June 26, 2012 - World Bank

Document of

The World Bank

Report No: ICR2355

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA-38390)

ON A

CREDIT

IN THE AMOUNT OF SDR 22.3 MILLION

(US$32 MILLION EQUIVALENT)

TO THE

FEDERAL REPUBLIC OF NIGERIA

FOR A

MICRO, SMALL AND MEDIUM ENTERPRISE PROJECT

June 26, 2012

Finance and Private Sector Development

Western and Central Africa

Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of May 14, 2012)

Currency Unit = Nigerian Naira (NGN)

US$ 1.00 = 155.3 NGN

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

ADR Alternative Dispute Resolution

ATF Access to Finance

BDS Business Development Services

CAC Corporate Affairs Commission

CB Credit Bureau

CPS Country Partnership Strategy

DCA Development Credit Agreement

ELAN Equipment Leasing Association of Nigeria

FIRS Federal Inland Revenue Service

FM Financial Management

GEL Grooming Enterprise Leadership Program

ICR Implementation Completion Report

IDA International Development Association

IFC International Finance Corporation

IRR Internal rate of return

ISR Implementation Supervision Report

M&E Monitoring and Evaluation

MFI Micro-finance Institution

MSME Micro, Small and Medium Enterprise

NGO Non Government Organization

NIPC Nigerian Investment Promotion Commission

NPL Non-Performing Loan

NPV Net present value

PAD Project Appraisal Document

PIU Project Implementation Unit

PMU Project Management Unit

PDO Project Development Objectives

SIL Specific investment loan

SME Small and Medium Scale Enterprises

DA Development Agency of Nigeria

TA Technical Assistance

UNDP United Nations Development Program

YouWiN Youth Enterprise with Innovation in Nigeria

iii

Vice President: Makhtar Diop

Country Director: Marie Francoise Marie-Nelly

Sector Manager: Paul Noumba Um

Project Team Leader: Ismail Radwan

ICR Team Leader: Andrej Popovic

iv

NIGERIA

Micro, Small and Medium Enterprise

CONTENTS

Data Sheet

A. Basic Information ....................................................................................................................... v B. Key Dates .................................................................................................................................... v C. Ratings Summary ........................................................................................................................ v D. Sector and Theme Codes ........................................................................................................... vi E. Bank Staff .................................................................................................................................. vi F. Results Framework Analysis ..................................................................................................... vii G. Ratings of Project Performance in ISRs .................................................................................. xiii H. Restructuring (if any)................................................................................................................ xv I. Disbursement Profile ................................................................................................................. xv

1. Project Context, Development Objectives and Design ....................................................... 1 2. Key Factors Affecting Implementation and Outcomes ....................................................... 5 3. Assessment of Outcomes ................................................................................................... 11 4. Assessment of Risk to Development Outcome ................................................................. 20 5. Assessment of Bank and Borrower Performance .............................................................. 21 6. Lessons learned ................................................................................................................. 25 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ................... 27

Annex 1. Project Costs and Financing .......................................................................................... 28 Annex 2. Outputs by Component .................................................................................................. 29 Annex 3. Economic and Financial Analysis .................................................................................. 31 Annex 4. Bank Lending and Implementation Support Supervision Processes.............................. 35 Annex 5. Beneficiary Survey Results ............................................................................................ 37 Annex 6. Stakeholder Workshop Report and Results ................................................................... 41 Annex 7. Summary of Borrower‟s ICR and / or comments on Draft ICR .................................... 42 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders ...................................... 47 Annex 9. List of Supporting Documents ....................................................................................... 48 Annex 10. List of sponsored events under each component of the Project ................................... 49 Nigeria Map ................................................................................................................................... 54

v

A. Basic Information

Country: Nigeria Project Name:

Nigeria Micro, Small

and Medium Enterprise

Project

Project ID: P083082 L/C/TF Number(s): IDA-38390

ICR Date: 05/15/2012 ICR Type: Core ICR

Lending Instrument: SIL Borrower: Federal Government of

Nigeria

Original Total

Commitment: XDR 22.3 million Disbursed Amount: XDR 21.8 million

Revised Amount: -

Environmental Category: C

Implementing Agencies:

Nigeria Investment Promotion Commission

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 07/09/2003 Effectiveness: 06/15/2004 12/15/2004

