Document of The World Bank Report No: ICR00003247 ...documents.worldbank.org/curated/en/... · Parti mauricien social démocrate (Social democratic party) Public-private partnership

Document of The World Bank

Report No: ICR00003247

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-81380 and IBRD 82470)

ON A SERIES OF

PUBLIC SECTOR PERFORMANCE

DEVELOPMENT POLICY LOANS

IN THE AMOUNT OF US$20 MILLION EACH

TO THE

REPUBLIC OF MAURITIUS

June 22, 2015

Macroeconomics and Fiscal Management Global Practice Country Department AFCS2 Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of June 22, 2015)

Currency Unit = Mauritius Rupee Rs 1.00 = US$0.0281 US$1.00 = Rs 35.55

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AfDB African Development Bank AFD Agence Française de Développement (French Development Agency) AFT AMB BOI

Aid for Trade Agricultural Marketing Board Board of Investment

BoM CPE

Bank of Mauritius Certificate of Primary Education

CPS Country Partnership Strategy DPL DSA

Development policy loan Debt sustainability analysis

ESS EU FDI

Education Sector Strategy European Union Foreign direct investment

GDP Gross domestic product HRMIS IBRD

Human Resources Management Information System International Bank for Reconstruction and Development

ICA ICT IMF

Investment Climate Assessment Information and communications technology International Monetary Fund

IT KPI MCSAR MID

Information Technology Key performance indicators Ministry of Civil Service and Administrative Reforms Maurice Ile Durable (Sustainable Mauritius)

MoBECC MoEHR MoFED MoU MoSIEE MoSS MRA NDS NEF

Ministry of Business, Enterprise, and Cooperatives Ministry of Education and Human Resources Ministry of Finance and Economic Development Memorandum of Understanding Ministry of Social Integration and Economic Empowerment Ministry of Social Security, National Solidarity, and Reform Institutions Mauritius Revenue Authority National Development Strategy National Empowerment Foundation

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NTBs NTMs OPSG PBB PDMA

Non-tariff barriers Non-tariff measures Office of Public Sector Governance Program-based budgeting Public Debt Management Act

PEFA PFM PIMS PMSD PPP PSC PSIP PSIA SMEs SOEs SRM

Public Expenditure and Financial Accountability Assessment Public Financial Management Parastatals Information Management System Parti mauricien social démocrate (Social democratic party) Public-private partnership Private sector competitiveness Public Sector Investment Plan Poverty and Social Impact Analysis Small and medium-sized enterprises State-owned enterprises Social Register of Mauritius

TVET UNDP ZEP

Technical and vocational education and training United Nations Development Program Zones d’Education Prioritaires (Priority Education Zones)

Vice President: Makhtar Diop Country Director: Mark R. Lundell Practice Manager: Mark R. Thomas

Task Team Leader: Maria Teresa Benito-Spinetto ICR Team Leader: Maria Teresa Benito-Spinetto

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The Republic of Mauritius First and Second Public Sector Performance Development Policy Loans

Contents B. Key Dates .................................................................................................................. v C. Ratings Summary .................................................................................................... vi D. Sector and Theme Codes ....................................................................................... vii E. Bank Staff............................................................................................................... viii F. Results Framework Analysis ................................................................................ viii G. Ratings of Program Performance in ISRs ............................................................ xi H. Restructuring (if any) ............................................................................................. xi 1. Program Context, Development Objectives and Design ............................................ 1

1.1 Context at Appraisal ............................................................................................. 1 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) .................................................................................................................... 3 1.3 Revised PDO (if any, as approved by original approving authority) and Key Indicators, and Reasons/Justification .......................................................................... 4 1.4 Original Policy Areas Supported by the Program (as approved):......................... 4 1.5 Revised Policy Areas (if applicable) .................................................................... 4 1.6 Other significant changes ...................................................................................... 5

2. Key Factors Affecting Implementation and Outcomes .............................................. 5 2.1 Program Performance (supported by a table derived from a policy matrix) ........ 5 2.2 Major Factors Affecting Implementation: ............................................................ 7 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: ... 11 2.4 Expected Next Phase/Follow-up Operation (if any): .......................................... 12 None expected at this time. ....................................................................................... 12

3. Assessment of Outcomes .......................................................................................... 12 3.3 Justification of Overall Outcome Rating ............................................................ 24 3.4 Overarching Themes, Other Outcomes and Impacts .......................................... 24 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 26

4. Assessment of Risk to Development Outcome ......................................................... 26 5. Assessment of Bank and Borrower Performance ..................................................... 27

5.1 Bank Performance ............................................................................................... 27 5.2 Borrower Performance ........................................................................................ 30

6. Lessons Learned........................................................................................................ 30 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........... 32

MAP IBRD 33446 ............................................................................................................ 40

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List of Annexes Annex A. Bank Lending and Implementation Support/Supervision Processes ............... 33 Annex B. Beneficiary Survey Results .............................................................................. 34 Annex C. Stakeholder Workshop Report and Results ...................................................... 35 Annex D. Summary of Borrower's ICR and/or Comments on Draft ICR ........................ 36 Annex E. Comments of Co-financiers and Other Partners/Stakeholders ......................... 38 Annex F. List of Supporting Documents .......................................................................... 39 List of Tables Table 1: Prior Action for First and Second Public Sector Performance DPLs ................... 5 Table 2: DPL Indicators Results ....................................................................................... 14

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A. Basic Information

Program 1

Country Mauritius Program Name

Mauritius First Public Sector Performance Development Policy Loan

Program ID P125694 L/C/TF Number(s) IBRD-81380 ICR Date 02/27/2015 ICR Type Core ICR

Lending Instrument DPL Borrower GOVERNMENT OF MAURITIUS

Original Total Commitment

USD 20.00M Disbursed Amount USD 20.00M

Implementing Agencies: Ministry of Finance and Economic Development Co-financiers and Other External Partners Program 2

Country Mauritius Program Name MU -Second Public Sector Performance DPL

Program ID P128140 L/C/TF Number(s) IBRD-IBRD-82470 ICR Date 02/27/2015 ICR Type Core ICR

Lending Instrument DPL Borrower GOVERNMENT OF MAURITIUS

Original Total Commitment

USD 20.00M Disbursed Amount USD 20.00M

Implementing Agencies: Ministry of Finance and Economic Development Co-financiers and Other External Partners B. Key Dates Mauritius First Public Sector Performance Development Policy Loan - P125694

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 05/16/2011 Effectiveness: n.a. 06/20/2012 Appraisal: 01/10/2012 Restructuring(s): Approval: 03/27/2012 Mid-term Review: Closing: 12/31/2012 12/31/2012

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MU -Second Public Sector Performance DPL - P128140

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 09/27/2012 Effectiveness: n.a. 07/12/2013 Appraisal: 01/07/2013 Restructuring(s): Approval: 03/27/2013 Mid-term Review: Closing: 06/30/2014 06/30/2014 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Moderately Satisfactory Risk to Development Outcome Moderate Bank Performance Moderately Satisfactory Borrower Performance Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating

Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Not Applicable

Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Not Applicable

Overall Bank Performance Moderately Satisfactory Overall Borrower

Performance Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators Mauritius First Public Sector Performance Development Policy Loan - P125694

Implementation Performance Indicators QAG Assessments

(if any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA) None

Problem Program at any time (Yes/No): No Quality of

Supervision (QSA) None

DO rating before Closing/Inactive status Satisfactory

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MU -Second Public Sector Performance DPL - P128140 Implementation

Performance Indicators QAG Assessments (if any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA) None

Problem Program at any time (Yes/No): No Quality of

Supervision (QSA) None

DO rating before Closing/Inactive status

Moderately Satisfactory

D. Sector and Theme Codes Mauritius First Public Sector Performance Development Policy Loan - P125694

Original Actual Sector Code (as % of total Bank financing) Central government administration 25 25 General industry and trade sector 38 38 Other social services 25 25 Secondary education 12 12

Theme Code (as % of total Bank financing) Administrative and civil service reform 25 25 Education for all 12 12 Social Safety Nets/Social Assistance & Social Care Services

25 25

State-owned enterprise restructuring and privatization 25 25 e-Services 13 13 MU -Second Public Sector Performance DPL - P128140

Original Actual Sector Code (as % of total Bank financing) Central government administration 25 25 Other domestic and international trade 38 38 Other social services 25 25 Vocational training 12 12

Theme Code (as % of total Bank financing) Administrative and civil service reform 12 12 Education for the knowledge economy 13 13

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Public expenditure, financial management and procurement

12 12

Social Protection and Labor Policy & Systems 25 25 Trade facilitation and market access 38 38 E. Bank Staff Mauritius First Public Sector Performance Development Policy Loan - P125694

Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Mark R. Lundell Haleh Z. Bridi Practice Manager/Manager: Mark Roland Thomas Lynne D. Sherburne-Benz

Task Team Leader: Rafael Munoz Moreno William David Wiseman ICR Team Leader: Maria Teresa Benito-Spinetto ICR Primary Author: Maria Teresa Benito-Spinetto MU -Second Public Sector Performance DPL - P128140

Positions At ICR At Approval Vice President: Makhtar Diop Makhtar Diop Country Director: Mark R. Lundell Haleh Z. Bridi Practice Manager/Manager: Mark Roland Thomas John Panzer

Task Team Leader: Rafael Munoz Moreno Rafael Munoz Moreno ICR Team Leader: Maria Teresa Benito-Spinetto ICR Primary Author: Maria Teresa Benito-Spinetto F. Results Framework Analysis Program Development Objectives (from Program Document) 5. The development objective of the DPL programmatic series is to support improvements in the performance of the public sector in Mauritius by assisting the government to implement the following three reform pillars: (i) strengthening services to support and empower the most vulnerable; (ii) streamlining trade regulations and processes; and (iii) improving human resource management in the civil service and the monitoring of SOE performance. Revised Program Development Objectives (as approved by original approving authority) 6. Program Development Objectives were not revised.

