The World Bank FOR OFFICIAL USE...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 67750-NE

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF

SDR 32.3 MILLION

(US$50 MILLION EQUIVALENT)

TO THE

REPUBLIC OF NIGER

FOR THE

COMPETITIVENESS AND GROWTH SUPPORT PROJECT

June 1, 2012

Financial and Private Sector Development

Western and Central Africa

Africa Region

This document is being made publicly available prior to Board consideration. This does not

imply a presumed outcome. This document may be updated following Board consideration and

the updated document will be made publicly available in accordance with the Bank‘s policy on

Access to Information.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 30, 2012)

Currency Unit = CFAF

CFAF 496 = US$1

SDR 0.64493 = US$1

FISCAL YEAR

January 1 – December 31

Regional Vice President: Makhtar Diop

Country Director: Ousmane Diagana

Sector Director:

Sector Manager:

Gaiv Tata

Paul Noumba Um

Task Team Leader: Djibrilla A. Issa/Mamadou Barry

ABBREVIATIONS AND ACRONYMS

AAA Analytic and Advisory Activities

AAP Africa Action Plan

ACBF African Capacity Building Foundation

AFD French Development Agency

AfDB African Development Bank

ANIPEX Agency for Export Promotion

APEIN Agence de Promotion des Entreprises et des Investissements au Niger

(Agency for Enterprise and Investment Promotion)

AQIM Al Qaeda in the Islamic Maghreb

ARMP Public Procurement Regulation Agency

BCEAO Central Bank of the West African States

BDS Business Development Services

CAPED Cellule d’Analyse et de Prospective en Développement (Unit for Analysis on

Development)

CAS Country Assistance Strategy

CEM Country Economic Memorandum

CFE Centre de Formalité des Entreprises (One-stop shop for entreprises

registration)

CNIP National Private Investors Council

CNPC China National Petroleum Company

CNPG National Management Development Center

COMINAK Akouta Mining Company

CPI Investments Promotion Center Consumer Price Index

DA Designated Account

DGB General Directorate of Budget

DGI General Directorate of Taxes

DPO Development Policy Operation

DTIS Diagnostic Trade Integration Study

EAN Entreprendre au Niger (Entrepreneurship in Niger)

ECOWAS Economic Community of West African States

EI Extractive Industries

EITI Extractive Industries Transparency Initiative

ERR Economic Rate of Return

ESIA Environmental and Social Impact Assessment

ESMF Environment and Social Management Framework

EU European Union

FDI Foreign Direct Investment

FIRST Financial Sector Reform and Strengthening Trust Fund

FPD Finance and Private Sector Development

FSAP Financial Sector Assessment Program

GDP Gross Domestic Product

GIE Groupement d’Intérêt Economique (Economic Interest Group)

GIS Geological Information System

GPRC Growth Policy Reform Credit

GPRG Growth Policy Reform Grant

GPRO Growth Policy Reform Operations

HACCP Hazard Analysis and Critical Control Points

ICA Investment Climate Assessment

ICB International Competitive Bidding

IDA International Development Association

IEG Independent Evaluation Group

IFC International Finance Corporation

IMF International Monetary Fund

INS National Institute of Statistics

LIB Limited International Bidding

M&E Monitoring and Evaluation

MCC Millennium Challenge Corporation

MDG Millennium Development Goals

MEF Ministry of Economy and Finance

NCB National Competitive Bidding

NIGELEC Niger‘s Power Company

NPV Net Present Value

OHADA Organization for Harmonization of Business Law

PICAG Programme Intérimaire de Cadrage de I' Action Gouvernementale (Interim

Governmental Strategy)

PIP Private Irrigation Project

PIU Project Implementing Unit

PMP Pest Management Plan

POM Project Operational Manual

PPP Public Private Partnership

PRGF Poverty Reduction and Growth Facility

PRODEX Agricultural Export Project

PRSC Poverty Reduction Support Credit

PRSP Poverty Reduction Strategy Paper

PSC Project Steering Committee

QCBC Quality and Cost Based Selection

SDRs Special Drawing Rights

SESA Strategic Environmental and Social Assessment

SMEs Small and Medium Enterprises

SML Société des Mines du Liptako (Liptako Mining Company)

SOMAIR Aïr Mining Company

SOPAMIN Societé de Patrimoine des Mines (National Mining Company)

SSA Sub-Saharan Africa

TA Technical Assistance

TFP Total Factor Productivity

TSGP Trans-Saharian Gas Pipeline

UNDP United Nations Development Program

USAID United States Agency for International Development

VAT Value Added Tax

WAEMU West African Economic and Monetary Union

REPUBLIC OF NIGER

COMPETITIVENESS AND GROWTH SUPPORT PROJECT

Table of Contents

I. Strategic Context ..................................................................................................................... 1

A. Country and Sector Context ................................................................................................ 1

B. Sector Challenges................................................................................................................ 5

C. Government‘s reform efforts ............................................................................................ 10

D. Rationale for World Bank Group involvement ................................................................. 11

E. Higher Level Objectives to which the Project Contributes .............................................. 13

II. Project Development Objectives........................................................................................... 14

A. PDO................................................................................................................................... 14

B. Project Beneficiaries ......................................................................................................... 14

C. PDO Level Results Indicators ........................................................................................... 15

III. Project Description............................................................................................................ 15

A. Project components ........................................................................................................... 16

B. Project Financing .............................................................................................................. 20

C. Lessons Learned................................................................................................................ 21

D. Alternatives considered ..................................................................................................... 22

IV. Implementation ................................................................................................................. 23

A. Project Institutional and Implementation Arrangements .................................................. 23

B. Results Monitoring and Evaluation .................................................................................. 25

C. Sustainability..................................................................................................................... 26

V. Key Risks and Mitigation Measures ..................................................................................... 27

A. Institutional capacity ......................................................................................................... 27

B. Country Risk ..................................................................................................................... 28

VI. Appraisal Summary .......................................................................................................... 28

A. Economic and Financial Analysis ..................................................................................... 28

B. Technical ........................................................................................................................... 29

C. Financial Management ...................................................................................................... 30

D. Procurement ...................................................................................................................... 33

E. Social (including safeguards) ............................................................................................ 34

F. Environment (including safeguards) ................................................................................. 34

Annex 1: Results Framework and Monitoring.............................................................................. 36

Annex 2: Detailed Project Description ........................................................................................ 39

Annex 3: Implementation Arrangements ..................................................................................... 57

Annex 4: Operational Risk Assessment Framework (ORAF) ...................................................... 70

Annex 5: Implementation Support Plan ........................................................................................ 72

Annex 6: Team Composition ........................................................................................................ 73

Annex 7: Economic and Financial Analysis ................................................................................. 74

Table 1: Niger‘s Doing Business Rankings, 2009, 2011 and 2012 ................................................ 6

Table 2: Current Portfolio of Bank Supported Projects in Niger................................................. 12

Table 3: Donor involvement in the extractive industries .............................................................. 14

Table 3 – Project cost and financing ............................................................................................. 21

Table 4 - Risk Ratings Summary Table ........................................................................................ 27

Figure 1: Factors with Largest Negative Impact on Initial Investment Decisions (negative or very

negative as percent of total replies) ................................................................................................ 5

Figure 2: Factors with Largest Negative Impact on Returns on Investment (negative or very

negative as percent of total replies) ................................................................................................ 6

i

PAD DATA SHEET

Republic of Niger

Competitiveness & Growth Support Project (P127204)

PROJECT APPRAISAL DOCUMENT

AFRICA

AFTFW

Basic Information

Date: June 1, 2012 Sectors: General industry and trade sector (50%), Agro-

industry, marketing, and trade (20%), SME Finance

(15%), Central government administration (15%)

Country Director: Ousmane Diagana Themes: Micro, Small and Medium Enterprise support (25%),

Regulation and competition policy (25%), Other

Private Sector Development (25%), Export

development and competitiveness (15%), Legal

institutions for a market economy (10%)

Sector Manager/Director: Paul Noumba

Um/Gaiv M. Tata

Project ID: P127204 EA

Category:

B - Partial Assessment

Lending Instrument: Specific Investment

Loan

Team Leader(s): Djibrilla Adamou

Issa/Mamadou

Barry

Joint IFC: No

Borrower: Republic of Niger

Responsible Agency: Ministère du Plan, de l‘Aménagement du Territoire et du Développement Communautaire

Contact: Issoufou Issa

Title:

Conseiller Technique

Telephone No.: 22720723467

Email:

[email protected]

Project Implementation Period: Start

Date:

28-Jun-

2012

End

Date:

31-Mar- 2019

Expected Effectiveness Date: 22-Oct-2012

Expected Closing Date: 31-Mar- 2019

Project Financing Data(US$ million)

[ ] Loan [ ] Grant [ ] Other

[ X ] Credit [ ] Guarantee

ii

For Loans/Credits/Others

Total Project Cost (US$M): 65.24

Total Bank Financing (US$M): 50.00

Financing Source Amount (US$ million)

BORROWER/RECIPIENT 6.03

International Development Association (IDA) 50.00

LOCAL BENEFICIARIES 9.21

Total 65.24

Expected Disbursements (in USD Million)

Fiscal Year 2013 2014 2015 2016 2017 2018 2019

Annual 5.50 4.50 16.00 18.00 4.00 2.00 0.00

Cumulative 5.50 10.00 26.00 44.00 48.00 50.00 50.00

Project Development Objective(s)

The Project Development Objective (PDO) is to improve selected aspects of Niger's business environment, to support the

development of the meat industry and to increase local business participation in the extractive industry sector.

Components

Component Name Cost (USD Millions)

Investment Climate, Investment Promotion and SME Support for identified value

chains

16.00

Support to selected value chains 20.50

Policy Reforms, Infrastructure and Services to harness the Relationship between

Niger and Nigeria through the Kano, Katsina, Maradi (K2M) corridor

9.10

Project Management 4.40

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X ]

Does the project require any waivers of Bank policies? Yes [ ] No [ X ]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ X] No [ ]

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

iii

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

Legal Covenants

Name Recurrent Due Date Frequency

Establishment of the Project Implementation Entity for

Component 1.3

Effectiveness + 3 months

Description of Covenant

No later than three (3) months after the Effective Date, the Recipient shall establish and thereafter maintain, for a term

extending at least two years after the implementation of the Project, the Project Implementing Entity with mandate,

composition and resources satisfactory to the Association.


Independent Auditor - Environmental Audits Effectiveness + 6 months


The Recipient shall recruit an independent auditor on the basis of terms of reference, qualifications and experience satisfactory

to the Association for the purpose of carrying out the Environmental Audits.


Environmental Audits, Strategic Environmental and Social

Assessment

Effectiveness + 12 months


The Recipient shall furnish to the Association the Environmental Audits, as well as the Strategic Environmental and Social

Assessment, each in form and substance acceptable to the Association.


Reporting on Environmental and Social Safeguards X Every 6 months


Without limitation upon its other reporting obligations under this Agreement, the Recipient shall regularly collect, compile and

submit to the Association, on a semi-annual basis, reports on the status of compliance with the Safeguard Documents, giving

details of: (a) measures taken in furtherance of the Safeguard Documents; (b) conditions, if any, which interfere or threaten to

interfere with the smooth implementation of the Safeguard Documents; and (c) remedial measures taken or required to be taken

to address such conditions.


Deposit of Counterpart funds

X

March 31, June 30,

September 30 and

December 31

Quarterly


iv

The Recipient shall no later than (i) March 31, (ii) June 30, (iii) September 30 and (iv) December 31 each year, starting on the

first of these dates after three (3) months have passed after the Effective date, deposit into the Project Account the amount

indicated in the Annual Work Plan and Budget to be provided by the Recipient for the financing of the Project Implementing

Entity‘s operation and other Project related activities for the next quarter (―Counterpart Funds‖).

Conditions

Name Type

Project Implementation Manual (PIM) Effectiveness

Description of Condition

The Recipient has adopted the Project Implementation Manual in form and substance acceptable to the Association.

Name Type

Establishment of the Project Implementing Unit (PIU) Effectiveness


The Recipient has established the PIU with terms of reference, composition and resources acceptable to the Association and has

recruited a coordinator; a procurement specialist; a financial management specialist; an accountant; a monitoring and evaluation

specialist; a meat and butchery specialist; a mining specialist; and an environmental and social safeguard specialist.

Name Type

Project Implementing Entity (PIE) for Project Component 1.3. First disbursement under

Categories 1 and 2


The Project Implementing Entity for Project Component 1.3. has been established.

Name Type

Project Agreement and Subsidiary Agreement First disbursement under

Categories 1 and 2


The Project Agreement has been signed by the Project Implementing Entity and the Subsidiary Agreement has been signed by

the Recipient and the Project Implementing Entity and a legal opinion in form and substance satisfactory to the Association,

issued by legal counsel acceptable to the Association for the purpose of issuing legal opinions under the laws of the Recipient,

has confirmed that the Project Agreement and the Subsidiary Agreement are valid, binding and enforceable in accordance with

their terms under the laws of the Recipient.

Name Type

Recruitments by PIE First disbursement under

Categories 1 and 2


The Project Implementing Entity has recruited the following staff each with terms of reference, qualifications and experience

satisfactory to the Association, for the purpose of working at least part time specifically on the activities carried out by the

Project Implementing Entity, under the Project: (A) a financial management specialist; and (B) a procurement specialist.

Team Composition

Bank Staff

Name Title Specialization Unit

Djibrilla A. Issa Senior Financial Specialist Team Leader MNSF1

Mamadou Barry Sr. Mining Specialist Co-TTL Mining Sector SEGOM

Suhail Kassim Private Sector Specialist PPD, Competitive

Industries

ASSFP

v

Abdoul-Wahab Seyni Senior Social Development Specialist Safeguard AFTCS

Amadou Konare Consultant, Environmental Specialist Safeguard AFTFW

Karima Laouali Ladjo Program Assistant Program Assistant AFMNE

Magueye Dia Financial Sector Specialist Economic and Financial

Analysis

AFTFW

Korotoumou Ouattara Sr. Financial Sector Specialist Investment Climate AFTFW

Ibrah Rahamane Sanoussi Senior Procurement Specialist Procurement AFTPC

Andre Ryba Consultant Financial Sector AFTFW

Gary Fine Sr. Private Sector Development Specialist Meat value chain AFTFW

Helene Bertaud Country Lawyer Country Lawyer LEGAF

Gokhan Akinci Lead Investment Policy Officer Trade Corridor, SEZ IFC

Adja Mansora Dahourou Private Sector Development Specialist Investment Climate AFTFW

Robert Utz Senior Economist Economist, Country

Context

AFTP3

Abdoulahi Garba Economist Economist AFTP3

Ndeye Anna Ba Program Assistant Program Assistant AFTFW

Beth Wanjeri Mwangi Financial Management Specialist Financial Management AFTFM

Alain Traore Sr. Operations Officer Investment Climate IFC

Ernesto Franco Temple Sr. Operations Officer Investment Climate IFC

Jaime Mayaki Operations Officer Operations AFMNE

Non Bank Staff

Name Title Office Phone City

Locations

Country First

Administrative

Division

Location Planned Actual Comments

1

I. Strategic Context

A. Country and Sector Context

1. Niger is a large, landlocked, mostly desertic country with an area of 1.27 million square

kilometers and a population of around 16 million. The population is concentrated in the areas

around the Niger River in the western corner of the country bordered by Mali, Burkina Faso

and Benin, and then stretches through the Sahel region all along the 1500 km long Nigeria‘s

northern border. North of this belt, the land is largely a desert. The population is growing

rapidly (3.3 percent per annum) with 47 percent under the age of 15. At this current growth

rate, the population would reach about 54 million by 2050.

2. Niger is a poor country with a limited natural and human resource base. Niger ranks

186th out of 187 countries on UNDP‘s Human Development Index, with a Gross Domestic

Product (GDP) per capita in Parity Purchasing Power terms of US$720 in 2010, one of the

lowest in the world. The country constantly battles drought although about 80 percent of its

population depends on rain-fed agriculture and livestock and only about 12 percent of all its

land is arable. Nonetheless, the exploitation of Niger‘s significant mineral and oil resources

could provide important economic opportunities if well managed.

3. Inadequate rains in 2009 and 2011 resulted in poor harvests and low GDP growth of -

0.9 and 2.1 percent respectively. A record harvest in 2010 supported a recovery of GDP growth

to eight percent in 2010. The increase in the fiscal deficit to 5.5 percent of GDP in 2009 was

due to a temporary increase in capital expenditures financed with resources from a signing

bonus received in the previous year. In 2010, the fiscal deficit declined to 2.6 percent,

reflecting inter alia a drying up of external concessional credit due to the political crisis. The

current account deficit remains large, reflecting large imports by mining and oil companies.

4. Macro-economic management remains sound in 2012 but severe external shocks have

resulted in unanticipated financing needs. Agriculture and mining sectors performance remain

the main drivers of growth. In 2012, large scale investments in uranium mining and the oil

sector are expected to start production and lead to double digit growth.

5. At present short term economic development efforts might be threatened by three

parallel severe external shocks – the Libyan crisis, insufficient rainfall that holds the threat of

another food crisis, and the European debt crisis. These external shocks are diverting attention

and resources from long term development to crisis management. The Libyan crisis is also

contributing to raising levels of insecurity due to the proliferation of heavy weapons in the sub-

region. This would further augment existing threats from Al Qaeda in the Islamic Maghreb

(AQIM) activities, criminal activities such as an expanding drug trade through the Sahara, and

recurrent insurgencies by rebel groups in the north of the country.

6. International Aid finances about 40 percent of Niger‘s budget while much of the

Government‘s revenues come from trade (especially uranium and starting in 2012 oil),

investment (especially in the mining and petroleum sector), and remittances. With the political

stabilization and a new Government in place, Niger is hoping to mobilize a significant amount

of concessional finance to help fund its ambitious development plans. The European Union

(EU) and France are among Niger‘s principal donors, providing about 33 percent of annual

development assistance. Current events in the developed world and especially in Europe

significantly dampen the outlook for significant aid increases.

2

7. The ongoing expansion of the oil and mining sectors brightens medium-term and long-

term prospects. Mining and oil sectors account for three percent of the GDP and 40 percent of

exports. As a result of recent Foreign Direct Investment (FDI) (see detail in paragraphs 15-16

below), oil and mining exports are projected to triple between 2012 and 2016 and to accelerate

GDP growth from less than four percent in 2011 to about 13.4 percent in 2012.

8. However, given the low labor intensity of mining and the high rate of demographic

growth, Niger needs to diversify its economy to create jobs. With its 3.3 percent population

growth and with employment in the public sector of the same order, the pressure is strong on

the Government for job creation. The Government is eager to diversify the economy to tackle

the looming risk of growing working age population. This arithmetic raises the importance of

the development of the non mineral private sector and its relevance for the Niger economy.

Although the FDI flows are significant and unprecedented for Niger, the opportunity to

leverage the Extractive Industries (EI) investments for large-scale dual use infrastructure

development is limited by the relatively low physical volumes of uranium exports (about

10,000 metric tons of concentrate at the peak production) and the transport of oil through

pipelines. The best opportunity to leverage mining investment is in developing side-stream

linkages (domestic sourcing), which can multiply the employment impact of mining by a factor

of two to ten.

9. The successful transition to democratic rule offers a solid basis for economic

diversification. Large scale mining and petroleum sector investments and the sustained

implementation of reforms offer a real opportunity for private sector led growth in Niger. The

swearing in of President Issoufou in early April 2011 completed Niger‘s successful transition

to democratic rule after the February 2010 military coup. President Issoufou‘s campaign

emphasized increasing spending to accelerate economic development and poverty reduction.

The return to democracy has also translated into increasing donor support.

10. The private sector in Niger remains small and mostly composed of micro and small

enterprises. With an underdeveloped financial sector and approximately 1,400 businesses

registered with the tax authorities and contributing to around 15 percent to the GDP, Niger‘s

formal private sector base is one of the smallest in the region. It is estimated that about 40

percent of Niger‘s economic activity takes place in the informal sector.1 With the exception of

some niche markets, Niger‘s private sector base is poorly connected to the global economy.

Most of the country‘s growth potential is associated with the oil and mining sector, livestock,

and with regional trade mostly with Nigeria (its main economic partner) and with the West

African Economic and Monetary Union (WAEMU) countries.

11. There are sectors/value chains which have strong potential and for which Niger can

develop a comparative advantage. These value chains include onions (le violet de Galmi),

Arabic gum, meat and the butchery industry and the mining sector. The project‘s intervention

could help increase the incentive to invest in these sectors with high potential for growth and

employment by improving the competitiveness of strategic clusters.

12. Of particular importance are the meat and butchery value chain and the mining sector

value chain that have the potential to generate strong economic and social benefits. Both value

chains were identified, based on analytical studies available, and the discussions held during

1 Schneider F., A. Buehn, and C. E. Montenegro. 2010. Shadow Economies All Over the World New Estimates

for 162 Countries from 1999 to 2007. World Bank Policy Research Paper No. 5356. July 2010.

3

project preparation, as (i) having the potential for generating jobs; (ii) having high upside

potential in terms of growth and spillovers effects (cost recovery and economic linkages); and

(iii) offering a platform for successful intervention such as the ability to bridge the

competitiveness gap, the likelihood that policy failures could be addressed with fresh reforms,

and the opportunity to harness private sector to address market failures (in the case of mining,

high ratio of capital to labor, little integration with the rest of the economy and revenue

volatility). Accordingly, these two value chains are strategic priorities for the Government and

the private sector.

13. The Extractive Industries (EI) value chain includes mining and hydrocarbons and

accounts for three percent of the GDP and 40 percent of exports. It has significant potential to

be the country‘s engine for job creation.

14. There are currently two uranium companies (COMINAK and SOMAIR all subsidiaries

of AREVA) producing about 1,800 metric tons of uranium. A third mine has began production

(the Chinese mine company in Azelik), and the commissioning of a fourth mine (Imourarem by

AREVA) will double the current production of 5,000 metric tons by 2016, making Niger the

world‘s second largest producer of uranium. The current directory of exploration permits

includes 121 targets for uranium, 14 for base metals, three for titanium/vanadium, and two for

coal. Estimates of the untapped mineral potential include important resources of gold (about

65 metric tons), phosphate (over 1.2 billion metric tons), iron ore (about 1.2 billion metric

tons), copper (875,000 metric tons), as well as nickel, molybdenum, salt, and vanadium.

15. The mining sector has been the biggest source of FDI in the country. Mining FDI grew

from US$116 million in 2007 to nearly US$700 million in 2009. Between 2010 and 2013,

mining FDI is expected to reach unprecedented levels with the development of the Azelik

uranium deposit (about US$30 million FDI) and the Imouraren uranium mine (about US$1.7

billion FDI). The two mines are expected to bring about US$75 million in fiscal revenues, and

additional revenues from the sales of the Government‘s share of production (33.35 percent for

Imouraren and 25.71 percent for Azelik).

16. As for the petroleum sector, Niger officially became an oil producer in November 2011

with the coming on stream of three oil deposits in the Agadem basin and the commissioning of

the 20, 000 barrels per day (bpd) refinery at Zinder. The estimated FDI inflows associated with

the development of the Agadem oil bloc were US$1.3 billion for the oil field, US$350 million

for an oil pipeline to Chad, and about US$1.2 billion for the Zinder refinery. In addition, the

Trans-Saharian Gas Pipeline (TSGP), of which Niger is expected to share 841 km (out of an

estimated 4,128 km-long pipeline across Nigeria, Niger and Algeria) will bring additional FDI

representing Niger‘s share of the estimated US$13 billion for installing the pipeline and

associated gathering centers.

17. In addition, the country‘s geologic structure offers a potential for new discoveries of

gold and base metals in the precambrian formations and of uranium and oil in the sedimentary

basins. As a result of the FDI in the above projects, oil and mining exports are projected to

triple between 2012 and 2016 and to accelerate GDP growth from less than four percent in

2011 to about 14 percent in 2012. Significant potential for private sector development and

spin-off growth exists through local content development and direct procurement of goods and

services from local suppliers.

4

18. Meat and butchery value chains. Livestock is one of the main foundations of Niger‘s

economy, accounting for 15 percent of Niger‘s GDP. Animal husbandry is practiced by over

87 percent of the workforce. According to the 2010 census statistics, Niger had 10.9 million

sheep, 13.7 million goats, 9.8 million cattle, 1.7 million dromedaries and camels, 1.6 million

donkeys and 242,000 horses. Maradi has 15.4 percent of Niger‘s total cattle, 16.5 percent

sheep, and 17.7 percent goats. Breeding in Maradi represents 18 percent of the wealth of the

local population. Retail prices of fresh meat: €3.40 / kg for meat from sheep or goat, € 4.20/ kg

for cattle meat and €3.50 / kg for offal (lungs, heart, liver, intestine and tripe). The heads and

feet are usually sold cooked. 2

19. Export of live cattle and meat represents nearly 12 percent of Niger total exports (90

percent of which goes to Nigeria and the remaining to Cote d‘Ivoire and Gabon). Besides the

export of live animals mostly to Nigeria, meat production is also growing in Niger. The total

production of meat has grown from 54,860 tons (valued at CFAF65.8 billion) in 2002 to

72,400 tons (valued at CFAF86.8 billion) in 2005 and about 95,000 tons in 2006.

