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AFRICAN DEVELOPMENT FUND
MULTINATIONAL
PROJECT TO SUPPORT THE PROMOTION OF ACCESS BY
MICROFINANCE INSTITUTIONS (OR DECENTRALIZED FINANCIAL
SYSTEMS) TO THE REGIONAL PAYMENT SYSTEM OF THE WEST
AFRICAN ECONOMIC AND MONETARY UNION (WAEMU)
DEPARTMENTS ONRI/ORWA/GECL
September 2016
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TABLE OF CONTENTS
Currency Equivalents, Fiscal Year, Weights and Measures, Acronyms and Abbreviations, Project
Information Sheet, Project Executive Summary, Results-Based Logical Framework, Implementation
Schedule………………………………………………..………………………………………….………….. i to ixi
I STRATEGIC THRUST AND RATIONALE .................................................................... 1
1.1 Project Linkages with WAEMU Financial Inclusion Strategy and Bank Strategies and
Top Priorities for Africa ............................................................................................. 1
1.2 Rationale for Bank Intervention ................................................................................. 1
1.3 Aid Coordination ........................................................................................................ 1
II. PROJECT DESCRIPTION ................................................................................................ 2
2.1 Project Components ................................................................................................... 2
2.2 Technical Solutions Adopted ..................................................................................... 4
2.3 Project Type………………………………………………………………….…….. 5
2.4 Project Cost and Financing Arrangements………………………………….…….....5
2.5 Project Beneficiaries and Geographical Area……………………………......…….. 8
2.6 Participatory Approach for Project Identification, Design and Implementation…... 8
2.7 Bank Group Experience and Lessons Reflected in Project Design………..….…... 8
III. PROJECT FEASIBILITY .............................................................................................. 9
3.1 Economic and Financial Performance ....................................................................... 9
3.2 Project Environmental and Social Impacts ................................................................ 9
IV. PROJECT IMPLEMENTATION ................................................................................ 10
4.1 Implementation Arrangements ................................................................................. 10
4.2 Monitoring………………………………………………………………………….11
4.3 Governance………………………………………………………………………....12
4.4 Sustainability…………………………………………………………………….....12
4.5 Risk Management………………………….…………………….………………....13
4.6 Knowledge Building………………………………………………..………………13
V. LEGAL FRAMEWORK…………………………………..………………………….14
5.1 Legal Instrument ...................................................................................................... 14
5.2 Conditions for Fund Intervention ............................................................................. 14
5.3 Compliance with Bank Policies ............................................................................... 14
VI. RECOMMENDATION ............................................................................................... 14
LIST OF BOXES AND TABLES
LIST OF BOXES
No. Title Page
1.1 Summary Data on the Microfinance Sector in WAEMU 2
2.1 Interbank Electronic Banking Group of the West African Economic
and Monetary Union (GIM-UEMOA) 4
2.2 Summary Presentation of GIM-UEMOA’s Mobile Banking and
Rural Banking Solutions 4
LIST OF TABLES
No. Title Page
2.1a Project Components and Planned Actions 3
2.1b Alternative Project Components and Reasons for their Rejection 5
2.2 Summary of Estimated Project Cost by Component 6
2.3 Summary of Estimated Project Cost by Expenditure Category 6
2.4 Sources of Financing by Project Component (in UA million) 7
2.5 Sources of Project Financing (in UA million) 7
2.6 Expenditure Schedule by Project Component (in UA million) 7
i
CURRENCY EQUIVALENTS
(October 2015)
Currency Unit: CFA Franc
UA 1 = USD 1.40
UA 1 = EUR 1.25
UA 1 = CFAF 821.91
Fiscal Year
1 January - 31 December
ACRONYMS AND ABBREVIATIONS
ADF African Development Fund
AfDB African Development Bank
APSFD Professional Association of Decentralized Financial Systems
BCEAO Central Bank of West African States
CFAF Franc of the African Financial Community
DFS Decentralized Financial System (or Microfinance Institution)
EMI Electronic Money Issuer
GIM-UEMOA WAEMU Electronic Money Interbank Group
IMS Information and Management System
MFI Microfinance Institution
MSME Micro-, Small- and Medium-sized Enterprise
PASFDSPR Project to Support the Promotion of Access by Microfinance Institutions (or
Decentralized Financial Systems) to the Regional Payment System of the West
African Economic and Monetary Union (WAEMU)
SME Small- and Medium-sized Enterprise
UA Unit of Account
WAEMU West African Economic and Monetary Union
ii
PROJECT INFORMATION SHEET
Client Information Sheet
GRANT BENEFICIARY : Central Bank of West African States (BCEAO) (to
facilitate access of Microfinance institutions or
Decentralized financial systems in the WAEMU regional
payment system)
EXECUTING AGENCY : Central Bank of West African States (BCEAO)
Financing Plan
Source of Financing Amount (UA) Instrument
ADF 4 600 000 Grant
BCEAO 1 400 000 Internal costs
TOTAL COST 6 000 000
ADF Key Financing Information
Grant Currency: UA
Timeframe – Main Milestones (Expected)
Concept Note Approval
June 2015
Appraisal July – October 2015
Appraisal Report Approval December 2015
Negotiations May 2016
Project Approval September 2016
Effectiveness September 2016
Completion August 2019
Last Disbursement August 2019
iii
PROJECT EXECUTIVE SUMMARY
Project
Overview
Project Name : Project to Support the Promotion of Access by MFIs
(or DFSs) to the WAEMU Regional Payment System
(PASFDSPR)
Geographic Coverage : WAEMU
Overall Implementation
Schedule
: 36 months (September 2016 – August 2019)
Project Cost : UA 6.0 million (ADF: UA 4.6 million; BCEAO: UA
1.4 million)
Target
Beneficiaries
The main project beneficiaries are: (i) the most disadvantaged segments of the
population (rural dwellers, women, youths and micro-, small- and medium-sized
enterprises) who will benefit from a wide and diversified range of regional financial
products and services at low cost, and improved living conditions; (ii) MFIs which will
benefit from access to payment and clearing systems; and (iii) WAEMU economies
which will be more integrated (through improved migrant remittances, regional
financial flows and formal intra-regional trade).
Outcomes and
Impacts
The project seeks to build the capacity of MFIs and provide solutions and mechanisms
enabling them to have access to WAEMU payment systems and facilities with a view
to ensuring greater diversification of their offer of financial services accessible to the
most disadvantaged segments of the population (rural dwellers, women, youths and
micro-, small- and medium-sized enterprises) and to improve the living conditions of
the population. Access to MFI financial services by the population is expected to
increase from 16.6% in 2015 to 25% at end-August 2019; 10% of MFIs will be
connected to WAEMU regional payment systems at end-August 2019 against 0% in
2015; 10% of all prepaid cards, electronic wallets, mobile payment and mobile banking
or rural banking services will be issued or distributed by IMFs in 2018 against less than
1% in 2015; 10% of secured inter- and intra-WAEMU member country payment flows
will be issued by MFIs at end-August 2019.
Needs
Assessment
and Relevance
In WAEMU, the rate of access to MFIs by persons above 15 years of age is 16%, and
the rate of access to banks only 12.2%. These data show a high potential with respect
to access to financial services. The promotion of access by MFIs to regional payment
and clearing systems will enable these institutions to provide a wide range of regional
financial services at low cost, especially to the most disadvantaged segments of the
population (rural dwellers, women, youths and micro-, small- and medium-sized
enterprises).
Bank’s Value
Added
Bank intervention is complementary to its operations in the financial sector and to the
regional integration of WAEMU economies. The Bank’s value added will be
determined through the promotion of access to financial products and services by the
most disadvantaged segments of the population, and improvement of living conditions
of the population as well as sub-regional financial transactions. This operation also
complements efforts already made by the Bank to develop payment systems in West
Africa.