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(a) PDO Indicator(s) Mauritius First Public Sector Performance Development Policy Loan - P125694

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

MU -Second Public Sector Performance DPL - P128140



approval documents)




Indicator 1 : Number of people with less than a secondary school certificate (SC) placed in Placement for Training

Value (quantitative or Qualitative)

912 1200 3280

Date achieved 12/31/2011 12/31/2013 12/31/2013 Comments (incl. % achievement)

Met 100% and overpassed by 2,080 people with SC been placed in the Placement for Training.

Indicator 2 : Number of households in the Social Register of Mauritius (SRM) Value (quantitative or Qualitative)

Zero 13,000 29,318


Met 100% and overpassed by 16,318 households in the SRM.

Indicator 3 : Percentage of students entering Year 1 and completing the pre-vocational education cycle


72.2% 74.2% 72.6%


Not Met. The Prevocational Education system was extended to 4 years. Out of the 2434 students who started in Year I in 2011, 1768 (72.6%) completed Year III in 2013 and 1561 (64.1%) completed Year IV in December 2014.

Indicator 4 : Number of regulations on which a decision is taken after review Value (quantitative or Qualitative)

zero 30 25


Partially Met (83%)

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Indicator 5 : Number of ministries involved in issuing certificates/ permits/clearances connected with the national single window


Zero All None

Date achieved 12/31/2011 12/31/2013 12/31/2013

Comments (incl. % achievement)

Not Met. However, the Mauritius Single Window system has been enhanced by the development of a National Single Window-OGA portal. 12 agencies have been identified to join it and first prototype pilot version was developed and tested in December 2014.

Indicator 6 : The amount of time needed to settle the Customs administrative penalty amount


6 weeks 3 weeks 2 weeks


Met 100% and target overpassed by one week.

Indicator 7 : Gradual reduction of processing time relating to the prescription of schemes of service and in the number of schemes of service


6 months for processing time; above 2,500 for number of Schemes of Service

4 months for processing time; consolidation of Schemes of Service piloted in to MCSAR and extended to other sectors of the civil service.

3.5 months for processing time; consolidation of Schemes of Service piloted in MCSAR and extended to other sectors of the civil service.

Date achieved 12/31/2011 12/31/2013 12/31/2013

Comments (incl. % achievement)

Met 100%. Processing time average is 3-4 weeks, with some cases being amended in about one month. The number of schemes of services has been reduced by around 14% compared to the 2011. It was piloted in the MCSAR and is taking place in other ministries.

Indicator 8 : Number of SOEs included in the annual performance report prepared by the Office of Public Sector Governance (OPSG) and published on the OPSG website


Zero 25 14


Partially Met (56%).57 SOEs have been registered in the PIMS database and 14 Performance Reports have been completed, but not published.

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(b) Intermediate Outcome Indicator(s) Mauritius First Public Sector Performance Development Policy Loan - P125694



approval documents)




Mauritius First Public Sector Performance Development Policy Loan - P125694



approval documents)




G. Ratings of Program Performance in ISRs Mauritius First Public Sector Performance Development Policy Loan - P125694

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 09/01/2012 Satisfactory Satisfactory 0.00 MU -Second Public Sector Performance DPL - P128140

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 10/28/2013 Satisfactory Satisfactory 19.95 2 06/26/2014 Moderately Satisfactory Satisfactory 19.95

H. Restructuring (if any)

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1. Program Context, Development Objectives and Design

1.1 Context at Appraisal

1. This DPL series of two loans followed a previous DPL series for Mauritius. As the first series was coming to an end, it was increasingly evident that the government’s reform agenda remained unfinished and critical constrains to economic development, particularly with regard to public sector performance, still needed to be addressed. GDP growth rates, although positive, were still below the level necessary to achieve the country’s aspiration to become a high-income country by the end of the next decade. There was evidence that domestic factors, such as skilled mismatches and infrastructural bottlenecks, were impacting the economic development of Mauritius and competitiveness had weakened as a result of this structural rigidities. To accelerate GDP growth while facing external imbalances, it was evident that Mauritius needed to undertake structural reforms to promote national savings and raise competitiveness. This series identified areas that included access to better skills, improvement in infrastructure and a more efficient public sector. At that time, the Government was preparing to present their new program for 2012-15 called Moving the Nation Forward (MNF) with the main objective of helping Mauritius become a high-income country in ten years’ time. In that context, this DPL series was prepared to support the Government efforts to achieve its development goals. The DPL was also intended to be a beacon for sharing knowledge with the authorities and harmonize dialogue while providing a well-priced source of funds. 2. The DPL was prepared in coordination with the First Sector Competitiveness (PSC) DPL series. The two DPL series were designed to mutually reinforce and address complementary aspects of the Government’s reform program for 2012-15 called Moving the Nation Forward (MNF). The MNF contains six pillars covering economic, political, social, and environmental issues (see paragraph 19 for examples of linkages between DPLs and MNF Pillars). The strategies in the MNF were translated into specific policy measures through the budget process. The first budget since the launch of the MNF was presented to Parliament in November 2012 and elaborated on many of the areas discussed in the MNF and supported by the two DPLs. The PSC DPL series would focus primarily on strengthening the policy and institutional environment for private sector competitiveness, while this series focus primarily on the performance of the public sector. 3. When the first operation was appraised in January 2012, the economy was continuing to recover from an adverse external environment. However, the coalition government that was elected in 2010 lost one of their parties in mid-2011. The withdrawal of the Mouvement socialiste militant (MSM) from its alliance with the Labor Party and the Parti mauricien social démocrate (PMSD) to join the opposition created a less satisfactory environment to a vigorous reform agenda at a time of extreme global economic uncertainty. GDP had grown by 4.1 percent in 2010 amid global economic turbulence and was estimated to have grown about the same magnitude in 2011. Growth was mainly driven by the service sector (mostly financial services and real state) and recuperation in the manufacturing of textiles. The government was paying careful attention to retain fiscal

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space should need to sustain aggregate demand in a highly uncertain environment. The fiscal deficit narrowed from 3 percent in 2010 to an estimated 2.4 percent in 2011 as expenditures decreased faster than revenues. The wage bill was lower than expected as government delayed filling up positions in the civil service. There were also lower than expected capital expenditures and the special funds showed net savings. Monetary policy had been tightening during 2011 due to inflationary pressures, but they moderated by the end of the year (to 4.9 percent by December 2011 from 6.1percent the previous year on year rate). The current account was widening as international commodity prices were increasing. In 2011, exports grew in nominal terms by 16 percent while imports grew by 17 percent. Tourism receipts also grew during the first three quarters, but started to show possible difficulties for the following year as arrivals from the EU decreased in the fourth quarter. Reserves, however, increased in nominal term as the inflow of portfolio investment and official loan disbursements were adequate, but decreased as percent of imports of goods and services (from 4.8 in 2010 to 4.2 in 2011). 4. By the time the second operation was appraised, there were positive and negative economic developments which affected the public sector reform program. Economic growth in 2012 had slowed down, from 3.8 percent in 2011 to 3.3 percent in 2012. The unfavorable external environment had weakened economic activity. Textile exports had decreased, construction had slowed down and tourist arrivals from Europe had slowed down (decreased by 8 percent in 2012), although tourism from Africa and Asia partially compensated with an increased by almost 15 percent. Growth was led by strong ITC and financial service sectors. Although the outlook for 2013 was positive, with GDP projected to grow at 3.7 percent, substantial risks remained both domestically to accelerate the reforms needed and externally, with headwinds from the uncertain European recovery. The fiscal position was improving and the government had achieved greater debt consolidation in 2012 than previously expected. The deficit was lower than previously estimated at 2.3 percent of GDP as revenues kept constant while expenditures decreased, mainly transfers, including to SOEs, and subsidies that drop by over one percent of GDP compared to 2011. Also expenditures on goods and services were lower as percent of GDP than the previous year. Monetary policy was accommodative in 2012, after reducing the REPO rate in March 2012, the Bank of Mauritius kept it constant until the end of the year in light of the continued uncertainty in the global outlook and declining inflation (3.2 percent by December 2012). The external current account deficit narrowed from 12.6 percent of GDP in 2011 to an estimated 10 percent of GDP in 2012, although exports only increased by 5 percent as the ongoing crisis in the EU adversely impacted trade. 5. More recently, data for 2014 shows GDP growth at 3.2 percent, below earlier projections of 3.7-4 percent due to the continued slowdown in the Eurozone. The construction sector declined by 6.7 percent, and the textile sector grew merely 1.5%. Growth continued to be supported by the services sector, mainly financial services, trade, and ICT which grew by 5.4%, 3.2 % and 6.4% respectively in 2014. Growth in the tourism sector also accelerated to 4.1% in 2014. Fiscal policy remained consistent with macroeconomic stability, although public expenditure has increased from 25.9% of GDP in 2013 to 26.2% of GDP in 2014 due to rising current expenditure. The current account deficit has narrowed slightly to 9.2% of GDP in 2014 compared to 9.9% of GDP in 2013,

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driven by a decline in the trade deficit and lower net outflows. Exports have remained stable around 52% of GDP in recent years. The current account deficit continues to be financed by FDI (mainly in real estate activities accommodation and food services), and financial flows from Global Business companies (GBC). Inflation declined to 3.2% percent in 2014, in part related to subsiding food and oil international prices. Gross international reserves increased to USD 4.0 billion in 2014 (6.0 months of import cover), compared to USD 3.3 billion in 2013 (representing 4.8 months of import of goods and service).

1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)

6. The development objective of the DPL programmatic series is to support improvements in the performance of the public sector in Mauritius by assisting the government to implement the following three reform pillars: (i) strengthening services to support and empower the most vulnerable; (ii) streamlining trade regulations and processes; and (iii) improving human resource management in the civil service and the monitoring of SOE performance. 7. The key indicators as approved were grouped under the three pillars of the program development objectives and were sub-categorized according to the indicator area of focus:

Pillar I: Strengthening Services to Support and Empower the Most Vulnerable

a. Social Protection i. Number of people with less than a secondary school certificate (SC) placed in

Placement for Training. ii. Number of households in the Social Register of Mauritius (SRM).

b. Education

i. Percentage of students entering Year 1 and completing the pre-vocational education cycle.

