Ministry of Foreign Affairs DANISH EMBASSY, BAMAKO

File no.: 104.Mali.809.200

External Grant Committee Meeting 11 September 2013

Agenda Item no.: 6

1. 1. Title: Private Sector Programme, Mali

2. 2. Partners: National Council of Employers in Mali; National Directorate for

Rural Engineering; National Agency for Executing Rural Infrastructure; Swiss Development Cooperation.

3. 3. Amount: 300.0 million DKK

4. 4. Duration: December 2013 – December 2018 (60 months)

5. 5. Presentation to the programme

Committee: 4 November 2011

6. 6. Previous Grants: Agricultural Sector Programme. 7 November 2007, item 19,

DKK 150.0 million. Private Sector Programme. 7 November 2007, item 20, DKK 185.0 million.

7. 7. Strategies and policy priorities: Right to a Better Life Strategy, 2012; Framework for Growth and

Employment, 2011; Realising the Potential of Africa’s Youth. Africa Commission, 2009.

8. 8. Danish National Budget

account code: 06.32.01.20

9. 9. Desk officer: Birte Torp Pedersen

10. 10. Head of Representation Anders Garly Andersen

11. Summary: The development objective of the Private Sector Programme in Mali is private sector driven inclusive growth leading to increased income and employment promotion. The programme will target agricultural value chains with focus on transformation from subsistence agriculture to commercial agriculture, agribusiness and manufacturing. Component one aims at improving performance of enterprises by providing access to business development services as well as facilitating improved access to finance. Component two will finance infrastructure in order to promote production and market access. Component three aims at improving human resources with capacities and skills relevant for the private sector. Compared to past interventions in Mali, the new programme has evolved to place the private sector centrally in the implementation of the programme and scale up investments. The programme will work with its partners to promote further the Danish human rights and green growth agenda.

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OBJECTIVE AND PROBLEM FORMULATION:

Since the inception of bilateral cooperation with Mali in 2006, Denmark has consistently engaged in productive sectors’ development. The proposed programme is a second generation programme building on lessons learnt from the first phases of agricultural and private sector programmes, merging these two programmes into one, applying best practises from these and changing scope to focus on bigger investments as well as the value chain approach. It responds to challenges related to the role of the private sector in generating economic growth and employment in Mali. According to the 2013 Doing Business Survey (World Bank), Mali ranks as 151 among 185 countries.

Even if the general context in Mali has changed significantly over the past 18 months, the importance of developing entrepreneurship and strengthening the private sector’s contribution to growth remain highly relevant and continue to be prioritised in the current poverty reduction strategy (2012-2017). Mali’s economy has over the past 20 years gradually transformed from a State-led economic development model towards a model increasingly based on a market-driven economy. But production capacities in critical sectors are still largely on public hands, and many public sector actors tend to intervene in the private sector beyond their role as regulator and facilitator. A key challenge is to inspire cultural change that gives the private sector and entrepreneurship the space and conditions needed to realise its unquestionable potential and allows private and public actors to play complementary roles. Therefore the programme will also facilitate dialogue between private and public actors and promote the private sector’s ownership of development policies and processes.

Annual GDP growth in Mali has been 5-6 pct. for the past decade. As a consequence of the recent crises, GDP growth has declined to -1.2 pct. in 2012, but positive growth rates are expected to resume in 2013. Per capita income increases continue to be undermined by a high population growth (3.6 pct. per annum). Demographic challenges can become a major source of instability if young people cannot find decent employment and sustainable livelihoods. Mali’s future stability depends considerably on its capacity to integrate the young population in productive activities. Employment of this scale will have to be created predominantly in the private sector. Transformation from subsistence agriculture to commercial agriculture, including agribusiness and manufacturing, presents the most promising growth potential.

The proposed programme aims at contributing to increased economic activity along selected agricultural value-chains with a clear potential for commercialisation, promotion of employment and income generation. The objective is that the private sector drives inclusive growth leading to increased income and employment. To achieve this objective, the programme will firstly target private sector actors to improve their performance and increase competitiveness along agricultural value chains. Framework conditions for the private sector will be improved by promoting dialogue between the private and public sectors and by improving services in relation to e.g. quality, certification processes and compliance with norms. Secondly, the programme will support infrastructure development necessary for production and market access. Thirdly, targeted capacity and skills development needed for private sector driven growth will be pursued. The programme is the first private sector programme in Mali rooted in indigenous local institutions.

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CHALLENGES AND UNDERLYING REFLECTIONS:

Private companies are small, with few permanent employees and highly fluctuating cash flows. Risk averseness remains high. Significant change is needed to increase competitiveness and stimulate entrepreneurship. Generally, economic actors need advice on both management and technical issues. Even if Mali has the potential to expand its food production significantly, the agricultural sector remains characterised by low levels of productivity.