Knowledge
Building
PASFDSPR implementation will help to build knowledge and acquire best MFI
promotion and development practices, integrate MFIs into payment systems, widen the
range of financial services they provide to the disadvantaged segments of the population
and improve the living conditions of the population. Project implementation will also
generate knowledge on the strengthening of regional integration.
iv
PASFDSPR: Indicative Project Results-Based Logical Framework
Region and Project Name: WAEMU - Project to Support the Promotion of Access by Microfinance Institutions (or Decentralized Financial Systems) to the Regional Payment System of the West African
Economic and Monetary Union (WAEMU) (PASFDSPR)
Project Goal: Contribute to regional integration and regional financial inclusion
RESULTS CHAIN
PERFORMANCE INDICATORS MEANS OF
VERIFICATION
RISKS/
MITIGATION MEASURES Indicators (including ISC) Baseline Situation Target
IMP
AC
T
1. Improved environment for
greater access to financial
services and facilitation of
intra-regional financial flows
1.1 Sales counters and points …
1.2 Secured inter- and intra-
WAEMU member country
payment flows from MFIs
3 514
NA
4 000 sales counters and points
10% of inter- and intra- WAEMU
member country payment flows
from MFIs
National and
regional statistics
BCEAO and
WAEMU reports
2. Improved access by MFIs to
payment systems and facilities
(through a wider range of
services and reduced
intermediation time and costs)
2.1 Percentage of the population
with access to MFI financial
services
2.2 Number of MFIs connected
to the WAEMU Regional
Payment System
16.6% at the end
of March 2015
Zero
Zero
About 25% of the population
(including disadvantaged
segments) have access to MFIs at
the end of August 2019
About 50% of women customers
of MFIs have access to new
financial products and services at
the end of August 2019
About 10% of MFIs are connected
to the payment system at the end of
August 2019
BCEAO reports
and statistics
MFI reports and
statistics
Risks 1. MFI governance problems
and low IMS development
2. Weak capacity of MFIs
Mitigation Measures
1. Rigorous selection of MFI
sample
2. Building the capacity of
selected MFIs and
upgrading IMS
3. Implementation by
BCEAO, alongside the
project and in collaboration
with Member States, of
necessary actions in the
microfinance sector to
strengthen MFI governance
3. The range of financial products
and services (usable in the
WAEMU space) provided by
MFIs is widened
3.1 Number of MFIs providing
financial products and
services (usable in the
WAEMU space)
Zero About 10% of MFIs provide
financial products and services
(usable in the WAEMU space) at
the end of August 2019
v
OU
TC
OM
ES
Component I: Upgrading Information and Management Systems and Building MFI Capacity
I.1 Upgrading the IMS of MFI (securing the systems and automating the processing of transactions)
Establishment of data processing
centres (CTIs)
CTIs established and
functional in the selected
countries
Inexistence of CTIs
(with the exception of
Senegal)
Zero (with the
exception of the CTI of
Senegal)
2 pilot CTIs are functional in
selected countries from end-
2017/early 2018
At least 50% of selected MFIs
are affiliated to a CTI
BCEAO reports and
statistics
Risks: Inefficient IMS or CTI
not established or non-
functional
Mitigation Measures 1. MFIs of critical size are
supported to update their
IMS
2. Small-size MFIs are
affiliated to CTIs supported
under the project
I.2 Building MFI Capacity and Controlling Operations
Building the capacity of MFI staff to
manage new payment, operations
clearing and operations settlement
instruments
Implementation of the
programme to build the
capacity of selected MFIs
Inexistence of a
programme for
building the capacity of
MFIs
All MFIs in the sample
benefit from a capacity
building programme from
end-2017/early 2018
BCEAO reports and
statistics
Risks: Low capacity of MFI
staff to assimilate training
Mitigation Measures Capacity building, financial
education and sensitization of
the entire staff (existing
BCEAO and GIM-UEMOA
experiences in the area)
Component II: Improving Indirect Access by MFIs to WAEMU Payment Systems and the Provision and Popularization of MFI Services and Products (including Mobile
Banking and Rural Banking Services)
II.1 Improving Indirect Access by MFIs to WAEMU Payment Systems (Reducing Intermediation Time and Costs)
Increase in the number of
MFIs with automated
indirect access to the
WAEMU Regional
Payment System
Number of MFIs with automated
indirect access to the WAEMU
Regional Payment System
Time taken to effect transactions for
MFI customers
Zero
14 days, on average
About 10% of MFIs (covered and not
covered by Article 44) have automated
indirect access to the Regional
Payment System at end-August 2019
Time taken to effect transactions for
MFI customers reduced to 2 or 3 days
at end-August 2019
BCEAO reports
and statistics Risks No MFI capacity for indirect
access to payment systems and
facilities
Mitigation Measures 1. Technical assistance and
capacity building
2. Investments required to
facilitate access
II.2. Improving the Provision of MFI Services and Products (including Mobile Banking and Rural Banking Services)
vi
Issuance or distribution
of prepaid cards,
electronic wallets and
Mobile Banking and
Rural Banking services
by MFIs
Number of prepaid cards, electronic
wallets and Mobile Banking or Rural
Banking services issued or distributed
by MFIs
Negligible number
(below 1% of total)
10% of total prepaid cards, electronic
wallets and Mobile Banking or Rural
Banking services issued or distributed
by MFIs
BCEAO and
GIM-UEMOA
reports and
statistics
Risks 1. Low capacity of MFIs
2. Too high cost of issuing or
distributing prepaid cards,
electronic wallets and
Mobile Banking or Rural
Banking services
Mitigation Measures 1. Training of APSFD in MFI
assistance (negotiation of
costs with GIM-UEMOA
2. Financial education,
sensitization, technical
assistance and capacity
building
II.3 Extending the network of acceptance of prepaid cards, mobile payment, e-money distribution, Mobile Banking and Rural Banking services
vii
2.3. Deployment of POS and
MPOS/ extension of the
network of acceptance of
electronic money and
issuance/ distribution of
Mobile Banking and Rural
Banking services
2.4. Organisation of
sensitization campaign,
training and capacity
building sessions to change
the mentality of the
population (target
sectors/population: trade,
agriculture, etc./rural
population, women, youths,
micro-, small- and medium-
sized enterprises, etc.)
Volume of transactions
carried out with prepaid cards
and electronic wallets (EWs)
issued by MFIs
Volume of Mobile Banking
and Rural Banking services
Sensitization campaign,
training and capacity building
sessions
Low volume of
transactions carried
out with prepaid
cards (less than
10%)
Almost zero volume
of Mobile Banking
and Rural Banking
services
Zero
20% of transactions carried out with
bank money by MFIs
20% of the volume of transactions
for Mobile Banking and Rural
Banking services
At least two sensitization campaign,
training and capacity building
sessions are carried out in each
WAEMU country
1. BCEAO
and GIM-
UEMOA
reports and
statistics
2. MFI
statistics
3. National
and
regional
statistics
Risks: 1. Lack of capacity
2. Too high costs of issuing or
distributing prepaid cards and EWs,
Mobile Banking and Rural Banking
services
Mitigation Measures 1. Capacity building, financial
education and sensitization of all
actors
2. Investments required to facilitate
these services
AC
TIV
ITIE
S Component I (see detailed description of activities in Technical Annex C1)
- Studies and technical assistance, equipment, training, seminars, workshops, communication and sensitization: pilot data processing centres
(CTIs), Data Processing Centre of Senegal (CTISN), MFI professional associations, MFIs.
Component II (see detailed description of activities in Technical Annex C1)
- Studies and technical assistance, equipment, training, seminars, workshops, communication and sensitization: pilot data processing centres
(CTIs), Data Processing Centre of Senegal (CTISN), MFI professional associations, MFIs, issuers and distributors of electronic money
Component III (Project Management: BCEAO)
Financing:
ADF grant: UA 4.6 million
BCEAO (internal costs): UA 1.4 million
Indicative
cost in UA
million
Component I 3.5
Component II 1.4
Component III 0.6
Physical Contingencies
and Price Escalation
0.5
Total 6.0
viii
Project Implementation Schedule
(Project Preparation)
Components/Sub-components and Tasks Responsible
Entity
2016 2017 2018 2019
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Component 0 – Project Preparation
Validation and signature of minutes of negotiation, initialling of
draft protocol agreement and draft disbursement letters BCEAO/AfDB
Establishment of project management entities BCEAO
Designation of persons authorized to operate the Special Account
and opening of the special account in the books at BCEAO’s
headquarters
BCEAO
Recruitment of experts (accounting and procurement) BCEAO/AfDB
Mobilisation of financial resources at the AfDB to finance project
components BCEAO/AfDB
Presentation of Project to decentralized financial systems, APSFD,
GIM-UEMOA and Ministerial entities responsible for monitoring
decentralized financial systems
BCEAO
Communication campaign on the Project BCEAO
ix
Project Implementation Schedule
(From the Grant Approval Date)
Components/Sub-components and Tasks Responsible
Entity
2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Grant Agreement Approval and Signature
Component 1 - Upgrading Information and Management Systems and
Building MFI Capacity
BCEAO (DMIF,
DSMP)
Sub-component 1.1. Upgrading Information and Management Systems
Task 1. Analysis of options/Preparation of TOR/ Establishment of CTIs BCEAO
Task 2. Publication of bid invitation
Task 3. Bid submission and evaluation, and contract award AfDB, BCEAO
Task 4. IMS implementation and upgrading
Sub-component 1.2. Building MFI Capacity (including for Mobile
Banking and Rural Banking services)
BCEAO & GIM-UEMOA
Task 1. Preparation of TOR/ Training experts
Task 2. Publication of bid invitation
Task 3. Bid submission and evaluation, and contract award
Task 4. MFI capacity building implementation
Task 5. Evaluation of training actions
Component 2 - Improving Indirect Access by MFIs to WAEMU Payment
Systems and the Provision and Popularization of MFI Services and
Products
Sub-component 2.1. Improving Indirect Access by MFIs to WAEMU
Payment Systems (PS)
BCEAO
Task 1. Needs assessment
Task 2. Implementation of indirect access by MFIs to PS
Sub-component 2.2. Improving the Provision of MFI Services and
Products (including Mobile Banking and Rural Banking Services)
BCEAO & GIM-UEMOA
Task 1. Preparation of TOR/Experts and service providers
Task 2. Publication of bid invitation
Task 3. Bid submission and evaluation, and contract award
Task 4. MFI capacity building implementation
Sub-component 2.3. Extending the Network of Acceptance of Prepaid
Cards and Mobile Payment and Distribution of Electronic Money and
Mobile Banking and Rural Banking Services
BCEAO & GIM-
UEMOA
Task 1. Preparation of TOR/Experts and Service providers
Task 2. Publication of bid invitation
Task 3. Bid submission and evaluation, and contract award
Task 4. Network extension implementation
Audit and Final Report BCEAO & AfDB
3.1 Final Evaluation Workshop and Final Project Report
3.2 Audit
3.3 Evaluation Report
1
REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARD OF
DIRECTORS CONCERNING A PROPOSAL TO AWARD A GRANT TO THE
CENTRAL BANK OF WEST AFRICAN STATES
Management hereby submits the following report and recommendation concerning a proposal
to award a UA 4.6 million ADF grant to the Central Bank of West African States (BCEAO)
to contribute to the financing of the Project to Support the Promotion of Access by
Microfinance Institutions (or Decentralized Financial Systems) to the Regional Payment
System (PASFDSPR) of the West African Economic and Monetary Union (WAEMU). The
resources allocated for the project were approved based on the prioritization of multinational
projects approved by OPSCOM in 2014 as regional public goods (particularly taking into
account the criteria fulfilled by the related project such as its significance and ownership by
member countries, its regional scope, its strategic alignment, additional benefits provided
through cooperation between member countries, and its development impact).