Appraisal: 07/15/2003 Restructuring(s): N/A N/A

Approval: 12/16/2003 Mid-term Review: 10/30/2006 05/19/2008

Closing: 06/30/2009 12/31/2011

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately

Satisfactory Government:

Moderately

Unsatisfactory

Quality of Supervision: Moderately

Satisfactory

Implementing

Agency/Agencies:

Moderately

Satisfactory

Overall Bank

Performance:

Moderately

Satisfactory Overall Borrower

Performance:

Moderately

Satisfactory

vi

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments (if

any) Rating

Potential Problem Project at

any time (Yes/No)

Yes: Delayed

Effectiveness

Quality at Entry

(QEA): N/A

Moderately

Satisfactory

Problem Project at any time

(Yes/No):

Yes: Unsatisfactory

rating during 2005

Quality of Supervision

(QSA): N/A

Moderately

Satisfactory

DO rating before

Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Micro and SME Finance 60 60

Other Industry 15 15

Animal Production 13 13

Central government administration 7 7

Law and Justice 5 5

Theme Code (as % of total Bank financing)

Regulation and competition policy 25 25

Micro, Small and Medium Enterprise support 25 25

Legal Institutions for a market economy 24 24

Judicial and other dispute resolution mechanisms 13 13

Other financial and private sector development 13 13

E. Bank Staff

Positions At ICR At Approval

Vice President: Makhtar Diop Callisto E. Madavo

Country Director: Marie Francoise Marie-Nelly Mark D. Tomlinson

Sector Manager: Paul Noumba Um Demba Ba

Project Team Leader: Ismail Radwan Peter Mousley

ICR Team Leader: Andrej Popovic

ICR Primary Author: Andrej Popovic

vii

F. Results Framework Analysis

Project Development Objectives

The Micro, Small and Medium Enterprise (MSME) Project in Nigeria aimed to increase the

performance and employment levels of MSMEs in selected non-oil industry sub-sectors and in

three targeted states of the country. To achieve this, the project supported: (i) development of the

capacity of local intermediaries to deliver financial and non-financial services to MSMEs; (ii)

reduction of selected investment climate barriers that constrain MSME performance; and (iii)

mobilization of increased private investments in MSMEs and intermediaries via (i) and (ii).

Accordingly, the project had the following five components: access to finance, business

development services, investment climate, public private sector partnership development, project

management, monitoring and evaluation. The Project targeted three non-oil producing states

(Lagos, Abia, and Kaduna), while part of the investment climate component also supported

nationwide reforms.

Two impact assessments were commissioned to gauge the direct impact on project beneficiaries

of the two largest components - Access to Finance and Business Development Services. The

assessments primarily focused on determining the impact that loans and business development

services had on beneficiary MSMEs‟ sales and employment levels.

To assess the impact of these components in terms of the PDO, sales revenue of beneficiary

MSMEs (together with employment generated) was used as proxy indicators of their

performance. While the PDO indicator was originally designed to capture MSME value added, in

practice value added was difficult to calculate. More specifically, value-added is defined as the

difference between sales revenues and purchased inputs. Given that the MSMEs did not use a

standardized accounting approach for measuring these inputs, it was difficult to ensure reliable

and comparable value added calculations. These data obstacles could be to some degree

surmounted by tracking MSME sales which are generally a more reliable and easily estimated

indicator of performance. Such data do not indicate profitability but combined with employment

as a second indicator may better indicate value added.

The achievement of the Project Development Objective was assessed primarily against the

outcomes of the Access to Finance and Business Development Services components for three

reasons. First, the intermediate outcome indicators for the Access to Finance and Business

Development Services components were most closely related to the achievement of the PDO.