Pillar II: Streamlining Trade Regulation and Processes

i. Number of regulations on which a decision is taken after review ii. Number of ministries involved in issuing certificates/ permits/clearances

connected with the national single window iii. The amount of time needed to settle the Customs administrative penalty

amount

Pillar III: Improving Human Resource Management in the Civil Service & Monitoring of SOE Performance

a. Civil Service i. Gradual reduction of processing time relating to the prescription of schemes

of service and in the number of schemes of service

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b. State-owned Enterprises

i. Number of SOEs included in the annual performance report prepared by the OPSG and published on the OPSG website

1.3 Revised PDO (if any, as approved by original approving authority) and Key Indicators, and Reasons/Justification

The PDO and key indicators were not revised.

1.4 Original Policy Areas Supported by the Program (as approved):

8. The program supported three main policy areas:

(i) Strengthening Services to Support and Empower The Most Vulnerable This DPL series supported the Government’s objective to promote inclusion and social cohesion as laid out in the new government program Moving the Nation Forward by focusing on: (i) restructuring the social protection system to make it better targeted and more cost-effective and (ii) improving education outcomes, especially for the poorest households. These reforms were intended to ensure that economic growth was more balanced and equitable.

(ii) Streamlining Trade Regulation and Processes This DPL supported the government’s objective to continue Mauritius’ transformation into an open, low tax, and business-friendly economy by further reforming the regulatory framework and removing administrative bottlenecks to enhance competitiveness. The program supported the following government measures: (i) streamlining existing regulations and systematically ensuring that the design of new regulations was conducive to business; (ii) increasing administrative efficiency in trade processes by using IT; and (iii) enhancing the effectiveness of the administrative appeals and penalties of the Mauritius Customs service.

(iii) Improving Human Resource Management in the Civil Service and the Monitoring of SOE Performance This DPL focused on establishing the building blocks to increase public sector efficiency in the medium term by assisting the government in its efforts to introduce a culture of improved service delivery in the public sector. Because public sector reforms would require consensus between diverse stakeholders and could have affected the political equilibrium, the government continued to take a strategically incremental approach. As a result, this DPL aimed to increase the efficiency of the public sector by supporting the streamlining of civil service management and the strengthening of the coordination and monitoring of SOEs to increase their efficiency and transparency.

1.5 Revised Policy Areas (if applicable) 4

The policy areas and key were not revised.

1.6 Other significant changes

9. There were not any significant changes in design, scope and scale, implementation arrangements and schedule, or funding allocations.

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance (supported by a table derived from a policy matrix)

10. The program was supported by two single tranche operations. The First and Second Public Sector Performance DPLs were approved subject to the implementation of eight prior actions each (see Table 1). All prior actions were satisfactorily met before their respective Board approvals on March 27, 2012, and March 27, 2013.

Table 1: Prior Action for First and Second Public Sector Performance DPLs

First Public Sector Performance DPL Prior actions from Legal Agreement/ Program Document Status

Pillar I: Strengthening Services to Support and Empower The Most Vulnerable a. Social Protection Prior action 1. The issuance of a new organizational and staffing chart for NEF which shall have been approved by the Ministry of Social Integration and Economic Empowerment (MoSIEE), reflecting the new institutional structure of the National Empowerment Foundation (NEF), and with separate departments for: (a) child and family development; (b) community empowerment; (c) placement and training; and, (d) monitoring and evaluation.

Met

Prior action 2. Cabinet approval of a memorandum giving details of a proposal and action plan for the establishment of the Social Registry of Mauritius (SRM)

Met

b. Education Prior action 3. Cabinet approval of a concept paper for prevocational education reform, giving details of proposed changes to existing learning and institutional arrangements, including extension of prevocational education to four years, revision of curricula, introduction of teaching and learning methods to promote retention, and acquisition of core basic skills and technical competencies.

Met

Pillar II: Streamlining Trade Regulation and Processes Prior action 4. Establishment of a join public-private Business Facilitation Task Force, giving it a mandate to review existing systems and processes, and streamlining regulations, governing

Met

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trade investments, with a view to removing bottlenecks and creating a business-friendly environment. Prior action 5. Cabinet approval of a memorandum, giving details of proposed modalities and action plans for the establishment of a comprehensive and up-to-date Trade Portal.

Met

Prior action 6. Development by the Ministry of Finance and Economic Development (MoFED) of a draft policy paper on the proposed establishment within its customs department of an appropriate internal appeals mechanism that complies with the requirements of the revised Kyoto Convention, giving details of the proposed legal and institutional framework, and operating guidelines and procedures, governing such mechanism.

Met

Pillar III: Improving Human Resource Management in the Civil Service & Monitoring of SOE Performance a. Civil Service Prior action 7. Submission to Cabinet, by the Ministry of Civil Service and Administrative Reform (MCSAR), and information paper, giving details of plans to streamline Schemes of Service and expedite the process of review, modification and consolidation of such Schemes of Service, based on adequate consultations with the civil service unions and other stakeholders, and reflecting the outcome of such consolations.

Met

b. Public Enterprises Prior action 8. Cabinet approval of a memorandum, giving details of the revised mandate of the Office of Public Sector Governance (OPSG) to: (a) monitor the overall performance of SOEs; (b) prepare quarterly reports; (c) support line ministries in the preparation and implementation performance improvement plans; and, (d) supervise the pace of SOE reforms as approved by Cabinet, reporting back to Cabinet with proposals for corrective measures as needed.

Met

Second Public Sector Performance DPL

Prior actions from Legal Agreement/ Program Document Status

Pillar I: Strengthening Services to Support and Empower The Most Vulnerable

a. Social Protection

Prior action 1. The Ministry of Social Integration and Economic Empowerment approves a Strategic Plan for the National Empowerment Foundation

Met

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Prior action 2. New social protection programs use the Social Registry of Mauritius for identifying beneficiaries, and the Ministry of Social Integration and Economic Empowerment adopts a timetable for incorporating existing National Empowerment Foundation programs into the Social Registry of Mauritius.

Met

b. Education Prior action 3. The Ministry of Education and Human Resources implements new curricula for pre-vocational education, including one for the training of trainers.

Met

Pillar II: Streamlining Trade Regulation and Processes

Prior action 4. The Cabinet approves elimination of permits issued by the Ministry of Industry, Commerce and Consumer Protection for six products to further facilitate trade in the country.

Met

Prior action 5. Adoption by the Steering Committee for Development and Implementation of the single window of a functional model for the single window.

Met

Prior action 6. The government adopts a prescribed schedule of administrative penalties for Customs.

Met

Pillar III: Improving Human Resource Management in the Civil Service & Monitoring of SOE Performance

a. Civil Service Prior action 7. The Ministry of Civil Service and Administrative Reforms appoints a firm to develop a Human Resources Management Information System at five pilot sites and adopts revised procedures to reduce the time required to amend schemes of service from six months to four months.

Met

b. Public Enterprises Prior action 8. The Cabinet has endorsed the implementation of the restructuring plans for the National Transport Corporation and Business Park Mauritius Limited. The Office of Public Sector Governance also provided a report on State Owned Enterprises sector performance.

Met

2.2 Major Factors Affecting Implementation:

Adequacy of government’s commitment 11. There was adequate Government Commitment throughout the implementation of both operations.

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Soundness of background analysis Applied Lessons from Previous Operations. This DPL series made use of important lessons learned from the previous programmatic DPL series. These lessons included the need to ensure:

• Alignment of program with government’s priorities and leadership. The government has a strong sense of direction with regard to its reform program. The success of a DPL in Mauritius is measured primarily by its capacity to stimulate and support the policy agenda rather than its financing. In Mauritius, the government views the Bank’s budget support as a catalyst for stimulating and coordinating its policy agenda, by contributing technically and effectively coordinating different stakeholders. The previous DPL series was effective in helping MoFED to bring sector ministries and agencies on board to align other donors with the reform effort. During the preparation of this series, the government repeatedly emphasized that this is, and will remain, the main value added of World Bank support, as it remains possible for the government to close its financing gap in both domestic and external markets.

• Strong coordination with development partners. The previous DPL series

succeeded to a large extent because of the harmonized policy dialogue among all development partners. This often translated into joint prior actions, missions, and single reporting for all development partners, thus significantly reducing the government’s transaction costs. Although, this joint partner approach had weakened during the 2010 hiatus in Bank DPL support, This DPL programmatic series was an opportunity to once again align the policy dialogue and the financing of all development partners with the government’s priorities. For instance, the close EU and Bank coordination with joint prior actions agreed in the areas of SOE reforms, and the joint World Bank/UNDP report on the reform of the NEF have both guided the preparation of the social protection component of this operation (Pillar 1).

12. Analytical work. The preparation of this DPL series was based on extensive analytical work carried out by the Bank, the government, and other partners:

• Enhancing and Sustaining Competitiveness in Mauritius: World Bank Policy Notes on Trade and Labor nurtured a productive policy dialogue with the government on the issue of trade policy and labor markets. This work was complemented by a report produced by the Permit Review Committee (PRC) of the Government of Mauritius and Jacobs and Associates and DCDM Mauritius in 2009 that highlighted constraints to competitiveness such as redundant licensing and permits and the duplication of information requested for trade. As a result, a “single window” that connects all permit-issuing agencies was established, and a thorough review of existing procedures for the issue of licenses and permits was launched.

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• The UNDP’s 2011 Report on Trade Mainstreaming in Mauritius identified the successes and challenges associated with mainstreaming trade into national development strategies.

• The second 2009 Investment Climate Assessment (ICA) for Mauritius prepared by

the World Bank, the AfDB, and the Board of Investment (BOI) identified some obstacles that hinder firms’ competitiveness, particularly the difficulty that small firms have in accessing finance and the lack of skilled labor. Also, the regulatory environment (licensing, labor regulations, and tax policy) and infrastructure (transportation and electricity) affects firms’ productivity. The recommendations made in the ICA have contributed to the reforms outlined in the competitiveness component of this series (Pillar 2) on the need to harmonize regulations and eliminate red tape.