I. STRATEGIC THRUST AND RATIONALE
1.1 Project Linkages with WAEMU Financial Inclusion Strategy and Bank’s
Strategies and Top Priorities for Africa
The project is consistent with the regional integration strategy for West Africa (2011-2015)
whose objective is to support investments in the integration of payment systems (Section
4.2.3.3), the financial sector development strategy and policy 2014-2019 (Pillar I which seeks
to increase access to financial services by the underserved), the Bank’s Regional Integration
Strategy and Policy (RIPoS 2014-2023) (Pillar II which seeks to support trade and industry),
as well as the Bank’s Ten-Year Strategy 2013-2023 (whose objective is to promote inclusive
growth). The project objectives are in keeping with two of the Bank’s High 5s for Africa,
namely to facilitate integration and improve the living conditions of the people through their
financial inclusion. The project is also aligned with the WAEMU Regional Financial Inclusion
Strategy (developed by BCEAO with the technical support of the United Nations Capital
Development Fund - UNCDF).
The project will therefore support payment system integration, financial inclusion, trade
integration and inclusive growth processes, and contribute to achieving the High 5s for Africa.
1.2 Rationale for Bank Intervention
Access to financial services in WAEMU is very limited. Only 12.2% of adults have a bank
account and 16.7% an MFI account (see Box 1.1). Many adults in the region use informal
methods of saving and the majority of micro-, small- and medium-sized enterprises (MSMEs)
lack access to credit. One of the major challenges in meeting the needs of the underprivileged
segments of the population and promoting inclusive growth is access to a wide range of
financial services. In view of these challenges, the region has to focus on two complementary
objectives, namely to: (i) increase access to financial services for the underserved, including
informal sector MSMEs; and (ii) enhance regional payment systems by promoting access by
MFIs to regional payment systems. This will enable these institutions to provide a wider range
of financial services that are more affordable and usable at the regional level.
The Bank’s intervention is justified by the experience it acquired in providing support to the
Project to Modernize WAEMU Payment Systems initiated by BCEAO in March 1999 which
helped to further strengthen the financial system and economic integration in WAEMU.
However, this reform, which was only a step, did not include the integration of MFIs into
2
regional payment systems. The very limited resources of MFIs to build capacity and promote
access to the systems justify the use of ADF resources.
Box 1.1: Summary Data on the Microfinance Sector in WAEMU
According to the most recent data published by BCEAO at the end of March 2015, the number of microfinance
institutions stood at seven hundred and twenty-four (724)1, showing an increase compared to end-March 2014,
and was about seven times the number of MFIs registered in 1993 (107 institutions). Access to financial
services by the population has been extended. The number of beneficiaries of the services of these institutions
was 13.8 million at end-March 2015 (i.e. approximately 16.7% of the population), against 13.0 million at end-
March 2014 and 0.277 million at end-December 1993. Comparatively, the basic rate of use of banking services
(corresponding to the percentage of the population above 15 years of age who have bank accounts) was only
12.2% at the same date. The rate of access to financial services, which includes data from all account-holding
entities, including electronic money issuers (EMIs), calculated by BCEAO as from 2010 stands at 49.5% of
the total population of WAEMU above 15 years of age (58.5 million).
1.3 Aid Coordination
Besides the Bank, financial sector development is supported by various donors, notably EU,
AFD and German (GIZ), Luxembourg and Canadian cooperation agencies. The status of
development aid coordination in the area is satisfactory and is carried out through formal
exchange and dialogue frameworks, of which the Bank is a member2. Though no other
development partner is involved in the financing of the project, the Bank has regularly informed
the other partners involved in the domain of microfinance and financial inclusion within
WAEMU on the project implementation status from the preparation phase to the present stage
of its appraisal. The Bank will therefore consider during the implementation of the project, any
subsequent additional technical or financial support provided by any other partner(s) under its
coordination.
II. PROJECT DESCRIPTION
2.1 Project Components
2.1.1 Objectives: the project seeks to contribute to increasing access to financial services
by the underprivileged segments of the population in WAEMU (women, youths, rural dwellers,
MSMEs, etc.) by establishing mechanisms to facilitate access by MFIs or DFS’ to WAEMU
payment systems.
2.1.2 Components: the project comprises two main components which do not require the
revision of the MFI regulations in force, namely: (i) Upgrading Information and Management
Systems and Building MFI Capacity; and (ii) Improving Indirect Access by MFIs to WAEMU
Payment Systems and the Provision and Popularization of MFI Services and Products.
1 MFI networks are counted on a unit basis. 2 In the specific case of Senegal, the 50 key (bilateral and multilateral) development partners form a working group (dubbed G50) which is
particularly responsible for: (i) implementing the principles of the Paris Declaration; (ii) improving consultation and information sharing
among TFPs; and (iii) structuring and deepening dialogue with the Government of Senegal on the fight against poverty, sector policies
and governance. The G50 comprises thematic sub-groups, one of which is “microfinance and financial inclusion”, whose members are TFPs involved in this domain, including the AfDB (Senegal Regional Office). The coordination between TFPs is almost similar to the
one existing in other WAEMU countries.
3
Table 2.1a
Project Components and Planned Actions
Activities Outcomes
Component 1: Upgrading Information and Management Systems and Building MFI Capacity (UA 3.5 million)
Sub-component 1.1: Upgrading Information and Management Systems (UA 3.1 million)
Assist small MFIs to establish an IMS to manage their e-money activities and indirect access to payment systems at low
cost (or their affiliation to a processing centre) Secured systems and automated processing of
operations
Sub-component I.2: Building MFI Capacity (UA 0.4 million)
(i) Train and prepare MFI staff to better manage their activities and master their working tools and new payment
instruments; (ii) Build the capacity of staff who will specialize in the management of clearing operations and staff who
will be responsible for settlement operations
Secured systems and automated processing of
operations
Component 2: Improving Indirect Access by MFIs to WAEMU Payment Systems and the Provision and Popularization of MFI Services and Products (UA 1.4 million)
Sub-component II.1: Improving Indirect Access by MFIs to WAEMU Payment Systems (UA 0.3 million)
CHAPTER 99
(i) Reduce the time and cost of finalizing interbank operations issued or received by MFIs in SICA-UEMOA through
banks by automating transactions between MFIs and their clearer; (ii) Ensure the change in the notion of secondary
participants in SICA-UEMOA and STAR-UEMOA, which requires a slight modification of each of the two sub-systems
Improved quality of services provided, reduced
intermediation time and cost, and reduced rates for
services provided to customers
Sub-component II.2: Improving the Provision of MFIs Services and Products (including Mobile Banking and Rural Banking Services) (UA 0.6 million)
Facilitate access by MFIs to solutions provided by GIM-UEMOA to its members (provision of a platform for issuing
prepaid cards used to carry out interbank and regional transactions, and a platform for Mobile Banking and Rural Banking
services)
Use of electronic payment facilities and Mobile
Banking and Rural Banking services developed,
MFI sector promoted and financial inclusion
improved
Sub-component II.3. Extending the Network of Acceptance of New Payment Facilities (UA 0.5 million)
(i) Promote the use of cashless payment facilities by extending the acceptance network, especially in rural areas; (ii)
Propose measures to extend the acceptance network in order to reduce the cost of transactions by increasing their volume
and to encourage users to prefer e-money to paper money
Extended access network and improved financial
inclusion
Component III: Project Management (Project Coordination, Monitoring and Implementation (UA 0.1 million)
4
2.2 Technical Solutions Adopted
The technical solutions adopted for the project are aligned with international standards to allow use
of the products and services offered at the regional and international levels. The first component
consists in making available to MFIs, and enabling them to benefit from, the latest developments in
information and management systems and building their capacity. The second component seeks to
provide technical assistance and support to selected MFIs to enable them to indirectly access
WAEMU payment systems, widen the range of the financial products and services provided to their
customers and widely disseminate these financial products and services, with the technical support
and assistance of BCEAO and GIM-UEMOA (see Boxes 2.1 and 2.2 and technical annexes).