20. There is significant potential in the formalization of the butchery industry and for the

development of a formal private sector in meat production given the large number of small and

informal butchers and the abundant availability of livestock. Butchers are organized into seven

associations/Groupement d’Intérêt Economique (GIE) in Niamey and Maradi representing both

individuals and enterprises and their associations.

21. Nevertheless, the ability of the meat and butchery sector in Niger to serve even the

domestic market has been constrained due to a lack of capacity of the Niamey slaughterhouse

and an inability to operate at capacity at the Maradi slaughterhouse. This has resulted from

population growth, a lack of spare parts and capital investment, including the lack of a cold

chain, and the need for upgrading of skills. In turn, it has also led to operational inefficiencies

and an inability to develop value-added products, further compounded by weaknesses in

industry associations and a dearth of working capital among industry participants.

22. Niger can take advantage of the large Nigerian neighboring market, assuming it can

reach an agreement with Nigeria to the exportation of meat as opposed to live animals. Trade

between the two countries has always been significant and Nigeria is Niger‘s largest trade

partner. Nigeria represents 80 percent of Niger non mining trade. Nigeria is not only the main

trading partner, but also the country that offers the greatest potential for export growth because

of its size and diversified economy. According to the 2008 Country Economic Memorandum

(CEM), Nigeria contributes significantly and increasingly to Niger‘s GDP growth; contribution

estimated at 26 percent. Furthermore, the geography (with a 1500 km border) and community

ties are other important factors which facilitate trade with Nigeria. Accelerating regional

integration and reinforcing Niger‘s trade relations with Nigeria is a key priority given the

offered opportunities. Also, Nigerian firms could benefit from better security and availability

of public utilities in northern Niger and access to the WAEMU market of 85 million people. In

view of the large trade potential, the Government of Niger has made it a strategic priority to

strengthen regional integration with Nigeria.

2 Meat prices have increased sharply in Nigeria the main market Niger targets: between, 2003 and 2005, the price

of beef increased by 30%. Prices of most types of meat are 2-3 times international levels according to Nigeria,

Product Value Chain Analysis, DfID, Consilium International, 2008

5

B. Sector Challenges

Investment climate challenges

23. Niger‘s main challenges in the years to come are to leverage the expected scaling-up of

natural resources production and diversify its economy by developing selected value chains to

accelerate growth. In particular, the challenges facing the Government are to (i) improve the

investment climate to create the incentive for the private sector to invest in the high value

clusters/value chains; (ii) make strategic choices and the required investment to tap into the

potential offered by the Nigerian market and the Economic Community of West African States

(ECOWAS) market for the selected value chains and export products; (iii) maximize the

contribution of the oil and mining projects to the Niger‘s economy; and (iv) design a medium-

term strategy to manage the revenue windfall and maintaining a prudent policy stance in the

short-term.

24. Private sector development in Niger is hampered by a poor investment climate and

infrastructure. The most recent investment climate survey3

25. Figure 1) identifies slow government procedures, corruption, poor infrastructure,

limited access to credit, taxation, and low labor productivity as factors that have a negative

impact on initial investment decisions. The 2006 Investment Climate Assessment (ICA) has

already highlighted serious challenges in Niger‘s business environment. Tax and tax

administration, access to finance, informal sector practices, and corruption were identified as

the main impediments to business activity.

Figure 1: Factors with Largest Negative Impact on Initial Investment Decisions (negative or very negative

as percent of total replies)

Source: BCEAO/DFI/BEAC/GoN(MEF). 2010.

3 BCEAO/DFI/BEAC/GoN(MEF). 2010. Rapport des enquêtes sur la perception du climat des affaires et les actifs

et passives étrangers au Niger. Novembre 2010.

0% 10% 20% 30% 40% 50% 60% 70%

Access to short term credit

Access to long term credit

Customs incentives

Corruption

Tax incentives

Labor productivity

Quality of infrastructure

Efficency of government

6

Figure 2: Factors with Largest Negative Impact on Returns on Investment (negative or very negative as

percent of total replies)

Source: BCEAO/DFI/BEAC/GoN(MEF). 2010

26. The 2012 Doing Business report ranks Niger as one of the countries in which it is most

difficult to engage in private sector activities – 173th

out of 183 countries. Table 1. shows that

there has been little improvement in Niger‘s rankings over the last two years. However, the

newly introduced measure of cumulative change, which illustrates how the business regulatory

environment has changed from Doing Business 2009 to Doing Business in 2012, indicates an

overall improvement for Niger. When ranked on this scale, Niger ranks 53rd

among 173

countries in terms of cumulative change over the five year period.

Table 1: Niger’s Doing Business Rankings, 2009, 2011 and 2012

DB 2009 ranking (181

countries ranked)

DB 2011 ranking

(183 countries

ranked)

DB 2012 ranking

(183 countries

ranked)

Ease of Doing Business 172 173 173

Starting a Business 159 159 163

Dealing with Construction Permits 157 162 158

Registering Property 75 84 86

Getting Credit 145 152 126

Protecting Investors 150 154 156

Paying Taxes 120 144 142

Trading Across Borders 169 173 173

Enforcing Contracts 134 139 139

Resolving Insolvency 138 142 123

Source: Doing Business 2011

27. Given this environment, most enterprises operate and remain in the informal sector.

This has kept down productivity, and competitiveness. Both labor productivity and Total

0% 10% 20% 30% 40% 50% 60% 70%

Cost of postal services

Corruption

Cost of road transport

Efficiency of postal services

Efficiency of health services

Access to long term foreign credit

Cost of water

Efficiency of road transport

Cost of electricity

Adequacy of human resources

Cost of internet access

Cost of telecommunication

Taxation

Efficiency of internet access

7

Factor Productivity (TFP) are lower than in other Franc Zone countries such as Senegal,

Burkina, Mali or Cameroon.

28. The cost and time for starting a business in Niger remain high, compared to similar

countries despite some progress since 2010. The 2010 budget introduced measures to reduce

the cost of starting a business, including the reduction of stamp duties for obtaining a tax

identification number, and for registering with the Commerce Registry. These measures have

reduced the fiscal cost for the creation of an enterprise. In addition, the chamber of commerce

has also suspended membership fees for businesses during their first year of existence. With

respect to the time required to establish a business, Government and the Chamber of

Commerce have established a one-stop shop for dealing with all the formalities related to

creating a business. According to the Doing Business indicators, between 2009 and 2012, the

time for starting a business in Niger has dropped from 19 to 17 days and the cost from 170 to

114 percent of income per capita. While the time for starting a business compares favorably to

the average for Sub-Saharan Africa (SSA) of 37 days, the cost of starting a business is still

above the average for Sub-Saharan Africa of 81 percent of per capita income.

29. High tax rates and cumbersome tax regulations and administration were identified as

key constraints in the 2012 and 2006 ICAs. Doing Business 2012 shows that the number of tax

payments per year (41) is higher than the average for Sub-Saharan Africa. In addition, Niger‘s

tax base is narrow. About 92 percent of the corporate tax is generated by less than 20 percent

of registered firms, mostly in the mining, oil and financial sectors. The burden of direct and

indirect taxes still acts as a disincentive for private firms to enter the formal sector. Also, at

27.4 percent, the marginal effective tax rate is also much higher than the SSA average of 21.7

percent. Furthermore, firms are subject to about 15 different non sector specific taxes. As

evidenced in the sub region and beyond, tax reform targeting both the level of taxation

(including exemption regimes), as well as the tax administration, help reduce the tax burden on

firms while helping increase the tax revenues for the state.

30. Limited access to finance. The Financial Sector Assessment Program (FSAP) and the

rural finance study that underpinned the Government financial sector development strategy

revealed that private enterprises, particularly Small and Medium Enterprises (SME) in Niger

have limited access to financial services. Findings from these studies pointed out the following

obstacles, to further expansion of financial services to SMEs and rural areas: (i) inappropriate

regulatory framework to develop product for the needs of selected sectors/value chains; (ii)

lack of adequate services and skills in the financial industry to serve the SME segment and key

and promising value chains in Niger; (iii) lack of proper and sufficient collateral and (iv) lack

of adequate and reliable financial information.

Constraints related to the selected value chains

31. Despite the many competitive advantages, the selected value chains face several

challenges, in addition to the poor investment climate mentioned above.

Meat and butchery value chain

32. Poor quality of slaughterhouses infrastructure. Niger has four refrigerated

slaughterhouses, located in Niamey, Maradi, Zinder and Tahoua. All slaughterhouses and

sacrifice areas are characterized by a lack of basic hygiene and poor organization. Moreover,

the lack of maintenance of infrastructure and equipment has caused a progressive deterioration

8

of the slaughterhouses, resulting in previously automated work now being replaced by manual

labor. With the tight fiscal situation of the Government over the years, the provision of

infrastructure and services was limited. This has led to rationing of investment and declining

quality of services in the slaughterhouses. Consumption data reveal that there is a need for an

expanded slaughterhouse in Niamey and another in Maradi. Currently, the slaughterhouses of

Niamey and Maradi are in a borderline situation, generated by three fundamental problems: (i)

badly deteriorated facilities, infrastructure and equipment; (ii) poor operational management

and hygienic practices; and (iii) capacity deficiencies of officials and workers.

33. Meat production in the slaughterhouse in Maradi is below the productive capacity of

seven tons per day for which it was designed. In 2010, the estimated population of Maradi was

530,000, and volume of meat produced in the slaughterhouse was four tons per day, with

approximately an equal amount coming from informal slaughtering of animals in the

surrounding towns and villages. By 2020, the estimated population of Maradi will be 590,0004,

necessitating an increase in current productive capacity. Further, eventual export of meat to

Nigeria would come from Maradi. In Niamey, the above factors combined with high demand

have caused production to overflow into the informal sector and neighboring villages,

approximately doubling production compared to the initial intended capacity of the

slaughterhouse of 20 tons per day when it was built. The population of Niamey in 2010 was

1.30 million which is projected to increase to 1.35 million by 20205. The slaughterhouse was

originally designed in 1967 for a population of 400,000, implying that current total production

would need to grow more than threefold just to cope with local population and demand.

34. Poor management of existing slaughterhouses. The most important management issues

facing slaughterhouses in Niger include asset ownership, operation and maintenance, capital

investment and commercial risk. The project will incorporate a system for upgrading the

management structure and practices, and will explore private sector participation options

possibly through a Public Private Partnership (PPP) arrangement or in other ways supporting

strategic investment in the future, but with a focus on developing small and medium enterprises

active in the meat value chain. Of the various options (complete or partial divestiture to the

private sector, concession, service contract, management contract or lease), consideration will

be given to various prerequisites for successful implementation of these options, including

stakeholder support and political commitment, outlet markets (export and local), profitability

and cost-recovery tariffs, and a developed regulatory framework. In addition, health and

environmental issues will be taken into consideration as they raise the question of public good

content in slaughtering activities which could be relevant to define the respective roles of the

private and public sectors in management.

35. Low capacity of private sector involved in the meat industry. Niger has many centuries

of knowhow in butchery as well as a domestic concentration of small private butcheries

organized into seven associations (Groupement d’Intérêt Economique) in Niamey and Maradi

representing individuals and around 800 enterprises and their respective associations.

However, many of these butcheries are in the informal sector and have limited managerial

capacities. Among the informal entrepreneurs in the industry, most do not maintain any sort of

4 Source: Government projections.

5 Source: Government projections.

9

books or written accounts. These are clear indicators of weak entrepreneurial capacity which

have, as consequence, led to a low level of productivity.

36. Bottlenecks to export. The fact that existing expertise and activities in butchery and

meat production have not translated into higher volumes of export of value-added products

(e.g. meat rather than live animals; prime cuts of meat rather than basic raw meat) results from

(i) low quality or lack of accreditation services to enable the industry to implement food safety

systems such as Hazard Analysis and Critical Control Points (HACCP) which are needed to

meet international food safety standards (ISO 22000); (ii) unofficial barriers to export meat to

Nigeria despite the ECOWAS agreement and the existence of a bilateral treaty between the two

countries through their Joint Commission.

Extractive Industries Value chain

37. Although extractive industries are important for the economy of Niger, the growth of

mining activities has not spurred the development of other economic sectors. The extractive

industries have evolved as enclave projects, and their impact on broad-based growth has been

constrained by the low level of private sector development and weak forward, backward and

sideways linkages with the non-extractive economic sectors. In order to develop these linkages,

there is a need to address the specific sector challenges discussed below.

38. Inadequate policy, legal and regulatory framework. The current mineral policy dates

back to 2001 and has been overtaken by a number of independent policy initiatives, such as the

Mining Code of 2006 and Niger‘s acceptance of the Extractive Industries Transparency

Initiative (EITI) as the standard for transparency of mining sector revenues. In addition, the

national mining law needs to be harmonized with regional and sub-regional policies, such as

the ECOWAS Mining Directives and the WAEMU Mining Code.

39. Inefficient fiscal regime. The fiscal regime has not succeeded in the objectives of

maximizing the Government‘s revenue and stimulating new investments in exploration and

mining development. The fiscal regime is geared toward uranium mining, and the Government

relies heavily on non-neutral taxes (royalties) and equity participation to capture its share of the

mining rent. Despite the size and potential of mining, the sector currently contributes only

about six percent to total fiscal revenues. Uranium mining royalty rates start at 5.5 percent, but

can reach the prohibitive rate of 12 percent when the ratio of operating income to export value

exceeds 50 percent. A flexible and reasonable taxation regime, featuring an optimal mix of

direct and indirect taxes coupled with effective tax administration (to conduct tax audits and

minimize transfer pricing) could remove inefficiencies and encourage further investment.

Weaknesses in the petroleum code include the reliance on negotiated deals rather than

competitive rounds to allocate available blocks.

40. Weak institutional capacity. The Ministry of Mines and Energy has just been

restructured into two ministries: Ministry of Mining and Industrial Development and Ministry

of Energy and Hydrocarbons. As the new structure takes hold, the main administration still

remains inefficient with some 20 technical, central and regional divisions with varying degrees

of functionality. Responsibilities are spread across several units and are sometimes conflicting.

Weak capacity for negotiation and monitoring compliance significantly constrains the

Government‘s ability to get the most out of the extractive sector. In the petroleum sector, the

technical complexity of the sector combined with the weak capacity for regulation and tax

10

administration constrains the Government‘s ability to capture all the fiscal benefits of oil and

gas development activities.

41. State involvement in mining operations. Through the parastatal Societé de Patrimoine

des Mines (SOPAMIN), the Government has an active involvement in the mining sector,

particularly in marketing its share of production. The Government shares are 36.6 percent in

SOMAIR, 31 percent in COMINAK, 33.35 percent in the Imourarem Project and 33 percent in

the Azelik Project. The Government also holds a significant equity interest in gold mining (20

percent in Société des Mines du Liptako (SML), coal and cement. State involvement in the

mining sector has encouraged inefficiency, poor management and possibly poor governance.

SOPAMIN lacks specialist skills and networks to intervene efficiently in the uranium trade and

does not have the management independence to operate as a commercial entity. In the oil

sector, the Government is already seeking to establish a National Oil Company and is

exploring how to finance its share capital from annual budget allocations.

42. Poor investment climate and capacity of local services providers. The industry has

limited linkages with the rest of the economy and continues to rely on foreign sources of

finance and inputs. Initiatives to redress this situation have made limited inroads and the

industry continues to buy only low value items locally, such as food and clothing. This reflects,

in large part, the poor business environment and the fact that the Niger manufacturing and

service sectors lack the capacity to supply competitively a substantial proportion of the

procurement needs of the extractive industries.

43. Unregulated artisanal mining. An estimated 400,000 people depend on artisanal

mining for their livelihood. This activity has economic potential (particularly for gold,

cassiterite, salt and construction materials), but it is often conducted outside formal channels

and is associated with significant social and environmental issues. Government‘s efforts to

impose a 2.5 percent sales tax on gold without adequate effort toward formalization were not

successful. Creating the conditions for formalization of artisanal mining could improve the

safety and environmental performance of artisanal mining and generate additional tax revenues

for the Government.

44. Governance and conflict dynamics. Through the 1990s, Niger has experienced political

instability and conflict arising from disagreements over the control and distribution of resource

wealth. The risk of political capture of extractive industries is also high. Enhancing governance

and transparency of revenue flows related to oil and uranium will be key to preventing

resource-based conflicts in Niger.

C. Government’s reform efforts

45. The Government under former President Tandja had launched an ambitious program of

reforms. They aimed to foster private sector growth and diversify the economy, and had been

pursued by the transition Government in 2010 and 2011. The transition Government

particularly focused on establishing appropriate frameworks for private sector development

and initiated reforms that had stalled since 2007/08. This includes the adoption of an action

plan for reforms for enhanced trade integration in May 2010, based on the World Bank‘s

Diagnostic Trade Integration Study (DTIS), the initiation of the preparation of a new

Investment Code and a new Charter for SMEs. The project will help complete and implement

these major reforms.

11

46. This strategic approach remains the priority for the new Government as it seeks to

accelerate employment generation. Diversification of the economy would help mitigate the

volatility inherent in the mining and agriculture sectors and provide employment and income

opportunities to the population. The Government is seeking to improve the investment climate,

with Doing Business indicators providing an entry point, while addressing and taking on other

reforms such as judicial effectiveness through the Organization for the Harmonization of

Business Law in Africa (OHADA). In addition, recognizing that private sector growth in Niger

is likely to be based on the development of economic niches, the Government is taking specific

actions to facilitate value chain approaches, with the private sector playing a leading role.

47. Investment climate reforms are supported by several groups. The National Private

Investors Council (CNIP) was established in 2004. Chaired by the Prime Minister, the CNIP

seeks to foster better synergy between the private sector and the Government. While the CNIP

is considered by private sector representatives as an effective tool for fostering public private

dialogue and resolving business constraints, it has not been convened since 2007. It has been

repealed in its current structure and a new one set up by the new Government in October 2011.

The implementation of a national private sector promotion policy has led to the creation of

several support and supervisory structures, in particular, the Chamber of Commerce, the

Investments Promotion Center (CPI), the Centre de Formatlité des Entreprises (CFE), the

Niger Exports Promotion Agency (ANIPEX), the National Management Development Center

(CNPG), and Entreprendre au Niger (EAN). Low capacity of these various institutions and

lack of coordination of their activities remain a challenge. The project will provide institutional

support to carry out studies and formulate investment climate reforms, conduct public/private

dialogue, provide business development services, investment and export promotion.

D. Rationale for World Bank Group involvement

48. The project is aligned with the 2009-2011 Country Assistance Strategy (CAS). The

CAS, presented to the Board on May 29, 2008, is built around two pillars: (i) accelerating

sustained growth that is equitably shared; and (ii) increasing access to basic services and

developing human capital; as well as two cross cutting issues covering demographics and good

governance. The project would make substantial contributions to the first pillar.

49. To achieve the first CAS strategic objective of accelerating sustainable and shared

growth, the World Bank seeks to promote the key sectors that drive growth and have the

greatest potential for creating jobs -- such as the agro-pastoral and mining sectors - while also

supporting efforts to strengthen the private sector, improve the business climate and access to

regional and global commercial opportunities, investment instruments, technical assistance and

non-financial services. This is also in line with the Poverty Reduction Strategy Paper (PRSP)‘s

first pillar (achieving strong, diversified and sustainable growth that creates jobs).

50. Recognizing the crucial importance of the mining sector for Niger‘s development, the

transition Government started to implement measures to strengthen the development of the

mining sector and the use of mining resources. The new constitution contains important

provisions for increased accountability and transparency in the mining sector, and the

Government has sought the assistance of the World Bank and other development partners to

support reforms in the sector.

12

51. The preparation of a new CAS has been launched in FY12. It will ensure alignment

with the new PRSP and deepening of harmonization and division of labor among development

partners.

52. This project will contribute to the first pillar of the Africa Region Strategy –

competitiveness and employment -- as well as to the strategy‘s foundation issues of governance

and public sector capacity. Reforms aimed at reducing barriers to economic growth through an

improved investment climate and improved infrastructure will contribute to both objectives of

the strategy by supporting the attainment of higher growth and the diversification of the

economy. Diversification of the economy is expected to reduce the economy‘s vulnerability

and enhance its resilience to external shocks by broadening the economic base and reducing

dependence on undiversified mineral exports and drought prone agriculture. The measures

aimed at strengthening the capacity of the Government to manage the mining sector will

directly support improved economic governance.

53. The project is informed by analytic work prepared by the Government, the Bank, other

development partners and local and international research institutes. Much of this work also

helped to inform the preparation of the PRSP and includes (i) the CEM prepared in 2007,

which identifies priorities for accelerating growth and achieving the Millennium Development

Goals (MDG); (ii) the 2010 DTIS, which reviewed sectors and values chains with high

potential as well needed reforms for their development; (iii) the ICA prepared in 2006 that

further deepens the understanding of the drivers of and key constraints to growth; (iv) studies

on value chains prepared under the Bank supported Agriculture Export Project (études sur la

compétitivité des filières bétail, cuir et peaux, oignon etc.) and the study on the

Competitiveness of the Agriculture and Livestock value chains conducted by the Cellule

d’Analyse et de Prospective en Développement (CAPED) funded by the African Capacity

Building Foundation (ACBF), which identified key markets and needed support to the actors to

further improve their competitiveness and capacity; and (v) reforms of the financial sector,

which draw on the 2008 FSAP and the follow-up financial sector strategy prepared with

technical assistance from the multidonor Financial Sector Reform and Strengthening Trust

Fund (First Initiative).

54. The project is an integral part of the World Bank‘s Niger portfolio. It seeks to generate

synergies with ongoing operations on infrastructure, agriculture, demographic development

and public financial management. It is also linked to the Development Policy Operation (DPO)

series related to growth and that supports key policy reforms critical for the success of

investment operations. The Niger Shared Growth DPO also targets the business environment.

Table 2: Current Portfolio of Bank Supported Projects in Niger

Projects related to growth and private sector development

Financial Sector Technical Assistance Project. Closed in December 2010

Projects related to Infrastructure

Transport Sector Program Support Project

Local Urban Infrastructure Development Project

Projects related to Agriculture and Rural Development

Niger Agro-Pastoral Export and Market Development Project

Strengthening Results-Based M&E for the Rural Development Strategy

Emergency Food and Rural Development Project (under preparation)

Projects related to Public Financial Management

13

Niger Reform Management and TA

Niger: Extractive Industries Transparency Initiative Implementation

Other Projects

Niger - Niger EFA-FTI Basic Education Project

Institutional Strengthening & Health Sector Support Program (ISHSSP)

Multi-Sector Demographic Project

Integrated Ecosystems Management in Niger (APL phase 2)

Community Action Program (PAC2)

Niger Basin Water Resources Development and Sustainable Ecosystems Management Project

Water Sector Project (under preparation)

Community Action Project for Climate Resilience (under preparation)

E. Higher Level Objectives to which the Project Contributes

55. The project would contribute to the achievement of the Government‘s goals as spelled

out in the PRSP and the recent Government Programme Interimaire de Cadrage de I'Action

Gouvernementale (PICAG). These goals include:

(a) Accelerating growth: Support to the development of two value chains will aim to

encourage increasing private investments, thus supporting sources of growth that will translate

into job creation opportunities;

(b) Reducing unemployment and poverty: Support to enterprises and increasing skills of

workers in Niger will promote enterprises, which in turn is expected to increase formal

employment and encourage better working conditions. In addition, the project will help

improve the investment climate in Niger so that the SMEs sector can better contribute to

growth and employment creation; and

(c) Finally, the project will help prepare policy reforms that will be pursued in the context

of the Government‘s broad poverty alleviation program.

56. Linkages will be made with current interventions and donor coordination. In the past,

up to 2009, assistance to promote private sector development and value chains in Niger have

been supported and financed by several development organizations, notably the World Bank,

the Arab Funds and the African Development Bank (AfDB). More recently, the U.S.

Millennium Challenge Corporation (MCC) is helping Niger improve its infrastructure and

identify sources of growth. The World Bank is also supporting an ongoing Agricultural Export

Project (PRODEX) focusing on five high-value products.

