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Document of
The World Bank
Report No: ICR00004080
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-53280TF - 13880)
ON A
DEVELOPMENT POLICY CREDIT
IN THE AMOUNT OF SDR 9.2 MILLION
(US$14 MILLION EQUIVALENT)
TO
TOGO
FOR THE
PROGRAMMATIC DEVELOPMENT CREDIT SERIES
ECONOMIC GROWTH AND GOVERNANCE CREDIT
February 27, 2017
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1
TOGO – GOVERNMENT FISCAL YEAR
January 1 – December 31
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of August 24, 2016)
Currency Unit
US$ 1.00 = XOF582.664
ABBREVIATIONS AND ACRONYMS
AFD Agence Française de Development
AfDB African Development Bank
AFRITAC African Régional Technical Assistance Centre
ARMP Agence de Régulation des Marches Publiques
EFF Electronic Frontier Foundation
BTCI Banque Togolaise de Commerce et de l’Industrie
CEB
CEET`
Communauté Electrique du Bénin
Communauté Energique et Electrique du Togo
CFAF
CPAR
Communauté Financière d’Afrique Franc
Country Procurement Assessment Report
DFID Department for international Development
DGSCN Direction Générale de la Statistique et de la Comptabilité Nationale
DO Development Objective
DPC Development Policy Credit
DPO Development Policy Operation
EI-TAF Extractives industries Technical Advisory Facility
EITI Extractive Industries and Transparence Initiative
EGGC Economic growth and Governance Credit
ERCG Economic Recovery and Governance Credit
EU European union
FSGP Financial Sector and Governance Project
FY Fiscal Year
GDP Gross Domestic Product
GoT Government of Togo
HIPC Heavily Indebted Poor Countries
HIV/AIDS Human Immunodeficiency Virus Infected and Acquired Immune Deficiency
Syndrome
ICRR Implementation Completion and Results Report
ICT Information and Communication Technology
IDA International Development Association
IFIs International Financial Statistics
IMF International Monetary Fund
2
INSEED Institut National de la Statistique et des Etudes Démographiques
ISN Interim Strategy Note
ISR Interim Strategy Report
ISPs Internet Service providers
L/C/TF Loan/Credit/Trust Fund
M Million
MDGs Millennium Development Goals
MDR Multi-Donor Relief
MDRI Multilateral Debt Relief Initiative
MVNO Mobile Virtual Network Operator
NA Not Applicable
NSCT Nouvelle Société Cotonnière du Togo
OTR Office Togolaise des Recettes
PAI Projet d’Appui Institutionnel
PASA Project d’Appui au Secteur Agricole
PDO
PEA
Project Development Objective
Political Economy Analysis
PEMFAR Public Expenditure Management and Financial Accountability Report
PEFA Public Expenditure and Financial Accountability
PFM Public Financial Management
PI Project Identification
PPP Purchasing Power Parity
PSDP Private Sector Development Project
PSIA-TF Poverty and Social Impact Analysis-Trust Fund
POVMAP Poverty Mapping
QAG Quality
QEA Quality at Entry Assessment
QSA Quality at Supervision Assessment
SCAPE Stratégie de Croissance Accélérée et de Promotion de l’Emploi
SDGs Sustainable Development Goals
SIGMAP Système de Gestion Intégré des Marchés Publics
SOE State-Owned Enterprises
SOTOCO Société Cotonnière du Togo
TA Technical Assistance
TG Togo
TFSCB Trust Fund for Statistical Capacity Building
UNDP United national Development Program
USD United States Dollars
UTB Union Togolaise des Banques
WAEMU West Africa Economic and Monetary Union
WARCIP West African Régional Communication and Infrastructure Program
WB World Bank
WGI Worldwide Governance Indicators
3
Vice President: Makhtar Diop
Country Director: Pierre Laporte
Global Practice Senior Director: Carlos Felipe Jaramillo
Sector Manager: Lars Christian Moller
Project Team Leader: Johannes G. Hoogeveen
ICR Team Leader: Godwill Kan Tange
ICR Primary Author: Godwill Kan Tange
4
TOGO
Economic Growth and governance Credit (P132208)
Implementation Completion and Results Report (ICRR)
Contents Data Sheet ................................................................................................................................... 5
A. Basic Information ............................................................................................................... 5
B. Key Dates ........................................................................................................................... 5
C. Ratings Summary ............................................................................................................... 5
D. Sector and Theme Codes .................................................................................................... 6
E. Bank Staff ........................................................................................................................... 6
F. Results Framework Analysis .............................................................................................. 7
G. Ratings of Program Performance in ISRs ........................................................................ 10
H. Restructuring .................................................................................................................... 10
Implementation Completion and Results Report (ICRR) .......... Error! Bookmark not defined.
1. Program Context, Development Objectives and Design .................................................. 11
2. Key Factors Affecting Implementation and Outcomes .................................................... 18
3. Assessment of Outcomes .................................................................................................. 24
4. Assessment of Risk to Development Outcome ................................................................. 27
5. Assessment of Bank and Borrower Performance ............................................................. 28
6. Lessons Learned................................................................................................................ 31
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners................... 32
Annex 1. Bank Lending and Implementation Support/Supervision Processes ..................... 33
Annex 2. Beneficiary Survey Results ................................................................................... 35
Annex 3. Stakeholder Workshop Report and Results ........................................................... 35
Annex 4. Summary of Borrower's ICRR and/or Comments on Draft ICRR ........................ 35
Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders ............................... 35
Annex 6. List of Supporting Documents .............................................................................. 36
5
Data Sheet
A. Basic Information
Country: Togo Program Name: Economic Growth and
Governance Credit
Program ID: P132208 L/C/TF Number(s): IDA-53280-TG, TF-
13880
ICRR Date: 02/27/2017 ICRR Type: Core ICRR
Lending Instrument: DPC Borrower: GOVERNMENT OF
TOGO
Original Total
Commitment: USD 14.00M Disbursed Amount: USD 13.46M
Revised Amount: USD 14.00M
Implementing Agencies:
Ministry of Economy and Finance coordinates the Implementation in association with other line
Ministries
Cofinanciers and Other External Partners:
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 01/16/2013 Effectiveness: 06/14/2014 11/14/2014
Appraisal: 10/09/2013 Restructuring(s):
Approval: 12/05/2013 Mid-term Review:
Closing: 06/30/2014 11/30/2014
C. Ratings Summary
C.1 Performance Rating by ICRR
Outcomes: Unsatisfactory
Risk to Development Outcome: High
Bank Performance: Moderately Satisfactory
Borrower Performance: Unsatisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Unsatisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Unsatisfactory
6
Overall Bank
Performance: Moderately Satisfactory
Overall Borrower
Performance: 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: NA
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Crops 13 13
Other Public Administration 25 25
ICT Infrastructure 12 12
Banking Institutions 25 25
Other Energy and Extractives 25 25
Theme Code (as % of total Bank financing)
Export development and competitiveness 25 25
Infrastructure services for private sector development 12 12
Other rural development 13 13
Public expenditure, financial management and
procurement 25 25
State-owned enterprise restructuring and privatization 25 25
E. Bank Staff
Positions At ICRR At Approval
Vice President: Makhtar Diop Makhtar Diop
Country Director: Pierre Laporte Madani M. Tall
Global Practice Senior
Director Carlos Felipe Jaramillo
Practice Manager: Lars Christian Moller Miria Pigato
7
Program Team Leader: Johannes G. Hoogeveen Johannes G. Hoogeveen
ICRR Team Leader: Godwill Tange
ICRR Primary Author: Godwill Tange
F. Results Framework Analysis
Program Development Objectives The Program Development Objective is to support Government-owned reforms to strengthen
economic governance, to improve the efficiency of resource use as well as to implement growth-
enhancing structural reforms in agriculture, energy, telecommunications, and mining.
Revised Program Development Objectives NA
(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 : Number of years for which budget data are available on line by April of that
year
Value
(quantitative or
Qualitative)
5 7 8
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Met. Budget data from 2008 to 2016 is available on the government’s website,
togoreforme.com. The budget has also been transformed into the BOOST
format and is available online in that format from 2009 to 2014.
Indicator 2 : Number of years for which budget execution data are available on line by
April of that year
Value
(quantitative or
Qualitative)
4 6 7
Date achieved 11/30/2013 04/30/2016 04/302016
Comments
(incl. %
achievement)
Met. Budget execution data is available on the Government’s website,
togoreforme, from 2008 to June 2015.
