's Development Partners in 2014
BA
SIC
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TIO
NS
(C
IVIL
SE
RV
ICE
, N
AT
ION
AL
AS
SE
MB
LY
, J
US
TIC
E)
INP
RO
VE
ME
NT
OF
TH
E B
US
INE
SS
EN
VIR
ON
ME
NT
AN
D
PR
OM
OT
ION
OF
PU
BL
IC-P
RIV
AT
E P
AR
TN
ER
SH
IP
CO
RR
UP
TIO
N C
ON
TR
OL
INF
RA
ST
RU
CT
UR
E M
AIN
TE
NA
NC
E
RE
HA
BIL
ITA
TIO
N O
F E
XIS
TIN
G I
NF
RA
ST
RU
CT
UR
E A
SS
ET
S
Source : Provisional Mapping Report/Labour Division
IV
Position of TFPs under the Various Pillars of Public Finance Reform
Public Finance Reform Intervention Pillars
TFP
AfDB (*) WB IMF EU GIZ/K
FW FRANCE
Thematic pillars
Planning-Programming-Budgeting X X X
Budget execution (revenue) X
External financing X
Budget execution (expenditure) X X X
Government accounting, X X X X
Cash flow and debt management X X
Internal and external control structures X X
Crosscutting pillars
IT systems X X X X X
Human resources and payroll management X X
Institutional and organizational framework of public
finance management and capacity building in piloting and
communicating on reforms
X X
(*) The Bank's position is in relation to the Public Expenditure Efficiency Improvement Support Project
V
Annex 4
Justification of the Government Counterpart Contribution Amount
1. The Public Expenditure Efficiency Improvement Support Project, estimated at a total of
UA 23.52 million, will be financed by the Bank Group and national counterpart contributions. The
Bank Group intervenes through an ADF loan of UA 11.21 million and an ADB loan of EUR 14.2
million, making a total of UA 22.48 million or 95.6% of the project cost. The national counterpart
contribution is estimated at UA 1.03 million, or 4.4% of the total project cost. This counterpart
contribution amount represents the amount of resources that the country can currently provide
without compromising project implementation.
2. The Government's counterpart contribution relative to Bank financing is below 10% of the
ADF funding and 50% of ADB funding, as required by the policy on eligible expenditures. Pursuant
to Section 4.2.2 of the Policy on Expenditure Eligible for Bank Group Financing (revised version
of 19 March 2008), which stipulates that Bank financing under the ADB and ADF windows, may
exceed the thresholds of 50% and 90%, the Government's counterpart contribution amount was
determined based on the following four criteria:
country commitment to implementing its general development programme;
financing allocated by the Country to sectors targeted by Bank assistance;
the country's budget situation and debt level; and
the upper limit on cost-sharing and guidelines specified in the Country Financing
Parameters.
Country Commitment to Implementing its General Development Programme
3. Drawing on the lessons learnt from implementation of its poverty reduction strategy after
attainment of the HIPCI Initiative in 2006, the Government formulated its development Vision 2035
in 2010. This long-term vision seeks to transform Cameroon into an emerging democratic State that
is united in diversity. Specifically, Vision 2035 is the reference framework for (i) substantially
reducing the poverty threshold; (ii) attaining the status of a middle-income country; (iii) becoming
a new industrialized country; and (iv) consolidating the democratic process and national unity.
4. These specific objectives informed the guidelines of the Growth and Employment Strategy
Paper (GESP) for 2010-2020 which covers the first ten years of Vision 2035. The main issues in
GESP implementation are growth acceleration, creation of formal jobs and poverty reduction.
Consequently, the targets are to (i) raise the growth rate to an annual average of 5.5% during the
2010-20 period; (ii) cut underemployment from 75.8% to at least 50% in 2020; and (iii) reduce the
poverty rate from 39.9% in 2007 to 28.7% in 2020.
5. To achieve these objectives, the Government decided to implement a three-pronged
strategy, following a coherent and integrated approach with the support of technical and financial
partners (TFPs), including the Bank. This three-pronged strategy comprises: (a) a growth strategy;
(b) a national governance and strategic management improvement strategy; and (c) a job strategy.
6. This operation is presented to the Boards in a specific context characterized by Cameroon's
graduation to the ADB window as a blend country. Indeed, given its recent macroeconomic
performance, Cameroon graduated in 2014 to the non-concessional windows of both the World
Bank and the AfDB Group. This double graduation attests to the confidence of the multilateral
institutions and enables the country to obtain resources from both the concessional and non-
concessional windows of the AfDB Group. It should enable the country to finance its development,
especially its ambitious infrastructure programme, on less expensive terms. The country's next target
is to graduate from "blend country" to "ADB country".
VI
7. In the area of governance, especially public finance governance, the Government
implemented major reforms in 2007 that led to the adoption of programme budgets from 2013. A
public finance modernization plan, jointly prepared with the TFPs, determined the priority reform
pillars. In the years to come, the Government intends to improve the preparation and implementation
of the public investment budget, enhance investment project maturation, review the procurement
code and gradually digitalise public procurement, improve energy sector regulation and promote
renewable energy, and lastly, enhance the maintenance of transport infrastructure.
8. This project is predicated on a strong Government commitment to implement the various
reforms designed to increase the impact of public spending in general and public investments in
particular, on the well-being of the people. The Government contributes to project implementation
mainly by financing the project maturation fund, as its way of taking ownership of the project to
ensure the sustainability of targeted outcomes. It also contributes to project management costs.