57. In the Mining sector, a number of donors are supporting the Government to address

these challenges, but their activities are not well-coordinated. In 2000, the European Union

amended its program in the mining sector to extend funding until 2013 and injected about 14

million Euros to support extractive sector activities, including geological mapping and

institutional capacity building. The AfDB has also approved the PAMOGEF project, which

allocates CFAF2.9 billion (about US$5.8 million) to strengthen internal resource mobilization

of fiscal revenues from the extractive sector and improve EI sector governance, including

establishment of the Observatory of Mining and Petroleum Resources. EI governance and

transparency initiatives are also being supported by the Embassy of France, the United States

Agency for International Development (USAID), and the World Bank‘s EITI Multi-donor

Trust Fund. The United Union Development Programme (UNDP) is supporting a resident

expert to assist the Government in policy and negotiations, while the International Monetary

14

Fund (IMF) is considering support to improve the fiscal regime under its topical trust fund. The

table below shows the range of activities being supported by various donors. Table 3 below

provides a synopsis of donor involvement in support of the extractive industries. This project

builds on the activities currently being supported to fill policy and regulatory gaps and focus on

developing linkages between the extractive industries and the domestic private sector.

Table 3: Donor involvement in the extractive industries

Activity EU UNDP IMF AfDB WB

Private sector linkages X

Institutional capacity building (mining) X X X X

Geologic database and mapping X

Promotion of mineral potential X X

Institutional capacity building (petroleum) X

Negotiation of mineral agreements X X

Mining code and regulations X X X X

Petroleum code and regulations X X

Fiscal regime X

Mineral wealth management X

Governance X X

II. Project Development Objectives

A. PDO

58. The Project Development Objective (PDO) is to improve selected aspects of Niger's

business environment, to support the development of the meat industry and to increase local

business participation in the extractive industry sector.

B. Project Beneficiaries

59. The Project‘s direct beneficiaries are estimated at 5,000 enterprises, of which 20

percent are led by women.

60. The project will benefit two main groups of stakeholders. The two main groups of

beneficiaries are firstly all various private sector stakeholders (primarily private enterprises and

investors mainly in the two supported value chains) and, secondly, government and private

sector agencies playing a key role in the interaction between government and private sector

(Chamber of Commerce, ANIPEX, APEIN, CNIP, mining directorate, tax administration).

61. Meat processors, butchers and enterprises procuring goods and services to main

mining companies: In addition to benefiting from the overall improvement in the business

environment, they will directly benefit from the technical assistance provided through the

project, the financing of infrastructure and services to increase the production capacity of the

slaughterhouses of Niamey and Maradi and to improve trade with Nigeria through the Kano,

Kastina, Maradi (K2M) corridor, and the matching grants component, which should improve

the skills of workers.

15

62. Entrepreneurs, SMEs and investors: Entrepreneurs and investors will benefit from the

improvement of the business environment. The increase in transparency and predictability will

benefit SMEs, which normally tend to have limited bargaining power, as well as foreign

investors by reducing uncertainty and transaction costs. Additionally, SMEs will directly

benefit through the Matching Grants Program which is expected to increase their performance

and managerial capacities.

63. Workers: The project will help create jobs by promoting investments and facilitating

entreprise creation through improvements in the business environment and support to SMEs

with the maching grants. Also, jobs will be generated in the two value chains supported by the

project either with the development of butcheries or the development of enterprises which will

be services providers to the main mining companies. Additionally, workers in various

enterprises will directly benefit from training through the matching grants program, which is

expected to improve their productivity, which is a fundamental determinant of their salaries.

64. Government and private sector agencies: The project will directly support various

Government entities and private sector agencies with technical assistance and training. The

public/private sector agencies that will specifically benefit from this direct support are the

ANIPEX, APEIN, CNIP and the Mining Directorate. In addition to the direct capacity

development for these specific agencies, the Government will also benefit by way of

improvement of its capacity to collect taxes through the General Directorate of Taxes (DGI),

which in turn is expected to generate higher tax revenues. Furthermore, improved transparency

and efficiency of the key agencies supported by the project are expected to increase public

confidence in the public institutions.

C. PDO Level Results Indicators

65. The PDO‘s related performance indicators are (i) the reduction of time to trade across

borders; (ii) the reduction of time to create a business; (iii) the improvement of turnover of

SME supported by the Matching Grant; (iv) the increase in volume of meat processed and sold

in slaughterhouses; (v) the proportion of local procurement achieved with Extractives

Industries; and (iv) the number of direct beneficiaries (of which 20% female). The result

framework for the PDO indicators and intermediate key performance indicators is in Annex 1.

III. Project Description

66. Overall approach: It appears from the various policy and strategy documents

mentioned above that to support private sector-led growth, actions need to be taken in a

number of mutually-supportive areas to create conditions for private sector development. This

involves a combination of elements including (i) providing policy, regulatory, and institutional

support to key government institutions involved in private sector development; (ii) supporting

for technical and business management skills to improve productivity at the firm level; (iii)

developing linkages with the regional/global economy; (iv) promoting a conducive business

environment, including in particular, financial services; (v) trade and investment facilitation

regulations and institutions; and (vi) facilitating increased availability of critical infrastructure

and services.

67. However, given the low capacity and while promoting such an integrated approach,

prioritization and sequencing of the reforms are vital for a successful implementation.

16

68. These priority reforms to be supported by the project would aim to develop conditions

conducive for the private sector to invest, and for Niger to attract more private investment in

the two selected high potential value chains and make necessary investment and policy reforms

to increase trade with the large neighboring Nigerian market.

A. Project components

The project would have the following components and activities:

Component I: Investment Climate, Investment Promotion and SME Support for

identified value chains (US$16 million)

69. The objective of this component is to help (i) improve the business environment; (ii)

provide Business Development Services (BDS) to support enterprise development primarily in

the identified value chains supported by the project (mining and meat) through a matching

grants program; and (iii) support the Government effort for investment and export promotion.

The project would finance the following activities through its sub components:

Sub-component 1.1: Public Private Dialogue Working Groups for Doing Business

(DB) and investment climate reforms (US$2.5 million)

70. This sub-component will focus on financing the efforts of Conseil National des

Investisseurs Privés (CNIP) and the Government for reforms to improve Niger business

environment in the following four key areas (starting a business, protecting investors, paying

taxes and trading across border) by providing the necessary support to carry out diagnostic

studies for the Council‘s meetings and technical assistance to implement the reforms.

71. In particular, the project will finance the following: (i) technical assistance to the CNIP

and the authorities to revamp the investment legislation (in particular, the provisions on capital

transfers, investor-state dispute settlement and guarantees against and compensations in case of

expropriation, reforming the ex ante investment authorization regime; and the minimum capital

requirement for foreign investment etc.); (ii) technical assistance to the authorities to revise the

mining and petroleum codes; (iii) technical assistance to streamline tax and customs regimes to

reduce the frequency of tax payments and create transparency and predictability of the tax

system; and transpose to national legislation and enforce WAEMU directives, particularly with

regard to competition policy and law, tax policy.

Sub-component 1.2: Implementation of institutional reforms aimed at promoting

exports (US$2.5 million)

72. This will be done by providing support to the Agence Nigérienne de Promotion des

Exportations (Niger Exports Promotion Agency, or ANIPEX) through the Chamber of

Commerce.

73. Specific activities to be supported by the project will include: (i) technical assistance to

ANIPEX for export promotion; (ii) operational budget support to ANIPEX; (iii) financing of

equipment; and (iv) support the implementation of ANIPEX action plan to promote exports.

Sub-component 1.3: Enterprise development and investment promotion in

identified value chains and other priority sectors (US$11 million)

Support to APEIN

17

74. Based on the feasibility study funded by the UNDP, an Agence de Promotion des

Entreprises et des Investissements au Niger (Agency for Enterprise and Investment Promotion

(APEIN)) will be created. Its mandate is to provide nonfinancial services and act as a one-stop

shop for businesses to access various services necessary for their establishment, including via a

matching grants scheme. The project will support the establishment of the Agency and the

provision of BDS.

75. Assistance under the project includes: (i) Institutional support for the implementation of

a business plan that spells out the technical assistance and training requirements for the

Agency; (ii) Equipment necessary for the establishment and operation of APEIN to make it

capable to provide requested services to local and foreign companies operating or wishing to

settle in Niger; (iii) Finance Technical Assistance (TA) and transaction advisors to assist the

Government in developing investment opportunities, in attracting private investors and

structuring PPP transactions; and (iv) Support to the development of APEIN‘s business

management function of providing non-financial business development services to businesses

primarily involved in the selected value chains through hiring a private company that will help

build its capacity and implement the matching grants scheme.

76. To ensure sustainability of APEIN, project assistance will progressively be replaced by

Government‘s contribution and APEIN‘s own contributions. The Government 2012 budget

includes US$0.4 million for APEIN activities. The contributions by APEIN are expected to be

generated by revenues for services rendered to businesses and membership fees.

Matching Grants Program

77. The objectives of the matching grants are (i) to help firms increase labor productivity

and enhance competitiveness; and (ii) support local SME‘s to improve their capacity to be

service providers to large mining companies, to take advantage of local procurement and

business partnership opportunities with large EI. To this end, the matching grants component

comprises a two-window program:

78. Matching grants to SMEs and smallholders and their associations. The matching grants

will finance the following types of activities: (i) Annual Business Plan Competition: Finance an

annual business competition to help identify and support new businesses with a high potential

for innovation in identified value chains and other priority sectors; (ii) Operational assistance

to SMEs: Provision of consultancy services to SMEs operating in identified value chains and

other priority sectors to support improvements in productivity, production processes,

processing and / or marketing; (iii) Access to finance (A2F) assistance to SMEs: Provision of

training and business development services to SMEs in identified value chains and other

priority sectors to improve their creditworthiness. Eligible activities could include preparation

of quality business plans, financial statements and applications that meet the criteria of

Nigerien commercial banks and other financial institutions; and (iv) Training to SME training

institutions, trade groups and producer organizations: Development and delivery of training

courses to SME training institutions, registered trade groups and producer organizations

through qualified trainers and training institutions.

79. Matching grants to SMEs for developing local procurement with large companies in

the extractive industries sector: This matching grants program of about US$3 million will be

linked to the local content development initiatives of extractive industries. Specifically, it will

seek a linkage with AREVA‘s local content initiative during the construction phase of the

18

Imouraren Project. The EI matching grants will leverage and extend the scope of corporate

local content initiatives by: (i) providing training to pre-qualified suppliers to upgrade their

skills and capacity through standardized training modules (for instance, the SME Toolkit

developed by the International Finance Corporation (IFC)) and the Business Edge training

modules; (ii) developing the technical and managerial capacity of the local suppliers to enable

them to meet the standards of product quality and performance, warranty, and health, safety

and environmental practices required by mining and petroleum companies; (iii) facilitating

links with local suppliers to existing international suppliers, through twining arrangements,

joint ventures, and participation at international mining trade shows; (iv) supporting supplier

certification initiative, including health, safety and environment; and (v) working with local

banks and large EI companies to develop partnership to help SME suppliers have access to

working capital fund with withdrawals and receivable monitoring mechanism.

80. Project funds will be made available to businesses (through APEIN) via a cost-share

mechanism. The matching grants will finance 50 percent of the cost of subprojects carried out

by SMEs. This ratio has been accepted based on international impact evaluations that show that

a higher grant contribution is often less successful for the reason of moral hazard. The

maximum matching grant amount to a single firm or consortium would be US$50,000

equivalent. While the matching grant would encourage firms from the meat/butchery and

mining value chains to apply, it would not be limited to these two value chains.

81. The Matching Grants operating manual is being developed (as part in the Project

Implementation Manual) to highlight the operating principles and procedures of the fund, as

well as the governance and internal control mechanisms. See Annex 2 for further details.

Component II: Support to selected value chains (US$20.5 million)

82. The Project will support the following sub components:

Sub-component 2.1: Support to the extractive industries value chain (US$11.90

million)6

83. This subcomponent aims to (i) improve the policy and regulatory framework to support

diversification of mineral production; (ii) strengthen the institutional capacity for efficient

management of the extractive industries and (iii) integrate EI project into local and regional

development and increase the industry‘s local supply base, spurring the growth of other

services and industries and creating more employment in those sectors. To this end, the project

will finance the following activities:

84. Providing TA and capacity building to the Government to help improve the policy and

regulatory framework to support diversification of mineral production by (i) updating mining

and petroleum laws and regulations; (ii) optimizing the fiscal regime for mining and petroleum

development; (iii) preparing specific environmental, health and safety regulations for mining

and petroleum operations (iv) designing an environmental management framework for mining

and petroleum development; and (v) reforming the policy and regulatory framework for

artisanal and small-scale mining.

6 An additional US$3 million is provided for the matching grant to support local content development initiatives

of extractive industries.

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85. Strengthening the Government institutional capacity for efficient management of the

mining sector by (i) building institutional capacity for policy management of the sector; (ii)

provide capacity building to Government for contracts negotiations, including financial and

economic modeling, review of technical and feasibility reports, updating model agreements for

specific commodities, and developing negotiations strategies; sector monitoring (including

inspections, technical, environmental and financial audits, petroleum and oil accounting and

finance, forensic accounting, market trend monitoring); (iii) revamping Government technical

capacity for inspection, audits, monitoring, and modeling (iv) improving mineral cadastre

management; (v) rehabilitating sample preparation and analysis labs at CRGM; (vi) upgrading

the GIS; (vii) organizing and formalizing artisanal and small-scale mining; and (viii)

promoting investment in new mineral targets.

86. Preparing the country for the challenges of oil and gas development by supporting: (i)

a multi-stakeholder consultative process to formulate a strategy for sustainable development of

the oil and gas sector, including the appropriate role of the State, mineral wealth management,

and social and environmental safeguards; (ii) institutional capacity needs assessment for the

efficient management of the nascent hydrocarbon sector; (iii) capacity building on oil sector

policies and negotiations; (iv) professional training of core staff for the regulation and

monitoring functions of the Ministry of Energy and Hydrocarbons; (v) an expert advisor for

two years to provide hands-on training to the Ministry of Energy and Hydrocarbons on core

functions relating to oil block licensing and exploration, drilling and seismic permits,

reviewing and approving annual work programs and budgets, enforcing lease rentals and

relinquishments, monitoring drilling operations, and environmental compliance; (vi) purchases

of software licenses and hardware for the storage and assessment of geologic and geophysics

and data; (vii) rehabilitation of the petroleum data center.

87. Integrating EI project into local and regional development by (i) developing a supplier

database (through a local content development report pre-financed under the project) and

identifying high-potential local supply opportunities; (ii) developing value chains around EI

projects by assessing the sources of broad-based growth around planned EI projects and the

potential synergies and complementarities between EI activities and non-EI sectors; (iii)

matching local industries with EI industries and building strategic partnerships between

selected small businesses and extractive industries to implement local content initiatives. n

local procurement (iv) designing and implementing the capacity building, financial support,

advisory and business incubation needed to prepare local SMEs to take advantage of local

procurement and business partnership opportunities.

Sub-component 2.2: Support to the meat and butchery value chain (US$8.60

million)

88. The project will work to strengthen the domestic market meat market and butchery

industry. To this end, the project will finance (i) investment in the Niamey and Maradi

abattoirs for the specific purpose of increasing their production capacity and efficiency; (ii) the

provision of a cold chain system including a refrigerated warehouse and transportation

equipment; (iii) the installation of waste water treatment systems (for the separation of animal

waste at slaughterhouses and meat processing plants which reduces the amount of materials

20

and other pollutants released into the watercourses); and (iv) capacity building for industry

associations to enable them to better represent, and provide needed services to, their members.

89. In order to enhance the Niger meat ―brand‖ by building on the perceived excellence of

meat from Niger, the project will provide equipment and technical assistance to enable the

Niamey and Maradi abattoirs to attain certification of regionally accepted quality and hygiene

standards. This will include training of abattoir management and staff to improve hygiene and

sanitation practices, as well as in improved management and worker skills, and assistance to

the Ministry of Livestock for developing related regulation and enforcement capacity.

90. The project will also finance technical assistance to help the Ministry of Livestock

explore ways to improve the management of the slaughterhouses, including through a lease

contract or ultimately spin off the commercial functions (such as the transport of meat to

retailers) to private sector and to the GIEs being supported through the project.

Component III: Policy Reforms, Infrastructure and Services to harness the Relationship

between Niger and Nigeria through the Kano, Katsina, Maradi (K2M) corridor (US$9.1

million)

91. The objective of this component is to help foster trade and regional integration with

Nigeria and to attract private investment in the Kano, Katsina and Maradi (K2M) corridor. The

project will help develop the K2M corridor by financing required institutional reforms;

infrastructure and services in the corridor in Maradi close to the Nigeria border.

92. The project will provide support for the following activities: (i) support the Niger-

Nigeria Joint Commission for cooperation to implement the action plan approved by the Joint

Commission ministers in January and September 2011 to develop the K2M) corridor including

the implementation of bilateral free trade agreements, support to the thematic subgroups of the

joint commission for the facilitation of policy dialogue and the organization of exchange for

products and programs supported by the project etc.; (ii) finance a study for the development

of a master plan and engineering designs for updating the existing trade corridor in Maradi (30

km for Nigeria border) and identifying the exact location of the required access roads and

infrastructure that will financed by the project; (iii) in connection with the plan, provide TA to

the local community in Maradi to better take advantage of the corridor, participate in the

design of the plan and the development of the corridor; (iv) finance the rehabilitation of access

roads; and (v) provide equipment for upgrading border markets in the corridor.

Component IV: Project Management (US$4.4 million)

93. This component will provide support for project implementation. The project will be

managed on day-to-day basis through a Project Implementing Unit (PIU) within the Ministry

of Planning (see details in the institutional arrangements section) and APEIN (supported under

the enterprise development and investment promotion sub component). A steering committee

will provide oversight to the project implementation. Financing to be provided for the PIU may

include: equipment, consultant compensation, operating costs, organizational and systems

development, training, capacity building and technical assistance.

B. Project Financing

94. The lending instrument is a Specific Investment Loan (SIL). An International

Development Association (IDA) Credit of SDR 32.30 million (US$50 million equivalent) is

21

proposed. The Government‘s and beneficiaries‘ contribution is US$15.34 million equivalent

(of which US$9.31 million is the matching grants beneficiary counterpart funding, US$4

million is the Government‘s contribution to APEIN operating costs, US$1.96 million is the

Government‘s contribution to safeguard related expenses including compensation and required

social infrastructure and US$0.08 million is the Government compensation to the focal points).

Table 3 – Project cost and financing

IDA Borrower Beneficiaries Local Foreign Total

Component I. Investment Climate, Investment Promotion and SME Support for identified value chains

Component 1.1. Support to Public Private Dialogue 2.50 0.00 0.00 2.25 0.25 2.50

Component 1.2. Export Promotion 2.50 0.00 0.31 2.25 0.25 2.81

Component 1.3. Enterprise Development and

Investment Promotion 11.00 4.00 9.00 9.90 1.10 24.00

Total Component I. 16.00 4.00 9.31 14.40 1.60 29.31

Component II. Support to selected value chains

Component 2.1. Extractive Industries value chain 11.90 0.00 0.00 10.71 1.19 11.90

Component 2.2. Meat and butchery industry 8.60 0.96 0.00 7.74 0.86 9.56

Total Component II 20.50 0.96 0.00 18.45 2.05 21.46

Component III. Policy Reforms, Infrastructure and Services to harness the relationship between Niger and Nigeria

through the Kano, Katsina, Maradi (K2M) corridor

Component 3.1. Support to develop the K2M corridor 1.10 0.00 0.00 0.99 0.11 1.10

Component 3.2. Rehabilitation of secondary access

roads and border markets along the corridor 8.00 1.00 0.00 7.20 0.80 9.00

Total Component III 9.10 1.00 0.00 8.19 0.91 10.10

Component IV. Project Implementation

Component 4.1. Project Coordination 3.20 0.08 0.00 2.88 0.32 3.28

Component 4.2. Refinancing of PPA 1.20 0.00 0.00 1.08 0.12 1.20

Total Component IV 4.40 0.08 0.00 3.96 0.44 4.48

TOTAL 50.00 6.03 9.31 45.00 5.00 65.34

Does not include US$3.0 million included in component 1 for EI matching grants

C. Lessons Learned

95. Public (IDA) funding leveraged by private sector investments. With private investments

representing only around 10 percent of official development aid, the Niger economy seems to

be over dependent on public funding. While proposing an additional public investment, this

project is designed to leverage private sector investments and to create a context for public

private partnerships. Investments in infrastructure and business environment should allow the

development of larger private sector operations in the supported value chains. Technical

assistance to SMEs will help trigger investment.

96. Reform momentum. Broad-ranging improvements in the investment climate and in

infrastructure provisions through regulatory and institutional reforms and sector investment are

typically done with national coverage. However, experience shows that such a strategy does

not bring results in the short term, and, more important, does not necessarily allow the

emergence of a better business environment to foster private sector investment. Given the

importance of a reliable business environment for the success of this Project, a combination of

22

targeted investments and regulatory reforms will be financed by the Project. These focus on

investment and policy reforms toward supporting the two selected value chains. The Project

will focus on quick wins in order to generate sustained support for the broader reform program.

97. Selectivity and sequencing. There are clear reform lessons emerging from several

developing countries concerning the prioritization of investment climate improvements. The

2008 CEM (Accelerating Growth and Achieving the MDGs) highlighted the ―binding

constraints‖ to growth in Niger. It looked at systematically identifying key growth drivers,

income-enhancing diversification, critical constraints, and the cost-benefit factors that could

help to determine the best sequencing of reform actions. The 2012 DPO series identified

binding constraints to private sector development. The project will focus on selected ones, with

other bank operations help the Government with additional reforms.

98. Matching grants. The design of the Project‘s proposed matching grants scheme also

draws lessons from past experiences on World Bank support to SMEs and the March 2011

Independent Evaluation Group (IEG) assessment of World Bank intervention on growth and

productivity in agriculture and agribusiness. Since the first such support to SMEs was

developed in 1993 with successful results, more than a dozen matching grants funds or similar

approaches have been funded by the World Bank in sub-Saharan countries. The matching

grants mechanism integrates the following: (i) building capacity building to ensure that that the

implementation agency is capable; (ii) incorporating good governance practices in the

procedures manual; (iii) maintaining a demand-driven approach, while at the same time

stimulating demand through targeted hand-holding; (iv) from the outset, building strong

monitoring and evaluation (M&E) systems that measure outcomes; (v) keeping the scheme

simple; and for the extractive industries, tying the grant to corporate initiatives on local

content.

D. Alternatives considered

99. Choosing an instrument. The lending instrument is a Specific Investment Loan (SIL).

A SIL is preferred (instead of the Technical Assistance Loan) as it is a flexible instrument that

can finance the diverse activities which are needed to support the private sector, such as

technical assistance, equipment and minor civil works, and provision of non financial services

to SMEs. This SIL complements the recent budget support operation, the Growth Policy

Reform Credit (GPRC1) and the GPRC2 (FY120) under preparation.

100. The GPRC series support the investment climate and financial sector reform program

of the Government and include triggers on taxation reform, DB reforms. The SIL brings the

technical assistance to the Government needed to implement its reform program, while

supporting private sector-led growth through support to the two selected value chains and

enterprises development.

101. Coordinating with other projects. Although the PRODEX, which supports five value

chains in Niger, is tackling similar issues with a value chain approach, it was considered

appropriate to separate the proposed Project from the PRODEX given that the Project also

focuses on non agriculture issues. In particular, the option to finance the slaughterhouses as an

additional financing in PRODEX was considered and not retained. The project is

complementary to PRODEX in supporting downstream activities (enterprise development in

the meat and butchery industry) while PRODEX support upstream activities (provision of

support to improve animal production and health). However, the task team worked closely with

23

the PRODEX team during the preparation, particularly on the value meat/butchery industry and

the proposed project builds on PRODEX support to livestock production.

102. Choosing the number of value chains. The Government identified a list of value chains

including handicraft, tourism, Arabic gum, construction and real estate, onion etc. as other

sources of growth to be supported by the project. It was determined that incorporation of more

than two value chains in Niger would be too taxing in terms of management oversight and

might spread the project resources too thinly. In addition, the two selected value chains,

although very distinct in nature, are linked in the project through components 1 and 3 that are

shared by them (e.g. matching grants and support to K2M corridor are examples of project sub-

components that would benefit both value chains). The Government intends to use the project

resource to help design a broader private sector development strategy and growth agenda.

IV. Implementation

A. Project Institutional and Implementation Arrangements

103. Implementation arrangements feature several players whose roles will be further

detailed in the Project Implementation Manual, the finalization and approval of which will be a

condition of effectiveness. These arrangements take into consideration capacity limitations in

Government and build on similar successful projects in Niger. The Government authorities

have proposed, and the World Bank has agreed, that the Ministry of Planning should take the

lead in the oversight of the project. Project implementation arrangements include the following

structures:

104. Executing Agency. The implementation arrangements were selected based on the need

to ensure effective execution of the core project management functions balanced with ensuring

ownership by and capacity building for the beneficiaries of the various project components. By

having implementation responsibility in the hands of designated persons in the beneficiary

agencies, it is expected that this will result in more ownership of the project at the local level

and sustainable results at the end of the project. These arrangements take into consideration

capacity limitations in Government and build on similar successful projects in Niger. The

Ministry of Planning has been designated as executing agency by the Government responsible

for the overall project implementation and will be supported by a steering committee, a Project

Implementation Unit and designated focal points in each of beneficiary ministries and

institutions. Project implementation arrangements include the following structures (See Figure

in Annex 3).