Malian enterprises face a variety of obstacles such as product quality not meeting international standards, a difficult business climate with heavy regulation and taxation, corruption and weak public-private dialogue, as well as insufficient supply of non-financial business development services and high transaction costs. In addition, most entrepreneurs face challenges accessing financial services and suffer due to general lack of infrastructure allowing them to invest in and develop their businesses. Some of the most important productive infrastructure constraints are transport and energy, and it is estimated by the World Bank that infrastructure constraints are responsible for about 40 pct. of the productivity handicap faced by Malian firms. Another constraint for private sector development concerns formal skills of the workforce. The formally educated workforce is limited in numbers and concentrated in urban areas. Students graduating from vocational education and training institutions often do not meet the requirements of the productive sectors. This is particularly valid for the agricultural and agribusiness sectors that remain the most important sectors in Mali in terms of economic scale as well as employment.

Many interlinked development challenges in the private sector suggest that the value-chain approach with its focus on understanding a production and market system in its totality holds considerable potential to develop and change the sector on a sustainable basis. Therefore, the programme is designed to address competitiveness constraints relating to financial and technical capacities of enterprises, lack of infrastructure and poor human resources within selected value chains. At least 80 pct. of the economically active population is directly or indirectly occupied in primary sectors, mainly agriculture, indicating a substantial poverty reduction potential by engaging in these sectors and applying the value-chain approach.

PROGRAMME DESCRIPTION:

The private sector programme will focus on transforming from subsistence to commercial agriculture. It comprises three components, which address private sector competitiveness, infrastructure development promoting production and market access and targeted capacity and skills development.

The importance of the productive sectors for Mali’s development, including agriculture, development of small and medium-sized enterprises/industries, employment creation, and development of financial services is highlighted by the Malian Government’s Strategic Framework for Growth and Poverty Reduction. Among the relevant initiatives the Malian Government has taken to improve its business climate, the Industrial Development Policy, the Framework Law for Private Sector Development approved in 2010, and the Investment Code under elaboration deserve attention. The Framework Law for Agriculture approved in 2006 highlights both the importance of modernizing agriculture and of promoting agricultural enterprises.

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The programme involves a number of different stakeholders and actors in the public and private spheres. The Malian private sector institutions comprise different chambers, associations and federations (agriculture, commerce/industry and artisan professions), who in turn often are members of the National Council of Employers. In the public sector, key stakeholders include the Ministry of Agriculture, the Ministry of Livestock and Fisheries, the Ministry of Employment and Vocational Training and the Ministry for Industry, Investment and Commerce. Fundamentally, all the actors, whether from the public or the private sector, recognize the need to strengthen the competitiveness of the Malian private sector. The government recognises its role mainly as a provider of an enabling environment for private sector driven economic growth, but reminiscences of the former model of economic dirigisme exist and public sector institutions still tend to intuitively see themselves in an operational role rather than a regulatory and facilitating one. This is understandable given a context of a weak private sector, market imperfections, and a largely non-monetised economy with very low levels of purchasing power.

Some other donors support the private sector and apply, at least partly, the value chain approach. In the agricultural sector, there are some large programmes aimed at enhancing not only productivity but also orienting production towards market demands and opportunities. These are supported by e.g. the World Bank and USAID.

As a consequence of the diverse spectrum of stakeholders, the preparation of the programme included very thorough stakeholder analysis and capacity assessments as well as participatory dialogue meetings based on which the final partners for implementation of the programme were selected in full transparency. Implementing partners were eventually identified on the basis of their potential to support achievement of the desired results. It is assumed that when national partners are supported in fulfilling their mandated roles, the results will be more sustainable and the transaction costs lower.

The National Council of Employers has been identified as the most relevant organisation to host a technical and financial advisory service aimed directly at private sector actors. The National Agency for Executing Rural Infrastructure will be responsible for implementing the identified relevant infrastructure projects, while the National Directorate for Rural Engineering will monitor implementation of these projects according to national standards, policies and strategies. The choice to work with these institutions and the innovative character of the programme, require a relatively solid input of technical assistance. Short and long term technical assistance is foreseen to support implementation, but also to empower the employees of the different partner institutions and build structures and systems to leave behind strong organisations capable of continuing and expanding activities after the programme ends.

Initial analysis pointed to Swiss Cooperation as the partner most deeply engaged in vocational training, with many years of valuable experience in the sector producing good results at a certain scale. In order to minimise transaction costs for the Malian partners, it has therefore been decided to delegate the relevant vocational training to Swiss Cooperation.

To fulfil the objective of economic growth driven by the private sector, a number of value chains have been identified. Main focus will be on agricultural value chains with a clear potential for commercialisation, promotion of employment and income generation. As a point of departure the value chains will include: poultry/corn, livestock/meat/dairy, fruit &

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vegetables and handicraft. The programme will be operating in Mopti, Segou, Sikasso, Koulikoro and Bamako regions. The choice of the value chains and geographic zones of intervention is based on a number of preparatory studies, but the programme will seek to continuously adjust and respond to relevant opportunities.