Box 2.1: Interbank Electronic Banking Group of the West African Economic and Monetary Union (GIM-
UEMOA)
GIM-UEMOA is a regional electronic money governance entity established in February 2003 in the form of an
economic interest group (EIG) responsible especially for ensuring regulation, standardizing the interbank electronic
money system, providing interbank, delegated and complementary electronic money services to WAEMU and non-
WAEMU banks, postal financial establishments and microfinance institutions. GIM-UEMOA comprises more than
one hundred banks and non-bank financial institutions in the region and enables access to a network of more than
2000 automated teller machines and 1 000 point of sale (POS) terminals throughout the WAEMU zone. It issues
withdrawal and payment cards for the WAEMU zone in compliance with the EMV standard. It also issues
international cards through agreements with Visa and MasterCard.
GIM-UEMOA’s main missions are to:
(i) Develop regional interbank services through increased use and wider acceptance of cards;
(ii) Promote bank cards as the leading payment instrument for the population’s day-to-day transactions;
(iii) Reduce the cost of processing transactions (procurement, transfers, authorizations, settlements, etc.) by
optimizing required technical infrastructure;
(iv) Increase the number of people using the banking system by developing mass electronic banking and access to
banking services by the population.
Source: GIM-UEMOA
Box 2.2: Summary Presentation of GIM-UEMOA’s Mobile Banking and Rural Banking Solutions
GIM-UEMOA’s Mobile Banking/ Mobile Money platform is a white brand solution proposed to financial
institutions. Thus, each institution using the platform can define its own graphic chart, the trade name to be
given to its solution, as well as its own tariff policy. It is a multi-service platform which combines: (i) mobile
money/mobile payment which, like operators’ solutions, is mainly designed for the population not using
banking services (payment for goods and services, money transfer, etc.); (ii) mobile banking which enables the
customers of financial institutions to manage their accounts using their mobile phones (balance, mini-bank
statement, transfer, ATM withdrawal, cheque book, stop payment order, etc.); (iii) interoperability which
enables two different financial institution customers using the mobile banking/mobile money platform to carry
out transactions between them (money transfer between customer 1 of financial institution A and customer 2
of financial institution B; payment by customer 1 of financial institution A to trader 2 of financial institution
B; money deposit/cash in by customer 1 of financial institution A at an automated teller machine 2 of financial
institution 2; money withdrawal/cash out by customer 1 of financial institution A at an automated teller
machine 2 of financial institution 2, etc.). Transactions between financial institutions are the subject of daily
multilateral clearing, then inserted in STAR-UEMOA for settlement (each institution should have a STAR-
UEMOA account or a Partner Bank for STAR-UEMOA settlements); (iv) mobile card which enables the use
of a mobile telephone on electronic money equipment (DAB/ATM cardless withdrawal using a mobile
telephone without a bank card, payment using a mobile telephone on a POS, etc.); and (v) rural banking which
enables the deployment of financial services for remote rural dwellers or poor and/or illiterate people
(biometric authentication, deposits, withdrawals and transfer with biometric authentication of customers and
voice messages in local languages, etc.).
Source: GIM-UEMOA.
5
In its original formulation, it was also envisaged that the project would include two additional sub-
components, namely: (i) direct access by MFIs to regional payment systems; and (ii) the subsequent
updating of BCEAO’s by-laws and MFI regulations. The table below describes these alternative
solutions and reasons for their rejection.
Table 2.1b
Alternative Project Components and Reasons for their Rejection Sub-components
(Alternatives) Brief Description Reasons for Rejection
1. Direct access by MFIs
to regional payment
systems
This solution consists in
enabling some MFIs to
access two regional
payment system modules,
namely the Automated
Transfer and Settlement
System (STAR-UEMOA)
and the Automated
Interbank Clearing System
(SICA-UEMOA) as direct
participants (such as
banks).
- Estimated cost very high (about UA 2.94 million, or
65% of grant).
- Very strict conditions of access; solution only possible
for large MFIs (ranked according to Article 44 of MFI
regulations) and not for small MFIs targeted by the
project.
- Need for BCEAO to amend its regulations in order to
authorize eligible large MFIs to open accounts in its
books (option rejected by BCEAO).
- Need for in-depth amendment of microfinance
regulations.
- Very low impact on access to financial services by the
underprivileged segments of the population (women,
youths, rural dwellers, MSMEs, etc.)
2. Update of MFI
regulations Review of the existing
microfinance regulatory
framework to create an
appropriate legal basis for
direct access by MFIs to
payment systems.
Provide legal assistance to
MFIs for the
implementation of this
option.
- Rejection of the sub-component that seeks to grant
direct access by some MFIs to regional payment
systems.
- Very long process.
The options chosen for the project, particularly indirect access by MFIs to WAEMU regional payment
systems and the non-amendment of MFI regulations, may enable implementation of the project in a
timely manner and the achievement of set objectives.
2.3 Project Type
This is a project to invest in the infrastructure needed to extend regional payment systems (including
a capacity building component) and not an institutional support or budget support operation which
requires the application of Bank procedures. This option should help to enhance the Bank’s visibility
as the expected social impact of the project is very significant. The project will be jointly financed by
the Bank (ADF grant resources) and BCEAO (internal costs).
2.4 Project Cost and Financing Arrangements
Costs per Project Component
2.4.1. The total project cost is estimated at UA 6 million, equivalent to CFAF 4.898 billion at the
October 2015 exchange rate (UA 1 = CFAF 821.91), of which UA 0.67 million (11%) in foreign
exchange and UA 5.33 million (89%) in local currency. This financing is broken down into ADF
resources (76.3 % of total project cost) and BCEAO internal resources (23.7 % of total project cost).
6
Costs were determined based on unit and lump sum prices, in line with current competitive bidding
for similar services in WAEMU. Provision for physical contingencies is 5% of the base cost, while
provision for price escalation is 3% of the base cost and the provision for physical contingencies. The
summary of estimated project cost by component and by expenditure category is presented in Tables
2.2 and 2.3 respectively.
Table 2.2: Estimated project cost by component 1/
Component CFAF Million UA Million
F.E. L.C. 2/ Total F.E. L.C. 2/ Total
1 Upgrading IMS and MFI capacity building 502 2.387 2.890 0.6 2.9 3.5
1.1 Upgrading IMS of MFIs 502 2.029 2,532 0.6 2.5 3.1
1.2 MFI capacity building 0 358 358 0.0 0.4 0.4
2 Improving indirect access by MFIs to WAEMU
payment systems and provision and popularization
of MFI products 0 1.173 1.173 0.0 1.4 1.4
2.1 Improving indirect access by MFIs to WAEMU
payment systems 0 278 278 0.0 0.3 0.3
2.2 Improving the provision of MFI products
(including mobile banking and rural banking
services)
0 522 522 0.0 0.6 0.6
2.3 Extending the network of acceptance of new
payment facilities 0 373 373 0.0 0.5 0.5
3 Project management 0 466 466 0.0 0.6 0.6
Total project base cost 502 4,026 4.529 0.6 4.9 5.5
Provision for physical contingencies 25 201 226 0.0 0.2 0.3
Provision for price escalation 16 127 143 0.0 0.2 0.2
Total project cost 543 4.355 4.898 0.7 5.3 6.0
1/ Estimated and rounded-off costs. 2/ L.C.: Local currency
Table 2.3: Estimated project cost by expenditure category 1/
EXPENDITURE CATEGORY CFAF Million UA Million
F.E. L.C. 2/ Total F.E. L.C. 2/ Total
A Goods 126.9 507.4 634.3 0.15 0.6 0.8
B Consultancy services (studies and
technical assistance) 375.2 1 334.0 1 709.2 0.46 1.6 2.1
C Training, seminars and workshops 0.0 451.0 451.0 0.0 0.5 0.5
D Operation 0.0 1 709.3 1 709.3 0.0 2.1 2.1
E Documentation 0.0 1.0 1.0 0.0 0.0 0.0
F Annual financial audit 0.0 24.0 24.0 0.0 0.0 0.0
Total project base cost 502.1 4 001.7 4 528.8 0.6 4.9 5.5
Provision for physical contingencies 24.9 201.5 226.4 0.03 0.2 0.3
Provision for price escalation 16 126 143 0.0 0.2 0.2
Total project cost 542.8 4 329.4 4 897.9 0.7 5.3 6.0
1/ / Estimated and rounded-off costs. 2/ L.C.: Local currency
Financing Arrangements
2.4.2 The project will be jointly financed with ADF and BCEAO resources as shown in Table 2.4
below. ADF contribution stands at UA 4.6 million, that is, approximately 76.3% of total project cost.
