The World Bank Report No: ISR14841 Implementation Status & Results Togo Togo - Financial Sector and Governance Project (P111064) Public Disclosure Copy Operation Name: Togo - Financial Sector and Governance Project (P111064) Project Stage: Implementation Seq.No: 11 Status: ARCHIVED Archive Date: 08-Jun-2014 Country: Togo Approval FY: 2009 Product Line: IBRD/IDA Region: AFRICA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Ministry of Finance Key Dates Board Approval Date 31-Mar-2009 Original Closing Date 31-Dec-2014 Planned Mid Term Review Date 01-Mar-2012 Last Archived ISR Date 14-Dec-2013 Effectiveness Date 11-Aug-2009 Revised Closing Date 31-Dec-2014 Actual Mid Term Review Date 29-May-2012 Project Development Objectives Project Development Objective (from Project Appraisal Document) The objective of the Project is to improve the stability of specific segments of the Recipient’s financial sector to support the Recipient’s financial sector reform program. Has the Project Development Objective been changed since Board Approval of the Project? ● Yes No Component(s) Component Name Component Cost Banking sector restructuring 3.90 Microfinance sector strengthening 2.70 Reforming the pension sector 1.80 Support to the implementation of reforms in financial and private sectors 1.10 Project implementation 1.40 Project Preparation Advance 0.95 Public Disclosure Copy Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Unsatisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status Overview This ISR summarizes the findings of the progress made in the project since the September 2013 technical mission and the mid-december 2013 supervision mission . Page 1 of 6 The World Bank Report No: ISR14841 Prior to the mission, targets were identified and agreed upon with the authorities in order to bring the project back on track, and possibly upgrade the rating to MS. Conclusions: It was noted that the project is showing a cumulative advance . The targets set have been met. The revised results framework clearly demonstrates the advances made both at the PDO level indicators, and intermediate indicators. In terms of components, the project also has shown a steady progress. For the Banking Sector component, two out of Public Disclosure Copy four intermediate indicators are met and the third one is partially achieved. Under Micro-finance Strengthening component, three out of seven indicators are achieved and additional two are close to be achieved. The Pension sector component shows that two out of four intermediate indicators are achieved. Given the above progress, project implementation has improved and as a result, the project rating was upgraded from Moderately Unsatisfactory to Moderately Satisfactory. We will continue to maintain close monitoring and implementation support to ensure the progress towards meeting the PDO reaches a satisfactory level. Following the december mission, it was noted that the project has continued to improve its performance . Key targets to consider before upgrading the DO and IP ratings were : (i) for the microfinance sector to adopt a strategy to deal with illegal MFIs and prepare a roadmap to restructure the microfinance supervisory authority; (ii) for the pension sector, a roadmap to review and update the new parameters stemming from the 2011 actuarial study. The mission findings and progress made since then provide sufficient grounds that the targets have been met: Microfinance sector: (i) to deal with illegal MFIs, letters were sent out to illegal MFIs to comply with the law on the risk of pending charges or forced closure. As of April 11th, 2014, the supervisory authority requested an authorization to the central bank to withdraw operating licenses to 14 institutions. As of March 24, 2014, it also sent a request to the central bank to grant operating licenses for 13 institutions, while 22 other requests for licenses were being examined by the supervisory authority; (ii) a proposal to restructure the microfinance authority had been submitted to the authorities for review ; (iii) the decree related to the regional microfinance law adopted by Togo in 2011 had been signed and provides legal foundations to strenghen surveillance in the sector. Pension sector: the road map has been prepared to update the new parameters stemming