Indicator 3 : Number of ministries that use SIGMAP
Value
(quantitative or
Qualitative)
0 4 0
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments Not met. Five ministries are able to use the automated procurement system
8
(incl. %
achievement)
SIGMAP: Agriculture, Transport and Infrastructure, Primary and Secondary
Education, Health, Higher Education. These Ministries submitted their
procurement contracts for processing through SIGMAP in 2015 and early
2016. However, in March 2016, the hard disc containing all procurement
information crashed and all procurement data was lost. The Government
appears not to have had a back-up system for safeguard purposes. As such, this
indicator is considered not to have been met.
Indicator 4 : Number of years that the price paid to producers (cotton) is in accordance with
the revised price formula
Value
(quantitative or
Qualitative)
0 3 3
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Met. A first formula was adopted in 2009 and implemented through 2012. A
revised formula was adopted in 2013 and implemented in 2014 and 2015. The
revised formula is effective again in 2016, making it 3 years. After 2016, the
authorities will review the formula to determine whether adjustments are
needed.
Indicator 5 : Non-carbonated phosphate production (million ton)
Value
(quantitative or
Qualitative)
1.1 2.0 1.15
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Not met. Non-carbonated phosphate production has not exceeded 1.15 million
tons for the past three years. Production stood at 1.2 million tons in 2013, fell
to 1.1 million tons in 2014 and increased slightly to 1.15 million tons in 2015.
The process of extracting phosphates has become increasingly difficult and
costly as reserves are depleted. Initially, phosphates could be extracted from a
depth of 7 meters. Today, extraction occurs at depths exceeding 42 meters.
Indicator 6 : Frequency with which the electricity tariff is reviewed using the financial
model
Value
(quantitative or
Qualitative)
Not done At least twice per
year Not done
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Not met. There is a new financial and pricing model in place, but this model is
currently not used to review electricity tariffs. The price of electricity has not
been reviewed since 2013. A major current challenge, in an environment
where electricity prices do not cover costs, is addressing the debt owed by the
electricity company, “Communauté Energique et Electrique du Togo” (CEET)
to its electricity provider, “Communauté Electrique du Bénin” (CEB).
Indicator 7 : Number of MVNOs
9
Value
(quantitative or
Qualitative)
0 1 0
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Not met. After launching a call for tenders for a third telecom operator, the
selection process for a Mobile Virtual Network Operator (MVNO) was
cancelled. This followed an earlier 18month unsuccessful effort to select an
MVNO.
Indicator 8 : Number of Internet Service Providers (ISPs)
Value
(quantitative or
Qualitative)
2 4 2
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Not met. There are two licensed ISPs in Togo: Café Informatique and
Togotelecom. Togo Cellular and MOOV also provide internet services in
Togo, but they do not have the required licenses to provide this service.
Indicator 9 : Number of licensed telecom operators
Value
(quantitative or
Qualitative)
2 3 2
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Not met. Togo has two licensed telecom operators. MOOV and Togotelecom.
Attempts to encourage the Government to open the sector to a third telecom
operator in order to foster competition and encourage better service provision
have not yielded results.
Indicator 10 : Number of commercial banks in which the government is a majority
shareholder
Value
(quantitative or
Qualitative)
2 0 2
Date achieved 11/30/2013 04/30/2016 04/30/2016
Comments
(incl. %
achievement)
Not met. The State still holds majority stakes in two major banks in Togo: the
BTCI (Banque Togolaise de Commerce et de l’Industrie) and the UTB (Union
Togolaise des Banques). These banks both have negative equity positions of
CFAF 29.5 billion and about CFAF 46 billion, respectively. The stated
intention of the Government is to merge the two banks into a single entity.
According to the Privatization Committee in charge of the public bank
divestiture process, the privatization process failed because the offers received
were so insignificant that the Government preferred to maintain ownership of
the banks.
(b) Intermediate Outcome Indicator(s)
Not Applicable
10
G. Ratings of Program Performance in ISRs
No. Date ISR
Archived DO IP
Actual
Disbursements
(USD millions)
1 N/A N/A N/A -
H. Restructuring
Not Applicable
11
1. Program Context, Development Objectives and Design
1. This Implementation Completion and Results Report (ICRR) evaluates the results
of the “Economic Growth and Governance” programmatic series of Development Policy
Credits (EGGC6) for Togo. The programmatic series was designed to support Government
reform efforts to strengthen economic governance, improve the efficiency of resource use and to
implement growth enhancing structural reforms in agriculture, energy, telecommunications,
mining and banking. The first operation in the series, Sixth Economic Growth and Governance
Credit (EGGC6) was approved by the Bank’s Board of Directors on December 5, 2013, and
disbursed upon loan effectiveness on November 14, 2014 – almost one year later.
2. Disbursement was delayed by almost a year owing to the lack of an adequate
macroeconomic framework. The Board approved EGGC6 based on a 2014 budget that was
discussed with Bank and IMF during the 2013 Annual Meetings and which was determined to be
consistent with an adequate macroeconomic framework. However, the 2014 budget presented to
and approved by Parliament on the same day as Board approval of the operation differed
considerably from what had been previously agreed to. Two missions were subsequently
conducted by the Bank to assess the adequacy of the macroeconomic framework prior to
approving disbursement. The first mission took place in January 2014. The report of the first
mission, dated April 2014, determined that the 2014 budget as adopted was over-optimistic and
not conducive to macroeconomic stability. Total revenue in the 2014 approved budget was
expected to increase by more than 30 percent compared to the 2013 budget, with customs
revenues increasing by about 60 percent compared to the previous year. This budget was
considered not achievable and therefore not conducive to macroeconomic stability.
Disbursement was then made contingent upon the adoption of a revised and more realistic
budget. The second mission to evaluate the macroeconomic framework in June 2014 insisted
once again that the budget be revised as proposed during the first mission of January 2014 as
well as including in the budget the pre-financed extra-budgetary public investment expenditures.
The Government eventually revised the 2014 budget, adopting a more realistic budget in which
the pre-financed contracts were included. The Government also presented an acceptable 2015
budget to both the Bank and the IMF, and the Bank thus disbursed the EGGC6 in late 2014.
2. The series was cancelled due to concerns about the adequacy of macroeconomic
framework. These concerns were related to unorthodox public finance management practices,
especially in the areas of public investment and debt management. Of particular concern was the
use of pre-financed contracts to fund public investment;1 a financing mechanism that was non-
transparent, did not follow conventional procurement procedures, was costly, led to significant
maturity mismatches, skirted public investment planning and approval processes, and was
undertaken off-budget. Moreover, these contracts were not included in the public debt stock, and
yet they accounted for a substantial part of public debt.
1 Pre-financing is a practice whereby the government contracts private sector companies, typically on a sole-source
basis, to undertake public investment projects. The private firm then arranges commercial bank financing of the
project, and the government assumes responsibility for payment of this commercial loan.
12
1.1 Context at Appraisal
3. At the time of appraisal, Togo had good prospects for economic growth given its
abundant supplies of high quality phosphate and other mineral resources, a favorable
climate for agriculture, and a natural deep-sea port. However, Togo was recovering from the
effects of a long period of poor economic management, which had caused serious social and
political tensions during the 1990s and 2000s. Key state institutions had crumbled in an
environment of civil strife, and the economy was significantly under-performing. GDP per capita
was lower at appraisal in 2013 than in 1980, and remains so today. Deteriorating financial
positions within state-owned enterprises had damaged their ability to service bank loans, in turn
affecting the soundness of the financial sector, which had previously been among the strongest in
West Africa. The economy was further weakened by the withdrawal of donor support in the
1990s. The economic malaise and long period of isolation from the donor community led to
mounting arrears, serious financial difficulties within the leading cotton and phosphate state-
owned enterprises, and a large non-performing loan portfolio in the banking sector. These
difficulties were still present at the time of appraising the operation in late-2013, though
conditions were improving.
By the late-2000’s, the political situation was relatively stable, but the economy
required ambitious reforms in order to reverse past trends. This included fostering a more
dynamic and competitive economy, as well as to strengthen a relatively weak economic and
public financial management environment
This willingness to reform led to Togo reaching the HIPC (Heavily Indebted Poor Countries)
completion point in December 2010 and qualifying for additional debt relief under the MDRI
(Multilateral Debt Relief Initiative). Several donors then re-engaged with Togo, particularly in
the social infrastructure and social services sectors. The World Bank increased its support from
USD 178 million in 2008 to USD 193 million in 2013. However, Togo was unable to conclude a
program with the International Monetary Fund (IMF) until 2013 and this limited the ability of
some key partners, notably the French Development Agency (AFD) and the Japanese
Government, to provide assistance.