This financing will be used to cover the entire (100%) foreign exchange cost and part of the local
7
currency cost, as shown in the table below. BCEAO financing will cover the institution’s internal
costs of project implementation. Tables 2.4 and 2.5 below present the detailed cost by source of
financing and a summary of the financing plan.
Table 2.4: Sources of financing by project component (in UA million) 1/
Source of financing ADF BCEAO
F.E. L.C.
2/
Total F.E. L.C.
2/
Total Total
A Goods 0.2 0.6 0.8 0.0 0.0 0.0 0.8
B Consultancy services (studies and
technical assistance), training, seminars
and workshops, and documentation 0.5 0.8 1.3 0.0 0.8 0.8 2.1
C Operation 0.0 2.1 2.1 0.0 0.0 0.0 2.1
D Project management 0.0 0.0 0.0 0.4 0.4 0.4
Total project base cost 0.6 3.5 4.1 0.0 1.4 1.4 5.5
Provision for physical contingencies 0.0 0.2 0.3 0.0 0.0 0.0 0.3
Provision for price escalation 0.0 0.1 0.1 0.0 0.0 0.0 0.2
Total project cost 0.7 3.9 4.6 0.0 1.4 1.4 6.0
1/ / Estimated and rounded-off costs. 2/ L.C.: Local currency
Table 2.5: Sources of Project Financing (in UA million) 1/
Source of Financing UA Million % of Total
F.E. L.C. 2/ Total
A ADF 0.7 4.0 4.6 77.6%
B BCEAO (internal cost) 0.0 1.3 1.3 22.4%
A + B Total project cost 0.7 5.3 6.0 100.0%
1/ Estimated and rounded-off costs. 2/ L.C.: Local currency
2.4.3 The expenditure schedule by project component is presented in Table 2.6 below.
Table 2.6: Expenditure Schedule by Project Component (in UA million) 1/
Component and
Sub-component
2016 2017 2018 Total
1 Upgrading IMS and building MFI capacity 0.0 3.3 0.2 3.5
1.1 Upgrading the IMS of MFIs 3.1 3.1
1.2 Building MFI capacity 0.2 0.2 0.4
2 Improving indirect access by MFIs to WAEMU payment systems
and provision and popularization of MFI products 0.0 0.6 0.9 1.4
2.1 Improving indirect access by MFIs to WAEMU payment systems 0.3 0.1 0.3
2.2 Improving the provision of MFI products (including mobile
banking and rural banking services) 0.2 0.4 0.6
2.3 Extending the network of acceptance of new payment facilities 0.1 0.4 0.5
3 Project management 0.1 0.2 0.2 0.6
Total project base cost 0.1 4.1 1.3 5.5
Provision for physical contingencies 0.0 0.0 0.2 0.3
Provision for price escalation 0.0 0.1 0.0 0.2
Total project cost 0.1 4.2 1.6 6.0
Total in % 2% 71% 27% 100%
1/ Estimated and rounded-off costs
8
2.5 Project Beneficiaries and Geographical Area
The project beneficiaries are MFIs and their current (particularly the most underprivileged segments
of the population such as women, youths, rural populations, MSMEs, etc.) and potential customers
in light of the growing number of financial service users in WAEMU. The indirect project
beneficiaries will include agricultural sector stakeholders in rural areas and agropoles that will benefit
from the use of the financial products and services provided for their activities (mobile payment of
inputs, receipt of customer payments irrespective of WAEMU country, facilitation of access to
financing, etc.), as well as actors in other sectors of the economy such as stockbreeding, fisheries,
handicrafts, etc.
2.6 Participatory Approach for Project Identification, Design and Implementation
Project identification and preparation were the subject of extensive consultations carried out together
with BCEAO, other regional institutions (WAEMU, GIM-UEMOA, Banking Commission of West
Africa, etc.), ministerial microfinance monitoring entities in WAEMU member countries,
microfinance networks, many MFIs, particularly those targeting women customers, youths and rural
dwellers, actors involved in the development of microfinance solutions (electronic money issuers,
mobile telephone operators, etc.) and other development partners involved in microfinance
development. Project identification and preparation also benefited from the participation of the
population and civil society (APSFD, women’s groups, etc.) in WAEMU.
The main concerns voiced by stakeholders focused on the need to provide appropriate solutions to
small MFIs for their IMS, provide accessible, user-friendly, affordable and regionally-based specific
financial products and services to the segments of the population who are generally excluded from
the financial system or poorly served by financial institutions (women, youths, rural dwellers, micro-
enterprises, etc.). National BCEAO agencies, ministerial microfinance monitoring entities and
APSFD will also participate actively in project implementation.
2.7 Bank Group Experience and Lessons Reflected in Project Design
The Bank has already participated in financing the Project to Modernize WAEMU Payment Systems,
initiated by BCEAO in March 1999.
This appraisal report took into account the lessons learned from, and the outcomes of, this first project.
BCEAO will particularly focus on the project to ensure adherence to the schedule for the use of ADF
financing and achievement of project objectives, namely to:
simplify administrative procedures in order to avoid project implementation delays;
preserve memory and expertise on the topics covered during the project period;
launch activities only when all safety rules are complied with (BIS Core Principles);
adhere to the project implementation schedule;
ensure communication of project issues and outcomes to key beneficiaries, MFIs and their
clients from the launching of the first operations (for example, launching of CTIs and indirect
access to regional payment systems) to further enhance the use of new financial products and
services.
9
The logical framework specifies project performance indicators based on project objectives. This
extension will be assessed based in particular on the progressive opening of counters and points of
sale; increase in secured inter- and intra-WAEMU member country MFI payment flows; the number
of MFIs connected to payment systems; the rate of access by the population to MFIs, particularly the
percentage of female MFI customers with access to new financial products and services. These
indicators will be verified using data collected and published by BCEAO, which is responsible for
project implementation, and by ministerial microfinance monitoring entities, APSFDs and CTIs
whose capacity will be built. Quarterly and half-yearly progress reports and other reference
documents will be prepared in conjunction with BCEAO and the other entities mentioned above
(ministerial microfinance monitoring entities, APSFDs and CTIs) and during Bank missions.
It is worth noting that in WAEMU, institutionally, regional projects in the monetary and financial
domain are placed under the supervision of BCEAO, while those in the economic domain
(infrastructure, agriculture, etc.) are under the supervision of WAEMU. Overall, the implementation
of multilateral projects in the sub-region is satisfactory.
III. PROJECT FEASIBILITY
3.1 Economic and Financial Performance
As shown in the project logical framework, the main expected project outcomes are: (i) improved
MFI information and management systems; (ii) improved indirect access by MFIs to WAEMU
regional payment systems; (iii) widened range of financial products and services provided by MFIs,
particularly the issuance of electronic payment facilities; (iv) extended network of acceptance of new
payment facilities in WAEMU; and (v) MFI capacity building.
The key assumptions and main foundations of the project’s economic viability and feasibility are
expectations of the same results achieved through Senegal’s CTI, which is a successful example of
the sharing of IMS for small MFIs, and the experience of GIM-UEMOA in providing electronic
banking services at the regional level and BCEAO in building MFI capacity (see technical annexes).
3.2 Project Environmental and Social Impacts
Regarding environmental and climate change issues, the project has been classified under
Environmental Category III according to Bank criteria. It will not have any negative impact on the
environment and on climate change. The targeted activities are limited to training, technical
assistance, studies and procurement of logistics, including computer hardware and office equipment.
Regarding gender, the project will help to provide a wider range of financial products and services at
costs that are more accessible to women (as well as other underprivileged segments of the population)
who make up the bulk of the customers of MFIs in the WAEMU zone. These standardized products
and services have interfaces in the main national languages of the region. Financial products and
services are standardized because no specific budget has been allocated for gender issues under the
project. However, specific training modules will also be designed for women. The project will,
therefore, contribute to enhancing women’s financial autonomy and support the promotion of women
entrepreneurship. The proportion of women customers of MFIs with access to new financial products
and services at end-2018 is projected to be at least 50%.
Socially, improved access to financial instruments and products by the most disadvantaged segments
of the population in urban and rural areas, youths, and MSMEs will contribute to: (i) improving
financial inclusion, the efficiency of financial resource mobilisation, and the creation and
consolidation of jobs; (ii) facilitating the transfer of migrant remittances; (iii) creating jobs; and (iv)
10
improving the quality of life of the population and promoting the reduction of poverty in West Africa.
