WORLD BANK PROJECT TO HELP STRENGTHEN GOVERNMENT OVERSIGHT AND FISCAL RISK MANAGEMENT OF STATE-OWNED ENTERPRISES REPORTED TO BE WORTH US $10 MILLION COULD BE MISDIRECTED AND ITS FUNDS SIPHON OFF UNDER THE ALLEGED DIRECTIVES OF FINANCE MINISTER MAMBURY NJIE

World Bank project to help strengthen government oversight and fiscal risk management of State Owned Enterprises reported to be worth US $10 million could be misdirected and its funds siphon off under the alleged directives of Finance Minister Mambury Njie.

The World Bank is supposed to approve US $ 10 million in grant financing from the International Development Association for the restructuring of State Owned Enterprises (SOEs) for which it is reported that US $ 3.5 million has already been approved for the preparation of the Gambia State-Owned Restructuring Project (P-166695) to strengthen government oversight, fiscal risk and the performance of selected SOEs for improved service delivery.

According to official documents obtained from the Bank, Mambury Njie and Mustapha Samateh, the Director of Public Private Partnership (DPPP & PE), signed the grant agreement on behalf of government and Maimouna Mbow, a Senegalese, working closely with Mambury Njie, signed for the Bank. None of the two Permanent Secretaries and their deputies in the ministry have been included in this project. This is an attempt to circumvent established government procedures, which raises a red flag.

There are two unusual elements in this project that heightened our suspicions. First, sidelining the two Permanent Secretaries who are the administrative heads charged with running the ministry on a day-to-day basis as well being the principal adviser of the minister, signaled that all is not well with this arrangement. The question is: how can a director who is supposed to be the project beneficiary be signing the grant agreement with the Minister at the exclusion of the Permanent Secretaries and their deputies while designating the same director to set up the Project Management Unit (PMU) within his department to coordinate the implementation of the project, making him the approving authority of all disbursements as well as being a signatory to the project bank accounts show the abnormality of this arrangement. It has conflict of interest written all over it.

The second issue highlighted is designating the DPPP unit as the PMU for this project, which is overwhelmed with unsolicited private sector project proposals and has yet to deliver any successful public infrastructure project through private investments, will risk overburdening the unit with superfluous activities. With no prior experience in managing projects funded by the World Bank or other donors, designating the unit to separately manage the implementation of this multi-million dollar project when there is already a well-established PCU within MOFEA with long history of success in managing the implementation of World Bank projects, makes everything about this set up to be highly suspicious.

Having two Project Coordinating Units within the same ministry to specifically manage different projects funded by the same donor raises another red flag. It wouldn’t be a surprise to note that there is a sinister intention to create a loophole in order to siphon off a huge chunk of the US $ 10 million project funds. It is absolutely indefensible for Minister Njie to create a separate PCU unit within the directorate of Public Private Partnerships and involved himself in the day-to-day management of a project under his ministry, undermining the roles and functions of his permanent secretaries. We have been informed that the two PSs who were transferred from the ministry expressed concerns to the Minister about this unusual arrangement only to be moved to other ministries.

The World Bank operates with the highest ethical standards, that’s why it is a requirement for every ministry to set up independent dedicated PCUs to manage the implementation of its projects to enhance and facilitate the efficient and effective coordination, development, implementation and reporting of projects. The activities of each PCU is subject to rigorous internal and external audits every year to give reasonable assurance that everything is going as planned in line with donors’ requirements.

Incidentally, our team of investigators are in possession of a complaint that was lodged with the Ethics and Oversight unit of the Bank against Mustapha Samateh, and the matter is currently under investigation. We will share the details as soon as the clearance is given to go public with it. Meantime, it is advisable to keep him and the finance minister away from handling any World Bank funded project in this country.

Our mission is to help fight corruption in both public and the private sector anywhere and everywhere.

# Civil Servants United Against Corruption and Graft in Government

Attachment #1

As can be seen from this attachment,   most of the initial expenditure components outlined in the preparatory budget have already been spent and the consultant’s reports have been delivered.  Our investigations did confirm that assignments I, 2, 9 and 10 have been completed and delivered since 2018. Including these items as assignments to be funded from the initial preparatory funds is fraudulent. There total value amounting to US $ 2, 775, 000 equivalent to GMD 140 million could be diverted for other purposes. We are aware that SMD is appointed as consultant for item 2. What the bank did not know is that Manbury Njie is a partner at SMD. He and the CEO shared the same flat in Dakar when he (Mambury) was in self-imposed exile in Sengalese capital. Since he became minister, SMD has been awarded contracts by government and public enterprises in the millions. We are watching!

1. Consultancy Assignments with Selection Methods and Time Schedule

3. The 13 corporatized State-Owned Enterprises (SOEs) operate in important parts of the Gambian economy, including air and sea transport, telecommunications and media, agriculture, energy, water and services. Since their creation from the 1980s, the financial and operational performances of the SOEs have not been broadly impressive. By 2015, the SOEs’ accumulating losses and indebtedness were reaching crisis proportions.  The previous regime had been plundering and diverting the resources and revenues of the SOE sector and constraining some SOEs to deliver public services at below cost.  The larger SOEs were particularly badly affected, including NAWEC, GAMTEL, GAMCEL, GPA and SSHFC.  But all SOEs were affected to some extent by the accompanying breakdown in financial discipline and failures in their governance structures. In 2014, the Government stepped in on an emergency basis to service the debts of the larger SOEs.  The overall fiscal deficit increased from 8.8 percent to 14 percent of GDP. The inability of the largest SOEs to service their debts had led to Government intervening in 2014 to meet their external obligations, with an amount equivalent to 5 percent of GDP.