Component 1 - Strengthened competitiveness of Malian private sector actors within an enabling environment. This component is designed as a finance and advisory facility for private entrepreneurs operating in selected value chains. It is hosted by the National Council for Employers. The facility offers a matching grant fund, which will partially fund medium-sized productive investments. Further, an advisory facility can support organisational development, business and marketing plans, exchanges of best practices, international quality certification processes, studies and analyses, training etc. Funding decisions will be made at regional level, i.e. as close to the private sector partners as possible. Green growth projects will be prioritised, and participation of female headed businesses will be promoted by offering more favourable terms. The entrepreneurs will raise the remaining funds either from own sources or through a bank loan obtained through financial institutions. The banks are cooperating directly with the programme to develop solutions directly relevant for the programme beneficiaries. Furthermore, the programme will support the establishment of a national credit guarantee facility as foreseen in the 2010 law on private sector development. The programme will also support selected public sector initiatives to address jointly identified business environment constraints. Finally, the general business environment will be improved by promoting dialogue between the private and public sectors notably through the joint planning of an annual high-level private sector conference hosted by the Malian government. The aim is to support approximately 450 investment projects and provide advisory services to approximately 700 enterprises.

Component 2 - Enhanced infrastructure development to promote production and market access. The targeted value chains serve as starting point for identification of infrastructure projects that will stimulate economic activities. A process led by the private sector (The National Council of Employers), in close collaboration with local government authorities, will identify the infrastructure gaps that are particularly constraining for the growth of the private sector. The component will finance public good investments like for example feeder roads, market places, abattoirs and other infrastructure aiming at creating an economic impact in accordance with local priorities. Labour intensive approaches will be applied where relevant. Ownership and responsibility for operation & maintenance will be an integrated part of the infrastructure investment projects. Local stakeholders will be involved to ensure that the identification, realisation and use of infrastructure live up to basic rights principles.

Component 3 - Targeted capacity and skills development for private sector driven growth. This component will address general capacity and skills gaps relevant to the private sector and the value chains supported by the programme. Component 3 will be implemented in close collaboration with the two other components providing training services where needs are identified. The component will target unemployed (e.g. primary school leavers with no vocational and technical skills) as well as the workforce active in the agricultural and agribusiness sectors among others. The capacity and skills development component will be integrated into the already existing Swiss funded Programme for Vocational Training, which supports training projects formulated jointly by private sector organisations and training

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institutions. The programme will support the private sector’s articulation of their demand for qualified personnel holding particular skills. In parallel, support is provided to training institutions to improve their demand responsiveness – in particular within agriculture and agro-business. Support is also provided to local and regional government to increase capacity to monitor and facilitate skills development. The key purpose is to train 40,000 beneficiaries.

For each component, a committee will be established to oversee the implementation and provide overall strategic directions for the implementation. Members of the committees are representatives of implementing organisations (chair), relevant government institutions according to their mandate and role, as well as the Danish Embassy in Bamako and other relevant donors. At technical level, meetings will be facilitated between the partners of the three components. Joint sector reviews are foreseen on an annual basis. The implementing partners will have their organisations strengthened with external management consultants embedded in their organisations.

Denmark will implement the new private sector programme in parallel to a thematic programme for conflict prevention & good governance, which has evolved during the last 18 months on the backdrop of the political and security crisis in Mali, and a water & sanitation programme, which in the future will incorporate climate change adaptation approaches. Furthermore, Denmark supports the political transition in Mali with contributions towards the democratisation process, a national stabilisation fund aimed at stabilising communities following limited public spending during the crisis, as well as the EU State Building Contract. Currently, the Embassy is exploring conditions for transition into country programming from 2017.

PREVIOUS EXPERIENCES:

Denmark is currently funding a business sector programme and an agricultural sector programme, which are both ending in December 2013. These two programmes, designed to create synergies in their implementation, have aimed at improving living conditions of rural populations and modernising agricultural techniques, as well as strengthening private sector actors, including small and medium enterprises. However, the achievement of synergies between the two programmes has proven to be difficult in practise, as their advancement was rooted in different national structures with no tradition of working together. Many intentions of the programmes proved too challenging to realise in the local context. On this background, it was decided to propose one new concerted private sector programme building on the many lessons learnt, including recommendations from reviews. Notably, the challenges related to entrusting the public sector with responsibility to manage private sector support programmes, and the limited capacity of micro and small enterprises to grow. Consequently, the proposed programme places the private sector centrally in the decision-making and management processes. And it scales up levels of investments, enhances market orientation and prioritises larger operations in order to ensure volume and financial sustainability. In particular the proposed new programme will build on the modalities already established to ensure proper checks and balances, create partnership with financial institutions, and give preferential treatment to women as well as opening a special window for green projects. Regarding rural infrastructure projects, important lessons have been learnt with respect to e.g. securing involvement of stakeholders in the identification process, follow-up and monitoring to ensure construction of good quality in time, applying labour

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intensive approaches when feasible and ensuring that a sustainable operation & maintenance set-up is established.