• In 2011, the report titled Skills and Technology Absorption in Mauritius prepared

by the World Bank pointed out constraints in both the education system and on-the-job training to increasing the skills of the workforce to enable them to use new and emerging technologies. The report’s recommendations focused on the important role that should be played by the primary and secondary education system, particularly in the pre-vocational system, the need to enhance the capacity of tertiary education to teach innovative and technological skills, and the need to foster technical and vocational education and training and active labor market programs.

• The government’s 2010 Social Protection Review and Strategy and a 2010 joint

World Bank/UNDP report on the reform of the NEF have both guided the preparation of the social protection component of this series (Pillar 1). These studies identified capacity gaps and bottlenecks in program implementation at the NEF and recommended steps to increase its effectiveness based on international best practices. These reports have guided the policy dialogue to improve institutional arrangements at the NEF and its social protection strategies.

• The World Bank’s 2012 technical overview note titled “Improving the Performance

of the Civil Service in Mauritius” provided the Ministry of Civil Service and Administrative Reform (MCSAR) provided a diagnosis for a civil service reform strategy. The note highlighted some constraints to improving the performance of the civil service within the current system. The civil service in Mauritius has changed only fairly slowly, and it retains more traditional career structures than many other Commonwealth administrations, which undermines the government’s efforts to make the public sector more results-oriented.

• In 2011, the Bank produced its Corporate Governance Reports on the Observance of Standards and Codes (ROSC) Report, which assessed the corporate governance policy framework in Mauritius and showed the progress in implementing most of the recommendations from the 2002 Corporate Governance ROSC. In addition, the Bank also prepared a Report on the Observance of Standards and Codes (ROSC) –

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Accounting and Auditing in 2011. The report recommended the adoption by the private sector and SOEs of the good accounting and auditing practices necessary to produce quality financial reports. The report also recommended improved support to accountants and auditors – including those in SOEs – to ensure that they fully comply with the stipulated financial reporting standards and issue quality reports that support accountability and necessary decision making.

Assessment of the operation’s design 13. The scope of reforms supported by this DPL series was appropriate. It covered critical areas of public sector reform as envisaged in the Country Partnership Strategy (2007-1013) for Mauritius (developed jointly by the World Bank and the Government of Mauritius) and in the government’s own reform agenda as presented in their 2012-15 program “Moving the Nation Forward”(MNF). The CPS Progress Report approved in 2011 which extended the CPS to FY2015 to align it with the electoral cycle in Mauritius, emphasized that this DPL series would be the Bank’s main vehicle for supporting the government’s broad reform agenda. This DPL series was aligned with the government’s budget cycle, which is the primary vehicle used by the government to induce new policy initiatives. Relevance of the risks identified at appraisal and effectiveness of mitigation 14. The first risk was the challenge of maintaining macroeconomic stability in the face of a highly uncertain global economic climate, particularly in the European economies to which Mauritius is substantially exposed. The trend towards reorienting trade to new markets (for example, Africa and Asia) and new products has helped this exposure. On the fiscal front, the government has made efforts to consolidate the fiscal deficit and reduce public debt. Current account deficits, although high, have been adequately financed, mostly by high FDI and inflows to the financial sector. The DPL has been supportive of government efforts to maintain macro stability and followed economic developments closely through implementation 15. The second risk was the potential political constrains that could affect the pace of the reform agenda. Many of these new reforms would have redistributive effects, meaning that they sometimes eliminate the rents, subsidies, and privileges of certain groups with vested interests. The approach of this DPL series was to mitigate this risk by supporting reforms for which a consensus existed, helping to put in place the building blocks to expedite the reform program over the medium term. This DPL series took a pragmatic approach by supporting reforms that were backed by a broad consensus and that would yield some immediate benefits (for example, in trade and social protection), while laying the necessary foundations required to accelerate other reforms in the future.

16. The third risk was that institutional constraints, including limited capacity in sector ministries, might had made it more difficult to effectively design, implement, and monitor the reforms. These institutional constraints and the potential political constraints had the potential to limit the effectiveness and progress of reforms. While previous reforms were

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led and coordinated by MoFED, the reforms supported by this DPL series were being overseen in most cases by the sector ministries. This involved a wider range of stakeholders, which required additional effort to build consensus around the reform agenda. However, most sector ministries, particularly those that were newly created, lacked the institutional capacity to build this consensus or to design and implement these sector reforms. In addition, after a period of ambitious reforms, some stakeholders both within and outside government were feeling a certain reform fatigue and a reluctance to change. The Bank has helped the government to mitigate this risk by involving specialized Bank staff in the DPL dialogue on selected areas and by encouraging a public debate by publishing articles and technical notes. Additionally, the DPL itself is a catalyst between the different ministries involved in the reform program, thereby enhancing coordination. Also, the Bank’s portfolio in Mauritius is designed to strengthen capacity in a way that is tailored to the needs of a middle-income country.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:

17. Designed. The indicators selected by this operation were carefully chosen to monitor progress towards the program development objectives. Indicator 3 (Percentage of students entering Year 1 and completing the pre-vocational education cycle) was changed as the duration of the pre-vocational training was extended to 4 years instead of 3 which made it difficult to evaluate it fully before December 2014 given that the end of the pre- vocational cycle for the first cohort was December 2014. Also, indicator on the timing for the SOEs report was changed in DPL2 to reflect the fact that an annual report would be prepared (instead of quarterly reports). 18. Implementation. MoFED was responsible for coordinating the supervision and monitoring of the reform program supported by this DPL series. MoFED liaised with the appropriate staff in the ministries, departments, and agencies involved. The Bank carried out periodic monitoring (every 6 months through 3 ISRs) and conducted a dialogue with relevant line ministries and other stakeholders involved in the implementation of the reforms through field missions and through staff based at the Bank’s country office. MoFED, as the primary counterpart agency of these operations, was responsible for providing the Bank with the information required to follow progress on all indicators and monitor outcomes in the policy matrix. For example, during the preparation of the ISR of September 2013, implementation was assessed as continuing at good pace across most components, but identified various areas were pace should have been moving faster, such as on social integration about the Number of people with less than a secondary school certificate placed in Placement Training. It was also identified that the civil service reforms were progressing at a lower paced than envisaged, reflecting the complexity of developing a Human Resource Management Information System (HRMIS). Likewise, during the ISR of May 2014, various areas were also identified with delays and authorities were urged to move forward with them.

19. Utilization. The data and information provided by the MoFED on the status of the indicators was received in a timely manner. These informed the ISRs and allowed for a closer follow up on areas which were lagging behind. For example, during the preparation

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of the first ISR for DPL2 in October 2013, there were indications that the reforms in the civil service were progressing at a slower pace than envisage. This allowed identifying critical areas of focus to try moving forward the agenda at a faster pace.

2.4 Expected Next Phase/Follow-up Operation (if any):

None expected at this time.

3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Overall relevance rating: Substantial Objectives: High 20. The medium term objectives of the DPL series are relevant to the current country and global priorities and to the CPS Progress Report (approved on April 11, 2011) which extended to FY2015 the CPS covering 2007 to 2013. The objectives are closely linked to the current government’s program for 2012-15 (MNF) which main objective is to help Mauritius become a high-income country over the next 10 years. A few examples of the relevance of the objectives and their link to the MNF are the following: (a) strengthening services to support and empower the most vulnerable continues to be one of the main pillars to attain Prosperity for All (Pillar 1 of MNF) and Empowering People (Pillar 3 of MNF); (b) improving human resource management in the public service is also a key factor required to deliver high quality services (Pillar 4 and 5 of MNF); (c) Monitoring of SOEs is essential to consolidate public finances envisioned in Pillar 3 of the MNF; and (d) making the regulatory framework more transparent and more business friendly and eliminating administrative bottlenecks to enhance competitiveness is crucial to moving Mauritius to a high income economic level. Design: Substantial 21. The design of the PDO emphasizing public sector performance remains relevant to Mauritius current priorities. The broader PDO was made more specific through its indicators and targets. The prior actions selected were relevant and sequential to attaining the medium term objectives. The design of the DPL took into account the potential risks for the success of the reforms supported by the operation. Choosing to support government reforms that are backed by a broad consensus and that will yield more immediate results while laying the necessary foundations required to accelerate reforms in the future is the most pragmatic and effective way to move the agenda forward. The political context at time of the design of these operations was less enabling environment for deep reforms. The withdrawal of the Mouvement socialiste militant (MSM) from its alliance with the Labour Party and the Parti mauricien social démocrate to join the opposition created a less satisfactory environment to a vigorous reform agenda at a time of extreme global economic

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uncertainty. Therefore, the team supported the government to implement reforms that were feasible politically. Implementation: Substantial 22. The CPS Progress Report emphasized that this DPL series would be the Bank’s main vehicle for supporting the government’s broad reform program. The MoFED was responsible for monitoring the reforms, reporting progress and coordinating actions with the various ministries, department and agencies involved. While in the past the MoFED had strong mandate to implement the economic reform program, the evolving political context translated into more decentralized reforms, which affected the pace of implementation. Supervision of SOEs, which previously had been at the MoFED, was moved to the newly created OPSG under the PMO. Carrying out trade regulatory assessments, which originally was expected to be carried out by MoFED was finally delegated to the Business Facilitation Task Force, which resulted in less traction in implementation. 3.2 Achievement of Program Development Objectives Rating: Moderately Satisfactory 23. The Program Development Objective achievements are summarized in the table below. Progress was made in the eight DPL indicators, with 4 fully met, 1 partially met and 2 not met. Therefore, the overall rating for the achievement of the development objectives is rated moderately satisfactory.

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Table 2: DPL Indicators Results

Indicators Baseline

(2011) Expected Results

Actual Results Comments

2012 2013 2013

Pillar I: Strengthening Services to Support and Empower The Most Vulnerable a. Social Protection

1. Number of people with less than a secondary school certificate (SC) placed in Placement for Training.

912 1,000 1,200 3,280 Met. Technical and vocational training relating to domestic workers, ICT, mechanics, welding and several ones from the hotel industry had been provided to some 2,932 unemployed below SC Level while 348 have been placed in different sectors of the economy. This represents a remarkable achievement of the target which was overpassed by almost 300 percent.

