World Bank Documentdocuments.worldbank.org/curated/en/175751558645682270/... · 2019-05-24 · document of the world bank report no: icr00004530 implementation completion and results

Document of

The World Bank

Report No: ICR00004530

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-86030 IBRD-86040 IDA-57850)

ON

LOANS

IN THE AMOUNT OF EURO 13.7 MILLION TO

THE REPUBLIC OF MAURITIUS

AND

IN THE AMOUNT OF US$5 MILLION TO

THE REPUBLIC OF SEYCHELLES

AND A CREDIT

IN THE AMOUNT OF SDR 7.3 MILLION TO

THE REPUBLIC OF MOZAMBIQUE

FOR THE

PROGRAMMATIC REGIONAL DEVELOPMENT POLICY OPERATION

FOR THE ACCELERATED PROGRAM FOR ECONOMIC INTEGRATION

May 10, 2019

Macroeconomics, Trade and Investment Global Practice

AFCS2 Country Management Unit

Africa Region

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Page 2 of 40

CURRENCY EQUIVALENTS

(Exchange Rate Effective May 10, 2019)

Currency Units =

Mauritius Rupee (MUR) / Seychelles Rupee (SCR) / Mozambique Metical (MZN)

MUR 34.86 / SCR 13.61 /

MZN 63.82 = US$1

US$ 1.39 = SDR 1

FISCAL YEAR

July 1 – June 30 (Mauritius) January 1 - December 31 (Seychelles, Mozambique)

Regional Vice President: Country Director: Global Practice Director:

Hafez Ghanem Mark Lundell Marcello Estevao

Practice Manager:

Mathew Verghis

Project Team Leaders: Mombert Hoppe, Gozde Isik, Alex Sienaert, Claire Hollweg

ICR Team Leader: Erik von Uexkull

Page 3 of 40

ABBREVIATIONS AND ACRONYMS

ABTC APEI Business Travel Card APEC Asia Pacific Economic Cooperation APEI Accelerated Program for Economic Integration ASA Advisory Services and Analytics BTOR Back to Office Report COMESA Common Market for Eastern and Southern Africa CWG Coordinating Working Group DB Doing Business DPL Development Policy Loan DPO Development Policy Operation EUR Euro FY Fiscal Year GDP Gross Domestic Product IBRD International Bank for Reconstruction and Development ICRR Implementation and Completion Results Report IDA International Development Association IMF International Monetary Fund IPF Investment Project Finance ISR Implementation Status and Results LPI Logistics Performance Index MoU Memorandum of Understanding MRA Mutual Recognition Agreement NGO Non-Governmental Organization NSW National Single Window NTB Non-Tariff Barrier NWG National Working Group OECD Organization for Economic Cooperation and Development OSBP One-Stop Border Post PDO Project Development Objectives RI Regional Integration RKC Revised Kyoto Convention RMCE Regional Multidisciplinary Center of Excellence SADC Southern African Development Community USD United States Dollar WBG World Bank Group WITS World Integrated Trade Solution

Page 4 of 40

Contents

1. DATA SHEET ..................................................................................................................................................... V

2. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN ........................................................................ 9

3. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES .................................................................... 15

4. ASSESSMENT OF OUTCOMES ........................................................................................................................ 19

5. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME .................................................................................... 25

6. ASSESSMENT OF BANK AND BORROWER PERFORMANCE ............................................................................. 26

7. LESSONS LEARNED ......................................................................................................................................... 29

8. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING AGENCIES/PARTNERS ............................... 30

The World Bank (P146512)

v

1. DATA SHEET

A. BASIC INFORMATION

Country: Africa Program Name: APEI Regional DPO (RI)

Program ID: P146512

L/C/TF Number(s): IBRD-86030,IBRD-86040,IDA-57850

ICR Date: 05/08/2019 ICR Type: Core ICR

Financing Instrument: DPL Borrower: GOVERNMENTS OF MW, MU, MZ, SC, ZM.

Original Total Commitment:

USD 29.90M Disbursed Amount: USD 20.32M

Revised Amount: USD 20.01M

Implementing Agencies: Ministry of Finance and Economic Development Ministry of Planning and Development Ministry of Finance, Trade and Investment

Cofinanciers and Other External Partners:

B. KEY DATES

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 07/24/2013 Effectiveness: 03/31/2017

Appraisal: 06/24/2014 Restructuring(s):

Approval: 04/07/2016 Mid-term Review:

Closing: 03/31/2017 03/31/2017

C. RATINGS SUMMARY C.1 Performance Rating by ICR

Outcomes: Moderately Unsatisfactory

Risk to Development Outcome: Substantial

Bank Performance: Moderately Unsatisfactory

Borrower Performance: Moderately Unsatisfactory

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

Bank Ratings Borrower Ratings

Quality at Entry: Moderately

Unsatisfactory Government: Not Applicable


vi

Quality of Supervision: Moderately

Unsatisfactory Implementing Agency/Agencies:

Not Applicable

Overall Bank Performance:

Moderately Unsatisfactory

Overall Borrower Performance:

Moderately Unsatisfactory

C.3 Quality at Entry and Implementation Performance Indicators

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:

D. SECTOR AND THEME CODES

Original Actual

Sector Code (as % of total Bank financing)

Industry, Trade and Services

Other Industry, Trade and Services 93 93

Agricultural markets, commercialization and agri-business

7 7

Theme Code (as % of total Bank financing)

Economic Policy 72 72

Trade 72 72

Trade Facilitation 72 72

Private Sector Development 28 28

Business Enabling Environment 7 7

Regulation and Competition Policy 7 7

Regional Integration 21 21

E. BANK STAFF

Positions At ICR At Approval

Vice President: Hafez M. H. Ghanem Makhtar Diop

Country Director: Mark R. Lundell Mark R. Lundell


vii

Practice Manager/Manager: Mathew A. Verghis David Bridgman

Program Team Leader: Gozde Isik Mombert Hoppe

ICR Team Leader: Jan Erik von Uexkull

ICR Primary Author: Alexis Sienaert

F. RESULTS FRAMEWORK ANALYSIS Program Development Objectives (from Project Appraisal Document)

The development objective of the Regional Development Policy Operation (DPO) programmatic series

is to improve the policy environment for trade in APEI countries by(i) removing barriers to trade in

goods, (ii) promoting trade in services, and (iii) enhancingmeasures to facilitate trade.

Revised Program Development Objectives: Not applicable

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at Completion or Target

Years

Indicator 1 : Remove Barriers to Trade in Goods

Value quantitative or Qualitative)

Date achieved

Comments (incl. % achievement)

country specific targets as discussed in main document (table 2 page 12ff)

Indicator 2 : Promote Trade in Services


Date achieved



Indicator 3 : Enhance Measures to Facilitate Trade


Date achieved




viii

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at Completion or Target Years

Indicator 1 : na


Date achieved


indicators are country specific as discussed in main document (table 2 p. 12ff.

G. RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived

GEO IP Actual Disbursements

(USD millions)

H. RESTRUCTURING (IF ANY)

Not Applicable


9

2. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN

1.1 Context at Appraisal Introduction

1. This Implementation Completion and Results Report (ICRR) assesses the results of the programmatic Regional APEI DPO series. Its aim was to support the five countries—Malawi, Mauritius, Mozambique, Seychelles and Zambia—participating in the Accelerated Program for Economic Integration (APEI), to improve the policy environment for trade in APEI countries by (i) removing barriers to trade in goods, (ii) promoting trade in services, and (iii) enhancing measures to facilitate trade. 2. The APEI is an initiative of the five countries, which agreed to accelerate jointly the implementation of reforms aimed at reducing barriers to trade. It was created as a response to the call for more rapid reforms and economic integration enshrined by the council of Ministers of Finance and Central Bank Governors of COMESA (Common Market for Eastern and Southern Africa, July 2011) and SADC (Southern African Development Community, November 2011). The five member countries recognized the persistence of barriers to trade despite commitments to remove them through COMESA and SADC, and agreed to collaborate and jointly accelerate implementation of such reforms. This program follows a flexible approach based on the principle of “variable speed and geometry” endorsed by Ministers of Finance of both COMESA and SADC. The initiative is open for other countries to join.

3. All five members undertook prior actions associated with the APEI Regional DPO, and the operation’s policy matrix included reform measures and results indicators for all five members, but only two members received loans. Malawi and Zambia did not meet DPO readiness criteria relating to fiduciary adequacy (Malawi)1 and macroeconomic policy framework adequacy (Zambia), and consequently loans and credits under this operation were approved only for Mauritius (IBRD loan), Mozambique (IDA credit) and Seychelles (IBRD loan). In addition, subsequent to appraisal, in April 2016, the government of Mozambique publicly disclosed large, previously unreported state-backed loans, calling into question macroeconomic policy framework adequacy. Consequently, the IDA credit to Mozambique was not made effective. 4. Only the first operation (APEI DPO-1) in the planned series of two operations was implemented. APEI DPO-1 was approved by the Board in April 2016 and closed in March 2017. Preparation of the planned second operation (APEI DPO-2) was cancelled in February 2018, because only two out of the five member countries (Mauritius and Seychelles) had the macroeconomic policy framework adequacy criteria for DPOs. Seychelles chose not to participate in the second DPO.