As the programme mainly will be implemented by existing public and private institutions and it operates in coherence with the existing legal framework and the Malian government’s priorities, elements of an exit strategy have already been anticipated and will continue to be explored during implementation. SPECIAL CONSIDERATIONS AND PRIORITIES:

In order to ensure a positive human rights impact of the programme, externally recruited management consultants and the Danish Embassy in Bamako will, based on engagement and continuous dialogue, advocate that the UN Guiding Principles on Business and Human Rights be respected and promoted throughout implementation of the programme. Decent employment is not only important for the development of a society – for the individual it is a fundamental right. The private sector can be a transformational driver of change that empowers the poor. The programme will work with the partners to formulate a human rights code of conduct and to consistently apply the principles of non-discrimination, participation and inclusion, transparency and accountability.

Pressure on natural resources in developing countries is mounting due to population growth, unsustainable consumption patterns, production systems and climate change. The consequences are degradation of natural resources leading to intensified competition and potential conflict over access to energy, water, land and food. To tackle these challenges, the active participation of the private sector is needed to reduce resource use, minimise waste and develop new environmentally friendly products and services. The identification and selection procedures of the programme will as a minimum include scrutiny of potential environmental harmful impacts and mitigation. Furthermore, all three components will give preferential treatment to “green projects” which are not only “not harmful”, but also introduce new technologies, knowledge and methods which further increase awareness and improve environmental sustainability. A dedicated window financing investments in energy efficiency and water saving measures, organic production techniques etc. is integrated into component 1.

Gender mainstreaming is a particular concern in Mali and gender action plans will be developed for each component and gender will thus be addressed as a priority in the continuous dialogue. The rights based approach as established by Danida’s strategy, The Right to a Better Life (2012), will be unfolded both technically and politically.

BUDGET: Year

Mio.DKK

2013 2014 2015 2016 2017 2018

Component 1. Private sector competitiveness 6,6 25,8 20,8 30,0 20,8 20,8 125,6

Component 2. Productive infrastructure 3,9 22,5 22,7 22,7 22,6 16,0 110,4

Component 3. Vocational training - 10,0 10,0 10,0 10,0 - 40,0

Administration/Review - 2,8 2,8 2,8 2,8 2,8 14,0

Total of allocated funds 10,5 61,1 56,3 66,3 56,2 39,6 290,0

Unallocated funds - - 4,0 4,0 2,0 - 10,0

Total 10,5 61,1 60,3 70,3 58,2 39,6 300,0

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Procedures for financial management will be adapted according to the special characteristics of the different partner institutions. The partners will develop annual work plans and budgets for supported activities. The partners will manage funds according to their systems and procedures, which have been evaluated as part of the capacity analysis and found acceptable. Unallocated funds could be used to initiate special activities to include the fragile northern regions into the selected value chains. Financial and progress reporting will take place according to the formats and schedules of the implementing partner at least semi-annually. Transfer of funds will take place against the approved annual work plans and budgets. For each year of the programme, there will be an independent financial audit of the accounts maintained by the implementing partners. If relevant, this will be combined with technical compliance/value for money audits to provide verification of physical works. SIGNIFICANT RISKS:

Political economy – risks related to the context in which the programme operates (medium/high). As already mentioned, the state still plays an important role as driver of the economy in Mali. Members of the political elite and many public servants were for years educated abroad in the former Soviet Union and/or allied Eastern European countries, and a certain intuitive distrust remains towards the private sector implying a risk that the programme could be captured by a political agenda not in favour of the private sector. It will be important to continue to build trust at high level in the political system and foster dialogue between public and private actors, as initiated during the extended formulation of the programme. Furthermore, engagement of political actors in the annual high-level private sector conference is meant to engage the public sector concretely and visibly in favour of private sector development according to the objectives of the national poverty reduction strategy. Political stability and political decisions providing the long-term context for private sector development are necessary for heavier investments to be made.

For the promotion of large-scale agribusiness, policies for subsidies and land tenure regulations will largely determine long-term investment opportunities. It is not envisaged that fundamental changes in the Malian economic development model will occur in the short or medium term, but the recently concluded presidential elections and foreseen parliamentary elections could result in policy changes/impasses that would need to be taken into account on a continuous basis during implementation. Finally, there is a risk that the financial sector will remain too risk averse. Based on dialogue with sector representatives, this risk is currently considered minimal to medium, but the financial sector remains highly sensitive to the general political and economic context.

Good governance remains a key element to create an enabling environment for private sector development. There are several on-going reforms to improve public financial management, the judicial system and to combat corruption, which figure prominently on the incoming President’s political agenda. Many of these initiatives were suspended following the coup d’etat in 2012 but have recently been resumed, and the Embassy monitors closely and actively supports advancement of relevant reforms and their impact on the business climate. Generally, political risks, i.e. risks related to universal values, fundamental rights, insecurity and conflict, will remain high. But development partners generally deem the risks of non-engagement as far higher than those of engagement. As for the general security environment, the UN Peace Keeping and

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Stabilisation Mission in Mali, and the EU Training Mission are seen as important contributions to mitigating security risks.