13
This Government strategy was in line with its second
Poverty Reduction Strategy (PRSP II), and included fiscal consolidation and a strategy to
promote private sector led growth; the Strategy for Boosting Growth and Promoting
Employment (Stratégie de Croissance Accélérée et de Promotion de l’Emploi -- SCAPE).
SCAPE offered a medium-term development framework for implementing the Government’s
Medium-Term Policy Strategy, for achieving the Millennium Development Goals (MDGs), now
the Sustainable Development Goals (SDGs), in furthering the Government’s vision for making
Togo an emerging economy in 15 to 20 years, as well as making it a country that respects human
rights and promotes the rule of law.
new cotton company and institutional
reforms of the phosphate company with the aim of increasing production. In addition,
efforts to develop Togo’s carbonated phosphate reserves were initiated. Togo joined the
Extractive Industries Transparency Initiative (EITI), received candidacy status in October 2010
and became a full member in May 2013. In telecommunications, a roadmap to open the sector to
competition was adopted and a new Telecommunications Act was approved in January 2013. In
the electricity sector, generating capacity was expanded with a 100MW power generation plant
operating under a public-private partnership. The Government made progress in clearing arrears
to the private sector, and in the financial sector, three state-owned banks were recapitalized.
These three banks, plus one other state-owned bank, were subsequently put up for privatization.
At the time of appraisal, two of the four banks had been privatized.
9. The previous DPO, ERGC-5, had thirteen key results indicators with at least one for
each action. ERGC-5 supported Government-owned reforms to improve public financial
management as well as structural reforms in cotton, energy, telecommunications and banking.
Seven of the results indicators of ERGC-5 were fully met, three were partially met, whereas
three others were not met. Of the six indicators related to PFM, five were met. The real sector
reforms which ERGC-5 supported were limited since the operation was a stand-alone operation,
but were successful to some extent in furthering the reform effort. Reforms in the cotton and
electricity sectors managed to lay the foundation for further significant reforms which were
ultimately addressed in the EGGC6. The ICRR for ERGC-5 points out that reforms envisaged in
the telecommunications and banking sectors fell short of expectations and the report deemed it
worthwhile for subsequent reforms to continue focusing on these areas.
14
10. During the design stage of the EGGC-6 both the IMF and the Bank had a positive,
constructive and close working relationship with the Minister of Finance., This was also the
case in the run-up to the HIPC Decision Point and Completion Point. The Minister of Finance
had played a critical role in bringing Togo back to the international community following more
than a decade of interrupted relations with the donor community under the previous
President. At the time EGGC6 was designed, the Minister of Finance was seen as a strong
reformer given recent accomplishments. Earlier, in September 2005, the Fund was not even
willing to consider a Staff-Monitored Program and the Bank had all but suspended
relations. Putting Togo on any credible pathway to a HIPC Completion Point was out of the
question at that juncture. It is to the former Minister of Finance’s credit to have turned this
situation around from 2007-2011. Relations with the Fund were positive enough that the IMF
was favoring a ‘reflection pause’ between the end of the previous program in 2011 and the new
program, with little doubt that a new program could be quickly agreed upon. Similarly, there was
little reason for the Bank to have doubted the reform commitment of the authorities in 2013
when the program was designed.
11. After accomplishing so much, by 2011-2012, the Minister of Finance had the
complete trust of the President. Following debt relief, he started feeling that Togo no longer
needed some of its traditional partners. The economy had stabilized compared to previous years
and the Government starting taking a few risky decisions without consulting its development
partners. The Minister of Finance also starting voicing his discontent that the country had been
under so much pressure from development partners in previous years to undertake reforms and
an impression emerged that he wanted to affirm the autonomy of the Government in the day-to-
day running of their country.
12. Moreover, the regional financial market as well as domestic banks became very
liquid and buoyant. This made it easy for the Togolese Government to borrow large amounts of
money for the country’s development purposes (despite high costs). The Government therefore
started to consider the advice from the World Bank and the IMF to seek concessional loans to
finance most of the country’s development projects as a binding constraint to their national
development. At the time, neither the Bank nor the IMF could perceive that the Government was
beginning to embark on risky deals with commercial banks. These developments and dynamics
partly explain the lack of ownership and commitment to reforms that followed.
13. Growth rates increased in 2013 and 2014 as cotton and phosphate production
improved and credit to the private sector expanded, but many challenges remained. Togo
started to attract interest from private investors.
Togo’s CPIA indicator (Country Policy and Institutional Assessment) remained low at 3.0,
below WAEMU and IDA averages, and the country was and remains classified as a fragile state.
However, growth prospects remained constrained by underdeveloped infrastructure, weak
governance structures, inadequate attention to implementation of programs and policies, and
vulnerability to trade and weather shocks. Mining activities contributed little to the budget, while
some banks remained insolvent. The overall business environment remained poor.
Telecommunication services were of low quality and costly.
14. The EGGC series was consistent with the Government’s program as spelled out in
15
the Government’s Second Poverty Reduction Strategy 2013-17 (PRSP II), and the Government’s
Strategy for Accelerated Growth and Employment Promotion (SCAPE). The program was also
consistent with the Bank’s Interim Strategy Note (ISN) for Togo for 2012-13 in that the Program
supported the ISN objectives of (i) deepening economic recovery and promoting sustainable
development through improvements in the business environment, increased agriculture
productivity, and improved access to productive infrastructure; and (ii) improving economic
governance through improved management and restructuring of key public enterprises and
banks, improved and transparent public financial management, and enhanced procurement
system and external budget control.
Table 1: Selected Economic and Financial Indicators
2013 2014 2015 2016 2017 2018 2019 2020
Est Proj.
Real GDP (annual % change) 5.4 5.4 5.3 5.0 5.0 5.3 5.4 5.6
Real GDP per capita (annual % change) 2.6 2.6 2.5 2.2 2.2 2.5 2.6 2.8
CPI, inflation (annual % change) 1.8 0.2 1.8 2.1 2.5 2.5 2.5 2.5
Gross Domestic Investment 24.5 25.7 27.0 29.2 27.0 26.2 25.3 25.2
Public sector investment (% of GDP) 9.2 11.3 13.0 15.3 12.6 11.4 10.2 9.8
Private sector investment (% of GDP) 15.3 14.4 14.0 13.9 14.4 14.8 15.1 15.4
Government Budget
Total revenues and grants (% of GDP) 21.3 20.5 21.9 25.6 24.9 24.9 24.7 25.0
Tax revenues (% of GDP) 18.0 18.2 19.6 20.6 21.0 21.3 21.5 21.7
Total expenditure and net lending (% of GDP) 26.5 27.3 30.8 32.7 34.1 28.8 27.3 27.2
Domestic Primary expenditure1 20.7 21.3 22.8 22.9 25.1 20.2 19.3 19.1
Overall Balance, cash basis (% of GDP) -6.8 -7.9 -7.8 -9.0 -9.2 -4.0 -2.7 -2.6
External Sector
Current account balance (% of GDP) -13.1 -9.9 -11.9 -12.9 -11.3 -10.1 -9.1 -8.2
Exports (% of GDP) 46.2 39.4 36.9 36.9 36.3 36.5 36.5 36.4
Imports (% of GDP) -65.8 -57.3 -56.6 -57.1 -54.7 -53.5 -52.4 -51.3
External public debt (% of GDP)2 14.2 17.1 21.1 23.4 26.3 28.5 30.6 30.4
Total public debt (% of GDP)3 55.4 64.8 74.7 76.5 75.0 72.3 68.8 65.0
Source: Government of Togo and IMF estimates and forecasts 1 Revenue minus expenditure, excluding grants, interest, and foreign-financed expenditure 2 Includes state-owned enterprises external debt 3 Includes arrears and state-owned enterprises
1.2 Original Program Development Objectives (PDO) and Key Indicators
15. The development objective of the EGGC series was to: support Government-owned
reforms to strengthen economic governance, to improve the efficiency of resource use as well as
16
to implement growth-enhancing structural reforms in agriculture, energy, telecommunications,
and mining.