from the 2011 actuarial study and submitted to the cabinet. The results framework clearly demonstrates the advances made . Out of the five PDO level indicators, four have been successfully achieved . Specifically: (i) the solvability ratio for two banks out of three was achieved ; (iii) no recapitalization in the state-owned banks has occurred since the last one in 2009; (iii) the two social institutions financial statements are balanced; and (iv) the number of project direct beneficiaries grew from 686 to 2779 (project end target was 2000) as of mid april 2014. In terms of components, the project also has shown a steady progress. For the Banking Sector component, two out of four intermediate indicators are met and the third one is partially achieved. Under Micro-finance Strengthening component, three out of seven indicators are achieved and additional two are close to be achieved. The Pension sector component shows that two out of four intermediate indicators are achieved. Overall project implementation progress improved to moderately satisfactory, with regards to the project indicators and activites undertaken. Disbursement rate improved from 74 % in Nov. 2013 to 78,96 % as of May 14, 2014. Projected disbursement to end-june 2014 is an additional $380, which should bring the overall disbursement rate at around 80%. Given the above progress, the project rating was upgraded from Moderately Unsatisfactory to Moderately Satisfactory. Authorities have requested an extension of the project closing date. This will be the first extension. A mission is scheduled in June to review progress in the project. Public Disclosure Copy Locations Country First Administrative Division Location Planned Actual Togo Not Entered Togolese Republic Togo Region Maritime Lome Results Project Development Objective Indicators Page 2 of 6 The World Bank Report No: ISR14841 Indicator Name Core Unit of Measure Baseline Current End Target After the recapitalization of Togolese Text Value Not applicable True True commercial banks (BTCI, UTB and BIA), the Date 01-Dec-2008 14-May-2014 31-Dec-2014 Public Disclosure Copy Government will no longer contribute to the Comments absorption of losses, recapitalization and liquidity of commercial banks. BTCI, UTB and BIA meet key prudential norms Text Value No YES, achieved except for yes (solvency and liquidity) by 2009 and every year BTCI until the end of the project Date 01-Dec-2008 14-May-2014 31-Dec-2014 Comments revised indicator UTB and BIA: yES BTCI :NO The two social security institutions are Number Value 0.00 2.00 2.00 financially viable by end of project Sub Type Supplemental All large MFIs (with outstanding loans over 1 Text Value 0/4 (No prudential ratios yet 1/4 4/4 billion CFAF) meet key prudential ratios by end defined by BCEAO) of project Date 01-Dec-2008 14-May-2014 31-Dec-2014 Comments revised indicator 2012 data. Indicator declined from 2011 data that showed 3/4. Project direct beneficiaries of which female Number Value 0.00 2779.00 2000.00 Sub Type Supplemental Percentage of female beneficiaries Number Value 0.00 14.00 30.00 Sub Type Date Breakdown Comments percentage 14% of project beneficiaries end-target is 30%. are female. Target partially achieved . Public Disclosure Copy Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target BTCI, UTB and BIA have new gross NPLs Text Value >5% <5% for UTB, >5% for BTCI Below 5 percent below 5 percent of total loans each year Date 01-Dec-2008 14-May-2014 31-Dec-2014 (starting in 2009) Comments BTCI has gross NPLs above 5 percent Page 3 of 6 The World Bank Report No: ISR14841 Two out of the three targeted banks (BTCI, Text Value None 2 2 UTB and BIA) have entered into partnerships Date 01-Dec-2008 14-May-2014 31-Dec-2014 with strategic banking investors by June 2010, Comments revised indicator: Two out of Achieved: BTD and BIA the third bank, by 2012 Public Disclosure Copy the Four targeted banks entered in partnerships. (BTCI, UTB , BTD, and BIA) have entered into partnerships with strategic banking investors by end 2014 The agency in charge of loan recovery and of Text Value Not created operational Operationnal creating a secondary market for government Date 01-Dec-2008 14-May-2014 31-Dec-2014 securities is created by end 2009 and Comments Achieved: created in operational