It is projected that about 25% of the population (including the underprivileged segments) will have
access to MFIs and the products and services provided by these institutions by 2018.
IV. PROJECT IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1 Executing Agency and Steering Committee
Executing Agency: the project will be placed under the supervisory authority of BCEAO, which is
the executing agency, and implemented by a project management team (PMT) housed in the
Directorate of Payment Systems and Facilities (DSMP). The PMT will comprise a coordinator
appointed from among the staff of the DSMP, and two experts to be recruited, including a
procurement specialist and a senior accounting manager. The PMT will manage all the technical,
administrative and financial aspects of the project, in close collaboration with the Directorate of
Budget and Procurement, which will be responsible for procurement, and the Directorate of
Accounting, which will be responsible for accounting.
The Steering Committee.
The Steering Committee will comprise the following BCEAO directorates that participated regularly
in project preparation: the Directorate of Payment Systems and Facilities (DSMP), the Directorate of
Microfinance and Financial Inclusion (DMIF), the Directorate of Accounting (DCO), the Directorate
of Information Systems (DSI) and the Directorate of Legal Affairs (DAJ). The Committee will be
chaired by the Director of Payment Systems and Facilities (DSMP). This internal committee at
BCEAO’s headquarters will approve budgets, quarterly financial monitoring reports, and annual
accounts, and take decisions on key issues concerning project orientation and strategic options. The
Steering Committee will meet at least once a quarter. Since microfinance activities in WAEMU
member countries are mainly organised and monitored in each country, there are plans to carry out,
during project implementation, national consultations between BCEAO’s National Directorates,
ministerial microfinance monitoring entities and professional MFI associations. The results of these
consultations will be submitted regularly to the Steering Committee. Similarly, consultations,
capacity building and training programmes, seminars and other activities will be organised in each
country in close collaboration with the national entities mentioned above.
4.1.2 Procurement, Disbursement and Financial Management Arrangements
Procurement arrangements: the procurement of goods and consultancy services financed by the Bank
under this project will be in accordance with the New Procurement Policy for Bank Group-Funded
Operations approved on 14 October 2015 which came into force on 1 January 2016 and the provisions
specified in the Financing Agreement. Specifically, the procurement of goods and consultancy
services will be in accordance with Bank standard procurement methods and procedures using Bank
standard bidding documents. The Directorate of Payment Systems and Facilities (DSMP) at the
Headquarters of the Central Bank of West African States (BCEAO), backed by the Directorate of
Budget and Procurement (DBA), will be responsible for the procurement of goods/works/service
contracts and consultancy services. The resources, capacity, expertise and experience of the executing
agency, especially those of the Directorate of Budget and Procurement (DBA), have been analysed.
The staff of this entity include a procurement specialist and two procurement officers with long
experience in procurement activities. However, given the additional work required by the project, this
number of staff is insufficient to carry out procurement activities and ensure efficient project
11
implementation. Lastly, to build its capacity, a procurement expert with wide experience in the
procurement procedures of donors, particularly the AfDB, will be recruited through a call for
candidatures for a 36-month period. The Project Procurement Plan (PPP) was prepared for an 18-
month period, based on the Bank model. The detailed procurement arrangements and PPP are
presented in Annex B5.
Disbursement arrangements: Grant resources will be disbursed using the special account,
direct payment and reimbursement methods. To implement the revolving fund method, BCEAO
will open a special account in the name of the project to receive ADF grant resources to finance
current operating expenditure. A Bank disbursement letter will specify the terms and conditions of
each of these disbursement methods prior to grant effectiveness and project staff will be trained on
disbursement procedures during the launching of the project.
Financial management: the financial and accounting management of the project will be based on
BCEAO’s financial management and accounting system. A specific project management manual,
drawn from BCEAO’s management procedures, will be used for its functioning. Similarly, an open-
source accounting software will be used to record project operations financed by the Grant. Project
expenditure will be executed on the basis of an annual budget drawn from the annual work plan and
budget (AWPB), which in turn will be prepared based on the procurement plan. The project will
prepare a quarterly financial monitoring report and annual financial statements comprising a balance
sheet, a funds flow statement, financial statement notes describing accounting principles and
explaining the main book balances, a physical inventory of fixed assets, and annexes on the cash
position and the status of disbursement of Bank resources. Training on Bank requirements for project
financial management will be provided to staff during the launching of the project.
4.1.3 Auditing
The project’s annual financial statements will be submitted for auditing by an independent
auditor to be recruited based on the terms of reference approved beforehand by the Bank. The auditor
will prepare a report on the project’s financial statements and another on its internal control. His
contract will not exceed three years. Validation by the Bank of the reports on the 1st financial year
audited will be a condition for the continuation of audit services. Audit costs will be paid directly by
the Bank after the approval of audit reports.
4.2 Monitoring
The internal monitoring and evaluation of project activities and project logical framework
indicators will be conducted by the DSMP Director, who will have monitoring and evaluation
skills. The Executing Agency will prepare and submit quarterly and annual implementation status
reports to the Bank. All reports must comply with Bank formats. At the end of project implementation,
the Executing Agency, with the support of a consultant, will prepare and submit a completion report
to the Bank. Reports will be prepared quarterly and annually, in accordance with relevant Bank
directives. Additional basic data will be collected, as appropriate, in accordance with project
performance indicators. PASFDSPR monitoring will be included in the quarterly and annual
implementation reports.
The external monitoring and evaluation system design will be based on the impact and output
indicators defined in the logical framework. The Bank will conduct at least two (2) supervision
missions annually. The Bank Field Office in Senegal (SNFO) will coordinate all monitoring missions
and also ensure close project implementation monitoring. At the end of fifteen (15) months of
implementation, the project will undergo a mid-term review which will examine the progress made
with respect to the logical framework indicators and the annual activity plans. Impact assessment will
12
be part and parcel of monitoring and evaluation through surveys that will serve as means of verifying
the indicators. The project completion report will be jointly prepared by the Donee and the Bank.
4.3 Governance
4.3.1 BCEAO pays special attention to the efficiency, reliability and safety of payment systems,
which must operate efficiently and safely for all participants. According to the WAEMU Payment
Systems Oversight Policy adopted in 2006, BCEAO’s main objective, through its oversight mission,
is to maintain financial stability in the zone. Concerning the domain chosen, oversight focuses
primarily on all the Union’s payment systems, including private electronic payment systems, as well
as electronic money transfer systems. The objective of this option is to give the Central Bank an
overview of WAEMU payment systems and the main related risks. In terms of methodology, BCEAO
assesses the smooth functioning of payment systems and verifies the compliance of the systems with
the relevant international standards.
4.3.2 The reliability and efficiency of BCEAO strategic and operational tools for payment systems
supervision (monthly data collection for systems managed exclusively by BCEAO, quarterly, half-
yearly and annual data collection for the continuous monitoring of actual operating conditions and
the use of the Union’s payment systems; small missions to understand the systems; bigger and long-
term missions targeting the entire operational, technical and legal system; collaboration between
BCEAO and bank and financial supervisory bodies, including those responsible for the supervision
of MFIs, etc.) help to conclude that there are few governance-related risks.
Furthermore, BCEAO’s ISO 9001 certification in 2013, covering all its activities (including the
management and supervision of WAEMU payment systems), confirm the institution’s capacity to
adapt to project-related constraints and changes. In fact, ISO 9001 quality certification has helped to
enhance proximity between the Central Bank, the general public and the financial system (including
the microfinance sector) through the establishment of a client-oriented framework in operational
entities and a customer support system.
4.3.3 The GIM-UEMOA group will also ensure better control of the development of electronic
banking in MFIs under the project to enhance the issuance and distribution of electronic banking
services at the regional level. Synergy between technical assistance and capacity building activities
will also help to achieve significant gains.
4.4 Sustainability
4.4.1 Project sustainability will mainly depend on BCEAO’s capacity to implement the project
and monitor its activities. BCEAO has an appropriate organisation and competent and sufficient
technical staff who can supervise planned project activities. In addition, BCEAO will allocate
adequate internal resources to ensure proper project implementation throughout its lifetime.
4.4.2 The sustainability of MFI access to payment systems and their capacity to provide a wide
range of financial products and services to their clients will depend on many factors, notably the
establishment of efficient information and management systems, the building of their capacity and
improvement of their financial position. All these factors will be managed by BCEAO, in
collaboration with GIM-UEMOA, ministerial microfinance monitoring entities, APSFDs and the
CTIs to be established.
4.4.3 Project sustainability will also depend on the expansion in WAEMU of the network of
acceptance of new payment facilities (credit and debit cards, prepaid cards and electronic wallets,
mobile payment, mobile banking and rural banking services) and the proper management of the
distribution network by GIM-UEMOA which is a regional electronic banking governance entity
responsible for interbank, assignee and complementary banking, financial, postal and microfinance
electronic banking services in and outside WAEMU. The use by MFIs of the solutions and
13
opportunities offered by GIM-UEMOA will be facilitated by applying rates that are affordable and
adapted to their target customers.