105. Project Steering Committee. The project will be overseen by a Steering Committee

(PSC) chaired by the Minister of Planning and comprising of high level representatives of the

various institutions and will have a strategic function role. Membership of the PSC will include

one representative of all the project beneficiary institutions, namely the Ministry of Commerce,

the Ministry of Industry and Mining, the Ministry of Energy and Hydrocarbons, the Ministry of

Livestock, the Ministry of Foreign Affairs, the Ministry of Finance, the Niger Nigeria Joint

Commission, the Chamber of Commerce, the Niamey Slaughterhouse and the butchers

associations. It will also include members from private sector and NGOs. The PSC will meet

on a quarterly basis and its responsibilities include providing strategic guidance and oversight

for the project, and proactively address any major problems affecting project implementation.

The PIU within the Ministry of Planning will act as the Secretariat of the Project Steering

24

Committee (including preparing the meetings, elaborating the documents for the meeting,

recording the minutes of the meeting, etc.)

106. A PIU within the ministry of Planning will be responsible for project coordination and

implementation. The PIU staff competitively recruited and dedicated will be responsible for all

procurement, disbursement, accounting, financial reporting and monitoring and evaluation of

the project, and for ensuring the auditing of project accounts. The PIU would be composed of

the following staff: (i) a Coordinator; (ii) a procurement specialist; (iii) a financial management

specialist; (iv) an accountant; (v) a monitoring and evaluation specialist; (vi) a meat and

butchery specialist; (vii) a mining specialist; and (viii) an Environmental and Social safeguard

Specialist. The PIU will prepare quarterly and annual reports recording the progress of the

project. Project supervision will be carried out twice a year and a mid-term review will take

place in 2015 with the objective of assessing progress to date and if necessary to re-direct the

project by integrating additional lessons learned and realities on the ground. All project

accounts will be audited annually by independent auditors acceptable to IDA and will be

submitted to IDA no later than six months after the closing of the fiscal year in Niger.

Implementation of project components.

107. Management and implementation of individual project components/project

subcomponents will be mainstreamed to the ministries involved in the project as well as private

sector representative bodies and other stakeholders (through designated focal points who will

work closely with the PIU).

108. The Chamber of Commerce and Industry. The Chamber of Commerce will be

responsible for the export promotion component to support ANIPEX.

109. The Agency of Enterprise and Investment Promotion of Niger (APEIN). The Agency of

Enterprise and Investment Promotion will be responsible for the implementation of the

enterprise development component. The project will support its creation, operational costs and

capacity strengthening through the recruitment of a private company that will assist in

implementing the Matching Grants Component.

110. Focal Points. To ensure coordination between the PIU and beneficiary institutions,

each will designate a focal point. These institutions are the Ministry of Commerce, the

Ministry of Industry and Mining, the Ministry of Energy and Hydrocarbons, the Ministry of

Livestock, the Ministry of Foreign Affairs, the Ministry of Finance, the Niger Nigeria joint

commission and the Niamey and Maradi slaughterhouses.

111. The role and responsibility of the focal point will be clearly detailed in the Manual of

Implementation and their terms of references. They will work in close collaboration with the

PIU, APEIN and the Chamber of Commerce. The project will strengthen the capacity of the

focal point through technical assistance and equipment. Civil servant focal points would be

compensated on the Government counterpart fund as set out in the current government

compensation legal framework.

112. A Project Operational Manual (POM) including a Project Implementation Plan and

Procurement Plan will be finalized by project effectiveness. The POM will include all periodic

reporting, monitoring and evaluation arrangements throughout the life of the project and will

also include independent annual audits.

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113. Agreements. For the purposes of the project, the International Development Association

(IDA) will enter into Project Agreement with APEIN, and the Government will on-grant to

APEIN the financing proceeds allocated to the components under its responsibility, under

subsidiary agreement with it.

114. The role of APEIN as the executing agency for the matching grants sub-component will

be spelled out in the Subsidiary Agreement to be signed between the Government and APEIN.

The signed Subsidiary Agreement acceptable to IDA, will be a condition of disbursement of

the corresponding funds of the credit.

B. Results Monitoring and Evaluation

115. Institutional framework. The M&E system will be based on the agreed Results

Framework (Annex 1) and implementation arrangements. The PIU within the Ministry of

Planning will be responsible for conducting M&E activities. Data collection for the agreed

indicators and component under their responsibility will be initiated by APEIN and the

Chamber of Commerce. The beneficiaries‘ associations will participate in data collection at

their point of operation in collaboration with APEIN, the Chamber of Commerce and ANIPEX.

Overall, the Chamber of Commerce, ANIPEX and APEIN (for their respective components)

will be responsible for consolidating and preparing all periodic fiduciary and M&E reporting,

including impact and output indicators as well as the annual audit of their financial statements

(including of the Project). In addition, APEIN will be required to provide to the Government

for forwarding to the Association a quarterly Implementation Progress Status Report.

116. Capacity building for data collection, management and reporting. The capacity of the

implementing agencies will be enhanced through the provision of information management

systems and online services delivery through a one-stop shop for the investment climate

component. For the mining component, the project will strengthen the Government

institutional capacity to efficiently manage the mining sector by upgrading the Geological

Information System (GIS), the mining cadastre system and provision of software and hardware

for the storage and assessment of geologic and geophysics data and rehabilitation of the

petroleum data center. Resources are allocated under Component 4 to finance these activities.

117. The design of the systems will be based on a participatory approach using up-to-date

and user-friendly application technology (a web site) allowing each technical implementing

agency as well the PIU to participate interactively in the production, analysis and exchange of

data and information both generated within the project cycle and the day-to-day operation of

the executing agencies. This will foster a greater ownership and accountability for the project

implementation results and outcomes.

118. The system will improve data harmonization and minimize duplication as well as

strengthen particularly the capacity of implementing agencies to respond to the Government‘s

need for information and data to improve management of these agencies, compare its business

environment with international standards and attract potential investors.

119. The capacity of the implementing agencies will be strengthened with technology

equipment, training on data collection, content management, information updates and basic

system troubleshooting and maintenance. The M&E specialist within the PIU will provide

technical support to implementing agencies designated focal points as well as coaching and

mentoring on data collection, management and reporting.

26

C. Sustainability

120. The sustainability of the project‘s impact will depend on several institutional,

economic, and environmental requirements.

121. Strength of the policy and institutional framework for project implementation. Given

the lack of capacity and track record of the new Government, the project includes an

institutional arrangement that will help build the Government capacity, and ensures

coordination between the various ministries involved in the project. The PIU will be housed

within the Ministry of Planning but will be staffed with dedicated personnel recruited

competitively to ensure adequate project implementation. A broad-based buy-in through

public/private dialogue is also being supported by the project by the setting up of a joint

public-private task force and working groups, and stakeholder consultations.

122. Ownership and beneficiaries’ commitment. The project has been tailored to national

development needs as expressed in the Government development strategy. The Government of

Niger has stressed its commitment to significantly improve the business environment as shown

by the recently developed action plan to improve the investment climate, and the creation of

the National Private Investors Council (CNIP), chaired by the Prime Minister considered by

private sector representatives as an effective tool for fostering public private dialogue and

resolving business constraints. The creation and existence of support and supervisory structures

(Chamber of Commerce, Investment Promotion Center, ANIPEX, CFE etc.) to lead the

implementation of a national private sector promotion policy and the recent improvements in

the area of business creation demonstrated the Government‘s willingness and ability to

undertake the required reforms despite the opposition of specific constituencies and vested

interests. These institutions will be supported by the project for better efficiency, and synergy

will continue operating after the project closure.

123. Financial sustainability of subprojects funded by matching grants. The project will help

improve the capacity of local enterprises in meat processing and working to deliver goods and

services to mining companies through provision of the necessary incentives and TA. Lessons

of experience demonstrate that the combination of technology adoption and advisory services,

market facilitation, capacity building, and capital underpin financially and economically

sustainable subprojects.

124. Capacity of beneficiary associations. The sustainability of the project‘s benefits

depends on the strength of the beneficiary associations especially the eight associations

involved in the meat and butchery industry in Niger, as well as the capacity of their leaders and

members to manage the proposed project investments and future improvements and reforms.

The project‘s matching grants program will provide capacity-building efforts to build technical

expertise and social capital and expand the knowledge frontier. In particular, the project will

help improve the management of the slaughterhouses and collective equipment it will finance.

125. Environmental and social sustainability. Safeguards assessments and frameworks have

been prepared and disclosed. The project will finance the installation of wastewater treatment

(for the separation of animal waste at slaughterhouses and meat processing plants which

reduces the amount of materials and other pollutants released into the watercourses) to improve

the environmental sustainability of the meat value chain. In addition, the Government will also

prepare during project implementation, a Strategic Environmental and Social Assessment

(SESA) to identify and address the project‘s potential positive and negative environmental and

27

social impacts along the entire mining value chain. The SESA will provide strategic guidance

for enhancing environmental sustainability and social equity of the sector as a whole and

specific recommendations to be incorporated into national policies and programs.

V. Key Risks and Mitigation Measures

126. The risks to the Project are Substantial. Preliminary risks and mitigation measures that

have been identified are presented in the attached ―Risk Identification Worksheet‖.

Table 4 - Risk Ratings Summary Table

Stakeholder Risk Substantial

Implementing Agency Risk

- Capacity High

- Governance Substantial

Project Risk

- Design Substantial

- Social and Environmental Moderate

- Program and Donor Moderate

- Delivery Monitoring and Sustainability Substantial

Overall Implementation Risk Substantial

127. The Project‘s complexity coupled with weak implementation capacity mean that the

development, safeguard, financial, and fiduciary risks are substantial. Therefore, the

Association will work closely with the Government and other partners to ensure that the risks

are identified and mitigated appropriately.

A. Institutional capacity

128. A new Government with an emerging policy agenda and lack of track record. The new

Government, which has been in power since April 2011, has in its strategy, priority action

supported by this operation. But as the new Government starts to refine and implement its

policy agenda, the priority of the reforms implemented by this operation could change.

Furthermore, the new Government has yet to develop a track record for consistent policy

implementation. One mitigation measure is that as the Bank has reengaged in Niger, the

country team is engaging proactively with the authorities to support them in the design and

implementation of their emerging reform program and provide necessary facts and policy

analysis.

129. Institutional Capacity. While Niger has made significant improvements in its capacity

to carry out its reform program, there are many weaknesses. These weaknesses can be found

across a wide range of areas: in the building of a more conducive business regulatory

environment, in the quality and efficiency of its public administration, and in the transparency

and accountability across the public sector. As most World Bank financed projects and

programs, this proposed project has a capacity building component (under Component 1 and

component 4) to provide support to key ministries involved in its implementation.

28

130. Given the lack of capacity and track record of the new Government, the project will

include an institutional arrangement to help build the Government capacity and ensures

coordination between the various ministries involved in the project. A dedicated PIU will be

housed within the Ministry of Planning and will be staffed with dedicated personnel recruited

competitively to ensure adequate project implementation. A broad-based public/private

dialogue is also being supported by the project through assistance to the joint public-private

task force and working groups (Conseil National des Investisseurs Privés- CNIP) chaired by

the Prime Minister.

B. Country Risk

131. The major risks are related to exogenous shocks. Niger is prone to drought and more

than 80 percent of its population depends on income from agriculture. Niger is also subject to

strong terms of trade swings in commodities that are important on either the export or the

import side. A deeper and/or longer than anticipated macroeconomic downturn in the current

global context could affect negatively the macroeconomic stability and jeopardize the expected

economic outcomes.

132. Security risk. Also, uncertainty about the future worldwide development of nuclear

energy sources and the sharp decline in uranium prices observed since the catastrophic events

in Japan add further uncertainty to Niger‘s prospects, given the large role the uranium industry

plays in its economy. If activities by AQIM continue, this could also potentially exert a

negative impact on FDI flows to Niger especially in the EI sector.

VI. Appraisal Summary

A. Economic and Financial Analysis

133. This project aims to contribute to the development of two new sources of growth

through industry based investment climate reforms and improved enterprises competiveness.

134. Significant economic benefit is expected to be derived from this Project. Broadly, the

project will create a business environment conducive to private investment, enterprise creation

and growth. It will enhance competitiveness of firms operating in the mining and meat and

butchery value chains. Increased competitively in these two sectors will generate value-added

and create more jobs. The project will contribute to increase Niger export potential in mineral

and meat products. It will improve cross border trading through better road connections and

reduced administrative barriers and procedures. It is expected that project intervention will

ultimately contribute to attract potential investment in the K2M corridor. Ultimately, through

its economy wide demonstration effect, the project is likely to generate benefits for a much

larger number of SMEs, with wider implications for private sector growth job creation and

poverty reduction.

135. The main beneficiaries of the project will be (i) a minimum of 200 firms and

associations with access to non-financial business development services and access to financial

services; (ii) the meat and mining sectors; (iii) the business consulting sector with an

improvement of availability and efficiency of business services; and (iv) the private sector

which will benefit from an improved investment climate. The project will also provide

economic and social welfare to the beneficiaries in the Maradi region and the mining regions

and to the national economy.

29

136. The economic analysis of sub component 1.1. Business Environment, Investment

Promotion and enterprise development presents a special challenge due to the indirect

relationship between the reforms supported under the Project and the stream of benefits that

these reforms are expected to trigger. In light of this, a literature review has been provided on

the positive effects of business environment reform on business creation, SME development

and growth. An attempt has been made to quantify the costs and benefits that are expected to

accrue from sub components 1.2, 1.3, 2.1 and 2.2. The Net Present Value (NPV) and the

Economic Rate of Return (ERR) for the investments in these components have been calculated

(see detail in annex 7). The total investment under components 1.2, 1.3, 2.1 and 2.2 are

estimated to result in NPV of US$49,981,469 and an ERR of 28 percent. The results are

summarized in table below.

Project ERR 28%

Project NPV (12% Discount Rate) $49,981,469

Project NPV (5% Discount Rate) $79,963,378

B. Technical

137. Choice of Competitive Industries. The process of identifying the value chains and the

design of the component was supported by the World Bank Group‘s Competitive Industries

Practice. Niger has few ―competitive industries‖, i.e. value chains or sectors which have strong

potential and for which the country has a proven comparative advantage and track record.

During project preparation, an exhaustive long-list of such value chains was identified in

discussions with the Government and private sector. These value chains included: mining and

services providers to major mining companies, onion, meats and the butchery industry, sesame,

cowpeas, souchet, Arabic gum, handicraft, construction and real estate industry and small

and/or large scale irrigation for fruit and vegetable related to the Kandadji barrage.

138. It was decided that the project will identify and support two value chains that offer high

potential for growth and employment. The project will aim to increase the incentive to invest in

these identified value chains by improving their competitiveness and make required needed

public investment.

139. Based on analytical studies available, and the discussions held during project

preparation, two value chains (i.e. extractive industries and service providers to major

extractive industry companies; and the meat and butchery value chain) have emerged as

Government priorities based on the following two criteria. These value chains (i) have high

potential to offer strong upside in terms of growth, employment and spillovers effects (cost

recovery and economic linkages); and (ii) they offer opportunities for successful reform aimed

at bridging the competitiveness gap and addressing market failures, including high ratio of

capital to labor, little integration with the rest of the economy, revenue volatility. The project

will support the enhancement of private investment in these two value chains by helping (i)

improve the organizations of the identified value chains; (ii) support the establishment of

quality standards for key products; (iii) support enterprise development in these value chains;

and (iv) finance needed public investment to attract private investment.

140. Improving the business environment. This component was designed in coordination

with the Investment Climate Department and the Niger private sector. Following a review of

30

existing diagnostics,7 discussions with Government counterparts and private sector

representatives, four areas were selected: starting a business; protecting investors; paying

taxes; and trading across borders. The main reasons behind this selection include (i) being a

key priority for the private sector; (ii) relevant to the two value chains supported under the

project and (iii) existing opportunities for further reforms. In addition, reducing discretion and

increasing transparency in the areas of business creation, paying taxes and import/export can

contribute to reduce opportunities for corruption. According to the Investment Climate Policy

Note (2009), paying taxes, importing, and obtaining business licenses are among the areas

where entrepreneurs have the highest probability of being asked for a bribe.8

141. The recent creation of the CNIP offers a good platform for dialog between Government

and private sector to improve the investment climate. The support to the creation of a one-stop

shop for enterprises creation provides incentives for further simplification of the business

registration procedures and is based on successful examples in similar countries.

142. Simplifying tax administration and making it more efficient through computerization

are two interlinked activities. Administrative simplification generally benefits taxpayers, as it

reduces compliance costs, but it also constitutes a necessary pre-requisite to computerization,

to avoid the crystallization of inefficient processes.

143. Trade facilitation, improvement of transparency and efficiency for import/export

transactions emerged as a key priority given the importance that trade has for the economy of

landlocked Niger. Due to the small size of its economy and the potential is has with Nigeria as

a trade partner, integrating regionally and globally through trade is a priority for Niger. The

cumbersome and costly process to import and export may be limiting trade. The time—64 days

for import and 59 days for export—is well above other countries in the region such as Burkina,

or Mali.

144. Support to improve entrepreneurial capacities. The entrepreneurial capacities of

existing companies in the two value chains are low. In the EI sector, Niger local private sector

cannot benefit from the 10 percent minimum local procurement that large mining companies

have to contract with them. In the meat value chain, Niger has many small private butcheries.

However, many of the entities are in the informal sector and have limited managerial

capacities. Among the informal entrepreneurs in the industry, the key areas of capacities gap

are: (i) record keeping; (ii) calculation of costs; (iii) fixing prices; (iv) marketing; (v) business

planning; and (vi) approaching a financial institution. These weaknesses are clearly reflected in

a very low productivity among companies and prevent them from participating in local

procurement from large EI companies. Accordingly, this component has been designed to

provide the most beneficial package of interventions to improve the performance SMEs in the

supported value chain.

C. Financial Management

145. Capacity assessment. As indicated above, a PIU will be established within the Ministry

of Planning specifically for the purpose of managing the Niger Competitiveness and Growth

7 Diagnostic Trade Integrated Study for the Enhanced Integrated Framework (2007), Country Economic

Memorandum (2008), Doing Business 2012 8 World Bank. 2009. Investment Climate Policy Note. Washington, D.C.

31

Support Project. APEIN will be responsible for the implementation of Component 1.3 of the

project. As these institutions do not exist yet, their capacity cannot be assessed.

146. In order to anticipate possible capacity constraints, the following measures will be

adopted: (i) a detailed responsibilities of the PIU and APEIN will be described in the project

Manual of Procedures. All key staff will be recruited according to the Guidelines for the

Selection and Employment of Consultants by World Bank Borrowers, published by the Bank

in January 2011; (ii) a Project Implementation Manual will be developed before effectiveness

of the Project. It will clearly describe the project implementation aspects throughout the project

implementation cycle. The manual will also clearly detail the role of each actor/stakeholder

involved in the project; and (iii) an administrative, financial and accounting procedures manual

will be developed and will clearly describe the procedures to be used to successfully manage

the project.

147. Overall assessment: Overall, the residual financial management risk of the project is

rated as High. The PIU and APEIN yet to be set up will oversee financial management of the

Project. The arrangements will be set up to ensure that minimum fiduciary requirements under

OP/BP10.00 are in place for the proposed project. A financial management specialist will be

recruited competitively and based in the PIU. S/he will be supported by an accountant. The

project will recruit and finance a second FM specialist under component 1.3 implemented by

APEIN. Other FM staff at each ministry and agency involved will be designated for the

implementation of the project‘s activity. All operational procedures will be documented in the

administrative, financial and accounting manuals and the project implementation manual.

32

148. The chart below describes the flow of funds arrangement from the Designated

Accounts.

IDA CREDIT

PIU Designated Account A in Commercial Bank

Payment of Contractors and Service Providers

APEIN Designated Account B in Commercial Bank

Application for withdrawal SOEs

IDA transfer to DAs

PIU payment to Providers

Providers Request for Payment

Legends:

33

D. Procurement

149. Procurement activities will be managed by the Project Coordinator who will be

competitively recruited and housed within the Ministry of Planning. He will have overall

responsibility in carrying the following activities: (i) managing the overall procurement

activities, and ensuring compliance with the procurement process described in the relevant

manuals; (ii) preparing and updating procurement plan annually; (iii) preparing bidding

documents, draft RFPs, evaluation reports, and contracts in compliance with WB procedures;

and (iv) seeking and obtaining approval of national entities and of IDA on procurement

documents as required.

150. Procurement of goods and consultants‘ services will be carried out in accordance with

the ‗Guidelines On Preventing and Combating Fraud and Corruption in Projects Financed by

IBRD Loans and IDA Credits and Grants‘ dated October 15, 2006 and updated January 2011,

and the ‗Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD

Loans and IDA Credits‘ published by the Bank in January 2011 and the ‗Guidelines: Selection

and Employment of Consultants by World Bank Borrowers,‘ dated January 2011, the

Financing Agreement and the Procurement Plan approved by the Bank. Operating Costs

include, inter alia, non civil servant support staff salaries, office space, utilities and office

supplies, bank charges, communications, vehicle operation, maintenance and insurance,

building and equipment maintenance costs, travel costs. These will be procured in accordance

with administrative procedures, acceptable to the Bank and detailed in the relevant manual.

151. Assessment of the agencies’ capacity to implement procurement. The overall Project

Risk for procurement is rated High based on the assessment of the proposed institutional

arrangements and the nature of interaction between the different ministries and agencies that

will be involved in project implementation.

152. The key risk identified is that staff involved in the project that may not have experience

with Bank procedures will be responsible for process control and approval. This could cause

misprocurement and/or rigidity in the interpretation of Bank procedures, leading to slowness in

procurement decisions, reputational risks to the Bank and the project, and delays towards

attaining the PDO.

153. The residual project risk for procurement is Substantial after adoption of the following

mitigation measures: (i) a qualified procurement specialist will be recruited before

effectiveness to ensure compliance with World Bank procurement procedures; S/he will be

based within the PIU at the Ministry of Planning; (ii) the Project will recruit and finance a

second procurement specialist under component 1.3 implemented by APEIN; (iii) a manual of

administrative, financial and accounting procedures will be prepared as a condition of

effectiveness to clarify the role of each team member involved in the procurement process,

specifically with regards to the review and approval system ; (iv) a workshop will be organized

at the beginning of the project to train all key stakeholders involved in procurement on World

Bank procurement procedures and policies; (v) non-application of the notified list of clauses of

the National Procurement Code which are not partially or entirely consistent with the World

Bank‘s procurement guidelines. This list is attached to the Procurement plan; and (vi) an

adequate filing system would be centralized and set up for the project records at the PIU. The

project will finance appropriate equipment, and the procurement specialists will be trained to

34

ensure compliance with the Bank procurement filing manual. More details on the fiduciary

arrangements are provided in Annex 3.

E. Social (including safeguards)

154. The project, by the nature of its development objective, brings together a diverse group

of stakeholders and beneficiaries, consisting of investors, SMEs, business owners, livestock

wholesalers, intermediaries, meat and livestock exporters (organized through seven

associations/Groupement d’Intérêt Economique in Niamey and Maradi) with diverse and

sometime conflicting interests. It will also bring together large mining companies, local

(mostly SMEs) and international suppliers etc. As the project is primarily offering technical

assistance and capacity building, with limited infrastructure rehabilitation, its social impacts

are largely expected to be positive. Under Component 1, the project will help improve the

business environment of the country and develop skills for beneficiaries to enter and exploit

private sector opportunities. Component 2 which will support the development of the value

chains will encourage job creation, especially for the butchery industry as well SMEs providers

of goods and services to main mining conglomerates (AREVA, China‘s CNPC etc.) thus

improving social inclusion in the mining zones.

155. Involuntary resettlement. Although the project will not involve any land acquisition, the

involuntary resettlement safeguard (OP/BP 4.12) is triggered on a precautionary basis, as there

may be temporary relocation and/or restrictions of access to livelihoods during the

rehabilitation of existing structures. The Borrower has prepared a Resettlement Policy

Framework for review and disclosure. It has been cleared by the Bank on March 26, 2012 and

disclosed in country on March 27, 2012 and in the Infoshop on March 28, 2012.

F. Environment (including safeguards)

156. The project is considered to be a Category B as it will primarily finance technical

assistance and capacity building activities, and physical infrastructure rehabilitation and

upgrading.