2. Number of households in the Social Register of Mauritius (SRM).

0 10,000 13,000 29,318 Met. Including the Housing Scheme (10,535 beneficiaries), the casting of roof program (233 beneficiaries), the housing general and crèche programs of NEF (480 beneficiaries), and NS and RI of Ministry of Social Security (18,070 beneficiaries). This represents an overachievement of the target by over 200 percent.

b. Education 3. Percentage of students entering Year 1 and completing the pre-vocational education cycle.

72.2% 73.2% 74.2% 64.1% Not Met. The Prevocational Education system was extended to 4 years. Out of the 2434 students who started in Year I in 2011, 1768 (72.6%) completed Year III in 2013 and 1561 (64.1%) completed Year IV in 2014. The drop-out was mainly due to the introduction of the dual mode of attendance in 2013 with significant number of students not able to adapt to the change and ceasing to attend the MITD Training Centers.

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Pillar II: Streamlining Trade Regulation and Processes 4. Number of regulations on which a decision is taken after review.

n/a 10 30 25 (as of May 2014) Partially met (83%). Six items delisted from Import Control in January 2013, 3 items delisted from Export Control from December 2013. From March 2014, samples of controlled goods bearing HS Code 10.06, 11.01, 17.01 and 25.23 weighting 10 kg or less exported for analysis or marketing purposes involving no transfer of funds do not require an import permit. The Cabinet has also decided to reduce the number of products requiring import and export permits by the Agricultural Marketing Board from 21 to 6.

Indicators Baseline (2011)

Expected Results Actual Results Comments

2012 2013 2013

5. Number of ministries involved in issuing certificates/ permits/clearances connected with the national single window.

0 All None Not met. The Mauritius Single Window system has been extended by the development of a National Single Window-OGA portal, integrating other Government Agencies, which caters for the online application, processing and approval of permits/authorizations related to import and export. Twelve agencies involved in the processing and issue of trade-related permits/clearances have been identified to join the OGA Portal. The first agency (Film Classification Board) was tested on a pilot basis in December 2014. It is expected that a full implementation will only be launched by mid- 2015.

6. The amount of time needed to settle the Customs administrative penalty amount.

6 weeks 3 weeks 3 weeks 2 weeks Met. In 2011, all operators were allowed 6 weeks to settle their Customs administrative penalty. Now, the allowed period is 2 weeks and already 71% of the Customs Offense Reports (COR)’s filled were settled within this period. For cases not settled within the initial

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14 days period, a final reminder is sent to the offender with an additional 14 day period. 16% of the cases have been settled after the issue of the final reminder After the lapse of the additional 14 days; the unsettled cases (13%) where the offenders have not responded to the agreement for compounding are referred to the Legal Services Department of the Mauritius Revenue Authority for legal proceedings.

Pillar III: Improving Human Resource Management in the Civil Service and Monitoring of SOE Performance

a. Civil Service

7. Gradual reduction of processing time relating to the prescription of schemes of service and in the number of schemes of service.

Processing time: 6 months Number of Schemes of Service above 2,500

Processing time: 5 months Consolidation of Schemes of Service piloted in MCSAR

Processing time: 4 months Consolidation of Schemes of Service extended to other sectors of civil service

Consolidation of Schemes of Service piloted in MCSAR in 2012; Processing time: 3.5 months in June 2013; Consolidation of Schemes of Service extended to other sectors of civil service in 2013

Met. The duration of the amendment of Schemes of Service now stands between 3 and 4 months, with some cases being amended in about a month. Consolidation of Schemes of Service has been piloted in MCSAR in 2012 and extended to other ministries reducing the total amount of Scheme of Service by around 14 percent compared to the amount in 2011.The total number of Scheme of Service for civil servants has been reduced to about 2,300 by February 2014 and is estimated to have been reduced to 2,156 at the end of 2014.

b. State-owned Enterprises

8 Number of SOEs included in the quarterly (amended in DPL2 to annually) performance report prepared by the OPSG and published on the OPSG website.

0 5 25 14 included but not published

Partially met. 57 SOEs have been registered in the PIMS database and 14 Performance Reports have been completed for those which have provided total inputs in the system up to December 2013. The annual performance report prepared by the OPSG were not published because it was found that these reports may contain sensitive information about these organizations and their clearances are needed before releasing the contents of these reports.

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Pillar I: Strengthening Services to Support and Empower the Most Vulnerable 24. Social protection. The government’s medium-term objective is to transform its social safety net into a more effective and efficient system to empower the poor and vulnerable to rise out of poverty, objective supported by the DPL series. Given the political difficulties that might be involved in any attempt to reform untargeted subsidies and benefits, the government has focused first on reforming its targeted programs. The government began by restructuring the National Empowerment Foundation (NEF) with support from the first operation in this DPL series. The restructuring has progressed well. 25. The Placement and Training is one of the three pillars of the NEF. The program aims at enhancing the employability of unemployed persons in unskilled and semi-skilled jobs through the provision of training and placement services. To this send, the NEF has been working with a number of organizations such as the Mauritius Institute of Training and Development, the National Computer Board, the Mauritius Institute of Education and Fashion and Design Institute to dispense vocational and technical training to those below Secondary (SC) Level with poor academic achievement so that they acquire technical knowledge and expertise to enhance their chance of employability and/or to start their own micro business. The Program Based Budget (PBB) indicator of the NEF for 2013 based on the Budget item “Number of persons below the School Certificate level, placed and trained” was set at 1200. This was also identified as the target indicator 1for the DPL. During 2013, several technical and vocational training related to domestic workers, ITC, mechanics, welding and several ones for the hotel industry had been provided to some 2,932 unemployed below SC Level while 348 have been placed in different sectors of the economy. The total number for placed/trained was 3,280 as of June 2014, well above the DPL target. 26. To this end, as a basis for improving the monitoring of both Social Aid and NEF programming as well as improving coordination and increasing impact, the government launched the Social Registry of Mauritius (SRM), another prior action in the first operation in this series. The SRM is an integrated management information system that provides comprehensive information on clients of social assistance programs with the aim of increasing coordination among the many different programs. The government has been consolidating the realignment of the NEF and bringing new and existing programs into the SRM. 27. There are substantial new social protection programs using the Social Registry of Mauritius for identifying beneficiaries, including the Housing scheme (10,535 beneficiaries), the casting of roof program (233 beneficiaries), the housing general and crèche programs of the NEF (480 beneficiaries), and National Solidarity (NS) and Reform Institutions (RI) of the Ministry of Social Security (18,070 beneficiaries). In total, as of June 2014, there were 29,319 households identified in the SRM, surpassing the target of 13,000 under indicator 2.

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28. Education. The DPL supported policy actions in pre-vocational education for attaining the government’s objective to improve learning outcomes and ensuring access to good quality general secondary education for all, especially the most disadvantaged. Learning opportunities for those who fail the Certificate of primary Education (CPE) are limited to a pre-vocational stream, which has not been able to meet the needs of the latter. 29. A comprehensive reform of the pre-vocational stream is expected to facilitate the transition of students from school to work and to increase the number of pre-vocational graduates who progress to technical and vocational education and training (TVET). Supported by the first operation under this DPL series, government’s approval was obtained for a broad reform that, by increasing retention and enhancing the quality of pre-vocational education, was expected to equip future graduates of pre-vocational education with the basic skills needed to enter the labor market or continue with further education in the TVET stream. The implementation of the reforms began at the start of the 2012 academic year. 30. However, fundamental changes have been implemented in the education system since the DPL was approved. The government is advocating 9 year basic education, which may result in dropping the pre-vocational stream. This might influence the sustainability of the reforms supported by the DPL. In parallel, additional changes have been made to the Pre-vocational Education (PVE) system, mainly the extension of program duration from three to four years. In the context of the implementation of the New Strategy for PVE in 2012, a new curriculum was introduced in Year I and gradually phased in for those who were attending Year II. This first cohort reached Year IV in December 2014. 31. Given these changes, the Government’s own monitoring and evaluation system will use a revised indicator to reflect achievement of indicator 3 of the DPL: “Percentage of students entering Year 1 and completing the pre-vocational education cycle”, which MoEHR proposes to be “Percentage of students entering Year 1 and completing the pre-vocational education cycle (now referring to the fourth year of prevocational cycle) as the year of completion and not the third year as for the previous years”. The first cohort in Year IV completed PVE in 2014 and not 2013 as previously measured. Out of the 2434 students who started in Year I in 2011, 1768 (72.6%) completed Year III in 2013 and 1561 (64.1%) completed Year IV in 2014. The drop-out was mainly due to the introduction of the dual mode of attendance in 2013 with significant number of students not able to adapt to the change and ceasing to attend the MITD Training Centers. Corrective actions are being taken for the subsequent cohorts.

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Pillar II: Streamlining Trade Regulation and Processes 32. Trade liberalization has been key in increasing Mauritius competitiveness. The government’s objective is to continue Mauritius’ transformation into an open, low tax, and business-friendly economy by further reforming the regulatory framework and removing administrative bottlenecks. In Mauritius, regulations are increasing as a result of society’s demands to regulate markets and control health and environmental hazards. These regulations play an important social role and fulfill key policy objectives, but if they are not properly designed, they can raise transaction costs (in particular cross-border ones) and production costs by making imported products more expensive or by generating red tape. A World Bank report on trade and labor completed in 20101 identified the main weaknesses in the regulatory environment in Mauritius as: (i) a lack of a systematic approach to assessing the costs and benefits of regulations; (ii) a duplication of requirements and a lack of coordination among many ministries and agencies; (iii) excessive reliance on ex-ante inspections rather than random and targeted ex-post controls; and (iv) the absence of any procedures allowing businesses to appeal against regulatory rulings. With the support of this DPL series, the government adopted the following measures: (i) streamlining existing regulations and systematically ensuring that the design of new regulations is conducive to business; (ii) increasing administrative efficiency in trade processes by using IT; and (iii) enhancing the effectiveness of the administrative appeals and penalties of the Mauritius Customs service. Streamlining existing regulations and systematically ensuring that the design of new regulations is conducive to business 33. The authorities have made progress streamlining regulations and further eliminating unnecessary permits, in addition to the 6 items delisted from Import Control with effect since January 3, 2013. The Ministry of Foreign Affairs, Regional Integration and International Trade division, also delisted 3 items from Export Control with effect from December 10, 2013. Moreover, as from March 15, 2014, samples of controlled goods bearing HS Code 10.06, 11.01, 17.01 and 25.23 weighing 10 kilograms or less exported for analysis or marketing purposes involving no transfer of funds do not require an import permit. The number of regulations on which decision was taken after review has been reduced to 25 as of May 2014, still slightly below the target of 30 as per indicator 4. 34. However, the government commitment in this area is also reinvigorated with the up-coming Accelerated Program of Economic Integration (APEI) regional DPO. As a prior action, the Cabinet has taken a decision to reduce the number of products requiring import and export permits by the Agricultural Marketing Board from 21 to 6. Moving forward, the Government will eliminate as part of APEI DPO2 and DPO3 the following NTBs: (i) import approvals for fish to be done by only Ministry of Health and (ii) remove NTB on

1 World Bank Report No 53322-MU, Mauritius Enhancing and Sustaining Competitiveness- Policy Notes on Trade and Labor, December 3, 2010.