Second, impact assessments were conducted for these components. Third, the Access to Finance

and Business Development Services components were intended to account for two thirds of the

project funding, i.e US$22 million of IDA funds versus US$6.2 million for the other two program

components – Investment Climate and Public Private Sector Partnership Development. The actual

disbursement to the BDS and Access to Finance components was in the end 47 percent of the

total (US$15.3 million out of US$32.8 million) but they accounted for most of the project funding

excluding implementation costs, versus US$8.9 million for the other two program components.

viii

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value Achieved at Completion

or Target Years

Indicator 1:

i) Growth of MSMEs‟ value-added in participating States and sectors

Value

quantitative or

Qualitative)

N/A i) MSMEs‟ value

added

i) Average monthly sales of MSMEs

increased by 44% for microfinance

borrowers and 84.4% for recipients of

business development services, while the

latter also experienced growth in

employment of 41.7%1

Date achieved 15-Dec-2004 21-Feb-2008 and 09-July-2009

Comments

(incl. %

achievement)

To assess progress towards the achievement of PDO, sales revenue of beneficiary MSMEs was

used as a proxy to measure their performance, instead of originally planned value-added which

proved difficult to calculate. This is justifiable as a first approximation on the basis that the

aggregate value added percentage of output in the assisted MSMEs would not be subject to

significant variation.

The two independent impact assessment surveys on business development services (BDS) and

access to finance (ATF) components showed that MSMEs which benefitted from project

supported BDS increased employment levels by 41.7% (from 5.8 to 8.3) and expanded average

monthly sales by 84.4% (from about N243,840.58 to N449,270.4) in the observed period. Sales

of MSMEs which obtained loans from project supported MFI providers increased by 44% (by

NGN 197,385) compared to pre-intervention time. While the surveys were conducted during

the project (in 2008 and 2009), significant portion of planned grants supporting access to

finance and BDS agenda had already been utilized.

More detailed information about the findings of impact assessment studies can be found in

Annex 5.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values

(from approval

documents)

Formally

Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 1: i) $15 million new private sector investments in microfinance institutions;

1 According to two independent studies: i) Impact Evaluation of Borrowers from Accion , Susu, and MIC Microfinance Banks, by Luba Shara, IFC with data collection conducted by: BDO OFO CONSULTING LTD, 2009; and ii) Impact Survey of MSME

Beneficiares, by BDO OFO CONSULTING LTD, 2008.

ix

ii) At least two MFIs established;

iii) Three commercial banks establish MSME downscaling programs

iv) Portfolio at risk (arrears over 60 days) not greater than 5 percent after second year

of operation for both MFIs and commercial banks

v) Loan portfolio cumulative disbursed of $75 million each for MFIs and commercial

banks

Value

quantitative or

Qualitative)

There were no large

scale self-sustainable

MFIs operating prior

to project launch.

i) $15 mn investments in

MFIs

ii) At least 2 MFIs;

iii) 3 commercial banks

downscale;

iv) PAR at 60 days <

5%

v) $ 75 mn loan portfolio

i) $30.8 million (N 4.478 bn)

of equity investment ii) 4 new

MFIs established after some

delay.

iii) 1 commercial bank

downscaled under the project

and at least 4 more followed

later without direct project

support but attributable iv)

PAR at 60 days for MFIs is

less than 2.5%2 and for the

commercial bank is 5.47%

v) $49.6 mn for 4 MFIs (N

7.199bn) and $7.8 million (N

1.139 bn) for the commercial

bank3

Date achieved 15-Dec-2004 30-Jun-2010 31-Dec-2011

Comments

(incl. %

achievement)

This component surpassed its initial targets in regards to supporting creation of MFI sector in

Nigeria although after some delay. While the initial target was to facilitate the creation of 2

MFIs, the project supported the establishment of 6 MFIs. Four of the six MFIs survived the

2008 crisis (i.e., Accion, Susu, Microcred and AB). Further, the original private sector

investment targets were doubled for MFIs, and their PAR at 60 days was satisfactory. These

achievements have to be regarded in the light of the length of time that the project required for

completion, and the possibility that attributability weakened over time as other initiatives

intervened. However the impact surveys provided good evidence of attribution.

The PAR of the microfinance portfolio of the commercial bank‟s (then Oceanic Bank) which

downscaled was higher than originally envisaged. The bank experienced difficulties as a result

of the crisis and was recently bought by Ecobank. The new owner has however maintained the

MSME focus of Oceanic Bank. The project was originally supposed to support downscaling of

three commercial banks, but only Oceanic Bank expressed interest at the time. Hence, only one

bank was included in the program. However, Oceanic Bank acted as a demonstrator and at

least 4 additional banks (Stanbic, First Bank, Diamond, and UBA) downscaled their operations

without direct project engagement. The outstanding loan portfolio for MFIs and the

commercial bank is below the initial target, but the impact of the crisis needs to be taken in

consideration when assessing this outcome.

