Evaluation Team

The present report was prepared by Mr. H. RAZAFINDRAMANANA, Principal Evaluation Officer and a Consultant, following their mission to Benin in October 2006. Questions on this report should be referred to Mr. D. A. BARNETT, Acting Director, OPEV or Mr. RAZAFINDRAMANANA (h.razafindramanana@afdb.org)

Objective

the programme aimed at increasing the rate of access to basic education and health services for the entire population. The following specific objectives were identified: (i) continue strengthening of the macroeconomic stability, (ii) improve and enhance the effectiveness of public services and its delivery to the poor and (iii) effectively implement the good governance reforms. 1.3.2 The overall objective of PRSSP I was to reduce poverty through better allocation of budgetary resources and strong, equitable and sustainable growth. The specific objectives aimed at (i) the acceleration of sustainable growth; (ii) improved access by the people to basic services and environmental protection; and (iii) the promotion and strengthening of good governance. The macroeconomic objectives of the programme focused on the following four points: (i) reduce the proportion of poor people by at least 3% annually beginning in 2004; (ii) achieve a 7% GDP growth by 2005 and an investment rate of over 20% of the GDP; (iii) maintain inflation at below 3%; and (iv) maintain budgetary revenue around 17% of the GDP during the entire programme

Main Findings

• The programmes helped initiate a pilot experience in the sub-region on poverty reducing programme budgets. However, the scope of the measures to be implemented and the areas covered (all the ministries) did not make it possible to achieve the desired results. Mastery of this new approach requires time and an improvement in the services of both the Bank and the Borrower. The impact of the programmes on macroeconomic stability and improvement in access to basic services is undeniable.

• The main strengths of Benin are represented by five major assets: (i) a relatively sound democratic system ; (ii) a strategic geographic situation; (iii) a dynamic civil society; (iv) a social and economic development strategy focused on a vision, a five-year development plan and a PRSP; and (v) availability of external financial resources.

• The main weaknesses are: (i) cotton monoculture; (ii) low private investment; (iii) weak competitiveness of the Port of Cotonou ; (iv) non-business-friendly environment; and (v) the unforeseen nature of trade relations with Nigeria. All these weaknesses may be reduced to two major constraints: non diversification of the economy and the delay in privatizations which undermines the competitiveness of the economy and economic growth.

Main Lessons

• Budgetary supports, as an instrument of intervention of the Bank in Benin, is an enriching pilot experience whose implementation showed the possibilities and limitations of the transformation of the Government budget into a tool for the operationalization of the PRSP. Government commitment is vital to ensure the efficacy and sustainability of the programme impacts. 

• The budgetary support has yielded effective benefits in terms of adjustment loans and project lending, in particular: (i) the programmatic approach which has enhanced governmental leadership for its development programmes, the budgetary process and concerned institutions, and reduces transaction costs in the provision of external aid; (ii) a multi-sectoral approach which enhances collaboration and coordination while maximizing the impact on poverty reduction; (iii) improvement of governance and management of public finances; and (iv) improvement of basic services such as water supply and sanitation, health and education.

• However, there is a need to pursue and consolidate the reforms geared towards improving the preparation and execution of programme budgets, widening the productive base and diversifying production, building institutional capacities and improving good governance in line with the PRSP strategic objectives. The supports to the two programmes have clearly contributed to macroeconomic stability but some structural reforms (privatization of large enterprises) have suffered delays. The impact of these programmes on poverty reduction has not been convincing. In the area of budgetary execution, control and monitoring improved only partially. It is worth noting that weak national capacities continue to affect (i) the rate of execution of the expenditure chain reform (use of cash advances, partial use of the capacities of the SIGFIP, absence of an interface with the Treasury) ; and ,(ii) the poor quality of reporting of programme budgets and monitoring-evaluation

• Furthermore, the budgetary supports covered too vast an area in terms of number of measures (50 measures for the BRSP and 149 for the PRSSP 1) and administrative domains (all ministries). All this did not take into account in a realistic manner, the execution capacities of the Ministry of Finance and the sector ministries. Consequently, it is essential to avoid overloading budgetary support with unrealistic objectives during the initial learning phase. 