from 2010 september 8th, 2011. Operational with key staff and start of activities as of Q2 2013 All MFIs with outstanding loans over 1 billion Text Value 67% 16,67% 75% CFAF have gross a Portfolio at Risk over 90 Date 01-Dec-2008 14-May-2014 31-Dec-2014 days (PAR>90) below 5 percent by the endof Comments revised indicator Sharp decline in PAR.two out the project of 12 MFIs had PAR below 5 percent as of MAY 2014. All MFIs with outstanding loans over 1 billion Text Value Not yet audited or certified 75% 100% CFAF) have their financial statements audited Date 01-Dec-2008 14-May-2014 31-Dec-2014 and certified yearly by BCEAO registered Comments revised indicator 9 out of 11 MFIs have the FS auditors audited and certified as of MAY 2014. All MFIs with outstanding loans over 1 billion Text Value 3 out 6 91% 100% CFAF) have undergone at least one rating Date 01-Dec-2008 14-May-2014 31-Dec-2014 between 2009 and 2013. Comments out of 12 MFIs with outstanding loans over 1 Public Disclosure Copy billion CFA, 11 have done at least one transparency exercise. All MFIs with outstanding loans over 1 billion Text Value 3 out of 6 33% 75% CFAF report their financial information on the Date 01-Dec-2008 14-May-2014 31-Dec-2014 Mix Market (www.mixmarket.org) starting in Comments revised indicator: 4 out of 12 MFIs have 2009 MFIs with outstanding loans published financial over 1 billionCFA information on the MIX market for FY 13 data. Page 4 of 6 The World Bank Report No: ISR14841 The legal frameworks for CRT and CNSS is Text Value Not modified Modified for CNSS Modified modified according to established best Date 01-Dec-2008 14-May-2014 31-Dec-2014 practices by 2011 (in particular, parameters for Comments revised indicator:The legal the framework for CNSS was contribution and payments are established Public Disclosure Copy through decrees) framework for CNSS is modified and decrees modified according to adopted for the parameters. established best practices by 2011 (in particular, parameters for contribution and payments are established through decrees) The parameters for CRT and CNSS have been Text Value Not adjusted Adjusted for CNSS Adjusted adjusted through decrees according to the Date 01-Dec-2008 14-May-2014 31-Dec-2014 findings of the actuarial studies by 2011 Comments revised indicator the decree 2012-038/PR was adopted in june 27th, 2012 The income statement of the pension branch of Text Value Not balanced Balanced Balanced CRT and CNSS is balanced by the end of the Date 01-Dec-2008 14-May-2014 31-Dec-2014 project Comments both institutions income statements are balanced by end-2013 Reform Secretariat is operational and Text Value Established, not fully fully operational Fully operational demonstrates the ability to identify and steer operational key reforms in the financial and private sectors Date 01-Dec-2008 14-May-2014 31-Dec-2014 Comments Target achieved. fully operational The public private sector dialogue platform is Text Value Platform inactive 1 round table per year active and contributes effectively to the shaping Date 01-Dec-2008 14-May-2014 31-Dec-2014 of policies on the private and financial sectors Comments indicator dropped after restructuring Volume of Bank Support: Institutional Amount(USD) Value 0.00 1790000.00 2500000.00 Development - Microfinance Public Disclosure Copy Date 30-Jun-2009 14-May-2014 31-Dec-2014 Comments new indicator indicator showing good progress. Data on Financial Performance (as of 22-Apr-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P111064 IDA-H4540 Effective 31-Mar-2009 23-Apr-2009 11-Aug-2009 31-Dec-2014 31-Dec-2014 Disbursements (in Millions) Page 5 of 6 The World Bank Report No: ISR14841 Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P111064 IDA-H4540 Effective XDR 8.00 8.00 0.00 6.32 1.68 79.00 Public Disclosure Copy Disbursement Graph Key Decisions Regarding Implementation Continue close monitoring and implementation efforts to ensure progress towards PDO reaches a satisfactory level. Authorities have requested an extension of the project closing date. This will be the first extension. A mission is scheduled in June to review progress in the project. Restructuring History There has been no restructuring to date. Public Disclosure Copy Related Projects There are no related projects. Page 6 of 6