Indicator 2:

i) At least 1,000 MSMEs are supplied with BDS by participating BDS providers;

ii) Up to 4,000 new (including indirect) jobs in 3-5 supply chains in selected

industries;

2 PAR at 60 days: AB 0.66%; Accion 2.3%; Microcred 0.29; Susu 1.84%, as reported by the four MFIs. 3 All financial indicators in this section were received directly from the four MFIs (Accion, Susu, Microcred and AB) and Oceanic Bank as of December 2011.

x

Value

quantitative or

Qualitative)

N/A

i) 1,000 MSMEs

ii) 4,000 new jobs

i) Approximately 3,360

MSMEs received BDS, and a

total of 20,161 MSME

workers of which 17,358 were

covered under the general

BDS program and 2,803 in 4

supply chains

ii) New direct jobs in

supported supply chains

estimated at around 1,1684

Date achieved 15-Dec-2004 31-Dec-2011

Comments

(incl. %

achievement)

Based on the available data from the PMU records and project reports, this component

exceeded the initial targets regarding the coverage of MSME beneficiaries of BDS services.

While the project originally targeted 1,000 MSMEs, it facilitated BDS support to 20,161

microenterprise workers, or estimated 3,360 MSMEs (around 2,893 under general BDS and

467 under four value chains). The estimated number of MSMEs is based on the previously

cited impact survey of BDS beneficiaries under the project, which stated that the target

MSMEs on average employed around 6 people prior to the introduction of BDS.

The employment data for the supply chains could not be exactly measured due to lack of

accessible data. Since BDS targeted to specific supply chains are more intensive than general

BDS the increase in employment per MSME attributable to the supply chain assistance would

likely exceed that of general BDS. Since the BDS study concluded that recipients of BDS

services under the project increased their employment levels from 5.8 to 8.3 employees - or on

average adding 2.5 jobs per MSME - it could be estimated that the BDS services for 467

MSMEs in four value chains supported creation of 1,168 or more new jobs. To the extent that

the total achieved is lower than the target of 4,000 jobs, one factor to be the financial crisis.

In this case a counterfactual was estimated from the survey which suggested that the assisted

MSMEs expanded employment significantly more than the sector as a whole.

Indicator 3:

i) Under both the BDS Fund and industry supply chain, at least 20 BDS providers

assisted by the Fund;

ii) At least 75% cost recovery reached by participating BDS providers within a

specific time frame;

iii) At least 20 products or services with sustained uptake improved or developed

through support from the Fund

Value

quantitative or

Qualitative)

N/A

i) 20 BDS providers

ii) 75% cost recovery

iii) 20 products/services

i) 69 BDS providers (45 under

general BDS Fund and 24

through 4 value chain

interventions) ii) 58% cost

recovery

iii) 25 new products and

services

Date achieved 15-Dec-2004 30-Jun-2010 31-Dec-2011

Comments Based on the PMU records and project reports, the original targets were exceeded. The only

4 Estimate in line with the assumptions made based on the findings of Impact Survey of MSME Beneficiares, by BDO OFO

CONSULTING LTD. Specifically, if estimated 467 beneficiary MSMEs under the value chain program added on average 2.5 jobs, new jobs could be estimated at 1,168.

xi

(incl. %

achievement)

exception is the cost recovery which fell short of the target. The BDS providers reported

difficulties in getting MSMEs to pay for BDS services, both due to lack of resources as well as

perceptions that World Bank funded government programs should not require payments Also,

some of the programs were implemented during and following the crisis, which put additional

pressures on the MSME sector and could account for lower cost recovery. At the same time,

according to the previously mentioned independent BDS study covering a sample of

beneficiary MSMEs, 88% of respondents confirmed that they have actually paid for BDS.