16. The following results indicators were included under the program to pressure
progress against the program development objectives:
Pillar 1: Improved budget transparency and procurement practices
Number of years for which budget data are available on line by April of that year;
Number of years for which budget execution data are available on line by April of that
year
Number of ministries that use SIGMAP
Pillar 2: Strengthened economic governance and growth
Number of years that the price paid to producers is in accordance with the revised price
formula
Non-carbonated phosphate production (million ton)
Frequency with which the electricity tariff is reviewed using the financial model
Number of MVNOs
Number of ISPs
Number of licensed telecom operators
Number of commercial banks in which the government is a majority shareholder
Number of microfinance institutions that have been liquidated (or for which another
solution has been found)
1.3 Revised PDO and Key Indicators
17. Not Applicable
1.4 Original Policy Areas Supported by the Program
18. Compared to previous operations, including EGGC-5, the program was more
selective in the area of public financial management (PFM) reforms, as the European Union
(EU) and the International Monetary Fund (IMF) were providing support in this area. The EGGC
series thus placed greater emphasis on reforms in the real sectors, including strengthening
governance in the cotton, mining, electricity and banking sectors. This included strengthening
the foundations for economic growth through enhanced access to fertilizer, fostering an
increasingly competitive telecommunications sector, increasing mining output, and strengthening
the investment climate. The sectors were chosen because of their relative importance to the
economy, their potential to foster growth, and because the Bank was active in these sectors and
the proposed policy actions complemented activities under ongoing operations. The
programmatic series included two policy areas, which correspond to the pillars of the series: (i)
improved budget transparency and procurement practices; and (ii) strengthened economic
governance and growth. Each pillar had sub objectives as well.
Policy area / Pillar 1: Improved budget transparency and procurement practices. Enhance
the efficiency and transparency of public finance management through the public release of public
finance information, by strengthening external oversight and by automating procurement
17
19. The reforms supported by the programmatic series under the first pillar sought to
improve public financial management by supporting implementation of the Government’s
PFM strategy. To improve transparency and efficiency of procurement the EGGC series
supported implementation of the public procurement information management system
(SIGMAP). It also sought to improve budget transparency by making 2009-2013 budget data and
2009-2012 budget execution data available online through a user friendly interface. Support to
strengthening budget oversight was not intended to commence until the second operation in the
series.
Policy Area / Pillar 2: Strengthen Economic Governance and the Foundations for Growth. Strengthen economic governance in the cotton, mining, electricity and banking sectors, and strengthen
the foundations for economic growth through enhanced access to fertilizer, a competitive
telecommunication sector, increased mining output, a sanitized microfinance sector and a better
investment climate
20. The EGGC series supported reforms aimed at improving the performance of high
potential sectors, thus strengthening the foundations for growth. The first was modernization
of the agricultural sector focusing on critical reforms related to the cotton value chain and to
fertilizer use, though support to the latter was planned to commence with the second operation.
Under EGGC, the authorities committed to preparing a cotton strategy including the
establishment of a formula for defining the price to be paid to farmers, and in a subsequent
operation to the establishment of an inter-professional body for the cotton sector.
21. In the mining sector, the Government was to prepare an evaluation of investments in
non-carbonated phosphate under phase 1 of the phosphate strategy along with an action plan to
implement the main findings. Actions under the subsequent operations included the identification
of a strategic partner to develop carbonated phosphate reserves.
22. The electricity company was to complete its financial model and use it to prepare a
commentary assessing the adequacy of the electricity tariff. Under follow-up operations
electricity tariffs were to be adjusted using the model.
23. In telecommunications, the Government was to ensure implementation of the
telecommunications strategy and increase competition by opening up the mobile phone sector to
increased competition through the issuance of Mobile Virtual Network Operator (MVNO)
licenses as well as a license for a third operator.
24. To strengthen the financial sector the Government was to continue its withdrawal
from commercial banking. This included: (a) creation the Non-Performing Loans Recovery
Company and making it functional; and (b) appointing the monitoring committee for the
provisional management of BTCI that is mandated to review all commitments under preparation
exceeding CFAF 500 million and the holding of its first meeting.
25. All of the prior actions supported by EGGC6 as described above were completed.
However, as subsequent operations were dropped, measures intended under EGGC7 and EGGC8
18
to reinforce, extend and ensure full implementation of a coherent reform program over time were
not undertaken as originally envisaged.
1.5 Revised Policy Areas
26. Not applicable.
1.6 Other significant changes: N/A
The proposed second and third operations in the series did not progress on the basis of the
adequacy of the macroeconomic framework as explained earlier in paragraph 3.
2. Key Factors Affecting Implementation and Outcomes
2.1 Program Performance
27. The first DPC in the programmatic series was approved by the Board of Executive
Directors (ED) on December 5, 2013. All prior actions were completed by the government
prior to the Board presentation. The series was canceled and thus, the second and third
operations were not prepared.
Table 2: Prior actions and triggers of the EGGC series Prior action EGGC6
Status
Prior action 1 Budget data for 2013 and budget execution data for 2009 – 2012
are released on togoreforme.com
Completed
Prior action 2 SIGMAP has been installed (for testing purposes).
Completed
Prior action 3 A new cotton sector strategy has been adopted. Completed
Prior action 4 An evaluation of the investments in noncarbonated phosphate
carried out under phase 1 of the phosphate strategy has been prepared along
with an action plan to implement its main findings.
Completed
Prior action 5 CEET finalizes its financial model and uses it to prepare a
commentary assessing the adequacy of the electricity tariff.
Completed
Prior action 6 The prequalification to license eligible MVNOs to operate in
Togo is completed.
Completed
Prior action 7 A monitoring committee for the provisional management of
BTCI that is mandated to review all commitments under preparation exceeding
CFAF 500 million has been appointed and has held its first meeting.
Completed
Prior action 8 The Non- Performing Loans Recovery Company has been
created and is functioning.
Completed
Trigger EGGC7 Status
Trigger 1 Togoreforme.com publishes detailed revenue information (annually)
as well as detailed information about domestic and foreign debt (quarterly)
Not completed
Trigger 2 By the opening of the Parliamentary session Government has sent to
Parliament the budget execution report for the 2012 budget as well as the report
from the Court of Accounts regarding 2011.
Completed
Trigger 3 Procurement plans for six ministries are incorporated into SIGMAP. Not completed
19
Trigger 4 FNGPC and NSCT agree on a new price formula defining the price
that should be paid to farmers.
Completed
Trigger 5 A new approach to the provision of (subsidized) fertilizer which
supports increased fertilizer use by smallholder farmers been adopted.
Completed
Trigger 6 Government has launched the call for proposals for the development
of Togo's carbonated phosphate reserves in form and substance and in
accordance with procedures satisfactory to the Bank.
Completed
Trigger 7 The draft financial model of CEB is available. Completed
Trigger 8 The decree concerning the interconnectivity between electronic
communication networks and for access to these networks has been adopted by
the Council of Ministers.
Not completed
Trigger 9 Steps to improve the (interim) management at BTCI have been taken
in accordance with the recommendations of the Banking Committee. Completed
Trigger 10 The decree operationalizing the 'Loi Communautaire' of 2007 and
transposed in May 2011 has been adopted by the Council of Ministers.
Not completed
Trigger EGGC8 Status
Trigger 1 SYGADE (debt database software) has been integrated into SIGFIP
and staff of the debt department have been trained in its use.
Not completed
Trigger 2 SIGMAP is interfaced with SIGFIP. Not completed
Trigger 3 The inter-professional body for the cotton sector is operational. Not completed
Trigger 4 The new approach to providing fertilizer is being implemented. Completed
Trigger 5 A strategic partner to develop the carbonated phosphate reserves
who meets the criteria set out in the call for proposals, has been selected and a
new mining code has been submitted to Parliament for approval.
Not completed
Trigger 6 Using the harmonized financial model for CEB and CEET and based
on a new law an independent (autonomous) regulator supervises the electricity
sector, including the implementation of a tariff (and subsidy) mechanism that
ensures that the costs of CEET and CEB are fully covered.
Not completed
Trigger 7 Licenses for at least two additional ISPs to operate in Togo have
been issued and the call for bids for a 3rd telecommunications license has been
published.
Not completed
Trigger 8 The state no longer owns a majority share in UTB and steps towards
the privatization of BTCI have been taken such that before the closing date of
the EGGC series (April 2016) the state no longer is majority shareholder in the
bank.
Not completed
Trigger 9 The microfinance restructuring strategy is being implemented and
restructuring (liquidation of insolvent institutions; formalization of informal
institutions) of non-legal micro finance institutions has started.
Completed
Trigger 10 The new API/ZF authority has been created and functions in a
transparent and professional manner.
Not completed
28. Only three out of the ten results were met with Pillar 1 performing somewhat better
than Pillar 2. Several results were achieved under Pillar 1 (Improved Budget Transparency and
Procurement Practices). The Government has published budget data since 2009 on the
Government website “togoreforme.com” in the BOOST2 format and at the time this ICRR was
2 The BOOST initiative is a World Bank-wide collaborative effort launched in 2010 to facilitate access to budget
data and promote its effective use for improved decision-making processes, transparency and accountability.