4.4.4 Project sustainability will be assured through the adoption by BCEAO in 2015 of WAEMU’s
Regional Financial Inclusion Strategy and its road map which are expected to be implemented in
2016 as well as measures to strengthen and develop the microfinance sector in all WAEMU member
countries. The implementation of this strategy and measures, most of which have already been
implemented, together with project activities, will lead to the expansion of microfinance and enhance
the development of the microfinance sector
4.5 Risk Management
To ensure successful project implementation, mitigation measures have been prepared to
address the risks identified. The main risks identified besides those specific to project governance
and sustainability are: (i) problems related to the governance of MFIs and low development of IMS;
(ii) poor performance of IMS and delays in the establishment or functioning of CTIs; (iii) weak
capacity of MFI staff to assimilate training. The main mitigation measures to be implemented are: (i)
the careful selection of the sample of MFIs, capacity building of selected MFIs and upgrading of their
IMS; (ii) support to very small MFIs to upgrade their IMS and affiliation of small MFIs to the CTIs
established under the project; (iii) capacity building, financial education and sensitization of all MFI
staff and electronic money distributors (thanks to the experience of BCEAO and GIM-UEMOA in
this domain), training of APSFDs in the provision of assistance to MFIs (in the negotiation of costs
with GIM-UEMOA).
Once the project is implemented, the main risks during project lifetime are: (iv) weak capacity of
MFIs to manage indirect access to payment systems; (v) weak capacity of MFIs to issue new financial
products and services; (vi) very high cost of issuing or distributing prepaid cards, electronic wallets
and mobile payment, mobile banking and rural banking services; (vii) very high cost of issuing or
distributing prepaid and SME cards, mobile banking and rural banking services. The main mitigation
measures to be implemented are: (iv) provision of technical assistance and implementation of
investments necessary to facilitate access; (v) training of APSFDs in the provision of assistance to
MFIs (negotiation of costs with GIM-UEMOA); (vi) provision of technical assistance for the issuance
or distribution of prepaid and SME cards, mobile banking and rural banking services; and (vii) the
continuation by BCEAO of the necessary actions and reforms in the microfinance sector in order to
strengthen the governance of MFIs and increase the number of MFIs eligible for the Project.
4.6 Knowledge Building
The implementation of PASFDSPR will help to build knowledge and adopt good practices in the
promotion and development of MFIs, their integration into payment systems, widening of the range
of their financial services for the underprivileged segments of the population and improvement of
their living conditions. Knowledge on the strengthening of regional integration should also be
acquired from project implementation.
The Bank’s project team will be actively involved in the implementation of the solutions adopted
within the framework of the project and the evaluation of outcomes. In particular, it will be regularly
provided with quarterly and annual project implementation and budget monitoring reports; annual
accounts; resolutions on all key issues concerning project steering and strategic options; assessment
of impacts which will be an integral part of monitoring and evaluation through the surveys provided
for as a means of verifying indicators. Lastly, it will hold regular discussions with the executing
agency and prepare the project completion report together with the Donee.
14
Close cooperation, particularly between ONRI, OFSD and ORWA will be continued during project
implementation. The lessons learned from, and outcomes of, the project will be regularly made
available to other departments, particularly through the Bank’s communications department.
V. LEGAL FRAMEWORK
5.1 Legal Instrument
The project will be financed with a UA 4.6 million ADF (the Fund) grant and BCEAO (the Borrower)
counterpart contribution of UA 1.4 million in the form of internal costs. The project legal framework
will be a Grant Agreement and a Protocol Agreement that will be signed between BCEAO and the
Fund.
5.2 Conditions for Fund Intervention
5.2.1 Conditions Precedent to Effectiveness: the effectiveness of this Protocol Agreement shall be
subject to fulfilment by the Borrower of the conditions set forth in Section 10.1 of the General
Conditions Applicable to Protocol Agreements on Grants of the African Development Fund.
5.2.2 Conditions Precedent to First Disbursement of Grant Resources: the obligation for the
Fund to effect first disbursement of grant resources shall be subject to effectiveness of the Grant
Agreement, in accordance with the provisions of paragraph 5.2.1 above, and provision of evidence of
the Donee’s fulfilment of the following special conditions in form and substance, to the Fund’s
satisfaction:
(i) Opening, in the books of the Headquarters of the Central Bank, of a special account to
receive grant resources, indicating the bank references of the account and the name of
the person(s) authorized to effect withdrawals therefrom;
(ii) Establishment of the Project Steering Committee and appointment of its members
(paragraph 4.1.2); and
(iii) Appointment of the Project Coordinator and recruitment of two experts (procurement
specialist and accountant, whose qualifications and experience would have been
approved beforehand by the Fund) (paragraph 4.1.1).
5.3 Compliance with Bank Policies
This project is consistent with all applicable Bank policies.
VI. RECOMMENDATION
Considering that the project will contribute to improving access by microfinance institutions
(MFIs) to WAEMU payment systems, extending access to financial services by the
disadvantaged segments of the Union’s population (including women, youths, rural dwellers
and micro-, small- and medium-sized enterprises), and improving the living conditions of the
populations of WAEMU member countries and regional integration (two of the High 5s for
Africa), Management recommends that the Board of Directors approve the proposal to award
a UA 4.6 million grant to BCEAO for the purpose and under the conditions set forth in this
report.
I
APPENDIX I: WAEMU: KEY MACROECONOMIC INDICATORS
2011 2012 2013 2014 2015
Est. Proj.
(Annual percentage change)
National income and prices
GDP at constant prices 0.8 7.0 5.8 6.1 6.0
GDP per capita at constant prices -2.1 3.9 2.7 3.1 3.0
Broad money/GDP 7.5 -3.1 3.5 … …
Consumer prices (average) 3.9 2.4 1.4 0.0 1.5
Terms of trade 9.31.9 9.3 1.9 -6.4 2.5 2.8
Nominal effective exchange rate 1.6 -2.3 4.4 … …
Real effective exchange rate 1.0 -2.7 2.8 … …
(As a percentage of GDP)
National accounts
Gross domestic savings 17.8 15.8 14.0 14.4 15.5
Gross domestic investment 19.8 21.4 22.0 21.6 22.8
including: public investment 5.5 5.9 7.7 8.0 8.6
Annual change as a percentage of beginning-of-period broad
money
Money and credit 1/ 1.0 -2.1 -5.3 -1.4
Net foreign assets 9.7 11.9 15.8 14.5
Net domestic assets 10.7 9.8 10.5 13.1
Broad money
(As a percentage of GDP, unless otherwise provided)
State financial transactions 2/
Total public revenue, excluding grants 16.3 18.3 18.8 18.5 18.9
Public expenditure 22.7 23.5 24.7 25.8 25.8
Official grants 2.5 2.6 2.9 2.7 2.8
Overall budget balance, including grants (cash basis) -3.9 -2.6 -3.1 -4.6 -4.1
Basic budget balance, including grants and HIPC funds -2.2 -1.7 -1.4 -1.3 -1.2
External sector
Exports of goods and services 3/ 28.2 28.1 26.0 25.6 26.0
Imports of goods and services 3/ 32.4 35.7 37.1 36.9 35.3
Current account balance excluding grants 4/ -3.2 -7.0 -11.2 -10.4 -9.9
Current account balance, including grants 4/ -2.0 -5.7 -8.1 -7.3 -7.3
External public debt 30.9 25.6 25.8 26.2 29.7
Total public debt 43.5 37.8 38.9 38.4 41.3
Broad money 29.8 28.9 29.9 31.4 …
For the record:
Nominal GDP (in CFAF billion) 37.791 41.709 44.473 47.569 51.573
Nominal GDP per capita (in USD) 795 795 851 884 843
CFAF to USD, on average 472 511 494 … …
EUR to USD, on average 0.72 0.78 0.75 …
…
Coverage ratio of foreign exchange reserve 5/ 97.2 98.4 84.0 80.4 …
Reserves in months of imports
(Excluding intra-WAEMU imports) 5.7 5.1 4.5 4.6 4.3 Sources: IMF, African Department database; World Economic Outlook; IMF Staff and BCEAO estimates, Economic Outlook of
WAEMU Member States.
1/ Year-on-year change at end-December; for 2013, year-on-year change at end-November.
2/ Data for 2014 reflect a significant increase in Niger’s budget deficit due to the implementation of a new project in the hydrocarbons
sector.
3/ Excluding intra-regional trade.
4/ Data for the period up to 2011 are adjusted by BCEAO to reflect differences in intra-regional trade.
5/ Gross official reserves divided by short-term domestic liabilities (IMF definition).