Management – risks related to limited capacity (medium-high). Absorption capacity of actors remains a critical factor for the implementation of the programme. The national institutions working with the promotion of private sector driven growth still have a limited capacity and are mainly based in the metropolitan area. It will remain a challenge to support capacity and skills development in the regions outside Bamako without taking ownership from the local institutions and using technical assistance as substitution. Risks apply to the capacity of The National Employers Council to manage a programme of this size and complexity, limited capacity to realise infrastructure of sufficient quality in time. Known capacity constraints will be mitigated mainly by applying technical assistance. Furthermore, the organisational audits carried out during the formulation phase will require regular follow-up.

During the period of formulation and planning - which extended beyond 2 years due to the political and security crisis in Mali and saw changes in Danish strategies, policies and guidelines - all identified partners of the programme have showed remarkable commitment to the programme. This is a factor that partly makes up for limited capacity as it demonstrates that will and motivation are abundant.

Fiduciary risks (high). Mali ranks 105 of 176 countries in the 2012 Transparency International Corruption Perception Index, equalling the level of Tanzania. This means that specific financial control mechanisms for the programme have been established. Notably, partners will be subject to an annual audit carried out by externally recruited auditing companies.

Generally, it should be noted that the situation in Mali remains liable to change, and deeply rooted fault lines, e.g. state/citizens and centre/periphery, as well as the general political environment will continue to create unpredictability for all development programmes in years to come. It is planned to carry out a formal risk assessment analysis during the first year of programme implementation according to the recently introduced Danida Guidelines.

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ANNEX 1 – PARTNERS: National Council of Employers in Mali (www.cnpmali.org) The National Council of Employers in Mali was created in 1980 as an autonomous structure independent of the state depending primarily on the members for finances. An umbrella organisation for currently 39 private sector associations in Mali representing an extensive collective of professional organisation and companies, it has emerged as the most notable private sector interest organisation in Mali, and the only one represented in seven out of eight regions. The Council of Employers plays an important role in organising the private sector to speak with one voice vis-à-vis the government of Mali. It already has some experience in managing government and donor projects. While The National Council of Employers is a relatively well consolidated organisation, the institutional capacity assessment has revealed a number of challenges such as insufficient organisational procedures as well as a shortcoming in human capacity. National Directorate for Rural Engineering The National Directorate for Rural Engineering was created in 2005 and is institutionally anchored in the Ministry of Agriculture. The mandate of Directorate for Rural Engineering is to elaborate national policies on rural planning and investments and monitor the implementation of these. The National Directorate for Rural Engineering is represented at both regional and local level and has a solid experience in identifying, formulating and implementing projects and programmes with a wide range of donors. The Directorate for Rural Engineering has some well qualified staff; however, in general insufficient financial and human resources, both in terms of quality and quantity, prevent the Directorate from carrying out its duties as intended. National Agency for Executing Rural Infrastructure – AGETIER (www.agetier.com) The National Agency for Executing Rural Infrastructure was established in 1999 as an autonomous body with the mandate to execute public works. It has particular procedures for financial management, tendering and procurement different from the much heavier procedures that apply in public institutions, which often are causing delays in project and programme execution. The Agency has extensive documented experience in realising rural infrastructure like rural roads, water channels, water points, irrigation, port-upgrading, fish processing centres, primary education facilities and training centres. The National Agency for Executing Rural Infrastructure has well tested institutional capacity with relatively solid systems and procedures for overseeing infrastructure construction. Swiss Agency for Development and Cooperation (www.sdc.admin.ch) The Swiss Agency for Development and Cooperation (SDC) is Switzerland’s international cooperation agency within the Federal Department of Foreign Affairs. In Mali, it has supported the skills development agenda since 1996. From 1996 to 2005 the focus was on strengthening the apprentice systems. From 2005 it shifted to the formal training system supporting the development of vocational education and training master plans in the regions of Sikasso, Mopti, Timbuktu, Ségou and Koulikoro and testing a number of different training approaches within different sectors.

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ANNEX 2 - BACKGROUND FACTS Political scene - In March 2012, a coup d’état led by Captain Amadou Sanogo overthrew the sitting President Amadou Toumani Toure (ATT). It was triggered by the defeats of the army against heavily armed Islamist groups, but frustration with the country’s political elite as well as pervasive corruption also played a certain role. Mali faced international sanctions including a freeze of the development aid and a regional embargo. Mali's military coup leaders and ECOWAS agreed to a deal under which the military junta according to the constitution handed over power to the President of the Parliament, Diouncounda Traore, who was sworn in as interim president in April 2012 with a mission to organise elections and reclaim territorial control of the country. Presidential elections took place on July 28 and August 11, 2013. Former Prime Minister, Ibrahim Boubacar Keïta, won a land slide victory in a vote that is seen as a popular rejection of the era under former president ATT and of the unconstitutional take-over of power. A new government is expected to be in place by early September.