157. The project aims to stimulate private sector investment, particularly in the meat

industry by helping the Government implement policy reforms and buy proving funding for the

rehabilitation and upgrading of physical infrastructure. This includes (i) the upgrading and

rehabilitation of the slaughterhouses in Niamey and Maradi to improve their production

capacity and quality; (ii) the construction and/or rehabilitation of feeder roads in the K2M trade

corridor. The EI sub component will finance only TA activities to help the Government

provide better oversight the mining sector and to local firms to improve their capacity to

become service providers (catering, transport, internet etc) to main mining companies. The

Government has prepared the following documents:

158. Environmental Assessment (OP 4.01). Although the project is not expected to engender

significant negative environmental impact, the Environmental Assessment safeguard (OP 4.01)

has been triggered. It will help determine possible negative environment impact of project

activities, particularly of the slaughterhouses. The Government has prepared an Environment

and Social Management Framework (ESMF). It has been cleared by the Bank on March 26,

2012 and disclosed in country on March 27, 2012 and in the Infoshop on March 28, 2012.

159. Environmental Audits. The Government will prepare Environmental Audits to assess

the environmental, social and health impacts/liabilities of the current production and

35

processing systems of the existing slaughterhouses in Niamey and Maradi and an ESMP as it

relates to the rehabilitation activities of the slaughterhouse in Niamey during the first year

project implementation.

160. Environmental and Social Impact assessment of two slaughterhouses. The Government

has prepared an Environmental and Social Impact Assessment (ESIA) of the Niamey

slaughterhouse. It has been cleared by the Bank on March 18, 2012 and disclosed in country on

March 27, 2012 and at the Infoshop on March 28, 2012. The Government has already prepared

under a Bank funded project (the Niger Agro-Pastoral Export and Market Development

Project), an ESIA for three slaughterhouses including in the one in Maradi (which will benefit

from funding by this Project). It has been reviewed and cleared by the Bank on March 26,

2012. It has been disclosed in country on March 27, 2012 and in the Infoshop on March 28,

2012.

161. Strategic Environmental and Social Assessment (SESA). The Government will also

prepare during project implementation, a Strategic Environmental and Social Assessment

(SESA) to identify and address the project‘s potential positive and negative environmental and

social impacts along the entire mining value chain. The SESA will provide strategic guidance

for enhancing environmental sustainability and social equity of the sector as a whole and

specific recommendations to be incorporated into national policies and programs. Terms of

Reference for the SESA have been prepared and cleared by the Bank and disclosed on April

11, 2012.

162. Pest Management Plan (PMP). The project, as it supports the meat industry and

increases meat production and exports of meat may trigger increased upstream production of

livestock and the use of agricultural chemical, such as fertilizers and pesticides (i.e., herbicides

and other chemical products designed to reduce the proliferation of disease vectors). Further,

improvement in livestock production and productivity may imply improved veterinary

treatments for diseases prevention and care of the livestock population. The project will not

undertake any activity to increase the livestock production itself. The activities to support the

upstream production of livestock are being funded by PRODEX. Niger has already prepared a

Pest Management Plan (PMP) which was cleared and disclosed in the Infoshop on January 30,

2009. The PMP is considered acceptable for this project. However, the current project will

provide training to its implementation staff in the area of pest and pesticide management.

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment (OP/BP 4.01) [X] [ ]

Natural Habitats (OP/BP 4.04) [] [ X]

Pest Management (OP 4.09) [X] [ ]

Indigenous Peoples (OP/BP 4.10) [ ] [X]

Physical Cultural Resources (OP/BP 4.11) [] [X ]

Involuntary Resettlement (OP/BP 4.12) [X] [ ]

Forests (OP/BP 4.36) [ ] [X]

Safety of Dams (OP/BP 4.37) [] [X]

Projects on International Waterways (OP/BP 7.50) [] [X ]

Projects in Disputed Areas (OP/BP 7.60) * [ ] [X]

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36

Annex 1: Results Framework and Monitoring

Project Development Objective: is to improve selected aspects of Niger's business environment, to support the development of the meat industry and to increase local business participation in

the extractive industry sector.

PDO Level Results

Indicators* Co

re

Unit of

Measure Baseline

Cumulative Target Values**

Frequency Data Source/

Methodology

Responsibility for Data

Collection

Descrip

tion

(indicat

or

definiti

on etc.)

YR 1 YR 2 YR3 YR 4 YR5

YR6

Indicator One: Reduced time

to trade across borders

1.1 Reduced time to clear

imported goods

days 64 64 60 50 45 40

38 Annual

Doing Business

report

Project Coordination

1.2 Reduced time to clear

exported goods

days 59 59 54 44 40 37

35 Annual

Doing Business

report


Indicator two: Reduction of

time to create a business

days 17 17 12 7 5 4

4 Annual Doing Business

report Project Coordination

Indicator Three:

Improvement of turnover of

SME supported by the

Matching Granta

% 0b 0 0 0 4 7

12 Annual APEIN Project Coordination

Indicator Four: Increased

volume of meat processed and

sold in slaughterhouses.

Tons/day 44 44 44 44 64 64

84 Annual

Slaughterhouses/

Ministry of

livestock


/Ministry of

Livestock/Slaughterhouses

Indicator Five: Proportion of

local procurement achieved

with Extractives Industriesc

% 0

(2012) 0 2 4 6 10

10 Annual

Survey


/Ministry of

Mining/Ministry of

Energy and Hydrocarbons

Indicator six: Number of

direct Beneficiaries (of which

20% female)

Number 0 0 25 600 2100 4000

5000 Annual

APEIN/Ministries

/ANIPEX/Joint

Commission


/APEIN/Ministries/ANIPE

X/Joint Commission

a Based on projected results from matching grant applications

b Survey will be conducted during the first year of the project implementation to provide the baseline data c Proportion of Goods and Services purchased by mining companies from local private enterprises

37

Intermediate Results Indicators: (Component 1 : Investment Climate, Investment Promotion and SME support for identified value chains)

Intermediate Level Results

Indicators* Co

re

Unit of

Measure Baseline YR 1 YR 2 YR3 YR 4 YR5

YR6

Frequency Data Source/

Methodology

Responsibility for Data

Collection

Descrip

tion

(indicat

or

definiti

on etc.)

1.1: Investment in newly

established firms.

US$

million 0 2 20 30 35 40

40

Annual APEIN Project Coordination

/APEIN

1.2 Number of enterprises

registered per year

of which 20% are led by

women

Number 0 500 1500 3000 3000 4000

4400 Annual APEIN


/APEIN

1.3 Number of firms in the

meat and mining value chains

supported through the

matching grant of which 20%

are led by women

Number 0

(2012) 0 50 200 300 500

600 Annual APEIN


/APEIN

Intermediate Results Indicators: (Component 2: Support to Selected value chains)

2.1 Proportion of known

artisanal mining sites

registered and organized into

formal groups

percent

0

(2012) 5 15 30 50 70

75 Annual

Reports from

Ministry of Mining

Tax

Administration

Ministry of Mining/


2.2 Increase in mining exports

other than uraniumd tons

M0

(2012) M1 M2 M3 M4 M5

M6 Annual

Ministry of

Mining/Ministry of

Energy and

Hydrocarbons/INS

Ministry of

Mining/Ministry of

Energy and Hydrocarbons/


2.3 Percent of Waste water

recycled percent 0 0 0 0 0 100

100 Annual

Slaughterhouses/

Ministry of

Environment/Mini

stry of Livestock

Ministry of

Livestock/Slaughterhouses

/ Project Coordination

2.4 Percent of production in

Niamey and Maradi

slaughterhouses in conformity

with regional standards.

percent 0 0 0 0 100 100

100

Annual

Ministry of

livestock/Slaughter

houses

Ministry of

livestock/Slaughterhouses/


Intermediate Results Indicators: (Component 3: Reforms, Infrastructures and Services to harness trade between Niger and Nigeria through the (K2M) corridor)

3.1 Kilometers of access roads

connecting production areas

to potential markets

Km 0 0 0 20 50 70

80

Ministry of

infrastructures/

Joint Commission

Joint Commission /

Ministry of

infrastructures /Project

d Survey to be conducted during the first year of Implementation will provide the baseline data

38

constructed Coordination

3.2 Number of new

investments in the K2M

corridor

Number 0

(2012) 0 5 10 15 20

25 Annual

APEIN/

Chamber of

Commerce/ Joint

Commission

APEIN/ Project

Coordination /Joint

Commission

39

Annex 2: Detailed Project Description

I. Project Development Objectives

PDO

1. The Project Development Objective (PDO) is to improve selected aspects of Niger's

business environment, to support the development of the meat industry and to increase local

business participation in the extractive industry sector.

Project Beneficiaries

2. The project direct beneficiaries are estimated at 5,000 enterprises, of which 20 percent

are led by women.

3. The project will benefit the two following main groups of stakeholders: (i) the various

private sector stakeholders (primarily private enterprises and investors mainly in the two

supported value chains); and (ii) Government and private sector agencies playing a key role in

the interaction between Government and private sector (the Chamber of Commerce, ANIPEX,

APEIN, CNIP, mining department, tax administration).

4. Meat processors, butchers and enterprises procuring goods and services to the main

mining companies. In addition to benefiting from the overall improvement in the business

environment, these entities will directly benefit from the technical assistance provided through

the project, the financing of infrastructure and services to increase the production capacity of the

slaughterhouses of Niamey and Maradi and to improve trade with Nigeria through the Kano,

Kastina, Maradi (K2M) corridor. They will also benefit from the matching grants component

which should help improve the skills of workers.

5. Entrepreneurs, SMEs and investors. Entrepreneurs, SMEs and investors will benefit from

the improvement of the business environment. The increase in transparency and predictability

will benefit SMEs, which normally tend to have limited bargaining power, as well as foreign

investors, by reducing uncertainty and transaction costs. Additionally, SMEs will directly benefit

through the entrepreneurial development program which is expected to increase their

performance and managerial capacity.

6. Workers: A key objective of the project is to create jobs through various channels by

promoting investments and creation of companies through improvements in the business

environment, through supporting the expansion of SMEs supported by the project as a

consequence of the improvement in managerial capacity, and through the development of

existing companies or the setting up of new butcheries or enterprises benefiting from local

procurement from the main mining companies. Additionally, workers in various enterprises will

directly benefit from training through the matching grants program, which is expected to

improve their productivity, which is a fundamental determinant of their salaries.

7. Government and private sector agencies. The project will directly support various

Government entities and private sector agencies with technical assistance and training. The

public/private sector agencies that will specifically benefit from this direct support are the

ANIPEX, APEIN, CNIP and the Mining Directorate. In addition to the direct capacity

development for these specific agencies, the Government will also benefit by the improvement in

40

its capacity to collect taxes through DGI, which in turn is expected to generate higher tax

revenues. Furthermore, improved transparency and efficiency of the key agencies supported by

the project are expected to increase public confidence in the public institutions.

PDO Level Results Indicators

8. The PDO‘s related performance indicators are (i) the reduction of time to trade across

borders; (ii) the reduction of time to create a business; (iii) the improvement of turnover of SME

supported by the Matching Grant; (iv) the increase in volume of meat processed and sold in

slaughterhouses; (v) the proportion of local procurement achieved with Extractives Industries;

and (iv) the number of direct beneficiaries (of which 20% female).

II. Project Description

9. Overall approach: It appears from the various policy and strategy documents mentioned

above that to support private sector-led growth, actions need to be taken in a number of

mutually-supportive areas to create a minimum platform for private sector development. This

platform involves a combination of elements including: (i) providing policy, regulatory, and

institutional support to key government institutions involved in private sector development; (ii)

support for technical and business management skills to improve productivity at the firm level;

(ii) developing linkages with the regional/global economy; (iii) promoting a conducive business

environment, including in particular, financial services; (iv) trade and investment facilitation

regulations and institutions; and (iv) facilitating increased availability of critical infrastructure

and services.

10. However, given the low capacity and while promoting such an integrated approach,

prioritization and sequencing of the reforms are vital for a successful implementation.

11. These priority reforms to be supported by the project would aim to develop conditions

conducive for the private sector to invest in the two selected high potential value chains and

make necessary policy reforms to increase trade with the large neighboring Nigerian market.

Project components

The project would have the following components and activities:

Component I. Investment Climate, Investment Promotion and SME Support for identified

value chains (US$16.0 million)

12. As indicated above, the Investment Climate Assessment highlighted the following areas

of weakness in Niger‘s current investment climate: starting a business, protecting investors,

paying taxes, trading across border, access to finance, cost of energy and transport. With

infrastructure and energy addressed by other operations, this component of the project would

focus on improving the business environment.

13. The objective of this component is to help improve the business climate, promote

investment and exports and develop businesses primarily in the identified value chains supported

by the project (mining and meat) as well as in other priority sectors. Therefore, activities under

this component will support the implementation of reforms which have an impact on the business

environment and thus assist the Government in meeting its objective of promoting

competitiveness and encouraging private investment. The project would finance the following

activities through its three sub components:

41

Sub-component 1.1: Public Private Dialogue Working Groups for Doing Business (DB) and

investment climate reforms (US$2.5 million)

14. This will be done through the provision of technical assistance to the Chamber of

Commerce and the Conseil National des Investisseurs Privés (CNIP) (created by decree 2007-

388/PM dated September 14, 2007 modified by decree 2011-681/PM/MC/PSP dated December

26, 2011) for the formulation and implementation of policies and reforms needed to improve the

business climate. It will focus on financing the efforts of CNIP and the Government for reforms

to improve the ranking of Niger in the following key Doing Business indicators (starting a

business, protecting investors, paying taxes, trading across border) by providing the necessary

support to carry out diagnostic studies for the Council‘s meetings and TA to implement the

reforms.

15. In particular, the project will finance the following: (i) TA to the CNIP and the authorities

to revamp the investment legislation by reforming the Investment Code (in particular, the

provisions on capital transfers, investor-state dispute settlement and guarantees against and

compensations in case of expropriation, reforming the ex ante investment authorization regime,

and the minimum capital requirement for foreign investment etc.); (ii) TA to the authorities to

revise the mining and petroleum codes; (iii) TA to streamline tax and customs regimes to reduce

the frequency of tax payments and create transparency and predictability of the tax system; and

to transpose to national legislation and enforce West African Economic and Monetary Union

(WAEMU) directives, particularly with regard to competition policy and law, tax policy etc.

Sub-component 1.2: Implementation of institutional reforms aimed at promoting exports

(US$2.5 million)

16. This will be done by supporting the Agence Nigérienne de Promotion des Exportations

(Niger Exports Promotion Agency, or ANIPEX) through the Chamber of Commerce. Project

funds will be channeled to ANIPEX through the Chamber of Commerce.

17. Specific activities to be supported by the project will include: (i) technical assistance to

ANIPEX for export promotion; (ii) operational budget support to ANIPEX in its initial years;

(iii) financing of equipment in its initial years; and (iv) support the implementation of ANIPEX

action plan to promote exports.

Sub-component 1.3: Enterprise development and investment promotion in identified value

chains and other priority sectors (US$11.00 million).

18. Based on the feasibility study funded by the Government, an Agence de Promotion des

Entreprises et des Investissements du Niger (Agency for Enterprise and Investment Promotion

(APEIN)) will be created. Its mandate is to provide nonfinancial services and act as a one-stop

shop for businesses to access various services necessary for their establishment, including via a

matching grants scheme. The project will support the establishment of the Agency and the

provision of BDS by the Agency. Assistance under the project includes: (i) institutional support

for the implementation of a business plan that spells out the technical assistance and training

requirements for the Agency; (ii) equipment necessary for the establishment and operation of

APEIN to make it capable to provide requested services to local and foreign companies operating

or wishing to settle in Niger; (iii) finance TA and transaction advisors to assist the Government

and APEIN in developing investment opportunities, in attracting private investors and structuring

PPP transactions; and (iv) support to the development of APEIN‘s business management

42

function of providing non-financial business development services to businesses primarily

involved in the selected value chains through a matching grants scheme.

19. To ensure sustainability of APEIN, project assistance will progressively be replaced by

Government contribution and APEIN‘s own contributions. The Government 2012 budget

includes US$0.4 million for APEIN activities. The contributions by APEIN are expected to be

generated by revenues for services rendered to businesses and membership fees.

Matching Grants Scheme

20. The objectives of the matching grants are (i) to help firms increase labor productivity and

enhance competitiveness; and (ii) support local SME‘s to improve their capacity to become

service providers to large mining companies, to take advantage of local procurement and

business partnership opportunities with large EI. To this end, the matching grants component

comprises a two-window program:

21. Matching grants to SMEs and smallholders and their associations. The matching grants

will finance the following types of activities: (i) Annual Business Plan Competition: Finance an

annual business plan competition to help identify and support new businesses with a high

potential for innovation in identified value chains and other priority sectors; (ii) Operational

assistance to SMEs: Provision of consultancy services to SMEs operating in identified value

chains and other priority sectors to support improvements in productivity, production processes,

processing and / or marketing; (iii) Access to finance (A2F) assistance to SMEs: Provision of

training and business development services to SMEs in identified value chains and other priority

sectors to improve their creditworthiness. Eligible activities could include preparation of quality

business plans, financial statements and applications that meet the criteria of Nigerien

commercial banks and other financial institutions; and (iv) Training to SME training institutions,

trade groups and producer organizations: Development and delivery of training courses to SME

training institutions, registered trade groups and producer organizations through qualified

trainers and training institutions.

22. Matching grants to SMEs for developing local procurement with large companies in the

extractive industries sector. The matching will leverage corporate local content initiatives by

mining and petroleum companies. The grant will provide support by (i) providing training to pre-

qualified suppliers to upgrade their skills and capacity through standardized training modules

(for instance the SME Toolkit developed by IFC and the Business Edge training modules; (ii)

developing the technical and managerial capacity of the local suppliers to enable them to meet

the standards of product quality and performance, warranty, and health, safety and environmental

practices required by mining and petroleum companies; (iii) facilitating links with local suppliers

to existing international suppliers, through twining arrangements, joint ventures, and

participation at international mining trade shows; (iv) supporting supplier certification initiative,

including health, safety and environment; and (v) working with local banks and large EI

companies to develop partnership to help SME suppliers have access to working capital fund

with withdrawals and receivable monitoring mechanism.

23. Project funds will be made available to businesses (through APEIN) via a matching

grants mechanism. The matching grants will finance 50 percent of the cost of subprojects carried

out by SMEs. This ratio has been defined based on international impact evaluations that show

43

that a higher grant contributions are often less successful for the reason of moral hazard. The

maximum matching grant amount to a single firm or consortium would be US$50,000

equivalent. While the matching grant would encourage firms belonging to the meat/butchery and

mining value chains to apply, it would not be limited to these two value chains.

44

Component I. Investment Climate, Investment Promotion and Enterprise Development for identified value chains

By Sub Components 2012 2013 2014 2015 2016 2017 2018 Total IDA Borrower Beneficiaries Local Foreign Total

Component 1.1. Support to Public Private

Dialogue 0.00 0.13 0.30 0.83 0.95 0.20 0.10 2.50 0.00 0.00 2.25 0.25 2.50

TA for Public Private Dialogue Working

Groups for Doing Business reforms through

CNIP and Chamber of Commerce 0.00 0.13 0.30 0.83 0.95 0.20 0.10 2.50 0.00 0.00 2.25 0.25 2.50

Sub Total 1.1. 0.00 0.13 0.30 0.83 0.95 0.20 0.10 2.50 0.00 0.00 2.25 0.25 2.50

Component 1.2. Export Promotion 0.00 0.13 0.30 0.83 0.95 0.20 0.10 2.50 0.00 0.31 2.25 0.25 2.81

Support to Chamber of Commerce/ANIPEX 0.00 0.13 0.30 0.83 0.95 0.20 0.10 2.50 0.00 0.31 2.25 0.25 2.81

Technical assistance 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.00 0.06 0.45 0.05 0.56

Operational budget support in initial years 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.00 0.06 0.45 0.05 0.56

Equipment in initial years 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.00 0.06 0.45 0.05 0.56

Transaction Advisors to Government and

ANIPEX to structure PPP transactions 0.00 0.05 0.12 0.33 0.38 0.08 0.04 1.00 0.00 0.13 0.90 0.10 1.13

Sub Total 1.2. 0.00 0.13 0.30 0.83 0.95 0.20 0.10 2.50 0.00 0.31 2.25 0.25 2.81


Investment Promotion 0.00 0.55 1.32 3.63 4.18 0.88 0.44 11.00 4.00 9.00 9.90 1.10 24.00

Support to Agency for Promotion of Enterprises

and Investment (APEIN) 0.00 0.10 0.24 0.66 0.76 0.16 0.08 2.00 4.00 0.00 1.80 0.20 6.00

TA for One Stop Shop 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.00 0.00 0.45 0.05 0.50

Operational budget support in initial years 0.00 0.05 0.12 0.33 0.38 0.08 0.04 1.00 4.00 0.00 0.90 0.10 5.00

Equipment in initial years 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.00 0.00 0.45 0.05 0.50

Matching Grant 0.00 0.45 1.08 2.97 3.42 0.72 0.36 9.00 0.00 6.00 8.10 0.90 15.00

Window 1: Sector agnostic

Annual Business Plan Competition 0.00 0.05 0.12 0.33 0.38 0.08 0.04 1.00 0.00 1.00 0.90 0.10 2.00

TA to SMEs (including for strengthening

access to commercial bank loans) 0.00 0.15 0.36 0.99 1.14 0.24 0.12 3.00 0.00 3.00 2.70 0.30 6.00

Training to SME training institutions 0.00 0.05 0.12 0.33 0.38 0.08 0.04 1.00 0.00 1.00 0.90 0.10 2.00

Matching Grant to trade groups and producer

organizations 0.00 0.05 0.12 0.33 0.38 0.08 0.04 1.00 0.00 1.00 0.90 0.10 2.00

Window 2: IE Sector focused

Supporting SMEs for local procurement to EI

projects 0.00 0.15 0.36 0.99 1.14 0.24 0.12 3.00 0.00 3.00 2.70 0.30 6.00

Sub Total 1.3. 0.00 0.55 1.32 3.63 4.18 0.88 0.44 11.00 4.00 9.00 9.90 1.10 24.00

TOTAL 0.00 0.80 1.92 5.28 6.08 1.28 0.64 16.00 4.00 9.31 14.40 1.60 29.31

45

Component II. Support to selected value chains (US$20.5 million)

24. Niger has few ―competitive industries‖, i.e. value chains or sectors which have strong

potential and for which Niger has a proven comparative advantage and a proven track record.

During project preparation, an exhaustive long-list of such value chains was identified in

discussions with the Government and private sector. These value chains included: mining and

enterprises/SMEs and services providers to major mining companies, onion, meats and the

butchery industry, sesame, cowpeas, souchet, Arabic gum, handicraft, construction and real

estate industry and small and/or large scale irrigation for fruit and vegetable related to the

Kandadji barrage.

25. It was decided that the project will identify and support two value chains that would offer

high growth potential. The project will aim to increase the incentive to invest in these identified

value chains by improving their competitiveness. The process of identifying these value chains

was supported by the World Bank Group‘s Competitive Industries Practice.

26. Based on analytical studies available, and the discussions held during project preparation,

two value chains (i.e. extractive industries and service providers to major extractive industry

companies; and the meat and butchery value chain) have emerged as project priorities.

27. Extractive industries (EI) value chain. It includes mining and oil accounts for three

percent of the GDP and 40 percent of exports. As a result of recent FDI, oil and mining exports

are projected to triple between 2012 and 2016 and to accelerate GDP growth from less than four

percent in 2011 to about 14 percent in 2012. Further, based on discussions with the authorities, it

was evident that the EI value chain: (i) has high potential to offer strong upside in terms of

growth, employment and spillovers effects (cost recovery and economic linkages); and (iii)

offers opportunities for successful reform aimed at bridging the competitiveness gap and

addressing market failures (high ratio of capital to labor, little integration with the rest of the

economy, revenue volatility). Acknowledging the criticality of EI for Niger, the project will

focus on strengthening the oversight of oil and mining projects to maximize their contribution to

Niger‘s economy. Given the low labor intensity of EI and the high rate of demographic growth,

the project aims to support the Government‘s efforts to use the extractive sector as an engine for

industrialization and job creation in related or complementary sectors.

28. Meat and butchery value chain. Of all the potential ―competitive industries‖, it was

indicated during discussions with the authorities that the meat and butchery value chain (i) is

directly linked to bottom-of-pyramid; (ii) has high potential to offer strong upside in terms of

growth and spillovers effects (cost recovery and economic linkages); and (iii) offers the

feasibility of successful intervention in terms of ability to bridge the competitiveness gap,

likelihood that policy failures could be addressed and the presence of a private sector able to

address market failures. Accordingly, meat and butchery value chain is a strategic priority for the

Government and private sector.