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wheat flour. The Government will also eliminate as part of APEI DPO3 5 NTBs identified through the codification exercise. Promoting administrative efficiency in trade processes by using IT 35. The specific reforms supported by the DPL series were: (i) Cabinet approval of a Memorandum detailing the establishment of a trade portal and (ii) adoption by the Steering Committee for Development and Implementation of a functional model for the single window. 36. The Ministry of Foreign Affairs, Regional Integration and International Trade have operationalized the trade portal, which was launched in August 2013 and can be accessed at http://www.mauritiustrade.mu/en. The portal increases the transparency and accessibility to all regulations listed by national tariff line for importers and exporters, as well as information relating to import and export procedures in Mauritius, opportunities existing on the regional and international markets under various agreements Mauritius signed (see them at: http://www.mauritiustrade.mu/en/trade-agreements), among others. 37. The Mauritius Single Window system has been enhanced by the development of a National Single Window-OGA portal, integrating other Government Agencies, which caters for the online application, processing and approval for permits/authorizations related to import and export. Twelve agencies involved in the processing and issue of trade-related permits/clearances have been identified to join the OGA Portal. The estimated date for the first agency (Film Censor Board) to be tested, on a pilot basis was delayed to December 2014. It is expected that other agencies will be linked in a phase like approach in 2015. The Ministry of Commerce and Consumer Protection will be the first agency to be hooked on the OGA Portal in 2015. Also, the detailed study (technical aspect) to link the Ministry of Commerce and Consumer Protection to the OGA Portal has started since mid-November 2014. However, indicator 5, which calls for all agencies to be connected with the national single window, was not met. The initial design seemed too optimistic, the customs department lacked the institutional capacity and status to coordinate other ministries and IT issues as well as a parallel process to review and streamline administrative processes proved much complex than anticipated. However, the government continues to develop the single window system and a revised timetable has been agreed among all stakeholders. 38. In order to optimize on the benefits of the Single Window, the business processes of the 12 agencies have been examined with a view to streamlining them. Furthermore, time limit for the issue of a permit has been fixed as from the effective date of receipt of the application. Further, legislative amendments required for the implementation of the Single Window have been included in the Economic and Financial Measures (Miscellaneous Provisions) Act, 2013 and shall come into force on a date to be fixed by Proclamation. Additional Regulations have been prepared, to facilitate the implementation of OGA portal and the streamlined procedures. In addition, comprehensive and clear guidelines, which will be made available on websites to facilitate compliance by operators, are being finalized. The Government has stated that it intends for the enhanced Single

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Window to also be linked to the Government e-payment gateway. 39. The government commitment in this area is also reinvigorated with the up-coming Accelerated Program of Economic Integration (APEI) regional DPO. As a prior action for this year for the APEI, the trade portal has been put in place, increasing transparency by presenting all relevant trade information. Moving forward, as part of APEI, DPO2 established the national single window. Enhancing the effectiveness of the Mauritius Customs administrative appeals and penalties 40. The specific reforms supported by the DPL series were: (i) Formulation of policy paper (by MOFED) on the legal framework, institutional set-up and operation of an appropriate internal appeal mechanism within Mauritius Revenue Authority (MRA)-Customs that would be consistent with the requirements of the Revised Kyoto Convention and (ii) the government adopts a prescribed schedule of administrative penalties for Customs. The internal appeal mechanism has been set up and the prescribed schedule of administrative penalties for Customs has been institutionalized. 41. With regards to the Schedule of administrative penalties the Finance (Miscellaneous Provisions) Act 2012 amended Section 162 of the Customs Act 1988 to: (i) Enable the Director-General with the consent of the Director of Public Prosecutions, to compound any offences committed by any person against any Customs Laws and is prescribed as a compoundable offence; and (ii) Regulations was made under Section 163 of the Customs Act for the introduction of the Customs (Compoundable Offence and Compounding Amount) Regulations 2012 which came into effect on 01.01.13. For the proper implementation of Section 162, an agreement has been made between the Mauritius Revenue Authority and the Director Public Prosecutions. 42. As a result of the enhancement in the compounding process more on the spot settlement for minor offences committed by passengers where the amount of duty, excise duty and taxes below the threshold of Rs 7,500 have taken place: They increased from 260 cases raised and 132 cases settled in 2012 to 623 cases raised and 408 cases settled in 2013. An increase in transparency, predictability, efficiency and effectiveness of the compounding mechanism is in line with the vision of the MRA and has been accepted by the economic operators as there is rarely dispute with respect to the compounding terms. Moving forward, Section 162 of the Customs Act 1988 and the Customs (Compoundable Offence and Compounding Amount) Regulations 2012 are being reviewed based on representations made by Economic operators. 43. In 2011, offenders were allowed 6 weeks to settle their Customs administrative penalty. In 2013, that period was reduced to 2 weeks. In 2013, 1,073 Customs Offense Reports (COR’s) were filled and the actual time taken to settle the penalty is shown below:

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NO of COR’s Filed - 1,073 COR’s settled at Source- 408 (38%) COR’s settled within 2 weeks - 355 (33%) COR’s settled after 2 weeks - 173 (16%) Unsettled COR’s - 137 (13%) 44. From the figures above, in 2013, 71% of the COR’s filled were settled within 2 weeks and16% were settled within 28 days, making the average of settled cases within 3 weeks, which is the target period for indicator 6. For cases not settled within the initial 14 days period, a final reminder was sent to the offender with an additional 14 day period. (16% of the cases have been settled after the issue of the final reminder). After the lapse of the additional 14 days, the unsettled cases (13%) where the offenders have not responded to the agreement for compounding were referred to the Legal Services Department of the Mauritius Revenue Authority for legal proceedings. Pillar III: Improving Human Resource Management in the Civil Service & Monitoring of SOE Performance 45. The public sector plays a pivotal role in the Mauritian economy as it represents around 25 percent of GDP and 25 percent of all investment. The central government comprises 25 ministries and some 50 departments and is the biggest single employer in the country with around 53,000 public servants (representing 10 percent of all employment and 4.1 percent of the total population). There has also been a proliferation of state-owned enterprises (SOEs) in Mauritius in recent years. To date, there are some 150 SOEs and parastatals supervised by different line ministries and departments, employing around 20,000 people or 1.6 percent of the total population. This compounds the challenges of reforming the role of the state and strengthening public sector management. This DPL series aimed at increasing the efficiency for the public sector by supporting the streamlining of the civil service management and the strengthening of the coordination and monitoring of SOEs to increase their efficiency and transparency. 46. Civil service. The reform efforts focused on three main areas: (i) the development of a civil service strategy and a medium-term action plan for reform; (ii) a review of the schemes of service to ease some cumbersome administrative constraints; and (iii) the design and implementation of the Human Resource Management Information System (HRMIS) to generate key information to monitor and manage the civil service, to identify reform goals, and to monitor the implementation of future reforms. Progress has been made in these three areas since the first operation in this DPL series was approved, but it has been incremental. 47. The duration of the amendment of schemes of services now stands at an average of 3.5 months. These measures are in line with the expected results anticipated in the DPL operation (i.e. gradual reduction of processing time relating to the prescription of schemes of service to four months by the end of 2013 according to the first component of indicator 7). The total number of schemes of service for civil servants were reduced to about 2,300

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by February 2014 and it is estimated to have been further reduced to 2,156 by the end of 2014. Also consolidation of schemes of service (second part of indicator 7) has been worked out on a pilot case by MCSAR for the various grades comprising the Human Resource Management Cadre which falls under the responsibility of the Ministry. The new model proposed constitutes a major change in the current practice in as much as it has been a long established practice to have a single scheme of service for each grade. The Federations of Unions have shown reluctance with the new model as it requires a streamlined approval process that they sense can undermine staff rights which are delaying implementation. Although the target indicator 7 has been only partially achieved the reduction of processing time to the prescription of scheme of services is a substantial improvement to accelerate hiring processes in the public sector. 48. Regarding the preparation of the Human Resources Management Information System (HRMIS), it has suffered delays. Initially, the HRMIS was to be implemented on a pilot basis in only 5 or 6 selected Ministries/Departments. However, after reconsideration, it has been decided that all Ministries/Departments be involved in the implementation process right from the beginning of the implementation phase. On certain technical or legal/policy matters, MCSAR has to rely on inputs/clearances of others to be able to move ahead. In view of the fact that every Ministry/Department has its own sectoral commitment, implementation of the HRMIS constitutes an additional workload to be attended to with the same amount of human resources. These are unpredictable constraints which arise in the course of the implementation process. 49. Moving forward, on-going initiatives such as an electronic system that will be part of the HRMIS and a handbook for drafting schemes of service and related training on the matter, will help to reduce the process required to amend schemes of service, though not drastically. Without additional changes in current operation modalities, it will be difficult for MSCAR to further accelerate the amendment of schemes of service, particularly given the need to secure the collaboration with a large number of unions, grouped in three major federations. 50. State-owned enterprises. Significant efforts have been made over the past decade to reduce the fiscal burden that state-owned enterprises (SOEs) represent. The government for some time has intended to strengthen the financial position of the largest SOEs while increasing its focus on improving service delivery. In 2010, the government established the Office of Public Sector Governance (OPSG) under the aegis of the Prime Minister’s Office to provide leadership, coordination, and cohesion to the implementation and monitoring of the SOE reform initiative. The OPSG launched the Parastatals Information Management System (PIMS) and is implementing a comprehensive performance monitoring framework to improve corporate governance. The OPSG prepared plans for reforming underperforming SOEs and presented them to the Cabinet for endorsement. Therefore, the OPSG took a cautious incremental approach while learning in the process and restructured only two SOEs in 2012 and learn lessons from this experience that could be applied to subsequent restructurings. This was in line with the objectives of this DPL series and was also aligned with the requirements for the EU budget support for 2012,