4. The aggregate sector performance indicators are heavily influenced by a few large SOEs. In 2016, NAWEC, GPA and GAMTEL accounted for 76 percent of total sector income, and NAWEC, GCAA and GAMCEL for 86 percent of total sector liabilities. While a restructuring plan for NAWEC is being implemented through the Gambia Electricity Support Project, restructuring plans for GAMTEL/GAMCEL, SSHFC and GPA should be the next priority, given the fiscal risk and actual burden on public finances that these SOEs present.

5. In more recent years the performance of SOE sector was seriously affected by the economic mismanagement of the long-lasting autocratic regime, including the plundering and diversion of resources and revenues. A sharp overvaluation of the Gambian Dalasi and other currency controls imposed, combined with marked fiscal slippages undermined investor confidence, generated capital flight, reduced remittance inflows and exports, and increased borrowing costs. The misuse of SOE funds and assets, including embezzlement of at least 4 percent of GDP[1] from SOEs from mid-2014 to 2017, was a major contributor to the country’s economic fragility.

6. Against the backdrop of severe liquidity crisis, the quality of public services provided by SOEs had deteriorated steadily. Inadequate energy supply is now a key binding constraint on inclusive growth and competitiveness.  Only 47 percent of Gambians have an electricity connection.  NAWEC’s power generation, transmission and distribution capacity is aging, and breaks down frequently.  In late 2017, available distribution capacity had dropped to 27MW in the Greater Banjul Area (GBA) where most Gambians live, compared to the installed generating capacity of 88MW – all against an estimated net demand of at least 70MW demand. Only 28% of the general population reportedly have access to the Internet, and only 13% of mobile phone users do so through Smartphones or other data enabled devices. Delays in reforming GAMTEL and GAMCEL are obstructing Gambia’s ambitions for bringing digital opportunities to it citizens, particularly for the youth. The operations of the GPA, which handle 80 percent of the country’s international trade through the Port of Banjul, are increasingly becoming a limitation on economic development due to low productivity, high turnaround times, and lack of renewal of investment in infrastructure.  And the deteriorating financial performance of the SSHFC, due largely to high administration costs and high levels of receivables, amid increasing obligations, is putting the country’s pension system in jeopardy.

8. The corporate governance framework in the SOE sector has a number of serious shortcomings. These include: (i) a fragmented oversight function and poor coordination among various actors; (ii) lack of a legal requirement for Government to reimburse SOEs for the costs of any public service obligations which are not financially viable, (iii) lack of a legal requirement for SOEs to enter into performance agreements with Government, (iv) lack of legal requirements for SOE boards to include adequate expertise and accountability for directors. In practice, many Boards consist predominantly of ex-officio public officials and representatives of interest groups such as employees or customers, (v) inadequate powers of the SOE monitoring and evaluation unit (DPPP&PE) to gain access to SOE operational and financial performance data, (vi) late delivery by SOEs of their audited financial statements to the National Audit Office and the National Assembly, and (vii) uneven application of accounting and auditing standards in line with international practices.
9. Initial responses of the Government were to: (i) create and strengthen the SOE monitoring and evaluation capacity within the DPPP&PE, and (ii) fully embrace the proposed SOE reform and restructuring program and start its implementation. But a dual model of SOE ownership still exists, with the line ministries and MoFEA sharing the ownership function while the appointment of managing directors and Board members falls under the President’s Office. In addition, the proposed SOE reform agenda is still at the early stages of implementation.

9. The recent Country Engagement Note (CEN) identified the SOE reform as a priority to restore macro-economic stability and growth. The CEN provided analysis on substantial fiscal risks associated with high level of debt stemming from the SOE sector. The CEN therefore sets the priority pillar to restore macroeconomic stability and growth, which respond to more immediate needs, will assist the Government to ensure good economic governance and macroeconomic stability essential to public confidence and a broad-based recovery. In addition, the pillar will focus on improving the environment for private sector-led growth and expanding opportunities for revenue generation to which the SOE reform will contribute. As the project preparation goes along with the preparation of Systematic Country Diagnostics (SCD), the project preparation will inform it and/or take into account the underlying issues in the SOE sector and key risks identified in the SCD.
10. Proposed Development Objective(s)

The Project Development Objective is to strengthen government oversight, fiscal risk management and the performance of selected SOEs for improved service delivery.

Key Results (From PCN)

10. The project will contribute to achieving the following expected results:

• PDO Indicator 1: Reduced public financing to SOEs – including transfer from the budget.

• PDO Indicator 2: GAMTEL and GAMCEL combined outstanding debt balances have been restructured

• PDO Indicator 3: GAMTEL and GAMCEL have been transitioned to financially viable operations.

1. Concept Description
2. The proposed project will be financed through Investment Project Financing (IPF) instrument, with Disbursement Linked Indicators (DLIs) in the amount of USD 10 million. The instrument would allow for the linking of disbursements to key results related to SOE restructuring, and for TA support to be provided in parallel to facilitate implementation of some of the policy measures. Furthermore, it is also proposed to consider the Multi-Phase Programmatic Approach (MPA) for this intervention as this would allow the Government to structure a longer-term engagement as a set of smaller linked operations (or phases), under one Program. Each phase of the program could address reform needs of a selected number of SOEs.

[1] The New Gambia: seizing transformational opportunities, April 2018, World Bank, Government of Gambia

Editors note: Finance Minister Mamburay Njie and those mentioned in the report could not be reached for comment.

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