• In the field of privatization, the Government, as well as the parliamentarians and ,people’s representatives, is proceeding with caution. On their part, the trade unions are concerned with safeguarding workers’ employment. To make significant progress in privatization, a new political impetus is required. The appointment of a new government following the presidential elections of March 2006 provides the opportunity to make a decisive step in the structural reforms to allow for a more effective role played by the private sector in economic growth and poverty reduction.

• The diversification of the economy constitutes a major challenge. Despite the general acknowledgement of its necessity, its materialization has been an uphill task. And ,since cotton production has been declining in recent years, the authorities are unable to achieve the development goals set in PRSP. Diversification is paramount to meeting the other challenges notably that of strong and sustainable economic growth capable of significantly effecting poverty reduction in the rural and urban areas.

• To fully produce their results, budgetary supports require: (i) greater presence of the Bank on the ground; (ii) a resolute will and complementarity of the partners that would contribute to achieving tangible results in overall coordination: procurement, control, etc.; (iii) taking into account of the context of the country in particular the socio-political forces that are crucial to the design and implementation of a budget reform programme.
   
• Budgetary supports have the advantage of generating a snowball effect on all the ,ministries currently involved in the programme budget experience. Activities in the ministries are conducted in a context whereby all the sectors are mobilized to achieve the targets set in the PRSP. As a result, the budgetary support instrument has a relatively high degree of relevance and effectiveness. When the results-based budgetary management is applied to all the ministries (for the moment, it has been introduced in only ten ministries), efficacy will be enhanced. The extension of the effects of budgetary support to all ministerial departments highlights the need to establish greater consistency between this kind of support and the classic institutional support provided by the Bank elsewhere (social sectors, environment, ex-post control, etc.)
   
• Building of technical, economic and financial management capacities at the central and departmental level is decisive for the smooth implementation of the budgetary support programmes and achieving progress in the assimilation of the new paradigm of programme budgets in the sector ministries. 

Main Recommendations

Recommendation(s) to the Beneficiary:

• Pursue efforts in the diversification of the economy in order to extricate the country from its over-dependence on the volatility of production and international cotton prices 

• Step up efforts to finalize the privatization of large enterprises to make the private sector play a more active role in economic growth

• Improve the value of budgetary allocations to communes, in order to better achieve the expected outcomes of the decentralization and deconcentration policy 

• Pursue the strengthening of basic infrastructure, in both urban and rural areas in order to impact poverty reduction

• Improve the integrated system of public finance management, in order to avert the saturation of the cabling network, establish a linkage between the centre and the periphery through increased exhaustiveness

• Build the capacity of sectoral and communal public procurement units to improve public procurement execution

• Improve dialogue between the Ministry of Development, Economy and Finance on the one hand and the other ministries involved in programme budget experience on the other, in order to raise the rate of execution of budgetary allocations in the priority sectors 

Recommendation(s) to the Bank:

• Reduce as much as possible the number of disbursement conditions to avoid slippages in the implementation of the programmes 

• Better assess and take into account risks represented by the citizenry control exerted by the civil society on the Government in order to optimize the chances of success of the programmes 

• Play a more visible role in the promotion of trade between African countries, in a manner as to avoid restrictions caused by criteria other than those relating to the quality of the products exported to neighbouring countries

• Strengthen dialogue with the Borrower aimed at providing better conditions (judicial aspects, access to credit, land acquisition, etc.) for a less controversial privatization 

• Strive towards greater exhaustiveness by including all external support in the SIGFIP, and the effective participation of all multilateral and bilateral donors in joint review missions

• Show greater realism in assessing the implementation capacities of the Ministry of Finance and the sector ministries 

• Strengthen the synergy of the intervention instruments of the Bank in Benin (budgetary support, institutional support projects, investment projects) in the various sectors with a view to boosting their contribution to the country’s development and poverty reduction 

• Enhance strategic partnership with other donors, notably joint missions, sharing of review exercises, harmonization and alignment of procedures

• Enhance its presence in the country in order to (i) fully play its role as a leader in the following areas: improvement of the fiduciary framework, the fight against corruption and money laundering, strengthening of the framework for the coordination and monitoring of programmes; (ii) to be closer to the country’s concerns; and (iii) better coordinate its interventions with those of other partners of Benin that are already present in the country 

• Pay greater attention to conditions for the success of the programmes by highlighting the building of the country’s implementation capacities