Indicator 4:

i) Secured transactions regime introduced in each target State

ii) Regulatory framework updated for leasing industry;

iii) Framework for credit bureau established;

iv) Alternative dispute resolution mechanisms developed and implemented in up to

three States

Value

quantitative or

Qualitative)

i) No framework for

secured transactions

ii) No framework for

leasing

iii) No credit bureau

law

iv) No Alternative

Dispute Resolution

(ADR)

i)Secured transactions

regime introduced in each

target State

ii)Regulatory framework

updated for leasing

industry;

iii)Framework for credit

bureau established;

iv)Alternative dispute

resolution mechanisms

developed and

implemented in up to

three States

i) Law on Secured

Transactions drafted, but not

adopted ii) This activity was

dropped, as progress was

reportedly made by ELAN5

and Central Bank of Nigeria

iii) Credit Bureau (CB)

regulations in place and 3 new

CBs operational iv) ADR

Mechanism set up - 2 new

multi-door court houses

established in Kaduna and

Abia States, while the existing

ADR centers in Lagos

received project support


Comments

(incl. %

achievement)

At least 50% of the expected results under this indicator were achieved and were attributable to

the project. This may be regarded as a fair result in challenging circumstances. ADR

mechanisms were established, credit bureau regulations were approved, and three credit

bureaus were established. The Law on Secured Transactions was not approved, but the Central

Bank has included it in the package of laws that it will submit for Parliamentary approval in

2012. The leasing law has been drafted and submitted to Parliament for approval. However,

this activity was dropped during project implementation, as the Equipment Leasing

Association of Nigeria (ELAN) and the Central Bank of Nigeria focused on it and did not

require project support.

Indicator 5:

i) Streamlined procedures; Integrated tax and business registration process

ii) Reduction in transaction costs for company registration with Corporate Affairs

Commission (including a reduction in the number of steps required to register a

business from 9 to 6 and reduction in time required by 30%)

Value

quantitative or

i) No integration of

tax and business

i)Streamlined procedures;

Integrated tax and

i) Initial report on integrating

registration process was

5 Equipment Leasing Association of Nigeria.

xii

Qualitative) registration process.

ii) 44 days and 10

procedures to

register a business in

Nigeria according to

Doing Business

2004 report.

No sub-national

data were available

at the time.

business registration

process

ii) Reduction in

transaction costs for

company registration

with Corporate Affairs

Commission (including a

reduction in the number

of steps required to

register a business from 9

to 6 and reduction in time

required by 30%)

prepared and disseminated,

workshop held, and hardware

delivered; however,

integration process is still

work in progress. ii) Based on

Nigeria Sub-national Doing

Business 2010 results partial

reduction in transaction costs

observed both nationally and

in target states as summarized

below, though this can only be

partially attributed to Project

(33 days and 9 procedures for

Abia; 31 days and 9

procedures for Kaduna; and 31

days and 8 procedures for

Lagos)


Comments

(incl. %

achievement)

The project supported the development of streamlined and common business registration

procedures between the Corporate Affairs Commission (CAC) and Federal Inland Revenue

Service (FIRS). These procedures were adopted by the relevant entities and the agreement was

formalized in a memorandum of Understanding between the CAC, FIRS, and NIPC. The

necessary hardware was also funded under the project. However, the physical link between the

databases of CAC and FIRS was not finalized by the closing date and is expected to be

completed in the Summer of 2012. The process of business registration in Nigeria improved

since Doing Business 2004 Report, from 44 days and 10 procedures to 34 and 8 respectively

according to DB 2012. Also, according to Nigeria sub-national Doing Business 2010 results,

the same indicators for target states are: 33 days and 9 procedures for Abia; 31 days and 9

procedures for Kaduna; and 31 days and 8 procedures for Lagos. However, while momentum

for improving procedures was created by the project, given that the intended streamlining of

the business registration process has not been completed yet, these improvements may only be

partially attributed to project activities.

Indicator 6:

Public-Private Sector Partnership Development

i) At least 3 MSME competitiveness conferences held (annual) and reports of

proceedings produced and disseminated;

ii) Associated roundtable discussions held between Government and private sector to

disseminate lessons , best practices, success stories from the project and establish

dialogue to improve policies and programs targeted at MSMEs

Value

quantitative or

Qualitative)

N/A

i) at least 3 MSME

conferences

ii) Roundtable

discussions

i) 1 MSME conference held

ii) 18 various events

supporting public private

dialogue held, including

roundtable discussions


Comments

(incl. %

achievement)

The purpose of this component was to develop public private dialogue as a precondition for the

successful execution of private public partnerships in policy formulation and in actual

development projects. The component supported preparation of one MSME Competitiveness

Report as well as a national conference on competitiveness which was organized in September

2011. In addition, according to the PMU‟s Completion Report, the following 18 events

xiii

supporting public private dialogue were held: three roundtables for MSME financial service

providers, two stakeholder forums on private credit bureaus, one consultative forum on

commercial bank downscaling, two roundtables on investment climate, two knowledge sharing

alternative dispute resolution events, co-sponsoring of three annual Nigerian Economic

Summits, three BDS fairs, and two stakeholder forums on rice and tourism sectors.