20
written, budget data spanning from 2009 to 2016 was available online. The second indicator
referring to the number of years for which budget execution data are available online was also
met. The Government has published budget execution data online on the Government’s website
from 2008 to June 2015 for a total of seven years. With respect to the third indicator, “the
number of ministries that use SIGMAP”, five ministries with large government budgets
processed their procurement contracts through SIGMAP by 2015 against a target of four
ministries. In 2016, the disc containing procurement data for the five ministries was damaged
and all the information was lost, implying that this result was not met partly for reasons of force
majeure.
29. None of the results under Pillar II (Strengthen Economic Governance and Growth)
were met except for targets related to strengthening the cotton sector. The other indicators
were not met largely because of the Government’s reluctance to proceed with meaningful
reforms in these sectors and in the real sector of the economy more broadly. The Government
considered the banking and telecommunications sectors as politically strategic sectors and was
reluctant to pursue reforms aimed at: (i) privatizing failing state-owned banks. The Government
did try to privatize all four state-owned banks but failed to privatize two of these banks as the
offers received from institutions willing to purchase these banks were deemed insufficient by the
authorities in charge of the privatization process. (ii) Opening the telecommunications sector to
greater competition. The Government tried to bring in two MNVO operators but was unable to
find suitable candidates. This was seen as important to facilitating commerce, reducing
transaction costs in the economy and contributing to economic growth.
2.2 Major Factors Affecting Implementation
Deterioration of the Macroeconomic Framework
30. The most important factor affecting implementation was the deterioration of the
macroeconomic framework. Macroeconomic management prior to disbursement and during
program implementation was weak. This led to an 11-month delay before disbursement after
Board approval in December 2013, due to the adoption of an unrealistic 2014 budget, with
projected increases in revenue of more than 30 percent when there was little to justify such a
large increase. This was followed by the subsequent cancellation of the programmatic series in
2015 after disbursement of EGGC6 due to increasingly poor macroeconomic management. Over
2013-15, Togo grew at about 5 percent per annum. Growth was driven by the expansion of the
services and industry sectors, public investment in infrastructure and increased agricultural
production as a result of favorable weather. During this period however, public finances
deteriorated and public borrowing, including non-concessional financing, increased rapidly,
endangering Togo’s fiscal and debt sustainability. In 2012, the Government embarked on
reforms aimed at increasing revenues that included the establishment in 2014 of the “Office
Togolaise des Recettes” (OTR), which merged the tax and customs administrations into one
independent revenue agency. This effort to mobilize more revenue was accompanied by a
simplification of some tax payment procedures. The newly created tax administration (OTR)
proceeded with some significant staff changes and salary adjustments to reduce corruption and
increase efficiency in tax administration. This effort led to an increase in revenue collection
from 18.8 percent of GDP in 2013 to 21.0 percent in 2015. However, the revenue collected
21
remained insufficient to cover fast-growing public expenditures, leading to increasing public
deficits and mounting arrears. As of December 2015, Togo had an estimated overall fiscal
deficit of -7.8 percent of GDP, which did not include deficits of some public enterprises,
especially those in the energy sector. The Government has increasingly relied on non-
concessional, largely domestic/regional debt to cover the fiscal gap. In 2010, total public debt
represented 32.1 percent of GDP and had risen to 54.8 percent of GDP by 2014 and 74.7 percent
of GDP in 2015, after including pre-financed investments and debts from State-owned
enterprises. Policy dialogue and engagement in following through on sector reforms then became
strained and there was little incentive on the part of the authorities to continue with the reform
program as agreed to under the DPO series.
Adequacy of Government’s Commitment to Reform
31. A major factor affecting implementation, and related to the preceding, was lack of
sustained Government commitment to reform. Despite initial momentum in the run up to the
HIPC completion point in 2010 and the period shortly thereafter, reform momentum waned and
the relatively ambitious reform program that had begun to be supported by the Bank and the
broader donor community faltered. Moreover, there was also a shift in Government focus as
attention began to be increasingly focused on key public investment projects and the provision of
certain public goods, particularly roads. Other priority projects underway included the
construction of the Lomé Container Terminal and a new international airport, and these were
successfully completed. This led the authorities to start drifting progressively away from
focusing on the reforms and programs that had been agreed upon with development partners and
to increasingly pursue unconventional policies in pursuit of quick solutions and rapid results. The
unconventional practice of pre-financing to finance an ambitious road construction and
rehabilitation effort, and its attendant problems, being a case in point.
Institutional Constraints and Human Resource Capacity
32. Weaknesses within public institutions and limited human capacity is also likely to
have compromised the implementation of specific measures. Togo was just emerging from a
long period of isolation and political turmoil, and was in the process of rebuilding institutions,
creating new institutions, as well as training and developing new young inexperienced executives
and managers that had been recently recruited into the civil service. This led to a very centralized
decision-making hierarchy within Government. This was particularly evident within the Ministry
of Finance, the implementing agency for the series. The Minister of Finance closely controlled
all activities and made all important decisions himself. This extremely centralized power
structure resulted not only in an inability within the Ministry of Finance to effectively implement
the many ongoing reforms, as essentially a single individual was controlling the entire process,
but it contributed to an environment where inappropriate PFM, budget management and public
investment practices were allowed to proceed unchecked, uncontrolled, without oversight and to
a degree that was highly inappropriate to effective use of resources. This contributed
significantly to the deteriorating macroeconomic environment and eventual cancellation of the
series.
Active Donor Consultation Framework
22
33. There was close coordination with the EU, the IMF and other development partners
during implementation of the EGGC6 that facilitated supervision and the presentation of
common positions to Government. IMF and Bank staff coordinated closely on issues related to
advice, missions and technical assistance. The EU, IMF, AfDB and the Bank also coordinated
their interventions on PFM reforms. The Bank’s PFM staff participated in the IMF’s inception
mission and ensured that the Bank’s activities were complementary to those of the IMF and EU.
The Bank also participated in sector groups to help improve donor coordination. This co-
ordination effort among donors yielded positive results up to a certain extent, and was especially
effective during joint reviews to assess progress in achieving Togo’s development objectives.
During these consultation review meetings, to which all development stakeholders, including the
Government, the private sector, the civil society and development partners participated, the
donor community would generally make a common declaration in which most of the most
pressing reforms were included.
Soundness of the Program’s Background Analysis
34. The analytical basis for the individual prior actions and the choice of the sectors of
intervention were sound and well-documented. In an environment where the series may have
been followed through to completion, a significantly greater achievement of results might have
been possible. Thus, the individual prior actions in and of themselves were highly appropriate.
35. The political economy context in which they were set however, proved problematic.
The risks that such a context posed to the achievement of program objectives, was well-known,
well-analyzed and well-presented by the team. However, the Bank proceeded with the operation
hoping that Bank and other donor support would encourage broader commitment to necessary
reforms. As a result, it could be argued that the Bank did not fully account for these contextual
risks and their potential impact and likelihood, and may have over-estimated the level of political
commitment to the supported reform program. In a more benign interpretation, the Bank took
substantial, but well-informed risk by pursuing this operation since the overall risk rating of the
operation was evaluated as high.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:
Design
36. The Ministry of Economy and Finance, had responsibility for the coordination,
monitoring and ensuring completion of the prior actions under the EGGC. Monitoring and
evaluation was to be supported by line ministries and agencies charged with the execution of the
various components, and some of the results indicators were to be monitored in coordination
with other Bank projects. A separate monitoring system for the series was not set up.
37. Supervision of the EGGC6 was facilitated and complemented by Bank investment
projects and technical assistance activities. EGGC’s reform agenda was in this sense
supported by the Private Sector Development Operation (FY11), the Financial Sector Reform
and Governance Project (FY09), the multi-donor Agriculture Sector Support Project (FY11), the
23
West Africa Regional Communications Infrastructure Program (FY13), and the Emergency
Infrastructure Rehabilitation and Energy Project (FY09). The Bank also provided technical
assistance and training in mining, property rights (cadaster) statistics and poverty analysis.
Engagement directly at the sector level through investment operations provided opportunities at
diverse levels within the Togolese bureaucracy to influence the reform agenda and to monitor the
achievement of results.
38. The results indicators were highly aligned with the prior actions and the grand
majority could be said to be directly attributable to the prior actions and proposed
triggers. In a few cases, the results indicators went beyond the impact that could be fully
attributed to the specific prior actions. For example, including “non-carbonated phosphate
production (millions of tons)” as a result indicator for the actions and triggers included in the
series may raise questions of attribution. Clearly many external factors could influence non-
carbonated phosphate production in addition to and perhaps with greater influence on production
than the actions noted in the supported program.