II
APPENDIX II: TABLE OF SELECTED MULTINATIONAL PUBLIC SECTOR PROJECTS IN WAEMU
(EXCLUDING MONETARY AND FINANCIAL SECTORS)
Project Source of
Financing Sector Status
Approval
Date
Closing
Date
Approved
Amount
Disburse
ment
Rate
Disbursed
Amount Balance
BURKINA FASO – PROGRAMME TO BUILD
RESILIENCE TO FOOD AND NUTRITION INSECURITY
IN THE SAHEL (P2RS)
ADF
Agriculture
OnGo
15/10/2014
30/6/2020
12 725 000
0.00%
0
12 725 000
MALI – PROGRAMME TO BUILD RESILIENCE TO FOOD
AND NUTRITION INSECURITY IN THE SAHEL (P2RS)
ADF
Agriculture
OnGo
15/10/2014
30/6/2020
70 770 000
0.00%
0
70 770 000
SENEGAL – PROGRAMME TO BUILD RESILIENCE TO
FOOD AND NUTRITION INSECURITY IN THE SAHEL
(P2RS)
ADF
Agriculture
OnGo
16/3/2015
30/6/2020
22 250 000
1.1%
250 000
22 000 000
NIGER – PROGRAMME TO BUILD RESILIENCE TO
FOOD AND NUTRITION INSECURITY IN THE SAHEL
(P2RS)
ADF
Agriculture
OnGo
15/10/2014
30/6/2020
14 480 000
0.00%
0
14 480 000
GAMBIA – PROGRAMME TO BUILD RESILIENCE TO
FOOD AND NUTRITION INSECURITY IN THE SAHEL
(P2RS)
ADF
Agriculture
OnGo
15/10/2014
30/06/2020
11 500 000
2%
230 000
11 270 000
Sub-Total Agriculture ADF 131 725 000 0.36% 480 000 131 245 000
TRANS-GAMBIA CORRIDOR PROJECT –
CONSTRUCTION OF TRANS-GAMBIA BRIDGE AND
CROSS BORDER IMPROVEMENT …
ADF
Transport
OnGo
16/12.2011
30/6.2017
63 550 000
16.05%
10 199 775
53 350 225
BENIN/TOGO – PROJECT TO REHABILITATE THE
LOME-COTONOU ROAD AND FACILITATE
TRANSPORT ON THE ABIDJAN-LAGOS CORRIDOR
ADF
Transport
OnGo
5/10/2011
31/12/2016
38 870 000
55.94%
21 743 878
17 126 122
BENIN/TOGO – PROJECT TO REHABILITATE THE
LOME-COTONOU ROAD AND FACILITATE
TRANSPORT ON THE ABIDJAN-LAGOS CORRIDOR
ADF
Transport
OnGo
5/10/2011
31/12/2016
34 270 000
50.53%
17 316 631
16 953 369
TOGO – ROAD REHABILITATION AND TRANSPORT
FACILITATION
ADF
Transport
OnGo
5/10/2011
31/12/2016
4 810 000
4.52%
217 412
4 592 588
III
TOGO – ROAD REHABILITATION AND TRANSPORT
FACILITATION
ADF
Transport
OnGo
27/6/2012
31/12/2017
17 800 000
65.34%
11 630 520
6 169 480
BURKINA FASO – ROAD REHABILITATION AND
TRANSPORT FACILITATION
ADF
Transport
OnGo
27/6/2012
31/12/2017
21 530 000
25.61%
5 513 833
16 016 167
NIGER – TRANS-SAHARAN HIGHWAY (RTS) PROJECT
ADF
Transport
OnGo
11/12/2013
31/12/2019
58 980 000
8.47%
4 995 606
53 984 394
COTE D’IVOIRE - ROAD DEVELOPMENT AND
TRANSPORT FACILITATION PROGRAMME IN THE
MANO RIVER UNION REGION (MRU/RDTFP)
ADF
Transport
OnGo
18/12/2014
30/06/2020
42 640 000
0.00%
0
42 640 000
COTE D’IVOIRE - ROAD DEVELOPMENT AND TRANSPORT FACILITATION PROGRAMME IN THE
MANO RIVER UNION REGION (MRU/RDTFP)
ADF
Transport
OnGo
18/12/2014
30/6/2020
22 820 000
0.00%
0
22 820 000
COTE D’IVOIRE - ROAD CONSTRUCTION AND
TRANSPORT FACILITATION ON THE BAMAKO-
ZANTIÉBOUGOU-BOUNDIALI-SAN PEDRO CORRIDOR
ADF
Transport
APVD
26/11/2015
30/6/2020
100 770 000
0.00%
0
140 770 000
COTE D’IVOIRE - ROAD CONSTRUCTION AND
TRANSPORT FACILITATION ON THE BAMAKO-
ZANTIÉBOUGOU-BOUNDIALI-SAN PEDRO CORRIDOR
ADF
Transport
APVD
26/11/2015
30/6/2020
40 000 000
0.00%
0
140 770 000
LIBERIA – ROAD DEVELOPMENT AND TRANSPORT
FACILITATION PROGRAMME IN THE MANO RIVER
UNION REGION (MRU/RDTFP)
ADF
Transport
APVD
18/12/2014
30/6/2020
26 451 000
0.00%
0
26 451 000
LIBERIA – ROAD DEVELOPMENT AND TRANSPORT
FACILITATION PROGRAMME IN THE MANO RIVER
UNION REGION (MRU/RDTFP)
ADF
Transport
APVD
18/12/2014
30/6/2020
25 630 000
0.00%
0
25 630 000
GUINEA - ROAD DEVELOPMENT AND TRANSPORT
FACILITATION PROGRAMME IN THE MANO RIVER
UNION REGION (MRU/RDTFP)
ADF
Transport
APVD
18/12/2014
30/6/2020
14 542 000
0.00%
0
14 542 000
GUINEA – ROAD DEVELOPMENT AND
TRANSPORT FACILITATION PROGRAMME IN THE
MANO RIVER UNION REGION (MRU/RDTFP)
ADF
Transport
APVD
18/12/2014
30/6/2020
8 857 000
0.00%
0
8 857 000
IV
MULTINATIONAL - AIR TRANSPORT SECTOR
SUPPORT PROJECT IN WEST AND CENTRAL
AFRICA
ADF
Transport
APVD
6/7/2015
31/12/2020
22 000 000
0.00%
0
22 000 000
Sub-Total Transport
ADF 543 520 000 13.18% 71 617 655 449 902 345
EBOLA FIGHT BACK PROGRAMME GUINEA ADF
Social
OnGo
1/10/2014
31/12/2016
12 400 000
100.00%
12 400 000
0
EBOLA FIGHT BACK PROGRAMME GUINEA
ADF
OnGo
1/10/2014
31/12/2016
6 000 000
100.00%
6 000 000
0
EBOLA FIGHT BACK PROGRAMME GUINEA
ADF
OnGo
1/10/2014
31/12/2016
2 600 000
100.00%
2 600 000
0 MULTINATIONAL PROJECT - POST EBOLA
RECOVERY SOCIAL INVESTMENT FUND (PERSIF) ADF
Social
APVD
21/10/2015
31/12/2020
23 970 000
0.00%
0
23 970 000
Sub-Total Social ADF
44 970 000
46.70%
21 000
000
23 970 000
BENIN - TOGO - GHANA POWER INTERCONNECT ADF Energy
OnGo
4/4/2007
31/12/2015
17 390 000
33.43%
5 813 477
11 576 523
GUINEA-MALI ELECTRICITY
INTERCONNECTION STUDY (FOMI) ADF Energy
OnGo
12/1/2011
30/6/2016
1 667 000
64.11%
1 068 714
598 286
MULTINATIONAL. OMVG ENERGY PROJECT
(GAMBIA, GUINEA, GUINEA-BISSAU, SENEGAL) ADF Energy
APVD
30/9/2015
31/12/2020
97 000 000
0.00%
0
97 000 000
CLSG - SIERRA LEONE ADF Energy APVD 6/11/2013 31/12/2018 14 500 000 0.00% 0 14 500 000 CLSG - SIERRA LEONE ADF Energy APVD 6/11/2013 31/12/2018 6 670 000 0.00% 0 6 670 000 CLSG INTERCONNECTION-GUINEA ADF Energy
APVD
6/11/2013
31/12/2018
28 910 000
0.00%
0
28 910 000 CLSG-RURAL ELECTRIFICATION -LIBERIA ADF Energy APVD 6/11/2013 31/12/2018 16 838 000 0.00% 0 16 838 000
Sub-Total Energy ADF 182 975 000 3.76% 6 882 191 176 092 809
BENIN - AFRICAN TRADE INSURANCE -
RMC MEMBERSHIP PROGRAMME ADF Finance APVD 23/9/2015 31/12/2017 4 970 000 0.00% 0 4 970 000
Sub-Total Finance 4 970 000 0% 0 4 970 000
V
APPENDIX III: MAP OF PROJECT AREA (WAEMU)