Country macroeconomic background

5. Macroeconomic circumstances at the time of appraisal (June 2014) varied considerably amongst the APEI member countries (Table 1). The economies of all the APEI member countries were expanding at a sustained pace compared to neighboring countries, and very rapidly in the case of Malawi and Mozambique. Macroeconomic imbalances, however, were apparent in Malawi (in the form of high inflation, and large fiscal and

1 In September 2013, revelations arose of misappropriation of significant amounts of public funds in Malawi through fraudulent transactions carried out in the Government’s Integrated Financial Management System (IFMIS).


10

current account deficits), and in Zambia (where large fiscal deficits were putting public finances on an unsustainable path).

Table 1: Key macroeconomic indicators in 2014 (year of appraisal)

Malawi Mauritius Mozambique* Seychelles Zambia

Real GDP (% change) 5.7 3.6 7.4 4.5 4.7

Inflation (% change, average) 23.8 3.2 2.3 1.4 7.8

Fiscal balance (% of GDP) -4.8 -3.2 -10.7 3.7 -5.7

Current account balance (% of GDP)

-8.3 -5.7 -38.2 -23.1 2.1

Notes: *Mozambique’s very large current account deficit was the result of large-scale investments in natural gas, not primarily a structural external imbalance. Source: IMF WEO

6. In Mauritius and Seychelles, the two countries which borrowed for this regional operation, the economic backdrop remained positive up until (and after) when the operation closed, in March 2017. Mauritius’ economy grew by an annual average of 3.8 percent in 2015-2017, led by services sectors, and helped by historically loose monetary policy which, in turn, was enabled by the low global interest rate environment. Seychelles’ economy grew at an even more rapid pace (4.6 percent annual average in 2015-2017), powered by a booming tourist industry, whilst macroeconomic management remained sound, supported by an IMF Extended Fund Facility, other Bank DPOs2, and the government’s sustained focus on public debt consolidation. Seychelles was classified as a high-income economy in 2015.

Structural background

7. African markets are small and fragmented, and more regional trade has the potential to unleash economic growth and opportunities, reduce poverty and accelerate shared prosperity. Yet, this potential remains untapped because of weak trade-related infrastructure, compounded by non-transparent and unpredictable trade policies due to a frequent lack of implementation of tariff commitments, prevalence of non-tariff barriers, and regulatory barriers to services trade. 8. The APEI member countries, whilst a heterogenous group, have close cultural and economic ties, and have sought to move forward to address their trade challenges, which include highly concentrated exports. The export baskets of all the APEI members, except Mauritius, are highly concentrated, making them vulnerable to external shocks. Mozambique’s aluminum exports are over 40 percent of the total, tobacco accounts for more than 60 percent of Malawi’s exports, more than 70 percent of the value of Seychelles’ goods exports is canned tuna, and Zambia relies on copper for around 80 percent of its export earnings. Tapping regional markets could help to diversify exports, especially for smaller firms, and there are natural complementarities within the APEI group that could lead to substantial gains from trade even before the additional benefits from comparative advantages are reaped, including from trade in services; the mainland APEI economies are more focused on agricultural products, and the island members of Mauritius and Seychelles are more focused on services. 9. The APEI sought to advance the regional economic integration agenda through coordination, collective action, and peer to peer accountability to catalyze reforms. Under this approach, countries aim to address common challenges collectively while also supporting country-specific reforms through peer to peer exchanges

2 Seychelles Sustainability and Competitiveness DPL series (ending with P146567), which closed in December 2015, and Seychelles Sustaining Reforms for Inclusive Growth (P153269), which closed in December 2016.


11

and mutual accountability to a jointly agreed reform program. South-South knowledge sharing, particularly among the low- and middle-income countries participating in the initiative, provides also a major input to reforms and reinforces coordination. Similar approaches have been used successfully, for example, in the Organization for Economic Cooperation and Development (OECD) and the Asia-Pacific Economic Cooperation (APEC). 10. The APEI reform program consists of commitments that the five members countries have made among themselves and is structured in five areas: (i) remove barriers to trade in goods, (ii) promote trade in services, (iii) enhance measures to facilitate trade, (iv) improve the business environment, and (v) peer to peer learning and knowledge sharing. The DPO-supported reform program consisted of a sub-set of specific reforms within the above pillars, in need of either (a) multilateral coordination or (b) bilateral coordination; and (c) country-specific reforms that were necessary to allow firms to benefit from new market opportunities that economic integration will bring.

Rationale for Bank assistance

11. The World Bank supported the APEI initiative from its inception. The APEI initiative was launched during a Ministerial meeting in Seychelles in September 2012, chaired by Seychelles, and facilitated by the Bank. Subsequently, a three-year reform program was adopted at a Ministerial meeting in March 2013 as the result of a sustained process involving multiple technical and high-level political meetings. 12. Bank support to APEI was predicated on the importance of supporting measures to reduce the trade barriers fragmenting African markets, and hence reducing poverty and accelerating shared prosperity. The initiative was envisaged as a mechanism to reduce trade costs for goods and services, increase trade and investment flows, diversify exports of goods and services and ultimately raise incomes. The initiative is built on an increasing body of knowledge on the barriers that continue to restrict trade in goods and services in Africa, and on the economic benefits of deeper economic integration between African countries.3 13. The Bank was particularly well-placed to support such a regional initiative. Because of its leading analytical role and convening power, the World Bank Group (WBG) was in a good position to support this group of reform-minded countries to design and implement regionally-oriented reform policies, and to draw in support from other development partners. The Bank’s regional and country-specific analytical work helped to initiate and inform the regional reform process, including two recent regional studies on “Africa can help feed Africa” and “Defragmenting Africa” as well as country specific work under the Zambia and Malawi Diagnostics Trade Integration Studies that the Bank completed. The Bank’s convening power stimulated and guided high-level political discussions and attracted assistance from other development partners.

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

14. The development objective of the APEI Regional DPO programmatic series was to improve the policy environment for trade in APEI countries by (i) removing barriers to trade in goods, (ii) promoting trade in services, and (iii) enhancing measures to facilitate trade. Table 2, below, summarizes the pillars of the program and associated results indicators, for each of the three countries for which loans or credits were approved.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

3 See, for example, World Bank (2012), “De-Fragmenting Africa”, http://siteresources.worldbank.org/INTAFRICA/Resources/Defrag_Afr_English_web_version.pdf

http://siteresources.worldbank.org/INTAFRICA/Resources/Defrag_Afr_English_web_version.pdf


12

The PDOs and results indicators were not revised.

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

15. The APEI DPO 1 had three pillars, supporting the overall PDO of improving the policy environment for trade in APEI countries. These pillars were a sub-set of those of the overall APEI initiative, which included also two additional areas not addressed explicitly in the regional APEI DPO: improve the business environment, and peer-to-peer learning and knowledge sharing. 16. The first pillar, remove barriers to trade in goods, focused on increasing transparency regarding non-tariff barriers (NTBs), by identifying (codifying) NTBs, and streamlining or eliminating those NTBs that affected regional trade flows the most. The APEI countries had committed to developing strategies to eliminate NTBs by developing inventories of NTBs and strengthening NTB monitoring committees, all with a view to review and revise existing regulations as needed. 17. The second pillar, promote trade in services, focused on deepening APEI countries’ commitments to liberalize services trade, through making and implementing specific services sector liberalization commitments at the regional (COMESA and SADC) level, and by facilitating the movements of professionals across their borders by revising regulations relating to business visas and work permits. 18. The third pillar, enhance measures to facilitate trade, focused on supporting the regulatory and institutional reforms needed to reduce clearance and dwell time at borders and clearing depots. These reforms included measures to improve traders’ access to information (i.e. transparency), reduce border clearance times at specific points of entry, reduce physical inspection of consignments, and reduce transport time on specific routes.

Table 2: APEI Regional DPO Pillars and sub-pillars, and associated results indicators and summary assessment of outcomes4, for the 3 countries for which lending was approved by the Board

Pillars and sub-pillars Mauritius Mozambique Seychelles Outcome rating

1. Remove Barriers to Trade in Goods

1.1. Increasing transparency in NTBs and streamlining NTBs.

Baseline: not applicable. Target: 5 NTBs removed.

Outcome: Exceeded (Mauritius removed

20+ NTBs).