29. The project will support the development of these two value chains as well as private

investment by helping (i) improve their organization; (ii) enhance the functioning of input

markets; (iii) support the establishment of quality standards for key products; and (iv) finance

needed public investment to attract private investment especially the main trade corridor between

Niger and Nigeria (the main export market for meat in Niger).

46

30. Activities financed under this component will complement and leverage achievements

made under other existing operations including the PRODEX and the PIP. For example, the

project will leverage PRODEX work in export promotion of high value commodities and in

working with producers of good quality livestock as well as producer‘s associations. They will

also complement the matching grants mechanism under component 1 and the support to the K2M

corridor under Component 3.

The project will support the following sub components:

Sub-component 2.1: Support to the extractive industries value chain (US$11.90 million)

31. The ongoing expansion of the oil and mining sectors brightens medium-term prospects.

The mining sector has been the biggest source of FDI in the country. Mining FDI grew from

US$116 million in 2007 to nearly US$700 million in 2009. Between 2010 and 2013, mining FDI

is expected to reach unprecedented levels with the development of the Azelik deposit (about

US$30 million FDI) and the Imouraren mine (about US$1.7 billion FDI, including 10 percent

local procurement). The two mines are expected to bring about US$75 million in fiscal revenues,

and additional revenues from the marketing of the Government‘s share of production (33.35

percent for Imouraren and 25.71 percent for Azelik). Niger officially became an oil producer

this year with the coming on stream of three oil deposits in the Agadem basin and the 20 000 bpd

refinery at Zinder that has entered into production since November 2011. The estimated FDI

inflows associated with the development of the Agadem oil bloc were US$1.3 billion for the oil

field, US$350 million for the pipeline, and about US$1.2 billion for the Zinder refinery. In

addition, the Trans-Saharian Gas Pipeline, of which Niger is expected to share 841 km (out of an

estimated 4,128 km-long pipeline across Nigeria, Niger and Algeria) will bring additional FDI

representing Niger‘s share of the estimated US$13 billion for installing the pipeline and

associated gathering centers.

32. The growth of the extractive industries is constrained by a number of challenges,

including: outdated policy, legal and regulatory framework, inadequate fiscal regime, weak

institutional capacity, unclear role of the State, unregulated artisanal mining, and weak

integration of extractive industries with the rest of the economy.

33. The objective of this subcomponent is to help (i) improve the policy and regulatory

framework to support diversification of mineral production; (ii) strengthen the institutional

capacity for efficient management of the extractive industries and (iii) integrate EI project into

local and regional development.

The project will finance the following activities:

34. Provide TA and capacity building to the Government to help improve the policy and

regulatory framework to support diversification of mineral production by (i) updating mining and

petroleum laws and regulations; (ii) optimizing the fiscal regime for mining and petroleum

development; (iii) preparing specific environmental, health and safety regulations for mining and

petroleum; (iv) designing an environmental management framework for mining and petroleum;

(iv) proposing an optimal revenue management mechanism and drafting the related legal and

regulatory framework, fiduciary arrangements, governance structure and bylaws; and (v)

reforming the policy and regulatory framework for artisanal and small-scale mining.

35. Strengthening the Government institutional capacity for efficient management of the

extractive industries by (i) building institutional capacity for policy management of the EI sector;

47

(ii) providing capacity building to Government for contracts negotiations, including financial and

economic modeling, review of technical and feasibility reports, updating model agreements for

specific commodities, and developing negotiations strategies; sector monitoring (including

inspections, technical, environmental and financial audits, petroleum and oil accounting and

finance, forensic accounting, market trend monitoring); (iii) revamping Government technical

capacity for inspection, audits, monitoring, and modeling; (iv) improving mineral cadastre

management; (v) purchasing of software licenses (including annual support and maintenance

fees) and hardware (laptops, servers, plotters, etc.) to allow the oil regulatory agency or Ministry

of Energy and Hydrocarbons and Mining to store and analyze geological and geophysical data;

(vi) financing an advisor to deliver hands-on training to oil regulatory agency or Ministry of

Energy and Hydrocarbons, establish capacity to perform core functions relating to licensing and

exploration, and advise the government and other officials on policy decisions as needed; (vii)

rehabilitating sample preparation and analysis labs at CRGM; (viii) upgrading the GIS and

petroleum data centers; (viii) organizing and formalizing artisanal and small-scale mining; and

(ix) promoting investment in new mineral targets.

36. Integrating EI project into local and regional development by (i) developing a supplier

database (through a local content development report pre-financed under the project) and

identifying high-potential local supply opportunities; (ii) developing value chains around EI

projects by helping the Government assess the sources of broad-based growth around planned EI

projects and the potential synergies and complementarities between EI activities and non-EI

sectors; (iii) matching local industries with EI industries and building partnerships between small

businesses and large companies in local economic integration and value chain management by

the development of upstream linkages with producers of local goods and services to EI firms,

sideways linkages among related non-EI industries or downstream linkages (further refining for

oil, processing or value-added products for minerals); (iv) designing and implementing the

capacity building, financial support, advisory and business incubation needed to prepare local

SMEs to take advantage of local procurement and business partnership opportunities.

Sub-component 2.2: Support to the meat and butchery value chain (US$8.60 million)

37. Livestock is one of the main foundations of Niger‘s economy, accounting for 15 percent

of Niger‘s GDP. Animal husbandry is practiced by over 87 percent of the workforce. This

includes sheep and goat (20 million animals), cattle (7.4 million animals); dromedaries and

camels (1.5 million), donkeys (1.5 million) and horses (230,000). According to 2008 census

statistics, Maradi has 15 percent of Niger‘s total cattle, 16.5 percent sheep, and 17.7 percent

goats. Breeding in Maradi represents 18 percent of the wealth of the local population. Retail

prices of fresh meat: €3.40 / kg for meat from sheep or goat, € 4.20/ kg for cattle meat and €3.50

/ kg for offal (lungs, heart, liver, intestine and tripe). The heads and feet are usually sold cooked. 13

Export of live cattle and meat represents nearly 12 percent of Niger total exports (90 percent of

which goes to Nigeria and the remaining to Cote d‘Ivoire and Gabon). Besides the export of live

animals mostly to Nigeria, meat production is also growing in Niger. The total production of

meat produced has grown from 54,860 tons (valued at CFAF65,8 billion) in 2002 to 72,400 tons

(valued at CFAF86,8 billion) in 2005 and about 95,000 tons in 2006. There is significant

potential in the formalization of the butchery industry and for development of a formal private

13

Meat prices have increased sharply in Nigeria the main market Niger targets: between, 2003 and 2005, the price of

beef increased by 30. Prices of most types of meat are 2-3 times international levels according to Nigeria, Product

Value Chain Analysis, Consilium International, 2008

48

sector in meat production given the large number of small and informal butchers and the

abundant availability of livestock. Butchers are organized into seven associations/Groupement

d’Intérêt Economique (GIE) in Niamey and Maradi representing individuals and enterprises and

their associations.

38. The Government wants to reduce the flow of live cattle vis-à-vis meat and meat by-

products, so as to increase the value added of livestock. Further, the potential for development of

a formal private sector in meat production and the formalization of butchery industry in Niger is

immense given the abundant availability of livestock, higher meat yield per animal in Niger

compared to other meat producing countries in the region and the large number of small and

informal butcheries. They are into seven associations/Groupement d’Intérêt Economique (GIE)

in Niamey and Maradi representing around 800 people and their associations (livestock

wholesalers, intermediaries/brokers, meat and livestock exporters etc.). The competitive

advantages and opportunities in Niger‘s meat and butchery industry include:

(i) the high quality of Niger meat which is very appreciated by consumers in regional

markets;

(ii) the existence of possibilities of fattening of livestock along the Niger river and the

urban centers;

(iii) the high and growing demand from Nigeria (meat consumption in Nigeria is growing

at 6-7 percent annually and would grow faster as meat consumption per capita is

lower than neighboring countries and only 61 percent of the local consumption in

covered by local production) ; and

(iv) the existence of centuries old knowhow in butchery that is well recognized in regional

markets as well as a domestic concentration of many small informal private entities.

39. Despite the many competitive advantages, the selected value chains face several

challenges in addition to a poor investment climate. The ability of the butchery sector in Niger to

serve even the domestic market has been constrained due to a lack of capacity of the Niamey

slaughterhouse and an inability to operate at capacity at the Maradi slaughterhouse. This has

resulted from population growth, a lack of spare parts and capital investment, including the lack

of a cold chain, and the need for upgrading of skills. This, in turn, has led to operational

inefficiencies and an inability to develop value-added products, further compounded by

weaknesses in industry associations and a dearth of working capital among industry participants.

Challenges include:

40. Poor quality of slaughterhouses infrastructure: Niger has four refrigerated

slaughterhouses located in Niamey, Maradi, Zinder and Tahoua. Consumption data reveals that

there is a need for both an expanded slaughterhouse in Niamey as well as another in Maradi. All

slaughterhouses and sacrifice areas are characterized by lack of basic hygiene and poor

organization. Moreover, lack of maintenance of infrastructure and equipment has caused a

progressive deterioration of the slaughterhouses, resulting in previously automated work now

being replaced by manual labor. The breeding and its associated industrial activity has great

potential for development of the economy of Niger, a leading meat producer in the area.

41. Thousands of cattle, goat and sheep are transported from the Niger mostly to Nigeria live

each month, or sold though border markets. The practice is costly in terms of loss of weight and

condition for animals and transport. It has long been recognized that slaughtering animals in the

49

Niger and transporting meat would be more efficient. Further, slaughtering practices, whether

traditional open air or in state owned slaughterhouses, are inefficient and represent a potential

health hazard.

42. In this context, the rehabilitation of slaughterhouses is a priority for the Government and

stands as an important activity within the Poverty Reduction Strategy. Currently, the

slaughterhouses of Niamey and Maradi are in a borderline situation, generated by three

fundamental problems: (i) badly deteriorated facilities, infrastructure and equipment; (ii) poor

operational management and hygienic practices; and (iii) capacity deficiencies of officials and

workers.

43. Meat production in the slaughterhouse in Maradi is below the productive capacity of

seven tons per day for which it was designed. During 2010, the estimated population of Maradi

was 530,000, and volume of meat produced in the slaughterhouse was 4.0 tons per day, with

approximately an equal amount coming from informal slaughtering of animals in the towns and

villages. By 2020, the estimated population of Maradi will be 590,000, necessitating an increase

in current productive capacity. In Niamey, the above factors combined with high demand have

caused production to overflow into the surrounding outside areas, approximately doubling

production compared to the initial intended capacity of the slaughterhouse of 20 kg per when it

was built. The population of Niamey in 2010 was 1.30 million which is projected to increase to

1.35 million by 202014

. The slaughterhouse was originally designed for a population of 400,000,

implying that current total production would need to grow more than threefold just to cope with

local population and demand.

44. Low capacity of private sector involved in the meat industry: As indicated above, Niger

has many centuries old knowhow in butchery as well as a domestic concentration of many small

private butcheries. However, many of the entities are in the informal sector and have limited

managerial capacities. Among the informal entrepreneurs in the industry, most do not maintain

any sort of books or written accounts. These are clear indicators of weak entrepreneurial

capacities and have as consequence very low level of productivity. Based on analytical data, the

key areas of capacities gap in SMEs are: (i) record keeping; (ii) calculation of costs; (iii) fixing

prices; (iv) managing stocks; (v) marketing; (vi) business planning and approaching a financial

institution.

45. Bottlenecks to export: Existing expertise and activities has not translated into export sales

of value add products (e.g. meat rather live animal; prime cuts of meat rather than basic raw

meat) due to: (i) low quality and lack to accreditation services to enable the industry to

implement food safety systems such as hazard analysis and critical control points (HACCP)

which are needed to meet international food safety standards (ISO 22000); (ii) unofficial barriers

to export meat to Nigeria despite the ECOWAS agreement and the existence of bilateral treaty

between the two countries through their Joint Commission.

46. The project will work to strengthen the domestic market meat market and butchery

industry. To this end, the project will finance (i) investment in the Niamey and Maradi abattoirs

for the specific purpose of increasing their production capacity and efficiency; (ii) the provision

of a cold chain system including a refrigerated warehouse and transportation equipment; (iii) the

installation of waste water treatment systems (for the separation of animal waste at

14

Source: Government projections.

50

slaughterhouses and meat processing plants which reduces the amount of materials and other

pollutants released into the watercourses); and (iv) capacity building for industry associations to

enable them to better represent, and provide needed services to, their members. In order to

enhance the Niger meat ―brand‖ by building on the perceived excellence of meat from Niger, the

project will provide equipment and technical assistance to enable the Niamey and Maradi

abattoirs to attain certification of regionally accepted quality and hygiene standards. This will

include training of abattoir management and staff to improve hygiene and sanitation practices, as

well as in improved management and worker skills, and assistance to the Ministry of Livestock

for developing related regulation and enforcement capacity.

47. The project will also finance TA to help the Ministry of Livestock explore ways to

improve the management of the slaughterhouses, including through a lease contract or ultimately

spin off the commercial functions (such as the transport of meat to retailers) to private sector and

the GIE being supported through the project.

48. The project will also provide assistance directly to the major Groupements d’Intérêt

Economiques (GIE) to build its capacity to represent its members and to provide services, and

will establish a steering committee for the component which will include representatives of the

government and the GIE in order to ensure transparency, public/private dialogue and joint

decision making.

51

Component II. Support to selected value chains

By Sub Components 2012 2013 2014 2015 2016 2017 2018 IDA Borrower Beneficiaries/ Local Foreign Total

other Donors

Component 2.1. Extractive Industries value chain 0.00 0.60 1.43 3.93 4.52 0.95 0.48 11.90 0.00 0.00 10.71 1.19 11.90

Improving the policy and regulatory framework for EI diversification 0.00 0.10 0.24 0.66 0.76 0.16 0.08 2.00 0.00 0.00 1.80 0.20 2.00

Strengthening institutional capacity for mineral sector

management 0.00 0.28 0.67 1.85 2.13 0.45 0.22 5.60 0.00 0.00 5.04 0.56 5.60

Preparing for oil development 0.00 0.18 0.42 1.16 1.33 0.28 0.14 3.50 0.00 0.00 3.15 0.35 3.50

Integrating EI projects into local and regional development 0.00 0.04 0.10 0.26 0.30 0.06 0.03 0.80 0.00 0.00 0.72 0.08 0.80

Sub Total 2.1. 0.00 0.60 1.43 3.93 4.52 0.95 0.48 11.90 0.00 0.00 10.71 1.19 11.90

Component 2.2. Meat and butchery industry 0.00 0.43 1.03 2.84 3.27 0.69 0.34 8.60 0.96 0.00 7.74 0.86 9.56

Strengthening domestic market 0.00 0.17 0.40 1.09 1.25 0.26 0.13 3.30 0.37 0.00 2.97 0.33 3.67

Study to identify equipment and civil works needs in

Niamey slaughterhouse 0.00 0.02 0.04 0.10 0.11 0.02 0.01 0.30 0.03 0.00 0.27 0.03 0.33

Equipment for upgrade and cold chain in Niamey slaughterhouse 0.00 0.08 0.18 0.50 0.57 0.12 0.06 1.50 0.17 0.00 1.35 0.15 1.67

Civil work for construction, upgrade and cold chain in

Niamey slaughterhouse 0.00 0.08 0.18 0.50 0.57 0.12 0.06 1.50 0.17 0.00 1.35 0.15 1.67

Strengthening export market 0.00 0.27 0.64 1.75 2.01 0.42 0.21 5.30 0.59 0.00 4.77 0.53 5.89

Study for upgrade of Maradi slaughterhouse 0.00 0.02 0.04 0.10 0.11 0.02 0.01 0.30 0.03 0.00 0.27 0.03 0.33

Equipment for upgrade and cold chain in Maradi

slaughterhouse 0.00 0.08 0.18 0.50 0.57 0.12 0.06 1.50 0.17 0.00 1.35 0.15 1.67

Civil work for construction, upgrade and cold chain in Maradi slaughterhouse 0.00 0.08 0.18 0.50 0.57 0.12 0.06 1.50 0.17 0.00 1.35 0.15 1.67

TA for improvement of slaughterhouse governance and

operations 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.06 0.00 0.45 0.05 0.56

TA for attaining certification of internationally accepted

quality and hygiene standards 0.00 0.05 0.12 0.33 0.38 0.08 0.04 1.00 0.11 0.00 0.90 0.10 1.11

Capacity building for butchery associations 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.06 0.00 0.45 0.05 0.56

Sub Total 2.2. 0.00 0.43 1.03 2.84 3.27 0.69 0.34 8.60 0.96 0.00 7.74 0.86 9.56

TOTAL 0.00 1.03 2.46 6.77 7.79 1.64 0.82 20.50 0.96 0.00 18.45 2.05 21.46

52

Component III. Policy Reforms, Infrastructure and Services to harness the Relationship

between Niger and Nigeria through the Kano, Katsina, Maradi (K2M) corridor (US$9.1

million)

49. The objective of this component is to help foster trade and regional integration with

Nigeria and attract private investment in the K2M corridor.

50. The project will help develop the K2M corridor by financing required institutional

reforms, infrastructure and services in the corridor in Maradi close the Nigeria border to target

firms that will export to the Nigerian market and attract Nigerian industries offering them the

potential of the WAEMU market and better security and services and utilities. The investments

and reform will be designed to primarily serve the supply chains supported by the project.

51. The project would provide support for the following activities:

(i) Support the Niger-Nigeria Joint Commission for cooperation to implement the

action plan approved by the Joint Commission ministers in January and

September 2011 to develop the Kano, Katsina and Maradi (K2M). This includes

(i) implementation of bilateral free trade agreements between the two countries;

and (ii) support to the thematic subgroups of the joint commission for the

facilitation of policy dialogue and the organization of exchange for products and

programs supported by the project;

(ii) Finance a study for the development of a master plan and engineering designs for

updating the existing trade corridor in Maradi (30 km for Nigeria border) and

identifying the exact location of the required access roads that will financed by

the project;

(iii)In connection with the plan, provide TA to the local community in Maradi to

better take advantage of the corridor, participate in the design of the plan and the

development of the corridor;

(iv) Finance the rehabilitation of access roads;

(v) Provide equipment for upgrading the slaughterhouse and cattle markets in the

corridor.

52. Some of the investment could be done with private sector participation though a PPP

arrangement. The sites of the infrastructures (access road) will be defined by the master plan

which will be developed during the first year of project implementation.

53

Component III. Policy Reforms, Infrastructure and Services to harness the Relationship between Niger and Nigeria through the Kano, Katsina, Maradi (K2M) corridor

By Sub Components 2012 2013 2014 2015 2016 2017 2018 IDA Borrower Beneficiaries Local Foreign Total

Component 3.1. Support to develop the K2M

corridor 0.00 0.06 0.13 0.36 0.42 0.09 0.04 1.10 0.00 0.00 0.99 0.11 1.10

Consultancy for a master plan and support to

develop K2M corridor including to the Maradi

local Community 0.00 0.03 0.06 0.17 0.19 0.04 0.02 0.50 0.00 0.00 0.45 0.05 0.50

Support to Joint Commission to remove barriers

to trade with Nigeria (TA, communication etc.) 0.00 0.03 0.07 0.20 0.23 0.05 0.02 0.60 0.00 0.00 0.54 0.06 0.60

Sub Total 3.1. 0.00 0.06 0.13 0.36 0.42 0.09 0.04 1.10 0.00 0.00 0.99 0.11 1.10

Component 3.2. Rehabilitation of secondary

access roads and border markets along the

corridor 0.00 0.40 0.96 2.64 3.04 0.64 0.32 8.00 1.00 0.00 7.20 0.80 9.00

Equipment and materials for upgrading selected

border markets along the corridor 0.00 0.10 0.24 0.66 0.76 0.16 0.08 2.00 0.25 0.00 1.80 0.20 2.25

Civil work for the rehabilitation/construction of

secondary access roads to Nigeria 0.00 0.30 0.72 1.98 2.28 0.48 0.24 6.00 0.75 0.00 5.40 0.60 6.75

Sub Total 3.2. 0.00 0.40 0.96 2.64 3.04 0.64 0.32 8.00 1.00 0.00 7.20 0.80 9.00

TOTAL 0.00 0.46 1.09 3.00 3.46 0.73 0.36 9.10 1.00 0.00 8.19 0.91 10.10

54

Component IV. Project Management (US$4.4million)

53. This component will provide support for project implementation. The project will be

managed on day-to-day basis through a Project Implementing Unit (PIU) within the Ministry of

Planning (see details in the institutional arrangements section). A steering committee will

provide oversight to the project implementation. Components 1.2 and 1.3 will be implemented

by the Chamber of Commerce and APEIN. Financing to be provided for the PIU may include:

equipment; consultant compensation; operating costs; organizational and systems development;

training, capacity building; and technical assistance.

55


By Sub Components 2012 2013 2014 2015 2016 2017 2018 IDA Borrower Beneficiaries Total

Component 4.1. Project Coordination 0.00 0.53 0.53 0.53 0.53 0.53 0.53 3.20 0.08 0.00 3.28

Operational expenses for PIU 0.00 0.10 0.10 0.10 0.10 0.10 0.10 0.60 0.08 0.00 0.68

Equipments (computer, copiers, printers, vehicles) 0.00 0.03 0.03 0.03 0.03 0.03 0.03 0.20 0.00 0.00 0.20

Compensation PIU staff 0.00 0.23 0.23 0.23 0.23 0.23 0.23 1.40 0.00 0.00 1.40

Training/Study Tours 0.00 0.02 0.02 0.02 0.02 0.02 0.02 0.10 0.00 0.00 0.10

Communications campaign (internal and external) 0.00 0.02 0.02 0.02 0.02 0.02 0.02 0.10 0.00 0.00 0.10

Steering Committee Meetings 0.00 0.03 0.03 0.03 0.03 0.03 0.03 0.20 0.00 0.00 0.20

Audit and other studies (including annual surveys for M&E) 0.00 0.03 0.03 0.03 0.03 0.03 0.03 0.20 0.00 0.00 0.20

Midterm review 0.00 0.03 0.03 0.03 0.03 0.03 0.03 0.15 0.00 0.00 0.15

Gov. ICR 0.00 0.02 0.02 0.02 0.02 0.02 0.02 0.10 0.00 0.00 0.10

Communications campaign (internal and external) 0.00 0.03 0.03 0.03 0.03 0.03 0.03 0.15 0.00 0.00 0.15

Sub Total 4.1. 0.00 0.53 0.53 0.53 0.53 0.53 0.53 3.20 0.08 0.00 3.28

Component 4.2. Refinancing of PPA 1.20 0.00 0.00 0.00 0.00 0.00 0.00 1.20 0.00 0.00 1.20

Refinancing of PPA 1.20 0.00 0.00 0.00 0.00 0.00 0.00 1.20 0.00 0.00 1.20

Sub Total 4.2. 1.20 0.00 0.00 0.00 0.00 0.00 0.00 1.20 0.00 0.00 1.20

TOTAL 1.20 0.53 0.53 0.53 0.53 0.53 0.53 4.40 0.08 0.00 4.48

56

Project Financing

54. Financing Instrument. The lending instrument is a Specific Investment Loan (SIL). A

SIL (instead of the Technical Assistance Loan) is proposed as it is a flexible instrument that can

finance the diverse activities which are needed to support the private sector, such as technical

assistance, equipment and civil work, and provision of financial and non-financial services to

SMEs.

55. Project cost and financing. An International Development Association (IDA) Credit of

SDR32.3 million (US$50.00 million equivalent) is proposed. The Government‘s and

beneficiaries‘ contribution is US$15.34 million equivalent (of which US$9.31 million is the

matching grant beneficiary counterpart funding, US$4.00 million is the Government‘s

contribution to APEIN operating costs, US$1.96 million is the Government‘s contribution to

safeguard related expenses including compensation and required social infrastructure and

US$0.08 million is the Government compensation to the focal points to ensure timely

availability for counterpart funds, the Government will be required to deposit into a separate

counterpart funds account on a quarterly basis the amount of counterpart funds needed for the

following quarter.