Humanitarian and Human Rights situation - The political, military and security crisis has deepened a humanitarian and food security crisis, which also affects the neighbouring countries. According to WFP and OCHA, more than 10 million people are affected, including 3.5 million in Mali. Over 500.000 Malians have been displaced as IDPs (Internally Displaces People) or as refugees to neighbouring countries because of the conflict in the northern regions. Mali's constitution of 1992 is enshrined in the UN Declaration of Human Rights and the African Charter on Human Rights. The Constitution guarantees civil, political, economic, social and cultural rights. At international level, Mali has ratified most of the regional and international conventions on human rights. However, there are significant challenges in enforcement of fundamental rights, in particular the enforcement of women's rights.

Economic conditions - Mali is among the poorest countries in the world with an average per capita income of 371 USD$ and about 72 pct. of the population living below the UN poverty line. In 2013, Mali was ranked 182 out of 187 countries on the Human Development Index. Currently, the economy is in recession, inflation is rising, and commerce as well as tourism have been hit hard by the security situation. Positive rates growth rates are presumed to return in 2013.

Security crisis – A rebellion led by the National Movement for the Liberation of Azawad (MNLA) began in the Northern regions in January 2012 taking control of the north and declaring independence in March. Islamist groups including Ansar Dine and Al-Qaeda in the Islamic Maghreb (AQIM), who had helped the MNLA defeat the government, soon took control of the area. On January 11, 2013, the French Armed Forces intervened at the request of the interim president and by January 30, 2013, the coordinated advance of the French, Malian and regional troops had ended the offensive. On 1 July 2013, 6,000 of a future total of 12,600 UN peacekeeping troops (MINUSMA) took over the responsibility for stabilizing the country's north from France and ECOWAS.

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ANNEX 3 – INDICATORS The table below is a summary of the programme logframe, which provides an overview of the most important achievements expected. The Embassy is currently working to fine-tune the logframe, which will form the basis for the support to strengthen the M&E systems of the partner organisations and ensure that the Programme M&E system, to the extent possible, is aligned to these. Given the participatory and demand-driven nature of the programme’s components 1 and 2, it is difficult to formulate SMART indicators as beneficiary groups and types of outcomes and impacts will depend on the concrete interventions chosen. Furthermore, the programme is designed to be able to adjust to a changing context. As previously mentioned, criteria for selecting interventions include among others marketability og sustainability of the business model, its economic growth and employment potential as well as special considerations related to “green growth” and gender. Throughout the programme, the impact in terms of these criteria will be closely measured and monitored.

Overall objective: Private sector driven inclusive growth leading to increased income and employment promotion

Objectives Results Key indicators

Component 1: Strengthened competitiveness of Malian private sector actors within an enabling environment.

Enterprises have accessed financial and technical services;

Investment projects have been successfully executed;

Coherence of targeted value chains is improved;

The Public-Private dialogue has been reinforced.

Number of partnerships created or strengthened;

Volume of investments facilitated;

Increase in revenue by 20 pct. amongst the beneficiary businesses;

Number of Public - Private dialogue processes established.

Component 2: Enhanced infrastructure development to promote production and market access.

Relevant infrastructure projects have been identified and carried out;

Infrastructure operation and maintenance systems are functioning.

Number of infrastructures realised for each targeted value chain;

Number of public (municipalities) – private partnerships established for operation and maintenance systems.

Component 3: Targeted capacity and skills development for private sector driven growth (results and indicators formulated by Swiss Cooperation).

Graduates are employable or able to self-employ in relevant sectors;

Vocational education and training adapted to the diverse needs of the private sector, is jointly identified and implemented by public and private stakeholders.

90 pct. of the 40,000 persons trained are professionally active in their sector or value chain;

80 pct. of the enterprises utilising the graduates, have improved their turn-over by 20 pct.

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ANNEX 4 - APPROVED RESPONSE BY REPRESENTATION TO SUMMARY OF

RECOMMENDATIONS IN THE APPRAISAL REPORT The final appraisal report1 must include this table summarising the recommendations regarding the further preparation of the Country programme. Only major recommendations of the appraisal report requiring action from the Danish Mission must be specified in the left column below, and the table must be signed by the team leader/TAS representative and received by the Danish Mission no later than 14 days after the end of the appraisal process. “N.a.” is indicated in case there are no recommendations regarding the issue concerned. The right column is filled in by the Danish Mission, when the final country programme document and development engagement documentation have been prepared, and the table must be forwarded to the Under-Secretary for Global Development and Cooperation and TAS as soon as possible, and no later than five weeks before the planned presentation of the Country programme to the External Grant Committee of Danida, i.e. two weeks before the request for inclusion of the country programme on the External Grant Committee’s agenda is forwarded to KVA.

Title of (Country) Programme Private Sector Driven Economic Growth and Employment Promotion in Mali (PACEPEP)

File number 104.Mali.809.200

Appraisal report date Field Appraisal report 12th June 2013 Desk Appraisal report January 2013

Grant Committee meeting date 11th September 2013

Summary of possible recommendations not followed (to be filled in by the Mission)

Overall conclusion of the appraisal The appraisal team find the programme eligible for financing subject to taking into consideration the

recommendations of the appraisal.