Outcome: Not met (did not report

mapping or removal of any

NTBs through APEI action matrix)

Outcome: Not met (did not report removal of any

NTBs through APEI action matrix)

unsatisfactory

2. Promote Trade in Services

2.1 Liberalizing sub-sectors.

Results indicator to be defined. Outcome: Not met.

Unsatisfactory

4 The assessment scale used to assess progress against the results indicators is as follows: “Not met”: <50% completion vs. target, “Partly met”: >50% but < 75%, “Substantially met”: approximately 75%+, “Fully met”: approximately 100%; “Exceeded”: >100%. Outcome rating: satisfactory if more than half of countries met outcome.


13

2.2 Facilitating movement of business people across borders.

Baseline: Number of business people entering: 37981 (2013) Target: 5 percent increase (2016) Result exceeded: 28% increase Baseline: Number of people from APEI countries entering: 9,013 (2013) Target: 5 percent increase (2016) Result not met: 0.8% decrease (2016) Outcome: Partially met

Baseline: Number of business people entering: 311,767 (2013) Target: 5 percent increase (2016) Result not met: 41% decrease Baseline: Number of people from APEI countries entering: 244,000 (2013) Target: 5 percent increase (2016) Result not met: No exact information available, but unlikely to have been achieved given drop in overall visitors. Outcome: Not met

Baseline: Number of business people entering: 8,027 (2013) Target: 5 percent increase (2016) Result not met: 4% decrease Baseline: Number of people from APEI countries entering: 3,783 (2013) Target: 5 percent increase (2016) Result exceeded: 9% increase Outcome: Partly met

Unsatisfactory

3. Enhance Measures to Facilitate Trade

3.1 Improve transparency of trade procedures and processes and improve transparency of responsibilities at borders to reduce dwell time at borders and customs clearing depots

Results indicator #1: Traders report improved access to information on all procedures and documents for importing and exporting, Baseline: Access to trade related information is not comprehensively available Target: Access to trade related information is comprehensively available

Unsatisfactory

Outcome: Fully met (NSW5 implemented)

Outcome: Not met. Outcome: Not met.

Result Indicator #2: Average clearance time for imports at borders key for intra-APEI trade reduced (without physical inspection)

Unsatisfactory

Baseline: Port Louis: 12.4 hours (yellow channel) Target: 11.2 hours Outcome: Exceeded (2.4 hrs in 2016)

Baseline: Nacala: more than 48 hours (median clearance time) Target: 43 hours Outcome: No data available

Baseline: Victoria 99 hours (2015 – DB) Target: 90 hours Outcome: Not met (DB 2018: 97 hours)

3.2 Reduce clearance time by improving risk-management

Reduction in share of consignments physically inspected by customs Unsatisfactory

Baseline: 12% (2014) Target: 10.8%% Outcome: Fully met (10.3% in 2016)

Baseline: 40% (estimate) Target: 36% Outcome: No data available

Baseline: 29.4 % (all shipments, Jan-Sept 2014) Target: 26.5% Outcome: Not met (2016: 38%)

5 NSW: National Single Window.


14

3.3 Harmonize transport standards and ensure effective functioning of transit arrangements

The results indicator was relevant only to Mozambique, where it was cross-referenced to those for Malawi and Zambia: Transit time to Beira/Nacala reduced, cross-referenced to Malawi RI: Baseline: Blantyre to Beira 3 days (2013); Blantyre to Nacala 3 days (2013) Target: 10% reduction And Cross-referenced to Zambia RI: Baseline: Chipata to Nacala by rail: 4 days (2014); Chipata to Beira by road: 4 days (2013) Target: 10% reduction Outcome: Not met (no significant change reported by source used for baseline. According to 2018 USAID Report6: Nacala-Chipata (rail) total time for imports is currently 8.5 days; Blantyre-Nacala (rail): 6.8 days, faster than road, and slower than the baseline, in both cases)

1.5 Revised Policy Areas (if applicable)

Not applicable as the policy areas were not revised.

1.6 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations)

19. The Credit approved for Mozambique for this operation was not made effective. The Board approved the APEI Regional DPO (RI, P146512) with loans to Mauritius and Seychelles, and an SDR 7.3m credit to Mozambique, on April 7, 2016. The associated loans for Mauritius (No. 8603-MU) and Seychelles (No. 8604-SC) were declared effective on June 9, 2016. However, following a 6-month extension of the original effectiveness deadline, to February 12, 2017, a financing agreement for Mozambique was never made effective, as the requirement for the International Development Association to be satisfied with the adequacy of the Recipient’s macroeconomic policy framework in accordance with the provisions of section 5.01 (a) of the Financing Agreement was not met. This was due to the uncertainty caused by the Mozambique government’s public disclosure, in April 2016, of previously undisclosed state-backed loans in the order of magnitude of USD 2 bln., which caused the Bank to suspend all development policy lending.

6 Nacala Corridor and Port Performance Assessment, USAID (2018) http://www.speed-program.com/content/download/2536/18813/file/SPEED+017-R022%20Nacala%20Corridor%20Draft%20Final%20Report%202018-02-12.pdf

http://www.speed-program.com/content/download/2536/18813/file/SPEED+017-R022%20Nacala%20Corridor%20Draft%20Final%20Report%202018-02-12.pdf




15

3. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES

2.1 Program Performance

20. The APEI Regional DPO was designed as a programmatic series of two DPLs, to support regional economic integration and trade. The first DPL (P146512) was approved by the World Bank Executive Board on April 7, 2016 and closed on March 31, 2017. All agreed prior actions were completed before this operation’s approval. 21. Preparation of the second DPO in the planned series of two APEI regional DPOs was dropped. Bank management decided to drop the planned second DPO because the only APEI member country to both (1) formally request this DPO and (2) meet the macroeconomic policy framework adequacy criteria for DPO support, was Mauritius. Given that only one country would draw on a second DPO, it was not considered to be possible for the Bank to proceed with the DPO series, premised as it was on supporting a regional reform program. Table 3 summarizes.

Table 3: Summary of APEI Regional DPO series performance

Approval Date Disbursed Amounts Closing Date

APEI DPL-1 April 7, 2016 EUR 13.7m (Mauritius); USD 5.0m (Seychelles)

March 31, 2017

APEI DPL-2 Operation dropped in February 2018

2.2 Major Factors Affecting Implementation Implementation of the APEI Regional DPO series was hampered by the following key factors. 22. Uncertainty regarding the ability of countries to participate in the proposed APEI DPO-2, because of macroeconomic policy framework adequacy concerns unrelated to the program. There was protracted uncertainty regarding whether, and when, the three APEI member countries which had not been able to access funding support under APEI DPO-1 would again become eligible for DPO financing. This complicated the dialogue between the Bank and the APEI countries, as maintaining the momentum of reforms could not be linked directly to additional funding support through the APEI DPO-2, the potential timing for which was uncertain.

23. Adequacy of DPO instrument. The novelty of a regional DPO was recognized as an experimental choice by the team, yet worth taking an informed risk. The rational was to create a harmonized platform for trade integration dialogue among member countries with the associated ‘carrot’ from a DPO, while supplementing with technical assistance were needed. The team felt that an alternative approach – such as a series of IPFs – would not have been adequate to create such a platform for coordination, which was seen as essential in order to support the regional dialogue. However, the DPO approach exposed the operation to the risk of above described macro issues, derailing the lending operation in 3 out of 5 member countries under DPO 1 and eventual cancellation of the second DPO. These challenges were recognized by participants of the 2017 High-level APEI member meeting at the WB/ IMF Annual Meeting in calling for “a more cohesive approach for WBG support in line with its regional integration strategy to the APEI countries under the variable geometry principle. This would be more flexible


16

support that was not instrument-specific (including a mix of TA, investment lending and policy lending support) over a longer time frame and address the multiple challenges to deeper regional integration.” While the regional DPO was instrumental in creating the basic action matrix and reporting framework around which APEI countries organized their activities, it ultimately proved too rigid in light of the objective to support a highly heterogenous group of countries in terms of macroeconomic context, existing reform momentum and political commitment, and technical capacity to implement reforms.

24. Coordination and institutional strengthening challenges. The APEI was designed to be institutionally ‘lean’, in order not to compete with or duplicate the functions of established regional bodies such as COMESA and SADC, and to support maximum reform progress according to the principle of variable speed and geometry. However, this lean approach also made it more difficult to maintain the continual exchange of information, and peer accountability, which were essential to keep reform momentum, particularly in the context of the apparent negative impact on stakeholders’ commitment to and focus on the program following the limited funding provided by APEI DPO-1. The Coordinating Working Group (CWG), which was intended to hold monthly meetings to support information exchange and keep stock of progress, only met irregularly 4-5 times per year, and an undue amount of advocacy work fell on Bank staff to make ensure participation in these meetings. As discussed further in the M&E evaluation below, members acted as Chair on a rotating basis. Considerable emphasis was placed on the role of the Chair in providing Secretariat functions, helping to make progress against agreed objectives, update the objectives, and ensure that the needed, regular inter-country communications and agreements were achieved. However, the capacity and commitment of countries to play this role proved to be limited and uneven. The Mauritius-based Regional Multidisciplinary Centre of Excellence (RMCE) acted effectively as an ongoing, quasi-secretariat to support the APEI initiative, but had only very limited human and financial resources, and a limited remit (that is, it had no formal mandate to act as a Secretariat). This challenge was interlinked with the DPO funding limitations described above, as more funding across the countries, or access to regional funds, may have helped to achieve stronger ongoing top-level commitment, cross-country coordination and within-country administration, including by strengthening the institutional capacity to drive APEI forward through having a more formalized approach to administration.