Indicator 7: i) Appropriate monitoring and evaluation system established to measure the project‟s

impact on participating States

Value

quantitative or

Qualitative)

N/A i) Appropriate M&E

system in place

i) M&E system in place,

though with some

shortcomings

Date achieved 15-Dec-2004

Comments

(incl. %

achievement)

The results framework included outcomes which extend beyond the immediate impact on

project beneficiaries and not all intermediate indicators were closely related to the achievement

of the PDO.

However, the team addressed this by commissioning two impact assessments in 2008 and 2009

to gauge the impact of the two largest components - Access to Finance and BDS – both of

which had a direct impact on PDO. The assessments were conducted at a time when a

significant portion of the planned grant funding for these components had been disbursed. As

explained, the actual total disbursements to these components turned out in the end to be

smaller as a percentage of the total project cost. Consequently, the ICR provides a summary

review below of the costs and benefits of the other components.

Detailed implementation reports were regularly prepared.

G. Ratings of Project Performance in ISRs

No.

Date ISR

Archived

DO IP Actual

Disbursements

(USD Millions)

1 4/30/2004 Satisfactory Satisfactory 0




5 6/24/2005 Moderately

Satisfactory

Unsatisfactory 1.12

6 12/20/2005 Unsatisfactory Unsatisfactory 1.12


Satisfactory

Moderately

Unsatisfactory

1.92

8 6/29/2006

Moderately

Satisfactory

Moderately

Satisfactory 2.83


Satisfactory

Moderately

Satisfactory

3.7

xiv

10 6/27/2007

Moderately

Satisfactory

Moderately

Satisfactory 5.46


Satisfactory

Moderately

Satisfactory

7.18

12 6/18/2008 Satisfactory Satisfactory 10.73




Satisfactory

Satisfactory 19.02



18 3/24/2011

Moderately

Satisfactory

Moderately

Satisfactory 25.36


20 n/a n/a n/a 33.37

xv

H. Restructuring (if any)

Project restructuring was done only to request project extensions and amend the Development

Credit Agreement. However, there was no restructuring of project activities or objectives.

Although the implementation performance dipped to less than satisfactory in 2005, it was not

considered that formal restructuring was necessary because the original composition of assistance

components remained valid and the main obstacles were in terms of implementation bottlenecks

(including an FM review) rather than the content of the assistance program as such.

I. Disbursement Profile

Disbursement under the MSME project was unexpectedly slow. This was caused by a number of

factors (see below) some of which were outside the control of the project. This situation led to

the unsatisfactory rating of 2005. However during the period of project extension (2010 to 2012)

the disbursement lag was reduced to zero and funds were finally 98% disbursed.

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. With a GDP of about US$40 billion at the time of project preparation, Nigeria was

Africa‟s second largest economy, endowed with rich natural resources, most notably oil.

According to the Project Appraisal Document (PAD), Nigeria‟s economy however displayed a

significant dualism between oil and non-oil producing sectors, with the middle-income oil

producing economy of about five million people having a per capita income of around US$2,200.

At the same time, 70 percent of its population lived below the poverty line with an average per

capita income of US$200. Further, based on the United Nation‟s Development Program‟s

(UNDP) Human Development Index, Nigeria ranked low in the human development category –

151st out of 174 countries for which the UNDP had data, and 22

nd out of 45 African countries.

2. In February 2002, the Joint Interim Strategy Update put private sector led growth at the

core of the Bank program. The strategy had three pillars: (i) improving economic governance; (ii)

creating the conditions for rapid private sector led poverty-reducing growth, particularly in the

non-oil economy; and (iii) enabling local communities to take charge of their own development.

Assistance to achieve the development objectives under the first and third pillars were to be

provided through a combination of lending and non-lending services including those for

economic management capacity building, sectoral programs on education, health, energy, water

and transport, and community driven projects.

