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PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Project Name
Region
Sector
Project ID
Borrower(s)
Implementing Agency
Environment Category
Date PID Prepared
Estimated Date of
Appraisal Authorization
Estimated Date of Board
Approval
Report No.: AB2930
CV-Growth & Compet. Supplemental Credit
AFRICA
General public administration sector (35%); Compulsory pension
and unemployment insurance (20%); General finance sector
(20%);General industry and trade sector (20%);General
transportation sector (5%)
P103329
GOVERNMENT OF CAPE VERDE
Government of Cape Verde
Ministry of Economic Growth and Comp.
Project Coordinating Unit
Cape Verde
Tel: (238)26 14 748
[email protected]
[ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined)
March 2, 2007
March 30, 2007
May 31, 2007
1. Key development issues and rationale for Bank involvement
3.
Country context. Cape Verde is a small country with a population of about 472,000
people spread over nine islands in a ten-island archipelago. As a small island economy, Cape
Verde is heavily dependent upon external support. Remittances and foreign aid are important
sources of capital and the economy relies on imports for much of its consumption and
investment. While lacking natural resources, it is more developed than most other countries in
Sub-Saharan Africa and has a good track record of sustainable development and good
governance. Cape Verde has grown steadily in recent years, with GDP growth averaging about
5.7 percent between 2000 and 2005 and reached 6.3 percent in 2005. The economy is dominated
by the service sector, which accounted for about 75.5 percent of GDP in 2005. The fastest
growing sectors are tourism, commerce, construction, transportation and communication.
Agriculture and industry have been also growing but more slowly.
4.
The original Credit. The original Development Credit Agreement (DCA) in the amount
of SDR 8.5 million (US$11.5 million equivalent) was signed on June 3, 2003. It became
effective on October 31, 2003 and the closing date is February 28, 2008. It is executed as a
Sector Investment Project. Although there were initially no co-financing arrangements, the
Millennium Challenge Corporation (MCC) approved, on July 4, 2005, a grant totaling US$105
million equivalent for infrastructure development on the port and road sectors and technical
assistance to support Cape Verde’s growth and competitiveness agenda. This program
complements and works closely with the current project. As of February 12, 2007, 63 percent of
the original Credit (SDR 8.25 million) had been disbursed. Disbursement projections indicate
that the total credit amount will be fully disbursed prior to the closing date.
2. Proposed objective(s)
The original project development objective (PDO) as stated in the PAD and the original DCA is
to broaden the base of private participation in Cape Verde’s economic growth and enhance
private sector competitiveness, as well as further develop its financial sector. This will be
achieved through a series of actions supported by the project, notably: (a) financial sector
reform, including pension reform; (b) investment climate reform, which includes, but is not
limited to: (i) tax reform; (ii) alleviation of administrative barriers; (iii) improved supply chains
and (iv) legal reform; (c) post-privatization and divestiture reforms; and (d) private sector and
institutional capacity building.
3. Preliminary description
The project has a well-balanced approach to improving private sector development, the
engine of growth, through the actions noted in paragraph 5. Overall project oversight is the
responsibility of the Ministry of Economy, Growth and Competitiveness, while day-to-day
coordination is ensured by a Project Coordination Unit (PCU). The Ministry of Finance (MoF),
in collaboration with the Banco de Cabo Verde (BCV, the Central Bank of Cape Verde), is
responsible for financial sector reform, including pension reform, customs and tax reform.
Judicial reform is being successfully implemented by the Ministry of Justice (MoJ). The EGovernment initiative which will revolutionize the manner in which Government interacts with
the public began under the MoJ but due to its multi-ministerial approach, is now being
coordinated by the Minister of State in the Prime Minister’s Office. The two Chambers of
Commerce work together with Government to strengthen private-public partnerships and
develop services to support private sector capacity building, including the MGF. Finally, the
project also supports Government’s privatization efforts carried forth under the closed
Privatization and Regulatory Capacity Building Project (PRCBP, Cr.3121-CV), which
encompassed, but was not limited to infrastructure reform, including TACV and port reform and
has been instrumental in establishing the Agência de Regulação Economica (ARE, the Agency
for Economic Regulation for energy, water, sanitation and transport) and the Agência de
Regulação e Supervisão de Produtos Farmaceuticos e Alimentares (ARFA, the regulatory
agency for the oversight of food and pharmaceuticals).
5.
Two high level Steering Committees, which will remain in place for the duration of the
project, provide strategic direction of the reforms. The first Steering Committee is headed by the
Minister of Economic Growth and Competitiveness and is comprised of high level government
officials and private sector representatives.
In addition to overall strategic direction and
ministerial coordination, it provides oversight of the project by monitoring project
implementation on a quarterly basis including work programs and budgets. The second Steering
Committee focuses on pension reform, a priority for Government. It is co-chaired by the
6.
Ministers of Finance and Labor and is comprised of various ministries and representatives of the
private sector. It is responsible for the strategic direction of the pension reform, including the
recent merger of the two pension schemes. For the past two years, it has also been supported by
an internationally recruited pension specialist, who provides on and off-site support, including
technical advice and training.
4. Safeguard policies that might apply
[Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project
and in what ways? What actions might be needed during project preparation to assess
safeguard issues and prepare to mitigate them?]
The original project had an environmental category of “C” and the proposed activities are
technical assistance, that do not change the category. All audits have been carried out in a timely
manner and are “non-qualified”. A recent procurement assessment made during the December
2006 mission, indicated that the PCU and the implementing agencies follow World Bank
Guidelines “satisfactorily”. The Government is fully committed to the project and has complied
with all covenants specified in the DCA. The PCU has established an acceptable accounting and
reporting system for the project that will continue for the Additional Financing.
5. Tentative financing
Source:
BORROWER/RECIPIENT
International Development Association (IDA)
Total
6. Contact point
Contact: Sherri Ellen Archondo
Title: Sr Operations Off.
Tel: (202) 458-1799
Fax: (202) 614-0658
Email: [email protected]
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