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

M&E Design

25. The policy and results matrix summarized in Table 2 was designed to be used as the primary monitoring tool for the APEI DPO series. Using existing coordination mechanisms under APEI, the three governments for which funding was approved, and the World Bank, were to review the progress of the program twice a year during the bi-annual APEI Ministerial Meetings, and a joint report was to be prepared after each meeting indicating progress and measures to overcome any implementation weaknesses or challenges identified. At each of these meetings, the Bank and the authorities of those countries participating in the planned second operation (depending on eligibility) were to monitor implementation status for the forthcoming operation and discuss the monitoring indicators. Where required, targets were to be revised and the indicators updated. 26. APEI mechanisms for the M&E comprised National Working Groups (NWGs) and a Coordinating Working Group (CWG), which were to be responsible for overall coordination and monitoring. The NWGs were be responsible at country level, and the CWG would be responsible at APEI level. The CWG would be responsible for monitoring progress, with the implementation of reforms that all five countries agreed among themselves and that might not be directly supported by the programmatic series, based on an overall APEI “action matrix”. It would also monitor those reforms that were directly supported by the programmatic series, for those countries that participated. The NWGs were to liaise with focal points in the other ministries, departments, and agencies involved.


17

As the primary counterpart of the program, the Ministries of Finance and Planning would be responsible for furnishing information to the Bank, as required, to monitor outcomes in the results matrix. Periodic monitoring and dialogue by the Bank with relevant line ministries and other stakeholders involved in implementing the reforms were to take place through field missions to ensure that the reform program stayed high on the agenda of the countries. Such missions were to take place every quarter. The Bank was to brief the CWG during its monthly meetings on relevant findings and discuss mechanisms to address any slowdown or deviation in reform efforts. 27. The need for Bank support to monitor progress in some areas, notably in trade facilitation, was anticipated. All APEI countries were deemed to have had the necessary institutional capacity to generate and provide data to monitor progress for almost all the areas, including those that might become eligible to participate in the second operation. In some areas, primarily in trade facilitation, this capacity was recognized to be limited. As such, the Bank was to field experts to generate the required data as well as to build capacity in the countries to collect and analyze such data, but this did not happen. Currently, trade facilitation outcome data in line with the baseline methodology is not available for some of the trade facilitation related indicators for Nacala (Table 2), though it is expected that a forthcoming subnational Doing Business report would deliver insight on this.

28. While many of the results indicators were quantitative in nature, and were clearly conceptually linked to the objectives, the M&E design had some shortcomings. Results indicators for liberalizing sub-sectors, within the first pillar (promote trade in services), were left “to be defined” in the policy matrix. Their omission does show a lack of clarity at the APEI DPO-1 stage as to the focus of the service sectors to be liberalized. Arguably, this was problematic in view of the level of ambition of committing to and implementing the opening-up of services trade which, in the region and globally, is a complex and sensitive area in trade agreements. Some indicators were vague (e.g. moving from “access to trade-related information is not comprehensively available” to “[…] is comprehensively available” [as “reported by traders”]). Other indicators appear likely to be vulnerable to significant confounding factors, making them hard to link directly to the measures supported by the operation (e.g. increases in total business traveler numbers, noting for example that business visitor numbers to Mozambique dropped sharply after 2013, likely reflecting in particular the impact of the 2015 public debt disclosure shock to business confidence). M&E Implementation and Utilization

29. The M&E design, with its emphasis on the results indicators spelt out in the overall APEI action and DPO policy matrices, informed the dialogue amongst the APEI members, and with the Bank. However, the monthly CWG meetings planned in the M&E design did not take place, due to ongoing difficulties to arrange mutually convenient dates and times for video conferences. As the frequency of (virtual) meetings declined, it became more difficult to obtain updates from countries on their progress on the wider APEI action matrix items, and towards the indicative triggers for the planned DPO-2, in particular. Table 4 summarizes the main events and meetings in which APEI member countries and the Bank participated, where the agenda included items relevant to the implementation of the APEI DPO series.

Table 4: APEI milestones and inter-country/Bank discussions linked to APEI DPO series implementation

Milestone / Meeting

June 9, 2016 Effectiveness date of APEI DPO-1 IBRD loans to Mauritius and Seychelles.

September 14-15, 2016

APEI Senior Officials and Technical meetings (held in Mauritius under the Chairmanship of Malawi): member countries updated the Bank and one another on progress made towards the APEI action matrix, which formed the basis of the prior actions and indicative triggers of the APEI regional DPO. At this stage, Mauritius and Seychelles had made very good progress across


18

all four pillars of the action matrix and triggers, but it was clear that the other three countries would require considerable support to move the policy reform agenda along. The meetings ended with the signing of the Memorandum of Understanding (MoU) on the free movement of professionals, which was one of the indicative triggers of DPO-2 for all five countries. All countries except Mozambique signed the MoU. Mozambique requested time for further consultation.

February 27-28, 2017

Seventh Meeting of the Senior Officials of APEI (held in Mauritius under the Chairmanship of Malawi, with representatives from all countries except Mozambique attending): the main objectives of the meeting were to facilitate dialogue and review progress towards implementation of the indicative triggers for the APEI DPO-2. The most progress had been made under movement of business persons, while the majority of indicative triggers to facilitate trade had either been completed or were ongoing. A few triggers specific to increasing transparency in NTBs and streamlining NTBs were also completed (this progress remained to be validated). However, countries expressed little or no progress towards the triggers to identify and remove 5 NTBs, or to amending legislation to align with regional trade in services commitments. Also, due to Mozambique’s absence in the meetings, it was not possible to assess Mozambique’s progress towards the indicative triggers.

March 31, 2017

Closing date of APEI DPO-1.

March 30-31, 2017

Workshop on the Roadmap for implementation of the MOU for the Facilitation of Movement of Business Persons and Professionals among APEI Countries. The countries agreed to implement an APEI Business Travel Card (ABTC) to facilitate movement of business persons and professionals among them. While the ToR are in the final stages of discussion, the implementation work has yet to begin.

October 13, 2017

High-level meeting at the time of the Annual Meetings of the World Bank/IMF. APEI government representatives reaffirmed their commitment to APEI and tasked the Bank to prepare a Business Plan for potential additional World Bank support to APEI.

February 2018

APEI DPO-2 preparation dropped, in view of the mixed demand for further DPO funding for APEI, and macroeconomic adequacy constraints to DPO borrowing for some APEI member countries.

Notes: This table draws on BTORs and meeting summaries by Bank staff and the RMCE, and the 2016 RMCE Annual Report.

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

30. No follow-up regional DPO is planned, although the Bank is continuing to work on ways to support regional economic integration, including amongst the APEI member countries. At a high-level meeting in Washington, DC, at the time of the IMF/World Bank Annual Meetings in October 2017, APEI member country representatives reaffirmed their commitment to the APEI, and their continuing demand for the World Bank’s support to the initiative. Accordingly, staff of the Macroeconomics, Trade and Investment Global Practice are preparing a business plan for the next phase of the APEI, aiming to develop a more cohesive approach for WBG support in line with its regional integration strategy to the APEI countries under the variable speed and geometry principle. This could be more flexible support using a mix of instruments (e.g. ASA, investment lending, policy-based lending) as appropriate over a longer timeframe and addressing the multiple challenges to deeper regional economic integration. For example, Bank-financed ASA to identify potential quick wins in APEI agricultural products trade has been approved for FY19. Another operation proposed under the business plan and requested formally (through letters under the APEI initiative) by the governments of Malawi, Mozambique and Zambia was in further


19

development of the Nacala corridor. This operation is currently at PCN review stage and providing competitive outlets for export products is an important objective for policymakers, businesses and investors.

4. ASSESSMENT OF OUTCOMES 3.1 Relevance of Objectives, Design and Implementation

Overall Rating: Substantial Relevance of objectives: Substantial.