39. Conversely, it could also be argued that some indictors were too narrowly linked to
the prior actions and triggers and so did not provide an effective gauge as to the
achievement of objectives. For example, does the indicator identified as “frequency with which
the electricity tariff is reviewed using the financial model”, provide significant insight into
whether the stated objective of “the electricity sector is funded transparently”?
40. Finally, at least one of the indicators could be said to be rather self-fulfilling. The
indicator stated as the “number of commercial banks in which the government is a majority
shareholder”, with a target of zero, would seem to be ensured of being met, given that one of the
triggers, and hence an eventual prior action, was that “The state no longer owns a majority share
in UTB and steps towards the privatization of BTCI have been taken such that before the closing
date of the EGGC series (April 2016) the state no longer is majority shareholder in the bank.”
While the indicator clearly reflects the objective of, “the state withdraws from active engagement
in commercial banking”, both the objective and the result seem to be assured by the relevant
prior action.
41. Despite these minor criticisms, the results matrix was generally well-designed and
the links between the prior actions and triggers, the results indicators and the stated sub-
objectives are clear.
Implementation and Utilization
42. The Ministry of Economy and Finance did not monitor indicator progress, and
information from official sources was not always available to support supervision. The lack
of government data was compensated by close consultation with the IMF, which carried out
regular reviews of its own program, and with the AfDB and the EU, which had their own
programs and also closely followed reform implementation. Again, complementarity with Bank
investment projects and various TA activities allowed for ongoing monitoring of developments
and reform progress in individual sectors in which the Bank was active, independently of the
monitoring undertaken under the EGGC6. Frequent communication and contact between Bank
24
staff and teams allowed for effective tracking of reform implementation and progress. Indicators,
as designed, were relatively easy to obtain and verify.
2.4 Expected Next Phase/Follow-up Operation (if any):
43. The EGGC DPO series was cancelled, after the first operation due to serious
economic governance issues and there will thus be no follow-up operations in this series.
However, the President of Togo has appointed a new Minister of Finance, who is more open to
engaging with the Bank around a new DPO series. The new Minister has ceased the unorthodox
PFM practices implemented by his predecessor and appears to be more transparent and less
centralized in his decision-making and management culture. It is expected that this change,
which is the first change in Finance Ministers in 10 years, may trigger a new wave of reforms,
which could eventually lead the IMF Board to approve a program with the IMF and renewed
policy discussions with the Bank around a potential DPO series provided that the
macroeconomic policy framework is deemed adequate.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
44. The objectives of the Economic Growth and Governance Credit (EGGC) DPC series
were highly relevant when the operation was appraised and they remain relevant today.
The Togolese economy remains constrained in capitalizing on its growth potential amid ongoing
economic governance issues, as it was at the time of appraisal. The emphasis placed on
reforming the agricultural, mining, energy, financial, and telecommunications sectors as the
drivers of growth was highly appropriate. Improving budget transparency and procurement
practices were also highly relevant when the DPO was being prepared. Problematic
developments on the PFM front subsequent to appraisal affirm that a focus on strengthening
transparency, budget oversight and procurement was a high priority, even if the operation wasn’t
completely successful in achieving its objectives.
45. Activities envisaged under the EGGC series were consistent with Government’s
priorities and reform program and most were also supported by the IMF, EU, AfDB and other
development partners. The EGGC6 was aligned with the FY12-FY13 ISN, which had just been
prepared at that time. The operation’s two pillars were in line with the objectives identified in the
ISN, and the reform program addressed key reforms associated with the ISN. Several Bank
investment operations were also supporting implementation of similar reforms and the EGGC6
was thus coherent with ongoing Bank programming as well.
46. In terms of design, the scope of the program was modest with respect to results
indicators, as they were tightly focused on the supported actions and were not overly
ambitious in going beyond what could be attributed to the supported program. Nonetheless,
the coverage was perhaps excessively broad, extending across a number of different sectors.
Greater focus would perhaps have better matched the noted capacity and institutional constraints
as sectors could have been selected where capacity was greatest and commitment clearly
demonstrated.
25
47. A programmatic series was selected and well-reasoned at the time because it allowed
for deeper reforms at a time when the country was running out of easy, one-off reforms. A
longer term program that focused on strengthening and reinforcing the reform agenda over time
was also perceived as strengthening the role of the reformists within the Government.
48. With the benefit of hindsight, one could question the wisdom of the decision to
proceed with a programmatic series. Given recent past performance of the Togolese
authorities at the time of appraisal there may have been benefits in proceeding with a stand-alone
policy credit as in previous operations in order to further assess the appetite and commitment to
reform. A stand-alone operation may have been able to focus on a smaller number of clearly
identifiable reforms, perhaps of less ambition, but that may have represented quick-wins, rather
than committing to a programmatic series of more ambitious reforms that also by nature required
an ongoing and sustained commitment. This would not only have enabled the Bank to implement
a more manageable and more appropriately scaled program given the circumstances, but also
would have provided an opportunity to assess Government commitment and its implementation
capacity. In this sense, the Bank may have underestimated the risks associated with a multi-year
program – risks that could have been attenuated to some degree by choosing a stand-alone initial
re-engagement DPO operation. This is clear in hind-sight given recent developments, but at the
time the choice of a programmatic series was as noted, well-reasoned and justified.
3.2 Achievement of Program Development Objectives
49. Some reforms aimed at improving budget transparency and procurement were
marginally achieved. Togo became the first French speaking country in sub-Saharan Africa to
implement the BOOST initiative in increasing budget transparency. The authorities also
automated the procurement system in five ministries, but unfortunately the disc containing the
data was later damaged and the authorities lost all the information. These were clear indications
that there was a desire by the authorities to improve transparency in budget and procurement
practices. However, the reforms included in the EGGC6 as the first operation in the series were
too insignificant to be considered as reflective of substantially improved public financial
management practices. The implementation of measures planned over the subsequent operations
in the series would likely have led to more sustainable improvements in PFM practices, but this
of course did not occur and as such the higher level objectives in this area must be considered to
have not been met. Furthermore, it is apparent that the public is not aware or possess the
inclination to go on-line to look at budget data. This may in part be because of the slow internet
connectivity, which can discourage many. Thus, it is evident that placing data on-line does not in
itself lead to the desired outcome. However, automating the procurement system in some
ministries to foster greater transparency, while at the same time encouraging a system of off-
budget spending and procurement (pre-financing) poses a serious contradiction. So a significant
amount of investment spending and procurement off-budget also highlights the lack of
government commitment to meaningful procurement reform.
50. Apart from the result related to the cotton sector, which is bound to have a positive
impact because it dealt with prices to farmers, none of the other targets linked to the
foundations of growth were met. This is true for phosphate production, public banks,
26
telecommunications and the electricity sector. One possible reason why most of the real sector
results indicators were not achieved was because the country had reached a stage of reform
fatigue, but also because the priorities of the Government started to change when the regional
and domestic financial markets became very liquid and the authorities realized that they could
borrow significant sums of money from these markets relatively easily and quickly.
3.3 Justification of Overall Outcome Rating
Rating: Unsatisfactory
51. The overall outcome of the program is rated unsatisfactory. While the objectives of
the EGGC were relevant when the operation was prepared, and remain relevant today, many of
the prior actions did not yield the desired results, in large part because follow-up actions were
not taken. As explained above, reform commitment faltered as the Government’s priorities
started changing. The Government became more inclined to pursue its road infrastructure
projects and less committed to the reforms agreed upon with its development partners. The
authorities did not implement measures envisaged under the program necessary for meeting
stated results and objectives and the fiscal and budget situation deteriorated significantly. Only
three results were met and the others are unlikely to be met over the short and medium term.
Cotton measures should have a positive development impact, but the measures on public finance
will not yield result in the absence of substantial changes in the preparation and execution of the
budget and the management of public debt.