Recommendations by the appraisal team Follow up by the Representation

1. Country programme Level: 1. Justification and rationale of the country programme, preparation process and strategic linkages between country programme vis-à-vis the country policy document.

1.1 1.1

1.2 1.2

2. Thematic Programme Level: 2. Consideration of relevant Danida strategies.

2.1 The strategic approach to green growth as well as the interventions should be further elaborated in the programme document.

2.1 Green growth aspects have been further strengthened in the final version of the programme documents.

2.2 2.2

3. Proposed thematic programme support design including rationale, effectiveness, efficiency, impact and sustainability and partner choices.

1 This table is only mandatory for programme support appropriations when TAS is involved in the appraisal, but may also be useful in smaller instances of programme support, when the appraisal is undertaken by external consultants.

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3.1 During the negotiation of the agreement with AGETIER, the Embassy should specify the obligation of AGETIER to supervise the work of the consultants recruited to supervise the construction work. If deemed necessary, the Embassy should reconsider the foreseen margin of 5% for AGETIER.

3.1

The recommendation is accepted.

3.2. The Embassy should initiate a tender process to select 2-3 banks to assist the implementation of Component 1. The tender documents should take into consideration a number of selection criteria including those proposed by the appraisal team.

3.2. A call for expression of interest has been initiated and the tender documents are being elaborated.

3.3 The Danish contribution to the National Credit Guarantee fund (FGSP) should be channelled via a governmental organisation. (e.g. a dedicated account attached to the FGSP).

3.3 Recommendation accepted. The best solution will be decided once FGSP is operational.

3.4 To ensure adherence to the principles of transparency, good governance and participation, the descriptions of Components one and two should more explicitly outline the process of identification, prioritisation and decision of the planned infrastructure projects.

3.4 The Component documents have been revised to take on board this recommendation. Preparatory work has been carried out to facilitate the identification process.

3.5 With the view to adhere to the above principles of transparency and participation and in the light of the recommendation to expand the programme to 5 years, the need to identify and select the infrastructure projects for the first batch during 2013 should be reconsidered.

3.5 The timing of the selection process has been reconsidered

3.1. 3.1.

3.2. 3.2.

4. Adherence to the aid effectiveness agenda

4.1. 4.1.

4.2. 4.2.

5. Budget

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5.1 The duration of the programme should be extended from four to five years which will make implementation of activities and spending of the allocated budget more realistic. Considering that the activities of Component 3 have already been initiated, a 4 year implementation period can be maintained.

5.1 The programme period has been extended to five years for Components one and two.

5.2 5.2

6. Identified risks and risk management

6.1 6.1

6.2 6.2

10. Follow-up to the recommendations of the Danida Programme Committee

10.1 10.1

10.2 10.2

11. Other recommendations

11.1. 11.1.

11.2 11.2

12. Engagement Level 12. Capacity of partners

12.1. 12.1.

13. Results Framework

13.1. 13.1.

13.2. 13.2.

14. Budget allocation

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14.1. The number of man-months foreseen for short term technical assistance for Component 1 should be further specified to facilitate the tender process. The number of short term technical assistance budgeted for Component 2 should be increased to at least 13 man-months to ensure availability of sufficient resources for issues as e.g. green growth, monitoring and evaluation and public-private partnerships.

14.1. Recommendation has been incorporated in the revised version of the programme document.

14.2 14.2.

15. Identified risks and risk management

15.1. Elaborate further the risk analysis and in particular the mitigation measures. “Value for money” studies should be foreseen and a budget of DKK 1 to 1.5 Million should be allocated for this purpose.

15.1. Recommendation has been incorporated in the revised version of the programme document.

15.2. 15.2.

16. Monitoring and reporting arrangements

16.1. 16.1.

17. Others

17.1. The Embassy should ensure that all contractual requirements relating to the cooperation with SwissContact are fulfilled in a satisfactory way.

17.1 The joint Swiss/Danish programme consists of the activities foreseen in PAFP III but further expanded in scope and outreach. A joint PAFP IV (2013-2017) reference document has been formulated which will replace PAFP III as guiding the implementation managed by Swisscontact. Component 3 will be delegated to the Swiss Development Cooperation (SDC) and the Danish funding will be added to a programme that is already in operation. SDC have confirmed that all Swiss procurement requirements have been respected in relation to the contract with SwissContact and that it is possible to extend the contract in light of the additional Danish funding.

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17.2. If the contractual requirements are fulfilled, the SDC should reassess the budget proposed by SwissContact to ensure that unit prices are reduced which should be possible in light of the sizable extension.