31. The DPO series’ overall objectives were relevant in light of the Bank’s assessment of key challenges facing the APEI countries, and the wider Africa region, and given the potential of more regional trade to lift development outcomes. Small domestic market sizes and export concentration (except for Mauritius) are fundamental, structural constraints in the APEI economies, and the importance of addressing these continues to be reflected in relevant Bank country diagnostic and strategy documents. The relevance of the operation to the APEI member countries was grounded in the design of the APEI DPO being designed to support an innovative, country-led regional initiative to identify, implement and generate peer-to-peer accountability around the reforms needed to accelerate regional economic integration. However, commitment and attention of member countries proved to be heterogeneous over the course of preparation and implementation.

Relevance of design: Modest.

32. The design of the operation as a programmatic series of two operations was broadly appropriate, given the operation’s goal to support a sustained, multi-country reform effort, and attempted to apply DPOs as an innovative instrument to support regional reform efforts. The Bank opted for a regional DPO, as opposed to a collection of country-specific operations, because this allowed the Bank to support explicitly APEI as a regional effort, supporting both reforms that required cross-country collaboration (such as at border posts), and at the national level, and with an emphasis on peer-to-peer accountability and knowledge exchange (including between IDA and IBRD-eligible countries). A programmatic approach was selected because this aligned the operation with the timing and scope of the overall APEI program it supported. 33. The resulting policy matrix was complex and may have pushed too many of the more challenging reforms into the second phase, contributing to the difficulties that were encountered in moving ahead with the APEI DPO-2 (which was not implemented). Results indicators were generally quantitative in nature and could be assessed objectively, but with some exceptions (as discussed in the section on M&E design, above). In some areas, the link between the prior actions and indicative triggers, and the results indicators, appears weak. The underlying ‘lean’ coordination mechanism proved to be vulnerable to varying degrees of commitment and attention by member countries due to the absence of a formal supporting secretariat and lack of consistency in member country meetings in terms of timing and level of participation.

Relevance of implementation: Modest.


20

34. The more substantive measures supported by the operation were envisaged to be the focus of the APEI DPO-2, but progress towards these was generally very slow. Implementation arrangements relied on the existing APEI structures, both within and across countries. As discussed in the M&E assessment, above, these structures proved not to be robust (with the exception of those in Mauritius, where regular NWG meetings were held). This negatively affected the implementation of the program and reduced the relevance of the operation to the participating countries’ reform agendas and to the Bank’s overall funding support and technical assistance.

3.2 Achievement of Program Development Objectives Overall rating: Unsatisfactory.

35. Achievement of the PDO was unsatisfactory, because there were major shortcomings in the operation’s achievement of its objectives, as measured in terms of the limited progress towards the indicative triggers for the DPO-2, and as measured by the results indicators. The following paragraphs briefly review the results in each of the three pillars of the operation. Table 5, at the end of this section, provides an at-a-glance summary of the progress towards the indicative triggers that had been agreed for the APEI DPO-2, and progress at the time of this ICRR against the results indicators.

Pillar 1, Removing barriers to trade in goods - unsatisfactory: With the exception of Mauritius, no progress was made on pillar 1. Only Mauritius met the single results indicator target for this pillar, of eliminating 5 NTBs, by undertaking an exercise for classifying and streamlining of NTBs, which resulted in the elimination of a number of import and export permits covering 20 products. Malawi (which did not receive funding under the operation) also eliminated export permits except for two items (maize and rice). Other countries reported either no progress, or only partial progress, such as undertaking an NTB inventory exercise (but not eliminating any of the NTBs identified). Even had the results indicator been met by more countries (i.e. eliminating five NTBs), it would have needed to be carefully assessed to gauge the development impact meaningfully (as it could in principle be met either through the elimination of more trivial, or more salient and impactful NTBs).

Pillar 2, Promoting trade in services – unsatisfactory

36. Little if any progress was made towards the first sub-pillar: liberalizing selected services sub-sectors. Prior actions focused on making commitments at the SADC and COMESA level towards liberalization, followed by implementing these commitments through the needed changes in legislation at the country level. However, these offers were either not made or, if they were, as in the case of Mauritius, did not extend commitments made already at the global level. The results indicator was “to be determined”, based on the specific sub-sectors to be liberalized. In retrospect, this sub-pillar was too ambitious, given the difficult and sensitive nature of services trade liberalization. The difficult actions were pushed out to the APEI DPO-2 stage, and, even had these been undertaken, it is questionable whether the planned results indicators (improvements in price and access metrics for sub-sectors) would have shown results quickly enough to gauge the success of the program on the ICRR time-frame.

37. The second sub-pillar for services trade, focused on facilitating the movement of business people across borders, saw a significant MoU being signed, but implementation has lagged, and progress against the results indicators is mixed. A Memorandum of Understanding (MoU) for the free movement of professionals was signed


21

in September 2016 by four of the five APEI countries (excluding only Mozambique); this was a significant accomplishment. However, implementation of the MoU has been slow. Furthermore, the results indicators (pertaining to increasing the number of business visitors and visitors from APEI countries), were, overall, only partly met. In any case, the results indicators are hard to link causally to the measures supported by the operation since many factors, such as the wider economic backdrop, drive business and APEI visitor numbers. The sharp decline in business visitor numbers to Mozambique, for example, is likely due to the general deterioration in Mozambique’s economy since 2016. Although not supported directly by the DPO-1, the APEI countries also agreed on a draft MOU on Education Services (in September 2016), and negotiated a Mutual Recognition Agreement (MRA) regarding accountancy services (negotiations concluded in Jan 2018; MRA still to be ratified and not yet signed by Mauritius and Seychelles). 38. Overall, achievement of the second, trade-in-services, pillar was unsatisfactory, because there is little evidence of any progress having been made towards liberalizing trade in services through opening up specific services sub-sectors and, whilst the MoU on the movement of professionals was a significant achievement, this was not signed by Mozambique, and still needs to be operationalized.

Pillar 3, Enhancing measures to facilitate trade – unsatisfactory:

39. Moderately unsatisfactory progress was made under sub-pillar 1: improve transparency of trade processes and improve transparency of responsibilities at borders to reduce dwell time at borders and customs clearing depots. Mauritius established a National Single Window (NSW), an indicative trigger for the APEI DPO-2, and access to trade-related information thus became comprehensively available. Mauritius has also subsequently requested and received further NSW implementation support from the Bank, funded through the Trade Facilitation Trust Fund. No other APEI member, however, reported progress towards indicative triggers in this sub-pillar for DPO-2, and results indicators were not achieved (with the exception of the increased availability of trade processes in Mauritius, as a result of the NSW). 40. Unsatisfactory progress was made under sub-pillar 2: reduce clearance time by improving risk-management. Mauritius conducted an institutional gap analysis (an indicative trigger) and the both results indicators of reducing clearance times and the share of consignments being physically inspected were met. No other country reported progress towards the relevant indicative triggers under the APEI action matrix, and results indicators were not met. 41. Unsatisfactory progress was made under sub-pillar 3: harmonize transport standards and ensure effective functioning of transit arrangements. Zambia and Malawi initiated an MoU on the Mwami/ Muchinji One-Stop Border Post (OSBP) within the Nacala corridor, thus making progress towards the indicative trigger (namely, the Governments of Malawi, Mozambique and Zambia have signed an agreement to facilitate regional transit trade along the Beira/Nacala-Malawi-Lusaka corridor by reducing key regulatory barriers and bringing domestic regulations into conformity with regional commitments). This MoU has been approved by Zambia and awaits ratification by both countries. However, the results indicator (pertaining to reduced transit times to Beira and Nacala) was not met, based on correspondence with the source for the baseline, substantiated by the findings of a recent USAID-funded report that found considerably longer average transit times than those used for the baseline of the APEI DPO-1 results indicator. 42. Overall for the trade facilitation measures pillar, progress towards the objectives was unsatisfactory (combining moderately unsatisfactory progress for one sub-pillar, and unsatisfactory progress for the other two sub-pillars).


22

Table 5: Summary of indicative triggers and results indicators (RIs) Mauritius Mozambique Seychelles

Indicative triggers met? RI achieved? Indicative triggers met? RI achieved? Indicative triggers met? RI achieved?

(1) Remove barriers to trade in goods

✓ Yes Trigger: eliminate 5 NTBs.

✓ Yes RI: 5 NTBs eliminated.

✓ Yes Trigger: Undertake inventory of NTBs.

X No RI: 5 NTBs removed.

X No Trigger: Undertake inventory of NTBs.

X No RI: 5 NTBs removed.

(2.1) Promote trade in services – 1st sub-component:

liberalizing sub-sectors

- Not applicable Regional commitment did not go further than existing ones, so no amendment to legislation (the indicative trigger) was needed to reflect regional commitments in at least 1 services subsector.

X Not met RI: to be defined; and no additional services liberalization was achieved by the indicative trigger as the regional commitment did not extend existing, global commitments.

X No Trigger: the government has submitted an offer to SADC with regard to liberalizing sub-sectors under communications, transport, financial services, and tourism.

X No RI: to be defined; and no information on any additional services sector liberalization.