Country Allocations to Sectors Targeted by Bank Assistance
9. The road transport and energy sub-sectors respectively account for approximately 25% and
12% of public investments. Over the last five years, the Bank has allocated a significant amount of
resources to the financing of transport and energy infrastructure in Cameroon. All transport sector
activities cost a total of UA 265 million used to pave 503 km of road, with an estimated Government
contribution of UA 67 billion, or 25.8% of investments made during the review period. Bank
financing to the energy sector amounts to UA 165 million, of which 54% goes to the private sector.
These statistics attest to the importance that the Government attaches to the transport and energy
sectors, and reinforce the need to ensure the sustainability of investments in these sectors.
Budget Situation and Debt Level of the Country
10. Fiscal policy has remained moderately expansionist, owing to the implementation of major
infrastructure projects. The 2016 finance law, like those of 2014 and 2013, was drafted and
implemented using the programme budget method.5 The budget deficit was estimated at 5.3% of
GDP in 2015 compared to 3.9% in 2014. The current account deficit remains structural and
fluctuates between 14% and 15% of GDP, reflecting the marked decline in oil prices. The monetary
policy is aimed at stabilizing prices and the real effective exchange rate, by avoiding any crowding-
out of private investment by Government spending. However, inflation remains below the CEMAC
area convergence threshold of 3%.
Table 1: Key Macroeconomic Indicators of Cameroon
2011 2012 2013 2014 2015 Forecasts
2016
Real GDP growth 4.1% 4.6% 5.6% 5.9 5.9% 4.9%
Inflation (annual average) 2.9% 2.4% 2.1% 1.9% 2.70 2.2%
Total budget balance
(excluding grants) as % of
GDP
-3.1% -2.0% -4.3% -5.0% -6.1 -8.2%
Public debt (as % of GDP) 13.2% 15.4% 18.7% 28.0% 33.5% 38.0%
Current account balance (as
% of GDP) -3.0% -3.6% -3.9% -4.4% -5.8% -5.7%
Sources: Regional Economic Outlook: Sub-Saharan Africa (IMF), 2016.
5 Pursuant to CEMAC Directive No. 01/11-Ueac-190-CM-22 on finance laws, which institutes the transition from means-based budgeting to programme
budgeting.
VII
11. Debt ratios have remained below CEMAC thresholds since cancellation of the debt
under the HIPC Initiative in 2006. However, escalation of the national debt over the past three
years following the structural fall in oil prices increasingly poses a risk of debt distress.
According to IMF estimates,6 the public debt rose from 18.7% of GDP in 2013 to 28% in
2014, and then to 33.5% in 2015. Based on these trends, the public debt is projected to exceed
41.3% of GDP in 2017, which is more than double its value at end-2013, while debt servicing
should also double in the medium term. Given this adverse trend and the decline in export
earnings due to falling oil prices from 2014, Cameroon’s external debt distress risk gradually
increased from 'low' to 'medium' and, ultimately, 'high' from 2015.7
12. By contributing to the improvement of public expenditure efficiency and
effectiveness, this project is implementing the recommendation from the 2015 IMF Article IV
consultations, calling for more prudent public debt management and the improvement of
public expenditure profitability. Furthermore, the project will enable the Government to
enhance the planning and streamlining of its budgetary choices and especially its public
investments.
Cost-Sharing Upper Limits and Guidelines Specified in Country Financing Parameters
13. Country Financing Parameters (CFP) governing cost-sharing highlight the need for
national commitment to, and ownership of, project activities financed by the Bank. These
parameters also provide flexibility in determining the percentage of the national counterpart
contribution. The Bank reviewed the level of commitment and ownership based on criteria
that includes: (i) the contribution of project activities to the achievement of national
development goals set out in the Growth and Employment Strategy Paper (GESP) for 2010-
2020; (ii) alignment and linkages with the strategic pillars of the Bank’s 2015-2020 Country
Strategy Paper (CSP) for Cameroon approved in July 2015, and inclusion in the State budget
of the project financed by the Bank and other Technical and Financial Partners. The CFP
stipulates that the percentage of total costs financed by the Bank will be evaluated on a case-
by-case basis, depending on the context and specific considerations of the project, the level of
Government commitment to and ownership of project implementation, the level of co-
financing with other TFPs, and the country's budget situation. It should be noted that the
parameters are aligned on the World Bank’s CFP in Cameroon developed in 2005 when the
country was only eligible to concessional resources. The CFPs indicated that World Bank
funding could reach 100% of the total project cost (including taxes), despite the fact that co-
financing could be obtained for some projects, especially in the transport sector. These
parameters have not changed despite Cameroon's graduation to the status of an IBRD/IDA
"blend country" in April 2014 at the World Bank and an ADB/ADF “blend country” in July
2014 at the African Development Bank.
14. In conclusion, given the above facts, and at the request of the Government, it is
proposed that the national counterpart contribution be set at 4.4% of the total project
cost, net of taxes. The contribution of the Government of Cameroon (UA 1.04 million), will
be used to finance the investment projects maturation fund and some of the project
management costs.
6 Regional Economic Outlook Report, 2016: Sub-Saharan Africa 7 A new debt sustainability analysis will be jointly conducted for Cameroon by the IMF and the World Bank in October 2016, as part of the Article IV
consultations.
VIII
Annex 5
Map of the Project Area
The staff of the ADB Group have provided this map for the exclusive use of readers of this report to which it is appended. The appellations and the
demarcations on this map do not imply any judgment on the part of the ADB Group and its members concerning either the legal status of a territory
or the approval or acceptance of its boundaries.