Table 1 – Project cost and financing (US$ million)

IDA Borrower Beneficiaries Local Foreign Total


Component 1.1. Support to Public Private

Dialogue 2.50 0.00 0.00 2.25 0.25 2.50

Component 1.2. Export Promotion 2.50 0.00 0.31 2.25 0.25 2.81


Investment Promotion 11.00 4.00 9.00 9.90 1.10 24.00

Total Component I. 16.00 4.00 9.31 14.40 1.60 29.31

Component II. Support to selected value

chains

Component 2.1. Extractive Industries value chain 11.90 0.00 0.00 10.71 1.19 11.90

Component 2.2. Meat and butchery industry 8.60 0.96 0.00 7.74 0.86 9.56

Total Component II 20.50 0.96 0.00 18.45 2.05 21.46

Component III. Policy Reforms, Infrastructure and Services to harness the Relationship between Niger and Nigeria

through the Kano, Katsina, Maradi (K2M) corridor

Component 3.1. Support to develop the K2M

corridor 1.10 0.00 0.00 0.99 0.11 1.10

Component 3.2. Rehabilitation of secondary

access roads and border markets along the

corridor 8.00 1.00 0.00 7.20 0.80 9.00

Total Component III 9.10 1.00 0.00 8.19 0.91 10.10


Component 4.1. Project Coordination 3.40 0.08 0.00 3.06 0.34 3.48

Component 4.2. Refinancing of PPA 1.00 0.00 0.00 0.90 0.10 1.00

Total Component IV 4.40 0.08 0.00 3.96 0.44 4.48

Total 50.00 6.03 9.31 45.00 5.00 65.34

57

Annex 3: Implementation Arrangements

A. Project administration mechanisms

1. Project Institutional and Implementation Arrangements

1. Implementation arrangements feature several players whose roles will be further detailed

in the Project Implementation Manual, the finalization and approval of which will be a condition

of effectiveness. These arrangements take into consideration capacity limitations in Government

and build on similar successful projects in Niger. The Government authorities have proposed,

and the World Bank has agreed, that the Ministry of Planning should take the lead in the

oversight of the Project. The Project will be implemented by a Project Implementation Unit,

designated focal points in each of beneficiary ministries and institutions under the supervision of

a steering committee.

2. By having implementation responsibility in the hands of designated persons in the

beneficiary agencies, it is expected that this will result in more ownership of the project at the

local level and sustainable results at the end of the project.

2. Implementation Arrangements Structure

3. Project implementation arrangements include the following structures:

58

4. Project Steering Committee. The project will be overseen by a Steering Committee (PSC)

comprising of high level representatives of the various institutions and will have a strategic

function role. The Steering Committee will be chaired by the Minister of Planning. Membership

of the PSC will include one representative of all Project beneficiary institutions, namely the

Ministry of Commerce, the Ministry of Industry and Mining, the Ministry of Energy and

Hydrocarbons, the Ministry of Livestock, the Ministry of Foreign Affairs, the Niger NGA joint

commission, the Chamber of Commerce, and the butchers associations. It will also include

members from private sector and NGOs. The PSC will meet on a quarterly basis and its

responsibilities include providing strategic guidance and oversight for the project, and

proactively address any major problems affecting project implementation. The PIU within the

Ministry of Planning will act as the Secretariat of the Project Steering Committee (including

preparing the meetings, elaborating the documents for the meeting, recording the minutes of the

meeting, etc.).

5. A PIU within the ministry of Planning will be responsible for project coordination and

implementation. The PIU staff will be competitively recruited. They will be responsible for all

procurement, disbursement, accounting, financial reporting and monitoring and evaluation of the

project. The PIU would be composed of the following staff: (i) a Coordinator; (ii) a procurement

specialist; (iii) a financial management specialist; (iv) an accountant; (v) a monitoring and

evaluation specialist; (vi) a meat and butchery specialist, (vii) a mining specialist; and (viii) an

Environmental and Social safeguard Specialist. The PIU will prepare quarterly and annual

reports recording the progress of the project. Project supervision will be carried out twice a year

and a mid-term review will take place in 2015 with the objective of assessing progress to date

and if necessary to re-direct the project by integrating additional lessons learned and realities on

the ground. All project accounts will be audited annually by independent auditors acceptable to

IDA and will be submitted to IDA no later than six months after the closing of the fiscal year in

Niger.

3. Implementation of project components

6. Management and implementation of individual project components/project

subcomponents will be mainstreamed to the ministries involved in the project as well as private

sector representative bodies and other stakeholders (through designated focal points who will

work closely with the PIU.

7. The Chamber of Commerce and Industry/ANIPEX. The Chamber of Commerce will be

responsible for the export promotion component to support ANIPEX.

8. The Agency of Enterprise and Investment Promotion of Niger (APEIN): On the basis of

feasibility study on enterprise development financed by the Government, it was decided to create

an autonomous agency for the promotion of enterprise and investment in the country. This

agency would provide non financial services and play the role of One-Stop-Shop to facilitate

enterprise creation. The Agency of Enterprise and Investment Promotion will be responsible for

the implementation of the enterprise development component. The project will support its

creation, operational costs and capacity strengthening and operational costs through the

recruitment of a private company that will assist in implementing the Matching Grants

component.

9. Focal Points. To ensure coordination between the PIU and beneficiary institutions, each

will designate a focal point. These institutions are the Ministry of Commerce, the Ministry of

59

Industry and Mining, the Ministry of Energy and Hydrocarbons, the Ministry of Livestock, the

Ministry of Foreign Affairs, the Niger Nigeria joint commission and the Niamey and Maradi

Slaughterhouses.

10. The role and responsibility of the focal point will be clearly detailed in the Manual of

Implementation and their terms of references. They will work in close collaboration with the

PIU, APEIN and the Chamber of Commerce. The project will strengthen the capacity of the

focal point through technical assistance and equipment. Civil servant focal points will be

compensated by the Government through its counterpart fund as set out in its current

compensation legal framework.

11. A Project Operational Manual (POM) including a Project Implementation Plan and

Procurement Plan will be finalized by project effectiveness. The POM will include all periodic

reporting, monitoring and evaluation arrangements throughout the life of the project and will also

include independent annual audits.

12. Agreements. For the purposes of the Project, the International Development Association

(IDA) will enter into Project Agreement with APEIN and the Government will on-grant to the

APEIN the financing proceeds allocated to the components under its responsibility, under

subsidiary agreement with it.

13. The role of APEIN as the executing agency for the matching grants sub-component will

be spelled out in the Subsidiary Agreement to be signed between the Government and APEIN.

The signed Subsidiary Agreement acceptable to IDA, will be a condition of disbursement of the

corresponding funds of the credit.

B. Financial Management and Disbursement

14. Capacity assessment. A Project Implementation Unit (PIU) will be established within the

Ministry of Planning specifically for the purpose of managing the Niger Competitiveness Growth

Project. The entity – Agence de promotion des Entreprises et des Investissements au Niger

(APEIN) that will manage the Matching Grants component will also be established. This entity

will be autonomous. As both institutions do not exist, their capacity cannot be assessed. In order

to anticipate possible capacity constraints, the following measures will be adopted:

(i) Detailed responsibilities of the organs of the PIU and APEIN as well those of the

staff of the both institutions will be described in the Manual of Procedures. All key staff

will be recruited according to the Guidelines for the Selection and Employment of

Consultants by World Bank Borrowers, edited in May 2004 and revised in October and

May 2010;

(ii) A Project Implementation Manual will be developed by Effectiveness. It will

clearly describe the project implementation aspects throughout the project

implementation cycle. The manual will also clearly detail the role of each

actor/stakeholder involved in the project; and

(iii) An administrative, financial and accounting procedures manual will be developed

by negotiations and will clearly describe the procedures to be used to successfully

manage the PIU.

15. Overall assessment: Overall, the residual financial management risk of the project is

rated as High. The PIU and APEIN, yet to be set up, will oversee financial management of the

60

project. The arrangements will be set up to ensure that minimum fiduciary requirements under

OP/BP10.00 are in place for the proposed project. As a result of the capacity constraint, the

following are included as effectiveness conditions: (i) A financial management specialist will be

recruited competitively and based in the PIU. S/he will be supported by an accountant; (ii) the

project will recruit and finance a second FM specialist under component 1.3 implemented by

APEIN; (iii) a manual of procedures will be developed and will include internal controls, budget

process, assets safeguards, and to clarify roles and responsibilities of all stakeholders. Other FM

staff at each ministry and agency involved will be designated for the implementation of the

project‘s activity. The PIU will purchase and install an appropriated accounting software (ii) and

recruit an external auditor based on terms of reference acceptable to the Bank.

Project financial arrangements will operate as follows:

16. Designated Account: A Designated Account will be opened in a commercial bank in

Niger that is acceptable to the Association and managed by the PIU according to the

disbursement procedures described in the disbursement letter. Documentation for all transactions

shall be retained by the PIU and shall be made available for audit and to the Bank and its

representatives, if requested. Detailed disbursement procedures will also be stipulated in the

administrative, financial and accounting manuals. A second Designated Account for the

management of matching grants funds will be opened and operated by APEIN. The initial

deposit will be based on APEINs approved work plan. Subsequent disbursements into the DA

will be based on SOEs, and accompanied by Withdrawal Applications, reconciled bank

statements and copies of all bank statements submitted for review by the PIU

17. Budgeting and Funds Flow: the budget process will be clearly stipulated in the

administrative, financial and accounting manuals. Annual budgets and work plans will be

coordinated and prepared by the PIU and APEIN. They will be approved by the Steering

Committee with Bank no-objection at the beginning of the year and any changes in the budget

and work plans will also be approved by the Committee with the Bank no-objection. In addition,

the Steering Committee will (i) discuss and review implementation strategies; ii) endorse the list

of beneficiaries as prepared by the PIU and APEIN on the basis of well designed targeting

criteria; and (iii) monitor and assess the implementation and results of the Project.

18. Accounting: Project accounting, policies and procedures will be documented in the

administrative, financial and accounting procedures manual. An accounting software with multi

project and multi site capabilities will be used to process financial information and prepare

interim financial statements as well as annual financial statements. Detailed FM documentation

will be maintained in the Project files.

19. Internal controls: The Steering Committee and the PIU Coordinator and APEIN will

ensure that staffing arrangements in the financial management department are in place and

sufficient to ensure adequate internal controls, preparation, approval and recording of

transactions as well as segregation of duties. The financial management and administrative

procedures will be outlined in the administrative, financial and accounting manual to be updated

when needed with the agreement of the Steering Committee and with Bank no-objection. An

internal audit function will be set up at the PIU and an internal auditor hired.

20. Financial reporting: The PIU Coordinator will be responsible for the overall reporting on

the entity. Through the Financial management specialist in the Project, S/He will ensure that the

quarterly Interim Financial Reports are prepared and transmitted. The reporting format will be

61

documented in the administrative, financial and accounting manual. The quarterly Interim

Financial Reports will be furnished to IDA no later than 45 days after the end of the quarter.

Annual financial statements will be prepared by the PIU and APEIN and approved by the

Steering Committee and will be subject to annual external audits.

21. External audits: The annual financial statements of the Project as well as the system of

internal controls will be subject to an annual audit by a reputable, competent and independent

auditing firm, based on terms of reference satisfactory to the Bank. The auditor will provide an

opinion on the financial statements of the project prepared by the PIU as per auditing standards

acceptable to the Bank. The audit report will be submitted to the Bank not later than six months

after the end of each financial year. In addition to the audit report, the auditor will also provide a

management letter detailing the status of the internal control systems in the PIU and APEIN.

22. Capacity: To carry out its FM obligations, the PIU and APEIN will set up and install an

accounting system that will ensure the production of financial reports, interim financial reports

and annual financial statements to be audited. Newly recruited staff will be trained on Bank

procedures with regards to financial reporting, procurement, disbursements and external auditing

among others.

23. IDA Implementation Support Missions: In addition to the regular internal and external

audits, the World Bank task team will conduct regular supervision missions on a half yearly

basis. During these supervision missions Bank FM Staff will evaluate the FM arrangements to

ensure that they remain adequate for the implementation of the Bank-funded project.

24. Disbursements arrangements: Disbursements from the Credit will follow the transaction-

based method, i.e., traditional Bank procedures: Statements of expenses (SOEs), Direct

Payments, Reimbursement, and Special Commitments. The initial deposit into the Designated

Accounts (one for the PIU and one for APEIN) will be based on a four months forecast prepared

by the PIU and submitted with the Withdrawal Application. Subsequent disbursements into the

DAs will be based on SOEs, and accompanied by Withdrawal Applications, reconciled bank

statements and copies of all bank statements. The supporting documentation for requests for

direct payment should include records which provide evidence of eligible expenditures (copies of

receipt, supplier‘s invoices).

25.

Category Amount of the Credit

Allocated (US$)

Percentage of Expenditures

to be Financed

(inclusive of Taxes)

(1) Goods, works, non-consulting

services, and consultants‘ services

financed with Matching Grants under

Part 1(c)(iv) of the project

9.00 100%


services, and consultants‘ services,

including Training, for Part 1(c)(i), (ii)

and (iii) of the project

2.00 100%

62


services, and consultants‘ services,

including Training and Operating

Costs, for the project, except Part 1(c)

of the project

38.00 100%

(4) Refund of Preparation Advance 1.00 Amount payable pursuant to

Section 2.07 of the General

Conditions

TOTAL AMOUNT 50.00

63

C. Procurement

26. Procurement activities will be supervised by the Project coordinator who will be

competitively recruited and housed within the Ministry of Planning. The Coordinator will be

supported by two procurement specialists based respectively at the PIU and at the level of

APEIN. The procurement specialist will have overall responsibility in carrying the following

activities: (i) managing the overall procurement activities, and ensuring compliance with the

procurement process described in the relevant manuals; (ii) preparing and updating procurement

plan annually; (iii) preparing bidding documents, draft RFPs, evaluation reports, and contracts in

compliance with WB procedures; and (iv) seeking and obtaining approval of national entities and

of IDA on procurement documents as required.

27. Procurement of goods and consultants‘ services will be carried out in accordance with the

‗Guidelines On Preventing and Combating Fraud and Corruption in Projects Financed by IBRD

Loans and IDA Credits and Grants‘ dated October 15, 2006 and updated January 2011, and the

‗Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans

and IDA Credits‘ published by the Bank in January 11 and the ‗Guidelines: Selection and

Employment of Consultants by World Bank Borrowers,‘ dated January 2011, the Financing

Agreement and the Procurement Plan approved by the Bank. Operating Costs include, inter alia,

non civil servant support staff salaries, office space, utilities and office supplies, bank charges,

communications, vehicle operation, maintenance and insurance, building and equipment

maintenance costs, travel costs. These will be procured in accordance with administrative

procedures, acceptable to the Bank and detailed in the relevant manual.

28. Assessment of the agencies’ capacity to implement procurement. The overall Project Risk

for procurement was rated High during pre-appraisal based on the assessment of the proposed

institutional arrangements and the nature of interaction between the different ministries and

agencies that will be involved in project implementation.

29. The key risk identified is that staff involved in the Project who may not have experience

with Bank procedures will be responsible for process control and approval. This could cause

mis-procurement and/or rigidity in the interpretation of Bank procedures, leading to slowness in

procurement decisions, reputational risks to the Bank and the Project, and delays towards

attaining the PDO.

30. The residual project risk for procurement is Substantial after adoption of the following

mitigation measures:

(i) A qualified procurement specialist will be recruited before effectiveness to ensure

compliance with World Bank procurement procedures; S/he will be based within the PIU

at the Ministry of Planning;

(ii) A qualified procurement specialist will be recruited at the level of APEIN to

manage the procurement activities related to the component;

(iii) A manual of administrative, financial and accounting procedures will be prepared

as a condition of effectiveness to clarify the role of each team member involved in the

procurement process, specifically with regards to the review and approval system;

(iv) A workshop will be organized at the beginning of the project to train all key

stakeholders involved in procurement on World Bank procurement procedures and

policies;

64

(v) An adequate filing system would be centralized and set up for the project records

at the PIU (within the Ministry will be developed). The project will finance appropriate

equipment and the Procurement Specialist will be trained to ensure compliance with WB

procurement filing manual.

31. Procurement plan. The Recipient has developed a procurement plan for project

implementation which provides the basis for the procurement methods. This plan has been

agreed upon between the Recipient and IDA during negotiations. Immediately upon approval of

the Credit, and with the Borrower‘s agreement, the plan will be published on the Bank‘s public

website and made available at the Ministry of Planning. The Procurement Plan will be updated in

agreement with the Project Team annually or as required to reflect the actual project

implementation needs and improvements in institutional capacity.

32. Fraud, Coercion and Corruption. All procuring entities, as well as bidders, suppliers and

contractors shall observe the highest standard of ethics during the procurement and execution of

contracts financed under the project in accordance with paragraph 1. 16 of the Procurement

Guidelines and paragraphs 1.23 of the Consultants Guidelines.

33. Frequency of procurement supervision. In addition to the prior review supervision to be

carried out from IDA, the capacity assessment has recommended two supervision missions in the

field and at least one annual post-procurement review. The World Bank Procurement Specialist

based in the Niamey Country Office, will provide continuous support to the Ministry of

Planning, and the implementing agencies. An Independent Procurement review could be carried

out if necessary.

Summarized procurement plan

a. General

(i) Bank‘s approval Date of the procurement Plan: May 3, 2012

(ii) Date of General Procurement Notice: Two weeks after board

(iii)Period covered by this procurement plan: First 18 months of project implementation

b. Goods and Works and non-consulting services

34. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as

stated in Appendix 1 to the Guidelines for Procurement are listed below.

Procurement Method Prior Review Threshold

US$

Comments

1. ICB and LIB (Goods) 300,000

2. NCB (Goods) packages None except for the first contract procured

respectively by PIU and ANIPEX/APEIN and

selected contracts identified in the Procurement Plan

3. ICB (Works) packages and LIB 3 million

4. NCB (Works) packages None except for the first contract procured by the PIU

and the ANIPEX/APEIN, and selected contracts identified in the Procurement Plan

5. (Non-Consultant Services) packages None

Shopping procedures None

Direct contracting All contracts

65

35. Additional mitigation measures: Since the overall procurement risk is substantial, the

following additional mitigation measures will be adopted:

(i) At least once a year, the Association and the Government will agree on a

procurement plan which will detail the procurement methods to be used and specific

contracts to be reviewed by the Bank;

(ii) The Bank will perform prior review of selected NCB contracts which will be

identified and mentioned in the procurement plan; and

(iii) All amendments of contracts raising the initial contract value by more than 15

percent of original amount or above the prior review thresholds will be subject to

prior review by the Bank as determined mandatory in Paragraphs 2 and 3 of Annex 1

of the Bank Procurement Guidelines.

(iv) Post Review: for each contract for goods and public works not submitted to

prior review, the procurement documents will be submitted to IDA post review in

accordance with the provisions of Paragraph 4 of Annex 1 of the Bank‘s procurement

Guidelines. The post review will be based on a ratio of at least one to five contracts.

36. Summary of the Procurement Packages planned during the first 18 months after project

effectiveness.

a. Works Procurement Packages with Methods and Time Schedule

1 2 3 4 5 6 7 8 9

R

ef

N

o.

Description

Estimate

d

Amount

in US $,

000

Procurement

Method

Pre-

qualification

(yes/no)

Prior or

Post

Review

Bid Closing-

Opening

Date

Contract

Signature

Com

ment

s

1 Rehabilitation of the

petroleum data center 1,000.0 ICB NO Prior 2/19/2013 6/28/2013

2 Upgrading/rehabilitating the

GIS and data centers 900.0 ICB NO Prior 3/12/2013 7/19/2013

3

Rehabilitating CRGM

sample preparation/analysis

labs

700.0 ICB NO Prior 3/24/2013 7/31/2013

4

Construction, upgrade and

cold chain in Niamey and

Maradi Slaughterhouses

3,000.0 ICB NO Prior 4/19/2013 8/28/2013

5

Rehabilitation/construction

of secondary access roads to

Nigeria

6,000.0 ICB NO Prior 3/26/2013 8/2/2013

66

b. Goods Procurement Packages with Methods and Time Schedule

c. Selection of Consultants

37. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in

Appendix 1 to the Guidelines Selection and Employment of Consultants:

Selection Method Prior Review Threshold Comments

1. Competitive Methods (Firms) 200,000 US$

2. Competitive Methods (individual consultants) 100,000 US$

2. Single Source (Firms and consultants) All single source consultants will be

subject to prior review

38. Short list comprising entirely of national consultants: Short list of consultants for

services, estimated to cost less than $100,000equivalent per contract, may comprise entirely of

national consultants in accordance with the provisions of paragraph 2.7 of the Consultant

Guidelines.

39. Selection of Consultants Arrangements:

(i) All TOR for the selection of consultants shall be subject to IDA‘s prior

review;

(ii) All amendments of contracts raising the initial contract value by more than 15

percent of original amount or above the prior review thresholds will be subject to

prior review by the Bank as specified mandatory in Paragraphs 2 and 3 of Annex 1 of

the Bank‘s consultant Guidelines;

(iii) For each contract for services not submitted to the prior review, the

procurement documents will be submitted to IDA post review in accordance with the

provisions of Paragraph 4 of Annex 1 of the Bank‘s Consultant Guidelines. The post

review will be based on a ratio of at least one to five contracts;

1 2 3 4 5 6 7 8

Ref

No. Description

Estimated

Amount in

US $ 000

Procurement

Method

Prior or

Post

Review

Bid Closing-

Opening

Date

Contract

Signature

Com

ments

1 Equipment for ANIPEX and APEIN

Vehicles 300.0 ICB Prior 3/5/2013 7/12/2013

Office furniture 300.0 ICB Prior 3/5/2013 7/12/2013

Computer equipment 5400 ICB Prior 3/5/2013 7/12/2013

2 Purchase of software licenses for geo

data assessment 350.0 ICB Prior 3/5/2013 7/12/2013

3 Equipment for upgrade and cold chain

in Niamey and Maradi slaughterhouse 3,000.0 ICB Prior 9/24/2013 1/31/2014

4

Equipment and materials for

upgrading selected border markets

along the corridor

2,000.0 ICB Prior 2/19/2013 6/28/2013

67

(iv) Except as otherwise stated in the procurement plan, consultants‘ services shall

be procured under contracts awarded on the basis of Quality and Cost-based

Selection; and

(v) Other Methods of Procurement of Consultants‘ Services may include Least

Cost Selection; Selection based on Consultants‘ Qualifications; Selection under a

Fixed Budget; Quality Based Selection, Individual Consultants. The Procurement

Plan shall specify the circumstances under which such methods may be used.

d. Consultancy Assignments with Selection Methods and Time Schedule

1 2 5 6 7 8 9

Ref

No. Description*

Estimated

Amount in

US$' 000

Selection

Method

Prior/Post

Review

Estimated Bids

opening/closing

Date

Estimated

contract

signing

date

Comments


1

TA for Public Private Dialogue Working

Groups for Doing Business reforms

through CNIP and Chamber of Commerce

500.0 QCBS Prior 6/26/2013 9/27/2013

5 separate

studies by

Selected DB

2

Study to develop a business plan for

ANIPEX) 100.0 QCBS Prior 7/11/2013 10/14/2013

3 TA to implement ANIPEX Business Plan 200.0 QCBS Post 7/11/2013 10/14/2013

3

Five (5) Transaction Advisors to

Government and ANIPEX to structure

PPP transactions

1,000.0 QCBS Post 9/26/2013 12/30/2013

Recruiting a

firm with five

transactions

advisors

4 TA for One Stop Shop 500.0 QCBS Prior 6/21/2013 9/24/2013

Component II. Support to selected value chains 7/25/2013 10/28/2013

Improving the policy and regulatory framework for EI diversification

5

Updating mining and petroleum policies,

laws and regulations 450.00 QCBS Prior 7/16/2013 10/17/2013

2 separate

studies Mining

and Petroleum

6 Strategic environmental & social study 100.00 QCBS Prior 6/21/2013 9/24/2013

6

Upgrading the fiscal regime for mining

and petroleum 200.00 QCBS Prior 8/1/2013 11/4/20137

7

Preparing environmental and social

regulations for mining and petroleum 250.0 QCBS Prior 6/21/2013 9/24/2013

8

Establishing an environmental

management framework for EI projects 150.0 QCBS Prior 8/9/2013 11/12/2013

9 Preparing EI revenue management policy 250.0 QCBS Prior 8/29/2013 12/2/2013

10

Reforming the policy framework for

artisanal and small-scale mining 600.0 QCBS Prior 6/21/2013 9/24/2013

Strengthening institutional capacity for mineral sector management

11

TA to build institutional capacity for

policy and strategy 300.0 QCBS Prior 11/7/2013 2/10/2014

12

TA to build capacity for negotiation of

mineral development agreements

300.0 QCBS Prior 11/14/2013 2/17/2014

A firm

proposing 4

consultants

13

Mining sector monitoring system to

strengthening capacity for inspection,

audit, and monitoring (including

1,000.0 QCBS Prior 8/29/2013 12/2/2013

A firm

proposing

Consultants to

68

1 2 5 6 7 8 9

Ref

No. Description*

Estimated

Amount in

US$' 000

Selection

Method

Prior/Post

Review

Estimated Bids

opening/closing

Date

Estimated

contract

signing

date

Comments

equipment and training assist

government

(TA to supply

equipment and

provide

training)

14 Improving mineral cadastre management 300.0 QCBS Prior 6/21/2013 9/24/2013

15

Implementation of recommendation on

reforming the policy framework for small

scale mining

300.0 QCBS Prior 4/3/2014 7/7/2014

16

Scoping studies and promoting

investment in new mineral targets 600.0 QCBS Prior 6/21/2013 9/24/2013

Preparing for oil development

17 Institutional capacity needs assessment 70.0 QC Post 7/4/2014 10/7/2014

18

Capacity building for oil and gas policies

and negotiations 300.0 QCBS Prior 11/28/2013 3/3/2014

19

Petroleum sector monitoring system

(including training and supply of

equipment)

1,300.0 QCBS Prior 8/15/2013 11/1/2013

TA to supply

equipment and

provide training

20

Resident expert to assist in licensing and

bid evaluations 400.0 QCBS Prior 11/14/2013 2/17/2014 For 2 years

Integrating EI projects into local and regional development

21

Preparing strategy and action plan for EI-

induced development 380.0 QCBS Prior 6/21/2013 9/24/2013

22

Developing linkages and multi-

stakeholder partnerships around EI

projects

400.0 QCBS Prior 9/5/2013 12/29/2013

Meat and butchery industry

24

Study to identify equipment and civil

works needs in Niamey and Maradi

slaughterhouse

300.0 QCBS Prior 6/21/2013 9/24/2013

25

Study for upgrade of Maradi

Slaughterhouse 300.0 QCBS Prior 6/21/2013 9/24/2013

TA for improvement of abattoir

governance and operation 500.0 QCBS Prior 7/19/2013 10/22/2013

TA to for attaining certification of

internally accepted quality and hygiene

standards

1,000.0 QCBS Prior 8/21/2013 1/22/2013

Component III. Policy Reforms, Infrastructure and Services to harness the Relationship between Niger and Nigeria through the Kano,

Katsina, Maradi (K2M) corridor

27

Consultancy for a master plan and support

to develop K2M corridor including to the

Maradi local Community

500.0 QCBS Prior 7/11/2013 10/14/2013

28

Support to Joint Commission to remove

barriers to trade with Nigeria (TA,

communication etc.)