X No Trigger: the government has amended legislation and regulations to reflect regional commitments on at least one services subsector.

X No RI: to be defined; and no information on any additional services sector liberalization.

(2.2) Promote trade in services – 2nd sub-component:

Facilitating movement of business people across

borders

✓ Yes Trigger: the government has signed an MoU with all other APEI countries to facilitate the movement of different categories of service providers.

- Partly met Baseline: Number of business people entering: 37,981 (2013) Target: 5 percent increase (2016) Result exceeded: 28% increase Baseline: Number of people from APEI countries entering: 9,013 (2013) Target: 5 percent increase (2016) Result not met: 2016: 8,938 (-0.8%).

X No (Trigger: the government has signed an MoU with all other APEI countries to facilitate the movement of different categories of service providers)

X No Baseline: Number of business people entering: 311,767 (2013) Target: 5 percent increase (2016) Result not met:184k (2016), -41% Baseline: Number of people from APEI countries entering: 244,000 (2013) Target: 5 percent increase (2016) Result not met: Info. not available, but unlikely to have been achieved given overall drop in visitor numbers

✓ Yes (Trigger: the government has signed an MoU with all other APEI countries to facilitate the movement of different categories of service providers)

- Partly met Baseline: Number of business people entering: 8,027 (2013) Target: 5 percent increase (2016) Result not met: -4% Baseline: Number of people from APEI countries entering: 3,783 (2013) Target: 3,972 (2016) Result exceeded: 4,291

(3.1) Enhance measures to facilitate trade – 1st sub-

component: improve transparency at borders…

✓ Yes (Trigger: the government has established a National Single Window, NSW)

✓ Yes, given NSW (RI #1: Access to trade-related information is comprehensively available)

X No (Trigger: the government has approved a policy to improve collaboration between border agencies based on a review of roles and responsibilities of these agencies)

X No (RI #1 Access to trade related information is comprehensively available)

X No (Trigger: the Cabinet (i) has approved a policy to improve collaboration between border agencies based on a review of roles and responsibilities of these agencies and (ii) has put in place a foreign trade portal

X No (RI #1 Access to trade related information is comprehensively available)

✓ Yes RI #2: Avg. clearance time for imports at borders key for intra-APEI trade reduced Baseline: Port Louis: 12.4 hours (yellow channel, MRA) Target: 11.3 hours Outcome: Exceeded (2.4 hrs in 2016)

RI #2: Avg. clearance time for imports at borders key for intra-APEI trade reduced Baseline: Nacala: more than 48 hours (median clearance time) Target: 43 hours (No outcome information available)

X No RI #2: Avg. clearance time for imports at borders key for intra-APEI trade reduced Baseline: Victoria 99 hours (2015 – DB) Target: 90 hours Result not met: 97 hours (DB 2018)

(3.2) Enhance measures to facilitate trade – 2nd sub-

component: Reduce clearance time by improving risk-

management

- Partly, as gap analysis has reportedly been undertaken (Trigger 1: the government (i) has undertaken a gap analysis for risk management procedures at borders compared to internal best practice and (ii) has approved a policy to address identified gaps).

✓ Yes (RI: reduction in share of consignments physically inspected by customs. Baseline: 12% (2014) Target: 10.8%% Outcome: Fully met (10.3% in 2016)

X No (Trigger: the government (i) has undertaken a gap analysis for risk management procedures at borders compared to international best practice and (ii) has approved a policy to address identified gaps)

RI: reduction in share of consignments physically inspected by customs. Baseline: 40% (estimate) Target: 36% (No outcome information available)

X No (Trigger: the government (i) has undertaken a gap analysis for risk management procedures at borders compared to internal best practice and (ii) has approved a policy to address identified gaps

X No. RI: reduction in share of consignments physically inspected by customs. Baseline: 29.4 % (all shipments, Jan-Sept 2014) Target: 26.5% Result not met: 38% of total consignments physically inspected (2016).

Trigger 2: the government has developed a risk-based approach for the use of scanners.

X No (Trigger: the government is in compliance with the RKC7 on risk management)

X No (Trigger 2: the government has approved a risk-based usage policy for the use of the “palette” scanner)

(3.3) Enhance measures to facilitate trade – 3rd sub-component: Harmonize

transport standards and ensure effective functioning of transit

arrangements

Not applicable. Not applicable. X No (Trigger: the Governments of Malawi, Mozambique and Zambia have signed an agreement to facilitate regional transit trade along the Beira/Nacala-Malawi-Lusaka corridor by reducing key regulatory barriers and bring domestic regulations into conformity with regional commitments)

X No Transit time to Beira/Nacala reduced. Baseline (from Malawi): Blantyre to Beira 3 days (2013); Blantyre to Nacala 3 days (2013) Target: 10% reduction.

Not applicable. Not applicable.

7 RKC: Revised Kyoto Convention.


23

X No (Trigger: the government (i) has approved a strategy to address the issue of multiple road blocks and (ii) has approved a policy to harmonize Axel load limits and vehicles dimensions in line with SADC standards, except for roads with physical constraints)

Baseline (from Zambia): Chipata to Nacala by rail: 4 days (2014); Chipata to Beira by road: 4 days (2013) Target: 10% reduction Result not met: based on info. from same source as used for the baseline.


24

Efficiency

Not applicable.

Justification of Overall Outcome Rating

Rating: Unsatisfactory. 43. Overall, the outcome of the operation is rated as unsatisfactory (i.e. there were major shortcomings in the operation’s achievement of its objectives, efficiency or relevance). The APEI Regional DPO was designed to be a series of two operations supporting the five APEI member countries, but only two countries could be supported in the first operation, and the second operation was dropped. As discussed above and summarized in Table 5, above, progress towards the indicative triggers for the APEI DPO-2 was uneven, and few of the results indicators were achieved.

Overarching Themes, Other Outcomes and Impacts

44. The APEI DPO was designed to support the APEI as a country-led, regional economic integration initiative. The relevance of this operation to the development agenda of these countries was, and remains, high. However, the regional DPO proved not to be an effective instrument for Bank support, as arguably became apparent at the approval stage with only three countries out of the five benefiting from funding, reduced to two subsequent to approval, all for reasons exogenous to the technical, trade-related focus of the operation. Coupled with the “light” organizational and institutional approach adopted by the APEI member countries to maintaining the reform dialogue and peer accountability across countries, which proved susceptible to long delays and insufficient exchange of information, the APEI reform program lost momentum. The macroeconomic management policy framework adequacy criterion specific to the DPO instrument, and the non-eligibility of DPOs for regional IDA funding, added to the difficulty to proceed to provide more funding and support to the APEI through the planned-for APEI DPO-2, which was dropped. Overall, very limited progress was made towards the PDOs.

(a) Poverty Impacts, Gender Aspects, and Social Development

The PDOs and results indicators of the operation were not focused directly on poverty, gender or social development goals.

(b) Institutional Change/Strengthening

45. APEI members have recognized the need to strengthen the administration and organization of the initiative, beyond the services provided during the time of APEI DPO-1 implementation by the Mauritius-based RMCE. Terms of reference to enable a strengthened coordination mechanism for the APEI has been drafted and is under review at the time of this ICRR by the member countries. Mauritius has offered to house this more permanent base to manage the administration and inter-country communication required for APEI.

(c) Other Unintended Outcomes and Impacts

None identified.


25

Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

Not applicable.

5. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME

Rating: Substantial

46. The development outcome supported by the program (increased regional economic integration) faces significant risks. Whilst representatives of the member governments have stated that they remain committed to the APEI, it is not yet clear how this commitment will translate into strengthening the institutional and governance arrangements for the initiative, both within and across countries. For example, the rotating Chair has been held by Malawi since 2016, considerably longer than the envisaged one-year period. Following the APEI DPO-2 not going ahead, the availability of additional funding (whether from the Bank or other development partners) for the APEI is unclear, adding to the risks to sustaining and building on the initiative. Measures to mitigate these risks are being taken. First, it is possible that the members will approve terms of reference for a strengthened coordinating mechanism (to be based in Mauritius), which could reinvigorate the initiative. The Bank is also working on an APEI Business Plan which will seek to identify the appropriate mix of future funding and technical support. The RMCE is reportedly in discussions with other development partners, some of which have already contributed to other elements of the APEI work program (for example, the Commonwealth supported the Accountancy MRA).