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which specified two pilot SOEs to be restructured in 20122. 51. Since 2012, the OPSG has focused on a total of 7 restructuring plans for SOEs (2 in 2012 and 5 in 2013), with 4 more to be completed by the end of 2014. These restructuring plans include the milestone for achieving a 5 percent return on their capital investment. The plans have been approved by Cabinet and published on the SOE website, as agreed by both the Bank and the EU. During 2013, the EU has provided technical assistance to OPSG towards the upgrading of the reporting in the Performance Information Management System (PIMS). The PIMS database currently contains annual data for 20 SOEs for the past three years. The system is being upgraded to enable the graphical display of forecasts of indicators for the next five years from trends detected from three year historical data. These reports will be provided to the SOEs for self-assessment. OPSG has published annual reports for 2011, 2012 and 2013. The report shows that restructuring plans were prepared and approved by Cabinet for five SOEs in 2013. However, the annual performance report were not published because it was found that these reports may contain sensitive information about these organizations and their clearances are needed before releasing the contents of these reports. Fifty seven SOEs have been registered for PIMS and 14 Performance Reports have been completed for those which have provided total input in the system up to Dec 2013. Since Indicator 8.called for 5 SOEs to be completed and published in 2012 and 25 in 2013, this result was only partially met.

3.3 Justification of Overall Outcome Rating

Ratings: Moderately Satisfactory 52. With the program remaining highly relevant in terms of its objectives, substantially relevant in terms of design, and implementation, and moderately satisfactory achievement of objectives, the overall outcome rating is moderately satisfactory.

3.4 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development 53. The DPL series was expected to reduce poverty in the following three ways: (i) social protection programs would become more effective at protecting the poor and helping them to rise out of poverty; (ii) widening access to education would help the most vulnerable to find higher-skilled, better paying jobs in the labor market; and (iii) streamlining non-tariff barriers (NTBs) would help to create jobs as NTBs

2 Although the indicative trigger under DPL 1 required that reform plans should be prepared for six SOEs, the Bank considered approval of the two restructuring plans reasonable given the importance of these first restructurings in engendering political support for SOE reform and for demonstrating the importance of restructuring other SOEs. In addition, while the DPL 2 trigger presented in DPL 1 called for the preparation of restructuring plans, the trigger proposed in DPL2 called for the approval of the plans by the Cabinet. Finally, the trigger was aligned with that of the EU’s budget support operation.

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disproportionally affect SMEs (which are major creators of employment in Mauritius) because they lacked the financial means to mitigate their cost. The progress that has been made in implementing the reforms supported by this DPL series would suggest that some of these benefits have started to be realized, although it would be hard to attribute the improvements directly to this DPO series. 54. Progress in the attainment of the expected target indicators in this area suggests that the government is advancing in making the social safety net a more effective, efficient and sustainable system that provides a coherent set of safety net services to empower the poor and vulnerable to rise out of poverty. The social protection programs have contributed to poverty reduction increasingly over the years. Comparison of simulated poverty impact in 2007 and 2012 indicated that in 2007 the social protection programs were associated with 8.5 percentage points of poverty reduction while in 2012 this increased to 9.5 percentage points. Absolute poverty measured by the poverty line based on consumption has fallen from 8.5 percent in 2007 to 6.9 percent in 2012. Expenditures of the bottom 40 percent of the population has been growing at around 2 percent annually between 2007 and 2012. However, more needs to be done as inequality has been broadening with the Gini coefficient increasing from 34.2 in 2007 to 36.6 in 2012. 55. Simplifying barriers to trade has further expanded opportunities to create jobs in the past. Trade regulatory and administrative costs are a bigger burden for SMEs than for large enterprises. Therefore, streamlining non-tariff measures (NTMs) and eliminating non-tariff barriers (NTBs) were both expected to have a positive impact on SMEs, which in turn would translate into additional employment. (b) Institutional Change/Strengthening 56. The DPL was instrumental in advancing reforms that impacted the long term capacity and institutional development of Mauritius. First, the Bank support of the issuance of a new organizational and staffing chart for the National Empowerment Foundation (NEF), prior action one, which was approved by the Ministry of Social Integration and Economic Empowerment (MoSIEE), reflected the new institutional structure of the NEF, and separated the departments for: (a) child and family development; (b) community empowerment; (c) placement and training; and, (d) monitoring and evaluation. Second, as a basis for improving the monitoring of both Social Aid and NEF programming as well as improving coordination and increasing impact, the government launched the Social Registry of Mauritius (SRM), another prior action in the first operation in this series. The SRM is an integrated management information system that provides comprehensive information on existing and potential clients of social assistance programs with the aim of increasing coordination among the many different programs. The government now intends to consolidate the realignment of the NEF and to continue to bring new and existing programs into the SRM. Third, the operations support of the actions undertaken by the Office of Public Sector Governance (OPSG) advanced its mandate to provide leadership, coordination, and cohesion to the implementation and monitoring of the SOE reform initiative (see paragraph 51). And forth, prior action 4 supported the establishment of the join public-private Business Facilitation Task Force, with the mandate to review existing

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systems and processes, and streamlining regulations, governing trade investments, with a view to removing bottlenecks and creating a business-friendly environment. 57. The DPL has also been important in deepening and further integrating trade reforms into the policy agenda. Building on the DPL, Mauritius continues to streamline trade regulations and processes by eliminating non-tariff barriers such as import and export permits and increasing transparency for trade transactions. Mauritius established the Trade Portal whose cabinet approval was supported by the DPL as part of its commitments under APEI and has committed to establish a Single Electronic Window as part of APEI as well. Commitments to improving risk management processes at customs also advance the agenda of streamlining trade regulations and processes that had been supported under the DPL. The strong trade policy agenda in Mauritius has also contributed to Mauritius launching the Accelerated Program for Economic Integration (APEI) in 2012 together with Malawi, Mozambique, Seychelles, and Zambia. The initiative aims to reduce trade costs and increase trade and investment flows within the region by breaking with the status quo of slow reform implementation and by implementing regional reforms and addressing common challenges collectively. (c) Other Unintended Outcomes and Impacts 58. This DPL was also positive in maintaining the policy dialogue with the authorities and opening the avenue for additional dialogue in the public sector (i.e. subsequent M&E support).

3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

Not applicable.

4. Assessment of Risk to Development Outcome Ratings: Moderate 59. The risk that development outcomes will not be maintained or realized is moderate. It is mostly associated with the country’s vulnerabilities to an uncertain global economic climate, a slowdown in the momentum of reforms, and limited institutional capacity within sector ministries to lead and implement reforms. 60. Macroeconomic stability risk to uncertain global economic climate. Global economic uncertainties always represent a significant threat to a small open economy such as Mauritius. However, the government has succeeded to partially contain the impact of the global economic slowdown in 2011 and 2012, and in 2013, it maintained a stable macroeconomic environment. The government has been consolidating the fiscal deficit and reducing public debt. Current account deficits, although high, have been adequately financed, mostly by high FDI and inflows to the financial sector. The small estimated recovery in the forecasted GDP growth on the euro zone for 2014, will impact positively the Mauritian economy. Tourist arrivals from January to August 2014 have already

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increased by 4.6 percent when compared with the same period last year and have diversified. However, the government needs to continue to mitigate this risk through an adequate mix of macro policies. Fiscal policy should continue to target gradual public debt reduction, monetary policy should continue to be broadly accommodative, and markets should continue to diversify. 61. Political risks that might affect the pace of the government’s reform program. The government is currently developing its Blue Print Strategy which is aimed at achieving high income status in the next ten years. However, many of the new reforms will have redistributive effects, meaning that they sometimes eliminate rents, subsidies, and privileges of certain groups with vested interests. In addition, legislative elections took place in December 2014. Therefore, the Bank has supported reforms for which consensus exists as a means to assist the government to put in place building blocks to expedite the reform, program over the medium term. Going forward, the Strategic Country Diagnostic (SCD) that is currently under preparation, in partnership with national authorities and other stakeholders, is expected to aid the government in defining its engagement with the Bank and possibly inform their own reform agenda. Furthermore, Mauritius has consistently ranked among the highest countries in terms of public sector management and governance. This is critical as an enabling environment to manage effectively the balance between growth and redistributive policies. 62. Limited institutional capacity within sector ministries to lead and implement reforms. These institutional constraints and the potential political constraints can limit the effectiveness and progress of reforms. While previous reforms were led and coordinated by MoFED, the current reforms are being overseen in most cases by the sector ministries. The Bank has help the government and will continue to do so by involving specialized Bank staff in the dialogue on selected areas and by encouraging a public debate by publishing articles and technical notes.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Ratings: Satisfactory 63. The program supported the government’s program for 2012-15, Moving the Nation Forward. It built on the reforms supported by the previous DPL series. It continued to focus on reforms that could be completed in the short term while building the necessary foundations for broader reform in the medium term. 64. The operation was underpinned by strong analytical foundations. Prior to the start of the preparation of this programmatic series, the Bank, the government, and other partners carried out a significant number of AAA work (see Paragraph 11). Extensive dialogue with Mauritian authorities and development partners were carried out during the

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preparation of the program, which together with the analytical background guided the designer of the operation. 65. The DPL and the Country Partnership Strategy (CPS) (2007-2013) for Mauritius (developed jointly by the World Bank and the Government of Mauritius) and the government’s reform program are closely linked. The Progress Report approved in 2011 extended the CPS to FY15 to align it with the electoral cycle in Mauritius. The CPS Progress Report emphasized that this DPL series would be the Bank’s main vehicle for supporting the government’s broad reform program. Both shared the same overreaching strategic objectives of increasing competitiveness while protecting the vulnerable. The DPL series was also closely aligned to the Bank’s Africa Region Strategy. Streamlining regulations and processes to increase competitiveness and employment creation, while reform of social protection systems to increase the amount of support provide to the most vulnerable were at the center of the regional strategy and DPL series. Furthermore, the DPL emphasized the importance of working together with other partners to produce joint analysis (for example, with UNDP on social protection) and built consensus on ongoing reforms. 66. Other examples of donor collaboration were:

• The PEFA assessment of Mauritius prepared jointly with the IMF, UNDP and EU.