3.4 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts and Social Development
52. Over the operation’s time span, the poverty rate decreased by 3.6 percent; from 58.7
percent in 2011 to 55.1 percent in 2015. While this cannot be directly attributed to the EGGC6,
there may be some direct links between the operation and poverty outcomes. Poverty in Togo is
largely, though clearly not exclusively, a rural phenomenon, as at the time of appraisal 73
percent of the poor were living in rural areas whereas 35 percent were in urban areas. The
operation was designed in such a way as to have a positive impact in terms of poverty reduction,
not only through the stated objective of fostering increased growth, but also through the selection
of the sectors of focus. The proposed reforms to facilitate and encourage structural
transformation and growth were aimed at revising the price paid to producers according to a
revised price formula, increasing non-carbonated phosphate production from 1.1 million tons in
2013 to 2 million tons, reviewing the electricity tariff according to an agreed financial model,
and increasing the number of internet service providers and licensed telecom operators, were
expected to be growth as well as directly welfare enhancing. For example, the cotton sector
measure to improve the producer pricing formula was effectively implemented and led to
increased cotton production and an increase in cotton farmers’ revenues. Not only was this a
growth enhancing measure, but this could be considered a significantly pro-poor measure as the
grand majority of cotton producers are poor. Similarly, planned measures in the
telecommunications and electricity sectors were also pro-poor in that improving
telecommunications services and lowering costs, as well as strengthening the financial viability
27
of the electricity sector to facilitate increased investment and improve access to electricity are
results that would have had a direct welfare improving impact on the poor. These measures
would also have directly increased opportunities for improved livelihoods among poor
households by affording access to telecommunications services and electricity. Unfortunately,
the fact that the reforms were not fully implemented led to the expected results not being
achieved and a less than expected impact on poverty measures.
53. While positive in the operation’s design aspects of focusing on measures with
significant poverty impact, given the very limited results achieved, one would have to
conclude that measureable and attributable poverty impacts were minimal.
(b) Institutional Change/Strengthening
54. Results achieved in the area of strengthening PFM practices have effectively
supported institutional change and strengthening outcomes. Having published budget
information and budget execution information for several years now, it could be said that the
supported reforms in these areas have instilled a culture of budget transparency in Togo. This
institutional change should be sustained and ongoing involvement with the BOOST budget
transparency tool should further deepen the commitment and ongoing implementation of a
culture of enhanced budget transparency.
55. Other supported measures were significantly less influential is fostering institutional
change. Once again, the series was designed to foster meaningful change in a number of
institutions, including through the development and implementation of pricing mechanisms in
the cotton and electricity sectors, and a new institutional approach to distribution and pricing in
the fertilizer sector, as prime examples. The inability to complete the series resulted in these
actions not being fully implemented and a less than successful impact on institutional change.
Without implementation of the entire program of reforms, the changes supported under EGGC6
were insufficient to inculcate a sustained cultural change and to embed processes and
mechanisms within relevant institutions that would have ensured, or at least contributed to, their
support and sustainability.
(c) Other Unintended Outcomes and Impacts (positive or negative, if any): N/A
3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops: N/A
4. Assessment of Risk to Development Outcome
Rating: High
56. The risk to outcomes being sustained is high. Many risks identified in the Program
Document for the EGGC6 materialized. Risks identified included: (i) the fragile political
climate; (ii) vested interests were expected to be more supportive of economic governance
enhancing reforms that in the past; (iii) spending pressures which were deemed politically
attractive, were thought to be controllable; (iv) fiduciary risks that had to be closely monitored;
28
and (v) implementation risks resulting from a lack of coordination within the Ministry of
Economy and Finance and between the Ministry of Finance and sector ministries.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
57. The Bank team took time to prepare a well thought out operation in a difficult
environment. While the objective of the DPO program was modest as suggested by the choice
of results indicators, this DPO was intended to set the stage for key structural reforms in key
areas. Cooperation with government counterparts was good throughout the preparation and
implementation of the program. The Bank team also coordinated closely and effectively with the
IMF, EU, AfDB, UNDP and other development partners. Technically, the operation and the
choice of prior actions and triggers could be considered to have been very well-designed.
58. However, following an extended period of isolation from the donor community and
a less than stellar performance record, the team could have perhaps expected greater
reluctance on the part of the authorities to an ambitious reform program. The Political
Economy (PE) study that the team commissioned was a thoughtful addition to the assessment in
this regard. Several signs existed that capacity might have been lacking. The PE study helped
identify political economy and governance risks and could have led to further design
adjustments, such as a stand-alone operation, or greater focus, that may have enabled the
operation to be more effective. Political imperatives to re-engage with Togo may have influenced
some design aspects, but these were not documented and so it is uncertain to what extent these
pressures may have been present.
59. Some performance indicators in the DPO have limitations in assessing progress
toward program objectives. For example, for transparency reasons, it is important to have an
indicator on the number of years the budget data are available on-line. However, of greater
importance is the quality of the budget, which is made public. There is little value-added in doing
analysis with a budget which is not credible and which the Government does not use as a tool for
economic policy. Nonetheless, publication of the budget does allow critics and analysts an
opportunity to begin discussions around the credibility of the budget and the Bank trained civil
servants as well as members of civil society in budget analysis and alerted the press and
Parliament to the existence of this data. One could also make the same point about opening up
the market to a third telecommunications operator. The major question here is whether it would
have been possible to address the identified weaknesses of the current telecommunications
operators directly, with a view to improving their efficiencies, instead of assuming that opening
up the market to a third operator would eventually or automatically lead to greater efficiency.
Also, the issue of the efficiency of state-owned banks could have perhaps been addressed by
better regulatory practices and not simply affirming that privatization would lead to greater
efficiency.
29
60. While the selected prior actions and triggers were highly appropriate in and of
themselves, they spanned a large number of disparate sectors. The operation might have
benefited from greater focus in the number of sectors chosen for support and may have
facilitated greater government adherence and commitment had the number of sectors of focus
been narrower. Again, this is easier to perceive in hindsight given how things played out, but the
choice of sectors was admittedly very broad at the design stage.
61. Finally, the availability of analytical work was considered to be of paramount
importance in ensuring a well-designed operation. The development of the EGGC6 and the
series benefited from the Country Procurement Assessment Report (CPAR), the Political
Economy Analysis (PEA), PEMFAR, the Country Economic Memorandum and the Poverty
Assessment. To inform the preparation of the series, team members actively engaged in the
preparation of several background notes, including a study on Togo’s political economy. The
latter was an explicit recommendation of the ICRR of ERGC-5.
b) Quality of Supervision
Rating: Satisfactory
62. There were two missions undertaken to assess the macroeconomic environment in
January and June 2014 prior to disbursement. The first mission concluded that the 2014
budget adopted was not conducive to macroeconomic stability and recommended that the
EGGC6 should not be disbursed. The second mission undertaken in June to assess the
preparation of a revised 2014 budget recommended that the Government should include some
identified off-budget spending (pre-financed contracts) in the revised 2014 budget prior to
disbursement. There were equally separate sessions held between the Bank and the Togolese
authorities during the Spring and Annual Meetings of 2014 to address these macroeconomic
anomalies. The eventual adoption of a revised 2014 budget and a draft 2015 budget acceptable to
both the IMF and the Bank led to the disbursement of EGGC6. In this respect supervision was
well-done and effective in ensuring the adoption of a realistic budget prior to disbursement.
Eventual cancellation of the series as a result of ongoing supervision and assessment activities
was also highly appropriate given the turn of events and the inability to proceed with planned
reforms.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
63. Overall Bank performance is rated Moderately Satisfactory for the reasons explained
above.
5.2 Borrower Performance
(a) Government Performance
Rating: Unsatisfactory
30
64. Government performance is rated unsatisfactory. The Government demonstrated
considerable commitment at the time of program preparation, but failed to fully accept
ownership of and commitment to the reform objectives once the first operation was disbursed.
As mentioned earlier, this can be explained by the change in Government priorities. The reforms
supported under EGGC6 required continued support, strengthening and supporting reforms and
actions that were planned for subsequent operations in order to ensure full implementation and
application. Unfortunately, in the absence of continuing Bank support and the change of
Government priorities, the Government did not sustain the reform effort and as a result the
reforms undertaken under EGGC6 were not fully supported with follow-up complementary
measures.
65. In parallel, a period of serious economic mismanagement followed approval of
EGGC6 and was not conducive to the achievement of results or maintenance of a stable
macroeconomic framework. This has led to a general state of fatigue in the donor community at
large about the rationale for continuing to invest in such reform programs. In addition, the
Government did not monitor progress for all targets included in the results framework and took
few steps to ensure agreed targets were met.