17.2. A letter has been submitted to the SDC, and discussions with SwissContact are on-going.

I hereby confirm that the above-mentioned issues have been addressed properly as part of the appraisal and that the appraisal team has provided the recommendations stated above. Signed in Copenhagen on the 7 August 2013, Hanne Carus f. Jørn Olesen. Team leader/TAS representative I hereby confirm that the Danish Mission has undertaken the follow-up activities stated above. In cases where recommendations have not been accepted, reasons for this are given either in the table or in the notes enclosed. Signed in Bamako on the 6 August 2013, Anders Garly Andersen Ambassador/Head of Danish Mission

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ANNEX 5 - LIST OF RELEVANT SUPPLEMENTARY MATERIAL

1. Strategy for Denmark’s Development Cooperation: The Right to a better Life. The Danish Government, June

2012.

2. Framework for Growth and Employment. Danida, 2011.

3. Realising the Potential of Africa’s Youth. Africa Commission, 2009.

4. Guiding Principles on Business and Human Rights, United Nations Human Rights, 2011.

5. Concept Note Private Sector Driven Economic Growth and Employment Promotion in Mali 2013 – 2017.

Programme Committee Meeting, 4 November 2011.

6. Summary conclusions Meeting in the Programme Committee: Growth and Employment programme in Mali,

Novembre 2011.

7. Cadre Stratégique pour la croissance et la réduction de la pauvreté CSRP 2012-2017, Ministère de l’Economie et

des Finances du Mali, Décembre 2011.

8. Loi d’Orientation du Secteur Privé (LOSP), République du Mali, 2011.

9. Loi d’Orientation du Secteur Agricole (LOA), République du Mali, 2006.

10. Document Cadre du Programme Décennal de Développement de la Formation Professionnelle pour L’emploi, Août 2011. 11. Etude sur les capacités organisationnelles des partenaires potentiels -Programme d’Appui à la Croissance Economique et à la

Promotion de l’Emploi Stimulées par le Privé au Mali, CENAFOD MALI, Janvier 2012.

12. Facilitation pour le Choix des Chaînes de Valeur dans le Cadre du Processus de Formulation du Programme

d’Appui à la Croissance Economique et à la Promotion de l’Emploi Stimulées par le Privé au Mali, PASAM - Michigan

State University, Juillet 2011.

13. Étude permettant de définir les possibilités de complémentarité du nouveau programme danois 2013-2017

Croissance économique & emploi avec les interventions des Partenaires Techniques et Financiers au Mali,

HydroConseil, Juillet 2011.

14. Atelier de capitalisation de PASAM et PAPESPRIM à Ségou, Mai 2011.

15. Atelier de capitalisation de PASAM et PAPESPRIM à Mopti, Juin 2011.

16. Atelier National pour la recherche des orientations stratégiques pour un nouveau programme pour la croissance

économique et l’emploi au Mali, Juin 2011.

17. Atelier de restitution des documents de formulation du PACEPEP 2013-2018, Décembre 2012.

18. Évaluation du Secteur Agricole du Mali 2011, USAID, Novembre 2011.

19. Mission de revue du programme pays pour le Mali en vue d’identifier les formes de coopération les plus efficaces

dans un nouveau contexte institutionnel, Tana Copenhagen, July 2012.

20. Etude de la stratégie du Fonds d’Investissement des Collectivités Territoriales (FICT) et Gestion Déléguée des

Infrastructures / Equipements marchands des Collectivités Territoriales, PAPESPRIM Avril 2011.

21. Analyse Statistique des Micro Petites et Moyennes (MPME) 2009-2011, PAPESPRIM Août 2011.

22. Rapport provisoire de suivi économique des PME, Mopti, PAPESPRIM Août 2012.

23. Formulation d’un partenariat stratégique avec le secteur bancaire pour financement des PME (rapport 2) ;

Méthodologie Cluster, PAPESPRIM Juillet 2011.

24. Formulation d’un partenariat stratégique avec le secteur bancaire pour financement des PME, PAPESPRIM Juin

2011.

25. L’entrepreneuriat jeune au Mali : Etudes de cas : Bamako, Ségou, Konobougou et Niono, Copenhagen Business

School – FLASH Université de Bamako Janvier 2012.

26. Note sur l’Accompagnement des banques, PASAM et PAPESPRIM, Mai 2013.

27. Revue des études existantes des filières dans le cadre de la formulation du nouveau Programme d’Appui à la Croissance

Economique et L’Emploi stimulé par le secteur privé (PACEPEP), Adama Coulibary Février 2013.

28. Rapport d’étude sur la filière gestion des déchets, INSTAT Janvier 2013.

29. Capitalisation des expériences et acquis de la composante 2 du PASAM, K&K Ingénieurs Conseil, Janvier 2013.

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30. Plan pour la relance durable du Mali 2013-2014, Ministère de l’Economie et des Finances du Mali, Avril 2013.

31. Mali economic update, Banque Mondiale, Janvier 2013.

32. Tableau de souscription de fonds national de garantie, Mai 2013.

33. Etude d’identification des infrastructures du Programme d’Appui à la Croissance économique et à la Promotion

de l’Emploi stimulées par le Secteur Privé au Mali (PACEPEP), Aout 2013.