• The EU’s 10th European Development Fund (EDF) Country Strategy Paper for the period 2008-2013. The EU and WB Collaborated on the joint diagnostic and results matrix for the World Bank CPS. In addition to the EU traditional areas of support, the 2013-15 three year budget allocated funds to issues related to SOEs and social protection, common areas of WB support.

• The Africa Competitiveness Report, the Climate Assessment Report, and the Country Memorandum update prepared in collaboration with the Africa Development Bank (AfDB). In addition, the policy reforms supported by the AfDB to mitigate the downturn of economic growth and employment while improving trade competitiveness, the health sector, ITC, and public financial management were aligned with the Bank’s DPL series.

• The WB collaboration with the UNDP for the preparation of their 2009-2012 and 2013-2016 Country Program. The later focuses on planning and resource management, inclusive growth, social inclusion and empowerment and on energy an environment, some of which were areas addressed in the DPL series.

67. The design of the operation applied lesson learned from the previous DPL series. These lessons included the need to ensure that: (i) the DPL was aligned with the government’s priorities and leadership; (ii) there was strong coordination with development partners; and (iii) the loan was designed to include an appropriate degree of flexibility to allow the government to respond to emerging crises as well as for the reform program to evolve over time. The dialogue with the government of Mauritius has gradually built a consensus about reforms and has helped participants to articulate country priorities linked to clear and achievable outcomes. Leadership and political commitment from the

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government complemented by strong institutional capacity in designing and implementing the policy reform agenda have been the critical factors in the success of this and previous operations. The series was designed in collaboration with development partners to reinforce the government’s program implementation. The success of the previous DPL was to a larger extent because of the harmonized policy dialogue among development partners. The same was done for this operation to ensure its success. In addition, the operation was designed with enough flexibility to allow the government to be able to adjust and respond to the country’s challenging needs, if required. It followed the Good Practice Principles of Conditionality3 when designing the prior actions and outcome indicators. (b) Quality of Supervision Ratings: Moderately Satisfactory

68. Supervisions focused on monitoring the development objectives and outcome indicators. The supervision of the first operation coincided with the preparation of the second one. Supervisions recorded progress in the reform program. There were three implementation supervision reports, two of which very detailed and served as the basis to evaluate this series. In addition, there was continued dialogue with counterparts to move the agenda forward and identify bottlenecks to it successful implementation. The timely and reliable dissemination of macroeconomic data by the government made easier the constant monitoring of the macro situation which aided the follow up of some indicators. The detailed ISR reports were used by the MoFED to monitor the reform and take corrective actions to move the reform forward. (c) Justification of Rating for Overall Bank Performance Ratings: Moderately Satisfactory 69. Given that the Bank performance for quality at entry is rated satisfactory and quality of supervision is moderately satisfactory, the overall Bank Performance is rated moderately satisfactory.

3 The five Good Practice Principle on Conditionality are: (a) Reinforce ownership; (b) Agree up- front with the government and other financial partners on a coordinated accountability framework; (c) Customize the accountability framework and modalities of Bank support to country circumstances; (d) Choose only actions critical to achieving results as conditions for disbursement; and (e), Conduct transparent progress reviews conducive to predictability and performance-based financial support.

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5.2 Borrower Performance4 Rating: Moderately Satisfactory

70. The Government’s performance was moderately satisfactory. The MoFED was the coordinating body for the reform program. They were responsible for coordinating the supervision and monitoring of the reforms supported by this DPL series. They provided the Bank with the information required to follow progress on all indicators and monitor outcomes in the policy matrix. The overall progress in the actual results of the DPL indicators reflects the commitment of the government to advance reforms in a timely manner, within a less political environment for reforms. 71. As anticipated at the time of DPL1 approval, the pace of the reform in Mauritius was slow due to technical and political complexities of the necessary public sector reforms. Some of them related to IT systems reflected too high expectations and in general have progressed with delays (i.e. the Human Resources Management Information System and single window. Policy reforms continue but at a slower pace in anticipation of elections that need to provide a reinvigorated mandate for reforms. (a) Government Performance (see Borrower Performance)

(b) Implementing Agency or Agencies Performance (see Borrower Performance) (c) Justification of Rating for Overall Borrower Performance (see Borrower Performance)

6. Lessons Learned 72. There were three main lessons learned from these operations that could aid future ones and could have wide general application. Lesson1: In an environment where the reform agenda was slowing down the team focused on areas that had more consensus to move forward. The DPL focused on achieving feasible reforms in the near term while laying the necessary building blocks to accelerate reforms in the medium term. Because public sector reforms would require consensus between diverse stakeholders and would affect the political equilibrium, the government continued to take a strategically incremental approach. Moreover, many of these new public sector reforms would have redistributive effects, and the government would need to reach a minimum level of consensus on them due to its social impact. This

4 According to the ICR Guidelines, if Government and Implementing Agency are indistinguishable, as it is in this case, only one overall rating is necessary for this section.

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DPL aimed to support reforms where consensus existed while putting in place the building blocks necessary to expedite the broader reform program in the medium term. Lesson 2: The balanced approach in the preparation of the operations between Social Protections and Competitiveness translated in positive results as provided the government with a set of reforms that reinforced each other (i.e. impact of some trade reforms might be partially compensated by reforms on the social protection system).The government, and the DPL series, sought to strike a balance between raising trade competitiveness and ensuring that a more efficient social protection system help to alleviate the impact on the most vulnerable. Lesson 3: The loan was designed to include a certain degree of flexibility to allow the government to adapt the reform program as needed over time. For example, in the education sector, changes were made to the Pre-vocational Education (PVE) system, mainly the extension of program duration and therefore, indicator 3 is now being assessed as of the end of December 2014. Likewise, the number of SOEs included in the quarterly (changed in DPL2 to annually).

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7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies 73. The Borrower received a copy of the draft document and responded jointly to both this ICR and the ICR for the Private Sector DPO series. The authorities concurred with the overall gist of the reports. They agreed that the results and monitoring framework jointly designed by the World Bank and the Government were well aligned with the budget cycle and policy actions were reasonable and enabled strong sector ministry accountability. They agreed that the lessons learned were useful and should be incorporated in the future when other such operations are designed (see Annex D below for the official comments received on June 2015 from the Ministry of Finance and Economic Development). (b) Cofinanciers Not applicable (c) Other partners and stakeholders

None received

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Annex A. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members P128140 - MU -Second Public Sector Performance DPL

Names Title Unit Responsibility/ Specialty

Lending Lorraine R. Blank HQ Consultant ST GSPDR Olivier Cadot Consultant GFMDR Fadila Caillaud Sr Education Economist GEDDR Mona E. Haddad Practice Manager GTCDR Peter Farup Ladegaard Lead Private Sector Development GGODR Jasmilla Luximon E T Temporary AFMMU Mariem Malouche Senior Economist GTCDR Khoudijah Bibi Maudarbocus-Boodoo

Private Sector Development Specialist GTCDR

Emma S. Mistiaen Social Protection Specialist GSPDR Jacques Morisset Program Leader AFCE1 Rafael Munoz Moreno Senior Economist GMFDR Phillippe George Pereira Guimaraes Leite Senior Social Protection Economist GSPDR

Sawkut Rojid Economist AFTP1 - HIS Uma Subramanian Lead Private Sector Development CICTI - HIS William David Wiseman Program Leader ECCU6 Chunlin Zhang Lead Private Sector Development GTCDR Supervision (b) Staff Time and Cost

Stage Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending 89.3 529,122.6 Supervision /ICR 11.9 39,575.8 Total 101.2 568,698.4

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Annex B. Beneficiary Survey Results

Not applicable

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Annex C. Stakeholder Workshop Report and Results

Not applicable

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Annex D. Summary of Borrower's ICR and/or Comments on Draft ICR

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Annex E. Comments of Co-financiers and Other Partners/Stakeholders

None received.

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Annex F. List of Supporting Documents

World Bank, Program Document for the Public Sector Reform Development Policy Loan, Report No. 61571-MU, February 27, 2012. World Bank, Program Document for the Second Public Sector Reform Development Policy Loan, Report No. 61571-MU, February 25, 2013. World Bank, Mauritius DPO (p125694 and P128140), Implementation Status Reports, August 2012, October, 2013 and May 2014. World Bank, Legal Agreements for Loan Numbers 8138-MU (April 20, 2012) and 8247-MU (April 19, 2013). International Monetary Fund, IMF Country Report No.12/62, 13/97 and 14/107, Mauritius, Staff Report for the 2012 Article IV Consultation, March 2012. International Monetary Fund, IMF Country Report No., 13/97 and 14/107, Mauritius, Staff Report for the 2013 Article IV Consultation, April 2013. International Monetary Fund, IMF Country Report No.14/107, Mauritius, Staff Report for the 2014 Article IV Consultation, May 2014. Mauritius, Ministry of Finance and Economic Development, Statistics Mauritius on line at: http://statsmauritius.govmu.org/English/Pages/default.aspx Mauritius, Ministry of Foreign Affairs, on line at: http://www.mauritiustrade.mu./en? Mauritius, Office of Public Sector Governance (OPSG) on line at: http://opsg.govmu.org/English/Pages/default.aspx

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http://statsmauritius.govmu.org/English/Pages/default.aspx

http://www.mauritiustrade.mu./en

http://opsg.govmu.org/English/Pages/default.aspx

MAP IBRD 33446

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