(b) Implementing Agency or Agencies Performance
Rating: Unsatisfactory
66. The Ministry of Economy and Finance was in charge of the overall implementation
of the operation. However, day-to-day monitoring of the reform program was undertaken by the
Permanent Secretariat in charge of Monitoring Policies and Financial Programs. The sector
reforms were implemented by the respective technical departments in the sector ministries, under
the oversight of the Ministry of Agriculture and Fisheries (cotton), the Ministry of Mines and
Energy (mining and electricity), the Ministry of Post and Telecommunications (telecom), the
Ministry of Economy and Finance (banking), and the Presidency (Free Zone and Investment
Promotion Authority) with overall coordination provided by the Ministry of Economy and
Finance. The Ministry of Economy and Finance was unable to do a proper job of coordinating
the implementation of the reforms. The Permanent Secretariat which was in charge of the day-to-
day monitoring of the reform program was seriously under-staffed and existing personnel in the
Secretariat did not have the required experience and expertise to fulfill their responsibilities. The
Ministries in charge of implementation sometimes even failed to realize they were in charge of
implementing some of the above reforms because of poor coordination from, and follow-up by
the Ministry of Economy and Finance. Some reforms that depended on the Ministry of Economy
and Finance were successfully implemented when the reformers within the Ministry had an
upper hand in implementing the reforms. However, there were other reforms, which were far
beyond their competencies, over which they had little control and which were eventually not
implemented – one example being the reforms in the financial sector. Moreover, the Ministry of
Economy and Finance, which was in charge of the entire coordination process, did not
effectively sensitize or engage line ministry colleagues to bring about the necessary reforms
within their sectors. It can also be argued that some of the sector reforms, such as reforms in the
telecommunications and energy sectors were sometimes not fully dependent on the sector
31
Ministries, but were reforms that depended on substantive support from higher levels within the
decision-making process. This may explain the lack of achievement of most of the real sector
reforms.
67. The highly centralized approach to decision-making in the Ministry of Economy
and Finance as practiced by the Minister of Finance at the time was not conducive to
ownership of the reforms. This contributed to poor communication within the Ministry and
between the Ministry and line ministries. Staff within the Ministry of Economy and Finance,
while tasked with implementation of the operation and monitoring, had little direct ownership as
they simply followed directions handed down from the top and were not fully engaged at the
decision-making or even analytical level. This led to some lethargy and lack of interest around
implementation and monitoring among those assigned the task in both the central ministry and
line ministries.
(c) Justification of Rating for Overall Borrower Performance
Rating: Unsatisfactory
68. The overall borrower performance is rated unsatisfactory for the reasons explained above
6. Lessons Learned
69. The DPO program was designed just two years after Togo attained the HIPC
Initiative completion point. It was at a moment when Togo’s medium term development
strategy, the SCAPE, had just been prepared and many development partners were seriously re-
engaging in Togo through various programs and projects. Several lessons emerge from that
process:
(i) Demonstrated government commitment is key to the success of program based
lending. In the case of a country emerging from a long period of isolation from international
assistance it may be that under such circumstances the Government could be less inclined to
commit to long term reforms because of fears of a lack of trust and the possibility of a return to a
situation of isolation. A certain level of confidence between the authorities and the Bank may be
necessary to ensure government credibility and commitment to the reform agenda. A stand-alone
approach may be preferable in such cases as a way to build commitment, trust and to establish a
track record when re-engaging with a country after a period of absence. At the same time, after 5
stand-alone operations, reforms of a longer duration were needed, so the team had to make a
difficult choice.
(ii) Selectivity and demonstrated impact are important aspects to consider when
choosing reforms. In many countries, several sectors may be identified as sectors in need of
reform. However, for efficiency and capacity reasons, it is preferable that the Bank chooses just a
few of these areas and ensures that the chosen sectors have significant impact. The EGGC6 may
demonstrate over-ambition in trying to accomplish too much, across too many areas, given not
only capacity constraints, but the Government’s ability to remain committed and provide
sufficient attention to concluding meaningful reforms across such a broad array of sectors.
32
Furthermore, the choice of reform sectors should also be based on the Bank’s comparative
advantages in the chosen sectors.
(iii) It is also important to build consensus for the reform program. In the case of the
EGGC6 many of the results were not achieved because of a lack of commitment to the reform
program. It is important that the Bank engages seriously with the authorities on the proposed
reforms and that both parties agree on the potential benefits in pursuing the selected reforms in
order to enable the Government to increasingly own the reform effort and to fully consider the
selected reforms as important drivers for future growth, development and the advancement of the
Government’s own priorities and objectives.
(iv) Coordination with other multilaterals enhances the impact of Bank operations. This
lesson applies both to preparation as well as to supervision, since each institution has
comparative advantages in different areas, all of which are essential for a comprehensive reform
program.
(v) There is need for a good understanding of the political economy environment in
implementing a DPO in a country like Togo. It is important to understand the complex
political environment and decision-making structure before proceeding with a DPO in such an
environment. A sound understanding of political economy issues, as well as the identification of
reform champions with whom the Bank can engage and support in furthering reform efforts
within a DPO framework is imperative.
(vi) The use of technical assistance and/or investment lending to bolster capacity and
accompany implementation of a DPO can be essential for achieving development
objectives. In the case of the EGGC6 many of the Bank’s investment projects were instrumental
in implementation of the DPC program. Also, technical assistance to support the implementation
of some reform programs could have had a significant impact.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/Implementing agencies
(b) Cofinanciers: N/A
(c) Other partners and stakeholders: N/A
33
Annex 1. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Miria Pigato Sector Manager GMF01 Sector Manager
Volker Treichel Lead Economist and Sector Leader GMF01 Lead Economist and
Sector Leader
Johannes G. Hoogeveen Senior Economist GPV07 Task Team Leader
Godwill Kan Tange Senior Economist GMF01 Team member
Yemdaogo Tougma Economist GMF01 Team member
Francisco Ahued Consultant
Eric Brintet Lead Financial Management Specialist GG025 Lead Financial
Management Specialist
Alain Hinkati
Financial Management Specialist GG026 Team member
Boutheina Geurmazi Telecom Team member
Brigitte Bocoum Mining GEEX2 Team member
Christian Berger Senior Agricultural Specialist GFA01 Team member
Benjamin Billard Operations Officer GFA01 Team member
Franklin Gbedey
Energy Specialist GEE07 Team member
Bronywyn Grieve Consultant Governance Specialist
Anca Dumitrescu Senior Transport Specialist
Sector Specialist
Adja Dahourou
Private Sector Development Specialist GTC07 Team member
Philippe Aguera Senior Public Sector Specialist GFM01 Team member
Leonardo Iacovone
Senior Economist GTC04 Team member
Magueye Dia
Private Sector Development Specialist GTC07 Team member
Sylvie Nenonene
Communications Officer AFREC Team member
Team member
Team member
Team member
Nneoma Nwogu
Counsel LEGAM Team member
Team member
Team member
Team member
Aissatou Diallo Senior Finance Officer WFALN Team member
Team member
Team member
Team member
Judite Fernandes Language Program Assistant Team member
Team member
Team member
Team member
Yutaka Yoshino Senior Economist AFCE1 Peer Reviewer
Katherine Bain Senior Governance Specialist
Peer Reviewer
Ganesh Rasagam Lead Private Sector Development
Specialist AFTFE Peer Reviewer
Overall Guidance
Miria Pigato Sector Manager
Volker Treichel Lead Economist
Herve Assah Country Manager
34
Katrina Sharkey Country Program Coordinator
Madani Tall Country Director
Ousmane Diagana Country Director
(b) Staff Time and Cost
Stage
Staff Time and Cost
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
Total: 197 933.14
Supervision/ICRR
Total: 3 537.24
35
Annex 2. Beneficiary Survey Results
NA
Annex 3. Stakeholder Workshop Report and Results
NA
Annex 4. Summary of Borrower's ICRR and/or Comments on Draft ICRR
NA
Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders
NA
36
Annex 6. List of Supporting Documents
Government of Togo – “Strategy for Boosting Growth and Promoting Employment – in French,
Stratégie de Croissance Accelerée et de Promotion d’Emploi -(SCAPE)” – January 2013.
IMF (2016b). Togo: Article IV Consultation. Press Release; Staff Report; and Statement by the Executive
Director for Togo. November 2015.
Independent Evaluation Group “Guidelines for Reviewing World Bank Implementation
Completion Results Reports: A Manual for Evaluators. Last updated, August 2014.
World Bank, “Togo Systematic Country Diagnostics” September 2016.
World Bank “Preparing High Quality Implementation Completion Results Reports (ICRs),
December 2015.
World Bank, “Togo Economic Update: Can Cash Transfers Enable Togo to Achieve its Poverty
Reduction Goals”, First Edition, January 2015.
World Bank “Implementation Completion and Results Report – Guidelines” August 2006,
updated on 22 July 2014.
World Bank “Program Document for a Proposed Loan in the Amount of US$14 million to Togo
for the Economic Growth and Governance Credit for Growth Development Policy Loan,
November 6, 2013.
World Bank “Interim Strategy Note for Togo for the period FY12/13”, December 2011.
World Bank. Togo: Investment Climate Policy Note: Draft Report. AFR. Finance and Private
Sector Development. July, 2010.
World Bank “Interim Strategy Note for Togo for the period FY08/10”, May 2008.