600.0 QCBS post 6/21/2013 9/24/2013


29 Audit of project accounts 30.0 LCS Prior 2/1/2013 3/15/2013

30 Midterm evaluation 50.0 IC Post 11/10/2014 12/18/2014

31 Implementation Completion Report 80.0 IC Post 11/14/2017 12/18/2017

69

e. Training, Workshop, Study Tours

40. At the beginning of each year, each beneficiary will submit their proposed staff

development plans in the form of an annual training plan for the coming year, to be reviewed by

IDA. The plan would indicate the persons or groups to be trained, the type of training to be

provided, indicative learning outcomes, the provider or location of the training, and its estimated

cost. Selection of training institutions for workshops/training should be based on a competitive

process, using the consultant‘s qualification method of selection.

f. Non Consultant Services

Revision of Procurement prior review thresholds

41. The prior review thresholds and other measures to be taken to mitigate the procurement

risk should be re-evaluated once a year with a view of adjusting them to reflect changes in the

procurement risk that may have taken place in the meantime and to adapt them to specific

situations. In case of failure to comply with the agreed mitigation measures or Bank guidelines, a

re-evaluation measure of both types of thresholds, ICB and prior review, may be required by

IDA.

70

Annex 4: Operational Risk Assessment Framework (ORAF)

Negotiations and Board Package Version15

1. Project Stakeholder Risks Rating: Substantial

Description:

Risk that stakeholders will not reach a consensus on project

design. The risk that Government Ministries (particularly the

new ministry for development, the ministry of finance, the

ministry of mining) will compete with the Ministry of

Commerce and PSD to claim the project is high. Private

investors and financial institutions may find that incentives are

not enough for their involvement in the project.

Risk Management:

Project preparation to include wide stakeholders‘ consultations, and design of incentives to be

informed by preliminary studies.

Resp: Client & Bank Stage: Preparation Due Date : 03/01/12 Status: In

progress

Resp: Bank Stage: Implementation Due Date : N/A Status: NYD

2. Implementing Agency Risks (including fiduciary)

3.1. Capacity Rating: High

Description:

There is a weak overall internal capacity to implement the

project. The Implementing Agency (IA) will be confronted with

complex procurement and contract management activities which

it is not familiar with.

Risk Management :

Independent project implementation unit with qualified technical staff to be set up and made

responsible for day-to-day management of project. Given the lack of capacity and track record of

the new Government, the project will include an institutional arrangement to help build the

Government capacity and ensure coordination between the various ministries involved in the

project. A dedicated PIU will be housed within the Ministry of Planning and will be adequately

staffed to ensure appropriate project implementation. A broad-based public/private dialogue will

also be supported by the project through assistance to the joint public-private task force and

working groups (Conseil National des Investisseurs Privés CNIP).

Resp: Client Stage: Preparation Due Date : by

effectiveness Status:

3.2. Governance Rating: Substantial

Description:

Ownership, accountability and oversight:

Weak and fragile institutions may lead to inefficiencies, lack of

required quality control and proper oversight of project. For

example, lack of transparency in selection of consultants may

result in poor selection and hence poor outputs.

Risk Management :

The Bank procurement staff will be involved from the beginning and will meticulously review the

procurement processes and actions undertaken. A procurement plan will be drawn and cleared by

the Bank, identifying among other things, the procurement methods to be adopted, and limiting the

potential for sole sourcing. Also, capacity building measures are an integral part of the Bank‘s

portfolio in Niger. A dedicated capacity building program for the Ministries of Finance and

Planning became effective in 2010. The creation of an Anti-Corruption body (Haute Autorité de

15

This is the version that should be used for Negotiations and submission for Board Approval.

71

Lutte contre la Corruption et les Infractions Assimilés), and the setting up of a hotline in the

Ministry of Justice to report corruption cases might help alleviate the overall corruption risk.

Resp: Client Stage: Implementation Due Date :N/A Status: N/A

4. Project Risks

4.1. Design Rating: Substantial

Description:

A complex project design encompassing diverse sectors may be

difficult to implement successfully. The project design can be

rendered technically complex as it intends to deal with DB

reforms and with several value chains and sectors (agriculture,

miming.).

Risk Management :

Since PCN, the project has been simplified to keep it mostly a TA operation in nature (learning

from similar successful operations in the region to help countries improve their investment climate,

support private enterprises in selected value chains). The value chains to be supported by the

project have been reduced from 5 to only 2. In addition, the project will no longer undertake the

creation of a special economic zone at the Niger/Nigeria border. It will focus on providing TA to

the Niger and Nigeria joint commission to have existing free trade agreements implemented

between the two countries. The project investment in infrastructure will be limited to the upgrade

of two existing slaughterhouses and feeder roads.

Resp: Client Stage: Prep Due Date : 03/01/2012 Status: In

progress

4.2. Social & Environmental Rating: Moderate

Description:

The proposed project may entail major safeguard issues.

Negative environment impact may result from some project

activities involving farming and industry. Relocation of

populations may be necessary in certain areas.

Risk Management :

The project has prepared an ESMF, RPF,PMP, ESIAs for slaughterhouses in Niamey, Maradi,

Zinder, and Tahoua, and the ToRs for a SESA. The Government will also undertake environmental

audits of the slaughterhouses in Niamey and Maradi. Other risk management measures include:

selecting growth sources/value chains with low and environmental and social disruptions; making

use of latest technology and products to mitigate pollution and health hazards and applying Bank

safeguard procedures during implementation.

Resp: Client Stage: Prep. Due Date : 02/24/2012 Status: NYD

4.3. Program & Donor Rating: Moderate

Description :

Impact and efficiency of project may be undermined by non-

collaboration of other donors undertaking similar activities and

unwilling to collaborate.

Risk Management :

World Bank team is actively engaged with donor community.

Resp: Bank Stage: Prep. Due Date : 03/01/2012 Status: In

progress

4.4. Delivery Monitoring & Sustainability Rating: Moderate

Description :

A newly created PIU may not be capable of handing a multi-

sector project. Delivery quality may be affected by weak

monitoring and evaluation capacity of PIU.

Risk Management :

Put in place a rigorous M&E system to track identified measurable indicators.

Resp: Client Stage: Impl. Due Date : 09/01/2013 Status: NYD

5. Overall Implementation Risk

Substantial

72

Annex 5: Implementation Support Plan

Table 1: Readiness Checklist

Readiness Checklist Comments

Project management The project will be managed by a PIU. TORs for the key staff of the PUI will

be included in the Project Implementation Manual (PIM) under preparation.

ORAF finalized ORAF risk matrix has been finalized and included in the package

Safeguard policy issues

addressed and documents

disclosed

This is a category B project. The following documents (ESMF, RPF, ESIA,

ESMF and PMP) have been disclosed in Country and InfoShop.

M&E system in place Government project preparation team has prepared a draft M&E plan to be

included in the PIM.

Full baseline data will be collected through pre-feasibility studies.

Fiduciary (Financial

management and procurement

arrangements are in place)

Financial Management:

PIM consultants will prepare draft Financial Management module.

Procurement:

The Government project preparation team has prepared a Project

Procurement plan for the first 18-month in consultation with the project team

Project Implementation Support

Plan (ISP)

See Table 2 below

Policy exceptions N/A

Counterpart Funding The Government‘s and beneficiaries‘ contribution is US$15.34 million

equivalent (of which US$9.31 million is the matching grant beneficiary

counterpart funding, US$4.00 million is the Government‘s contribution to

APEIN operating costs, US$1.96 million is the Government‘s contribution to

safeguard related expenses including compensation and required social

infrastructure and US$0.08 million is the Government compensation to the

focal points. At the matching grant level counterpart funding for subprojects

from beneficiaries (will be monitored at the point of awarding and signing of

subproject grant signing)

The following table indicates the main focus of support to implementation during the

project‘s lifetime, skill mix requirements, and involvement of other partners.

Table 2: Project Implementation Support Plan (ISP)

Skills Needed Number of Staff Weeks Number of

Trips Comments

Task Team Leader 10 SWs annually 2 Based in DC

Co-Task Team

Leader/Mining Specialist 8 SWs annually 2 Based in DC

Investment climate

reforms specialist 4 SWs annually 2 Based in the region

Entrepreneurship

specialist 3 SWs annually 2 Based in DC

Meat/butchery specialist 4 SWs annually 1 STC

Financial management

specialist 3 SWs annually 0 Based in Niger/or in the region

Procurement specialist 4 SWs annually 0 Based in Niger/or in the region

Social specialist 2 SWs annually 2 Based in Niger/or in the region

Environment specialist 2 SWs annually 2 STC

Operations officer 2 SWs annually 2 Based in Niger/or in the region

Communications

Specialist 2 SWs annually 2 Based in Niger/or in the region

73

Annex 6: Team Composition

World Bank staff and consultants who worked on the project

Djibrilla A. Issa Sr. Financial Sector Specialist, TTL

Mamadou Barry Sr. Mining Specialist, Co-TTL

Magueye Dia Financial Sector Specialist

Korotoumou Ouattara Sr. Financial Sector Specialist

Suhail Kassim Private Sector Specialist

Gary Fine Sr. Private Sector Specialist

Adja Dahourou Private Sector Specialist

Ibrah Sanoussi Procurement Specialist

Andre Ryba Consultant, Financial Sector Specialist

Helene Bertaud Sr. Counsel

Gokhan Akinci Lead Investment Policy Officer

Amadou Konare Sr. Environmental Safeguards Specialist

Alain Traore (IFC) Sr. Operations Officer

Ernesto Franco Temple (IFC) Operations Officer

Abdoul Wahab Seyni Sr. Social Specialist

Beth Mwangi Financial Management Specialist

Abdoulahi Garba Economist

Karima Lawali Ladjo Program Assistant

Ndeye Anna Ba Program Assistant

Jaime Mayaki Operations Officer

74

Annex 7: Economic and Financial Analysis

1. The Niger Source of Growth project aims to contribute to the development of two

values chains through industry based investment climate reforms and improved enterprises

competiveness. The project will be implemented through three components, namely, (a)

Investment Climate, Investment Promotion and SME Support for identified value chains; (b)

Support to two selected value chains; and (c) Support to foster trade relations with Nigeria in

along the Kano Katsina Maradi corridor.

2. The economic analysis of component 1.1. Investment Climate, Investment Promotion

and enterprise development for identified value chains presents a special challenge due to the

indirect relationship between the reforms supported under the project and the stream of

benefits that these reforms are expected to trigger. In light of this a literature review has been

provided on the positive effects of business environment reform on business creation, SME

development and growth. An attempt has been made to quantify the costs and benefits that are

expected to accrue from components 1.2, 1.3 and components 2 and the Net Present Value

(NPV) and the Economic Rate of Return (ERR) for the investments in these components have

been calculated.

3. The total investment under components 1.2, 1.3, 2.1 and 2.2 are estimated to result in

NPV of US$ 49,981,469 and an ERR of 28 percent. The results are summarized in table

below.

PROJECT ERR 28%

PROJECT NPV (12% Discount Rate) $49,981,469

PROJECT NPV (5% Discount Rate) $79,963,378

Methodology

4. The economic analysis of this type of private sector development project faces some

difficulties particularly where there is indirect relationship between the technical assistance

provided under the project on its stream of benefits. Therefore in keeping with common

practices in the appraisal of project of this type, a mix of quantitative and qualitative

techniques has been used to analyze the economic benefits and costs of the project.

5. Main beneficiaries: The main beneficiaries of the project would be: (i) a minimum of

200 firms and associations with access non-financial business development services and

access to financial services; (ii) the meat and mining sectors, iii) the business consulting

sector with an improvement of availability and efficiency of business services; (iv) the private

sector which will benefit from an improved investment climate. The project will also provide

economic and social welfare to the beneficiaries in the Maradi region and the mining regions

and to the national economy.

Component 1: Investment Climate, Investment Promotion and SME Support for identified

value chains

6. Subcomponent 1.1 aims at improving the public private dialog in Niger. The objective

of this assistance is to allow consensus between private sector organizations and unified

approach on reform pertaining to business environment. The experiences and lessons learned

from public-private dialogue across different countries and sections have shown that not only

significant reforms can be associated to these dialogues but also these dialogues demonstrate

a strong measurable economic impact.

75

7. Sub-component 1.2 will support the establishment of one-stop shop for business

registration and licensing. The relationship between the characteristics of the business

regulatory environment and the performance of firms has been well documented (Djankov et.

a1 2002, Botero et. a1 2004, Acemoglu and Johnson 2005, Mastruzzi 2006, and Kaufmann et.

a1 2006). Also documented is the effect on business environment of the specific indicators

that will be affected by the establishment of the one stop shop.

8. A recent study finds that barriers to starting a business are negatively and significantly

correlated with business density and entry rate. Fewer procedures are associated with greater

number of registered firms and higher entry rates (Klapper, 2006). A similar relationship can

also be found with the cost of starting a business. It is estimated that for every 10 percent

decrease in entry costs, density and the entry rate increase by about 1 percent (Klapper, 2006).

Simpler entry encourages the creation of new companies. Easier start-up is also correlated

with higher productivity among existing firms. A study which analyzes data in 157 countries,

finds that there is a reduction in entry costs raises output per worker by an estimated 29

percent (Barseghyan, L ―Entry Costs and Cross-Country Differences in Productivity and

Output.‖ Journal of Economic Growth 13, 2008).

9. The 2008 World Bank Group Entrepreneurship Survey (WBGES 2008) includes new

data on the impact of modernization of business registries on business creation. It gathers

extensive data on the functioning and structure of business registries in 71 countries from the

registrar of companies, as well as complementing data on the number of total and newly

registered businesses in over 100 countries. This empirical evidence suggests that greater ease

in starting a business and better governance are associated with increased entrepreneurial

activity. After controlling for economic development (GDP per capita), higher entrepreneurial

activity is significantly associated with cheaper, more efficient business registration

procedures (as measured by the Doing Business 2009 ―Starting a Business‖ indicators) and

better governance (as measured by Kaufmann and others, 2008).

10. Subcomponent 1.3 supports the provision of Business Development Services to SMEs

especially those operating in the two selected value chains through a matching grants

program.

11. This sub-component will set-up a Matching grants program with a special window

focusing on support to the development of local procurement with Extractive Industries. The

total investment under this component is estimated to result in an NPV of US$ 51,584, 615 at

the discount rate of 12 percent and an ERR of 88 percent. The results are presented in the

Table below.

ERR for component 1 40%

PROJECT NPV (5% Discount Rate) US$ 82,399, 843

PROJECT NPV (10% Discount Rate) US$ 51,584, 615

Window 1: support provision of Business development services to SMEs

12. The provision of financial and non-financial Services through this project has been

designed in a manner that on one hand it would result in tangible economic benefits such as

improved sales and growth of SMEs. And on the other hand, this component would yield

intangible benefits such as enhancing the ability of SMEs to develop specialized and

innovative skills in different segments of the selected value chains, creating a sustainable

market for providers of business development services. Owing to these benefits, this

76

component would also help in achieving increased employment and income generation in the

local economy.

13. In order to get a quantitative sense, a conventional methodology is used to carry out

the economic analysis of the matching grants by estimating future stream of costs and benefits

and deriving net benefits to calculate the net present value (NPV) and economic rate of return

(ERR) in a ―with‖ and ―without‖ project framework based on 10-year time horizon. To

address the limitations of this approach, a conservative set of assumptions is used and

sensitivity analysis has also been conducted to assess the robustness of results. In addition, for

a project of this type the focus of analysis is on estimating the economic benefits and costs

rather than financial analysis.

Assumptions

14. Based on the information on experience from similar projects in other African

countries, the following assumptions were made:

The discount rate used for the economic analysis is 12 percent. Given the global

financial crisis and the economic environment in Niger, this is slightly more

conservative than the standard assumption in most of World Bank Projects, which is

that the opportunity cost of capital is 10 percent.16

The project impact is expected to start materializing during project implementation.

The maximum impact of the project will be reached once the relevant capacity and

institutions are strengthened.

Under the Matching Grants component it is assumed that a minimum of 200 MSMEs

would be supported by the project based on an average grant funding of US$25000 per

firm or US$50,000 for associations.

15. The project is expected to have direct impact on SME sales. Further it is assumed that

as a result of increased efficiency and capacity utilization, the supported firms would yield an

increase in output at a multiple of 10 times the support provided with a lag of two years. This

is based on experience in other countries such as Burkina Faso in which a multiple of 10

times the grant was used. In addition, support to these enterprises would also result in direct

and indirect job creation, however due to difficulty in accurately estimating this variable, the

secondary impacts in terms of increased employment income have not been included in the

calculation of NPV and ERR.

Results

16. In the economic analysis of this subcomponent, the NPV for the matching grants

program is estimated at US$19,890,221 for a 12 percent discount rate, and the ERR is

estimated at 50 percent, much higher than the discount rate (see Table below).

Economic analysis of enterprise support Matching Grant

Component ERR (10 years) 50%

NPV (discount rate 12%) US$ 19,890,221

NPV (discount rate 8%) US$27,124,701

17. A sensitivity test was carried out by assuming a lower increase in output for each firm

from 10 to 5. The model proved to be robust as the ERR remained to a high 37 percent.

16 Handbook on Economic Analysis of Investment Operations, OPR, May 2006

77

Window 2: Supporting SMEs for local procurement to EI projects

18. The project will match local industries with EI industries and build partnerships

between small businesses and large companies in local economic integration and value chain

management by the development of upstream linkages with producers of local goods and

services to EI firms. The project will build capacity of local SMEs, though training, coaching,

to prepare them to take advantage of local procurement and business partnership

opportunities.

19. The project will invest a total of US$3.68 million matched with contribution by the

Extractive Industries and the EU. Beneficiaries are expected to contribute 10 percent of the

total grant provided to them. Overall resources for this component amounts to US$3 million

and are mainly expected to disburse in the first three years of the project.

Assumptions

20. A conservative estimate of the projected investments from Extractive Industries in the

next four years is US$41.3 billion.

21. It is assumed that following project support, local SMEs will secure 10 percent of

procurement from extractive industries amounting to US$10 million. The project impact is

expected to start materializing during project implementation. The maximum impact of the

support provided to SMEs will be reached once their capacity is strengthened.

Results

22. In the economic analysis of this component the ERR is expected to be 111 percent and

the NPV is expected to be closed to US$35 million with a discount rate of 12 percent. The

results of this component and main assumptions are reported in the Table below.

Economic analysis of enterprise support Matching Grant

Component ERR (5 years) 42%



Supporting local procurement by mining companies can bring about significant benefits to a

wide range of stakeholders. Mining companies can minimize their logistics and stock holding

costs, reduce their lead times, increase security of supply as well as enhance their reputations

and obtain a ‗social license‘ to operate. Local businesses, entrepreneurs and communities can

benefit from increased access to business growth opportunities, increased stability and

diversity of markets, as well as improvement of business capabilities, including access to

capital, productivity, technology, and HSE practices. Wider benefits include increased

employment and skills, increased domestic and foreign investment, technology and

knowledge transfer from international companies, exports and foreign exchange and increased

government tax revenues.

78

23. The results of the sensitivity analysis include:

Component 2: Support to selected value chains

24. Sub-component 2.1 aims to provide support to improve the regulatory framework to

promote diversification in the mining sector; strengthen the institutional capacity for efficient

management of the mining sector and enhance integration of EI projects into local and

regional development.

25. Enhancing Government‗s ability to efficiently manage the country‗s mineral resources

will increase the contribution of the mining sector to sustainable development. Thanks to this

assistance, Niger can be expected to both expand mineral investment flows and optimize their

contribution to sustainable development, including improving revenue collection. In the long

term, this should strengthen fiscal sustainability of the Project. The project support will

contribute to development of economic linkages between EI projects and local SMEs.

Economic analysis of this activity is conducted under component 1.3.

26. Subcomponent 2.2 aims to provide support to the meat value chain through the

provision of TA and funding for the construction/rehabilitation of slaughterhouses to increase

meat processing capacities in Maradi and Niamey and improve the quality of meat products.

The objective is to bring capacity from four tons/day to 16 tons/days for Maradi

slaughterhouse and from 20 tons/day to 84 tons/ day respectively for Niamey slaughterhouse.

27. As project support is similar for both Niamey and Maradi slaughterhouses, the

economic analysis will be conducted only for the Maradi slaughterhouse.

28. This subcomponent will lead to increased benefits and reduced costs as followed. The

slaughterhouse facilities will increase the meat processing capacities in Niger, enhance the

quality of meat products, the reduction in waste products, the development and of by-products

(skin, hides, casings etc.), and unlock the export potential especially towards Nigeria and the

regional market.

29. A quantified analysis has been conducted to determine the net present value and the

economic rate of return for a discount rate of 12 percent and over a 15-years time horizon.

The resulting ERR has been estimated at 29 percent for Niamey and 19 percent for Maradi.

Niamey Maradi

Component ERR (15 years)

29% 19%

NPV (discount rate 12%)

US$ 3,056, 793 US$ 578,419

NPV (discount rate 8%)

US$ 6,350,511 US$ 604,711

Sensitivity Analysis with Different Scenarios

1. 7 percent of procurement going to local SMEs with project support affects the overall economic return

significantly, revising it downwards to 44 percent; while 13% share of mining companies‘ procurement

going to SMEs, instead of the assumed 10 percent, increase the ERR to 175 percent.

2. Increasing the overall estimate investments for mining companies from US$ 1,3 billion to 1.6 US$

billion increases the ERR to 161 percent. Reducing the estimated overall investments for mining

companies to 1,0 billion reduces the ERR to 60 percent.

79

30. A sensitivity test conducted showed the ERR falls below 12 percent with 15 percent

change in the proposed slaughter fees for Maradi Slaughterhouse. In Niamey, it would take a

30 percent downward revision of slaughter fees to bring the ERR below 12 percent. This

reveals a vulnerability of the slaughterhouse model to change in proposed fees, it is much

more pronounced for the Maradi Slaughterhouse.

Component 3: Support to foster trade relations with Nigeria in identified value chains

31. Subcomponent 3.1 aims at enhancing regional integration with Nigeria through the

provision of TA to remove administrative barriers to trade and the construction of secondary

access roads to Nigeria. Due to the nature of the TA, it is difficult to measure its impact

although it will contribute to develop quality production in the Maradi area and exports to

Nigeria. Construction of access roads will contribute to income generation by facilitating

linkage between production areas and potential markets.

Conclusion

32. In summary, significant economic benefit is expected to be derived from this project.

Broadly, the project will create a business environment conducive to private investment,

enterprise creation and growth. It will enhance competitiveness of firms operating in the

mining and meat and butchery value chains. Increased competitiveness in these two sectors

will generate value-added and create more jobs. The project will contribute to increase Niger

export potential in mineral and meat products. It will also improve cross border trading

through better road connections and reduced administrative barriers and procedures. It is

expected that project intervention will ultimately contribute to attract potential investment

from Nigeria especially in the K2M corridor.

33. Ultimately, through its economy wide demonstration effect, the project is likely to

generate benefits for a much larger number of SMEs, with wider implications for private

sector growth, job creation and poverty reduction.

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