26

6. ASSESSMENT OF BANK AND BORROWER PERFORMANCE 5.1. Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Moderately unsatisfactory 47. The Bank recognized at the outset that the regional reform program faced considerable implementation risks. The use of a regional DPO to support a multi country initiative was recognized as being innovative and worth attempting in order to provide a coordinated framework to support a complex set of reforms across member countries. It was felt that an operation based on a series of IPFs or other country specific instruments would not be suitable to achieve this result. However, it was also clear from the onset that this operation was ambitious and complex, due to the possibility that macroeconomic risks would limit countries’ participation and the inherent complexities of trade-related reforms and of monitoring and maintaining progress in a multi-country results framework embodying “variable speed and geometry”. Participants in the review and decision meetings during the design phase debated alternative design options (e.g. using standalone or country-specific operations, or complementary country-specific operations and a regional P4R), before opting on the chosen approach of a programmatic series of regional operations. Reflecting the complexities, approval to negotiate was sought from a full Operations Committee meeting chaired by the Chief Operating Officer. 48. Despite the efforts made to anticipate difficulties, some of the implementation difficulties faced by the APEI Regional DPO can be traced back to shortcomings in ensuring the quality at entry of the operation. Some difficulties, such as the cancellation of Mozambique’s IDA credit due to the state-backed loan revelations, had nothing to do with APEI, were clearly beyond the control of the Bank, and could not have been anticipated. However, there were some warning signs in the lending phase that should have been taken into account more fully. The lengthy gestation period of the operation, with the concept review taking place in July 2013 and Board approval in April 2016, is an indication that the DPL series may have been too ambitious, or at least that the communication, coordination and consensus-building process amongst the five APEI member countries, and with the Bank, was proving to be more complex and slower than anticipated. Macroeconomic management issues were also apparent by the time of appraisal which, with the benefit of hindsight, should have been taken into consideration, because the use of the DPL series to support the APEI, with ultimately only 2 out of 5 countries benefiting, did not prove effective. The non-eligibility of regional DPOs for regional IDA funding was discussed at PCN review stage but the risk it presented to achieving the development outcome was underestimated.

49. The M&E framework reveals some weaknesses. As discussed in paragraph 28, some important M&E related decisions were backloaded to DPO2 which never materialized, and other indicators, while quantitative in nature, lacked clarity or were sensitive to confounding factors. The APEI processes that the M&E system relied on were not sufficiently developed and entry and did not perform, and quarterly multi-country supervision missions by the Bank as envisaged in the initial M&E framework turned out to be unrealistic. For some trade facilitation related indicators, data was taken from a one-off analytical report with no provisions for follow up data collection.


27

50. Borrower risks were underestimated. Risks were rated as moderate for all three participating countries (Mozambique, Mauritius, Seychelles), which in retrospect appears to have understated the reform program’s vulnerability to weaker political commitment, and implementation challenges arising from technical complexity, the political economy sensitivities of trade-related reforms (especially in services), and uneven implementation capacity.

51. Consequently, Bank performance in ensuring quality at entry is rated as moderately unsatisfactory (i.e. there were significant shortcomings in preparation).

(b) Quality of Supervision

Rating: Moderately unsatisfactory

52. The Bank actively supported the APEI during the APEI DPO-1 implementation period, however, no formal ISRs were filed. Quarterly supervision missions, as envisaged in the M&E design, did not take place, but it is questionable whether this was realistic given the staff time and travel costs that would be required to support quarterly missions to all five member countries. As discussed, the lack of regular, high frequency CWG discussions weakened the momentum and peer accountability of the program, but this occurred despite consistent efforts by the task team, in conjunction with the RMCE, to convene them, so it is unclear what more could have been done. The Bank placed considerable emphasis on convening and facilitating the less frequent senior official and technical-level meetings. These meetings took place, although with variable levels of representation, and did help maintain some level of dialogue regarding implementation, and towards the planned APEI DPO-2. No formal ISR was filed, as the task team’s efforts were focused on supporting continued dialogue amongst the countries and evaluating how to move forward with the planned second operation. Filing a formal ISR may have helped to highlight and mobilize more technical support in specific, lagging areas. Consequently, a moderately unsatisfactory rating is merited for the quality of Bank supervision (i.e. there were significant shortcomings in supervision). Technical assistance on data collection for monitoring and evaluation did not take as originally planned.

(c) Justification of Rating for Overall Bank Performance


53. Bank performance regarding quality at entry was moderately unsatisfactory, and regarding supervision was moderately unsatisfactory. Therefore, an overall rating for Bank performance of moderately unsatisfactory overall ratings is assigned.


28

5.2. Borrower Performance

(a) Government Performance


54. Government performance towards achieving the intended outcomes of the APEI DPO varied amongst the three countries for which the DPO was approved and should also be assessed in the context of the DPO supporting the overall APEI regional initiative involving five countries. An overall rating of moderately unsatisfactory (i.e. there were significant shortcomings in performance) for the participating governments’ performance on the APEI DPO is assigned. This rating is consistent with the unsatisfactory extent to which progress was made overall at the regional level, through the commitment of policymakers and follow-through at the technical level, to maintain dialogue and reform momentum amongst all APEI members. 55. The government of Mauritius showed consistent, strong commitment at the policymaker level to the APEI, and set up and maintained the national-level working committee structure envisaged by the APEI DPO. It also supported APEI indirectly by funding the RMCE, which acted as a quasi-secretariat for the APEI. Uniquely amongst the APEI members, Mauritius made substantial progress towards the indicative triggers for a second DPO, despite the challenges encountered to maintain reform momentum across countries during the implementation period. Consequently, Mauritius’ government performance merits a highly satisfactory rating (i.e. there were no shortcomings in government performance). 56. Following the approved DPO-1 credit not becoming effective for Mozambique, the commitment of the government to the APEI reform process waned. For example, Mozambique was the only APEI member not to sign the Memorandum of Understanding on the Free Movement of Professionals, which was a notable, tangible achievement towards reforms requiring regional cooperation during the DPO implementation period. The participation of Mozambican officials at the technical level, and information-sharing (updating the APEI action matrix), was limited. Mozambique’s more limited participation, meriting rating government performance pertaining to the operation as unsatisfactory (i.e. there were major shortcomings in government performance), should be seen in the context of it not receiving financial support for APEI from the Bank. 57. The government of Seychelles, along with Mauritius, was a keen proponent of APEI from the beginning of the program, and through to its achievement of the prior actions for DPO-1. However, subsequently during DPO-1 implementation, counterparts’ focus on the APEI reduced, formal national-level committee structures were not constituted, and Seychelles’ representation and information-sharing towards the dialogue at the cross-country level was uneven. Yet, Seychelles’ policymakers have indicated that they remain strongly committed to APEI. Overall, reflecting the mix of generally strong commitment at the policymaker level, achievement of prior actions, but uneven operationalization of the envisaged structures and procedures for reforms at the technical level, Seychelles’ performance on APEI merits a rating of moderately unsatisfactory. 58. The overall government performance rating of moderately unsatisfactory is also supported by the wider difficulties to move forward with the APEI agenda at the regional level. Commitment at the policymaker level was uneven; for example, no Ministers attended the Ministerial meeting convened in September 2016 (i.e. during implementation) in Mauritius. However, APEI member countries’ representatives did subsequently reaffirm their commitment to the APEI at the high-level meeting held at the time of the WB/IMF Annual Meetings in October 2017. At the technical level, implementation of the APEI DPO-1, including obtaining adequate information regarding progress towards the indicative triggers for APEI DPO-2, was significantly impeded by the difficulty of


29

convening coordinating working group (CWG) meetings. It should be recognized that this occurred after the DPO-1 was approved for only three of the members, and subsequently also the macroeconomic difficulties experienced in Mozambique.

(b) Implementing Agency or Agencies Performance

No separate rating for implementing agencies as government and implementing agencies were indistinguishable in this case.

(c) Justification of Rating for Overall Borrower Performance

Rating: Moderately unsatisfactory, as discussed in (a) above.

7. LESSONS LEARNED

59. Meeting macro adequacy requirements simultaneously across multiple participating countries can be a major hurdle for regional DPOs, potentially seriously reducing the usefulness of regional DPOs as an instrument to support regional policy reforms. The 1st APEI DPO, approved in April 2016, supported only Mauritius and Seychelles, because Malawi, Mozambique and Malawi all implemented reforms as agreed in the APEI action matrix, but were ruled out from DPO support due to prevailing, country-specific macro conditions. This impacted negatively on the dialogue between the Bank and the APEI member countries, and arguably slowed down subsequent policy reform momentum. The planned second operation in the APEI DPO series was dropped in March 2018, as only Mauritius had both the demand and eligibility on the basis of macro conditions to proceed. 60. Regional DPOs should seek to complement policy reforms with strengthening of the relevant institutions, particularly where these are new or evolving regional bodies. While DPOs can help regional policy reform momentum, there is a need to manage the risk that they substitute for the development of clients’ own regional cooperation at the operational level. The APEI was envisaged as a “lean” or “nimble” initiative, based on the concept of variable speed and geometry in trade policy reforms amongst like-minded countries, with peer-to-peer accountability. The regional APEI DPO injected not only substantive support to policy reforms, but also operational and procedural structure and impetus, without which reforms would not have been achieved. After the DPO prior actions were achieved, however, and it became clear that some APEI members could not benefit from the DPO for exogenous reasons, there were insufficient enduring, underlying and client-led coordinating mechanisms to support the process, and reform momentum largely ceased. 61. Regional DPOs should recognize the complexities and resource-intensiveness of multi-country reform programs. Particularly in cases such as APEI where the regional institutional infrastructure being supported is nascent or weak, regional DPOs should ensure that the complexities of making and implementing reforms across multiple countries is recognized, and policy matrices are kept simple and amenable to focused, ongoing Bank support. Supervision costs across multiple countries escalate quickly. Coupled with insufficient strength of institutions and processes linked to the reform program (both within and across countries), this can make identifying and remedying implementation problems very challenging. 62. Regional DPOs would benefit if they were able to mobilize regional IDA funding. Had the APEI DPO been able to do so, the appetite of IDA-eligible APEI participants to continue to aim for funding and TA support under


30

the program would likely have been greater, which may have had a positive impact on countries’ continued commitment to the reform program, even following the disappointment that came with only the two IBRD-eligible countries (Mauritius and Seychelles) benefiting directly from APEI DPO-1.

8. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING AGENCIES/PARTNERS

(a) Borrower/Implementing agencies

The comments received from counterparts in Mauritius were addressed as follows: Mauritius Revenue Authority: Revised numbers on clearance times and physical inspections were incorporated. Mauritius Passport and Immigration Office: Revised numbers on arrival of business people was incorporated. Numbers provided on arrival of APEI business people were not incorporated as the results indicator calls for visits from APEI countries in general (regardless of purpose). Mauritius Ministry of Finance and Economic Development: Information on the status of signature of regional agreements was incorporated. (b) Co-financiers

Not applicable. (c) Other partners and stakeholders

None received.


31

ANNEX 1: BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES

(a) Task Team members

Lending

Names Title Unit Responsibility/

Specialty

Benito-Spinetto, Maria Teresa (14639)

Research Analyst AFCS2 Technical guidance and support

Blanco Armas, Enrique (280144)

Lead Economist AFCS2 Technical guidance and support

Brenton, Paul (239509) Lead Economist AFCS2 Technical guidance and support

Butao, Davie Chimwemwe (309145)

Driver AFCS2 Administrative support

Bwalya, Lillian Saili (216994)

Procurement Specialist AFCS2 Technical guidance and support

Chilima, Chikaiko Catherine (210542)

Must be retired – not in system

AFCS2 Technical guidance and support

Chilima, Efrem Zephnath (409570)

Sr. Private Sector Specialist AFCS2 Technical guidance and support

Dihel, Nora Carina (305628)

Sr. Economist AFCS2 Technical guidance and support

Gondwe, Temwa Roosevelt (398584)

Short Term Consultant AFCS2 Technical guidance and support

Guloba, Asumani (372198)


Hoppe, Mombert (287610)

Sr. Economist AFCS2 Team Leader

Isik, Gozde (277011) Sr. Economist AFCS2 Team Leader

Kandoole, Priscilla Flaness (464771)

Economist AFCS2 Technical guidance and support

Kunaka, Charles (260482) Lead Private Sector Specialist AFCS2 Technical guidance and support

Macia, Agonias Antonio (473160)

Must be a retiree, no long in system


Maudarbocus-Boodoo, Khoudijah Bibi (341289)


Meza-Bartrina, Luz (174951)

Sr. Counsel AFCS2 Technical guidance and support

Mulla, Zulfa (22190) Short Term Temporary AFCS2 Administrative Support

Ngwira, Tanangachi (21723)

Operations Analyst AFCS2 Technical guidance and support


32

Nhabangue, Clarisse Livia Isaias (319357)

Program Assistant AFCS2 Operations and Administrative Support

Reyes, Jose Daniel (323270)

Sr. Economist AFCS2 Technical guidance and support

Rojid, Sawkut (349596) Short Term Consultant AFCS2 Technical guidance and support

Sienaert, Alexis (346505) Sr. Economist AFCS2 Technical guidance and support

Tobela, Luis Eugenio (361500)

Bank retiree AFCS2 Technical guidance and support

Watanuki, Maika (380339)


Weber, Barbara (292994) Sr. Operations Officer AFCS2 Technical guidance and support

Supervision/ICR:

Brenton, Paul (239509) Lead Economist AFCS2 Technical guidance and support

Hoppe, Mombert (287610)

Sr. Economist AFCS2 Team Leader

Omar, Ahmad Ibrahim (308856)

Sr. Customer Service Representative


Shahid, Sohaib (449258) Short Term Consultant AFCS2 Technical guidance and support

Sianeart, Alex Sr. Economist CRO ICR Main Author

Uexkull, Erik Von Sr. Economist GMTA4 Team Leader

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and

consultant costs)

Lending 110.53 $370,266.94

Total: 110.53 $370,266.94

Supervision /ICR

23.96

$92,557.23

Total: 23.96 $92,557.23


33

Not applicable

ANNEX 2: BENEFICIARY SURVEY RESULTS


34

ANNEX 3: STAKEHOLDER WORKSHOP REPORT AND RESULTS Not applicable


35

ANNEX 4: SUMMARY OF BORROWER'S ICR AND/OR COMMENTS ON DRAFT ICR

Comments from Mauritius Revenue Authority:

1. Paragraph 3.1 (page 10) at Result indicator #2

On the basis of table 1 below on average clearance time for consignments without physical inspection (Green and

Yellow channels), the target was met.

Table 1: Average Dwell Time for Clearance of Sea (Port Louis) Imports by Channel for Year 2013 - 2018

Please note that average dwell time is based on working hours only.

2. Paragraph 3.2 (page 10)

The target of 5.7% is not met. However the percentage as at 2018 is on the decrease to achieve 6.2%. Table 2 below

refers.

Table 2

Percentage of physical examination of consignments

Year % of Physical Examination

2014 12%

2015 9.4 %

2016 10.3 %

2017 8.9 %

2018 6.2 %

3. Paragraph 35 (page 17) Mauritius has progressed on Pillar 1 by eliminating 5 NTBs and elimination of import and export permits on 20

products. (Agree)

Channel Year 2013 Year 2014 Year 2015 Year 2016 Year 2017 Year 2018

Green (Mins) 46.0 27.7 29.5 29.1 30.5 30.1

Yellow (Hrs) 12.4 2.4 2.2 2.4 3.1 3.1

Red (Hrs) 27.1 13.0 12.3 12.9 12.6 12.4


36

4. Paragraph 40 (page 18) Maximum use of risk management is made for by MRA Customs for rapid clearance of legitimate consignments. Table 1

shows reducing clearance time over the period 2013 to 2018 and this is the result of improved risk management.

Comments from Mauritius Passport and Immigration Office

The information pertaining to movement of persons indicated in the attached report at pages 9 and 10 has been

verified and it came to light that the figures of Business persons visiting Mauritius do not tally to that which is available

at this Office.

The figures available at this Office are as follows:

(i) Number of people travelling on Business purpose:

a. Year 2013: 37981

b. Year 2016: 48546

(ii) Number of people from APEI countries travelling on Business:

a. Year 2013:

Mozambique: 155

Malawi: 154

Seychelles: 532

Zambia: 288

Total: 1129

b. Year 2016:

Mozambique: 217

Malawi: 181

Seychelles: 487

Zambia: 231

Total: 1116


37

Additional comments from Ministry of Finance and Economic Development (MoFED)

Paragraph 37: Kindly note that APEI countries have not yet signed the MOU on Education Services. A draft MOU was

adopted by APEI Ministers in September 2016. The draft was amended in 2017 following a second workshop on

Education Sector Services held in March 2017. The amended draft MOU was circulated to all APEI Members for their

comments. As at date, only Mauritius has submitted its comments on the amended draft MOU. Regarding the APEI MRA

on accountancy services, kindly note that the Agreement was signed by three APEI member states, namely Malawi,

Mozambique and Zambia, on 28 February 2019 in the side-lines of the 8th APEI Senior Officials Meeting, in Lusaka,

Zambia. A first meeting of the APEI Professional Accountants and Auditors Committee (APAAC) was also held after the

signature. A second meeting of the APAAC is scheduled for 29th – 30th May 2019 in Maputo, Mozambique.

It is to be noted that Mauritius and Seychelles have not yet signed the MRA.

Seychelles and Mozambique did not submit comments on the draft ICR.

ANNEX 5: COMMENTS OF COFINANCIERS AND OTHER PARTNERS/STAKEHOLDERS Not applicable

ANNEX 6: LIST OF SUPPORTING DOCUMENTS None


38

ANNEX 7: MAPS


39


40

Documents

World Bank Documentdocuments.worldbank.org/curated/en/175751558645682270/... · 2019-05-24 · document of the world bank report no: icr00004530 implementation completion and results