3. The MSME Project aimed at supporting growth potential of MSMEs. Project components

included: access to finance, business development services, investment climate, public private

sector partnership development, project management, monitoring and evaluation. The Project

targeted three non-oil producing states (Lagos, Abia, and Kaduna), except for part of investment

climate component which also supported nationwide reforms. The MSME project was

complemented by the IDA Privatization Support Project, which was successfully implemented

and closed in December 2009.

4. The MSME Project was part of the joint IDA-IFC MSME Development Pilot Program

for Africa. The Program aimed at unlocking private sector growth in selected African countries

by supporting MSMEs, which taken together account for the vast majority of private sector

activities in most of the continent. Projects under this Pilot Program were meant to differ from

previous private sector development projects in three ways: (i) they would address MSME

constraints in a holistic manner, i.e., by tackling regulatory obstacles, as well as facilitating access

to finance and the creation of a market for business development services; (ii) they would rely on

a range of private sector partners for implementation, (iii) they would provide a framework for

collaboration between the Bank and IFC. The initial pilot included the following seven countries:

Ghana, Kenya, Madagascar, Mali, Nigeria, Tanzania and Uganda. The program was later

extended outside the Africa region to Cambodia and Papua New Guinea.

1.2 Original Project Development Objectives (PDO) and Key Indicators

5. The PDO aimed to increase the performance and employment levels of MSMEs in

selected non-oil industry sub-sectors and in three targeted states of the country. To achieve the

PDOs the project supported three sets of interventions (i) development and strengthening of the

capacity of local intermediaries to deliver financial and non-financial services to MSMEs; (ii)

2

reduction of selected investment climate barriers that constrain MSME performance; and (iii)

mobilization of increased private investments in MSMEs and intermediaries via (i) and (ii).

Key performance indicators included the following:

PDO Indicator: i) Growth of MSMEs‟ value-added in participating States and sectors

Intermediate Outcome Indicators:

Component 1- Access to Finance:

i) US$15 million new private sector investments in microfinance institutions;

ii) At least two MFIs established;

iii) Three commercial banks establish MSME downscaling programs;

iv) Portfolio at risk (arrears over 60 days) not greater than five percent after the second

year of operation for both MFIs and commercial banks; and

v) Loan portfolio cumulative disbursed of US$75 million each for MFIs and

commercial banks.

Component 2 – Business Development Services (BDS):

i) At least 1,000 MSMEs are supplied with BDS by participating BDS providers;

ii) Up to 4,000 new (including indirect) jobs in 3-5 supply chains in selected industries;

iii) Under both the BDS Fund and industry supply chain, at least 20 BDS providers

assisted by the Fund;

iv) At least 75 percent cost recovery reached by participating BDS providers within a

specific time frame; and

v) At least 20 products or services with sustained uptake improved or developed

through support from the Fund.

Component 3 – Investment Climate:

i) Secured transactions regime introduced in each target State;

ii) Regulatory framework updated for leasing industry;

iii) Framework for credit bureau established;

iv) Alternative dispute resolution mechanisms developed and implemented in up to three

States; and

v) Streamlined procedures; integrated tax and business registration process

Reduction in transaction costs for company registration with Corporate Affairs

Commission (including a reduction in the number of steps required to register a

business from 9 to 6 and reduction in time required by 30%).

Component 4 - Public-Private Sector Partnership Development:

i) At least three MSME competitiveness conferences held (annual) and reports of

proceedings produced and disseminated; and

ii) Associated roundtable discussions held between Government and private sector to

disseminate lessons, best practices, success stories from the project and establish

dialogue to improve policies and programs targeted at MSMEs.

Component 5 – Project Management, Monitoring and Evaluation - Project Impact Assessment:

i) Appropriate monitoring and evaluation systems established to measure project‟s

impact in participating States.

3

1.3 Revised PDO and Key Indicators, and reasons/justification

6. The PDO and key outcome indicators remained unchanged during the project as it was

considered that they were appropriate, and that the targets were by and large feasible, if

challenging in some cases.

1.4 Main Beneficiaries

7. The project supported MSMEs growth by: (i) facilitating increased access to finance; (ii)

improving business development services; (iii) enhancing the investment climate; and (iv)

supporting the dialogue between the public and private sector to facilitate MSME development.

The main targeted beneficiaries of the project included: (i) BDS providers which received grants

to improve and expand their services to MSMEs; (ii) financial institutions which received grants

to establish microfinance operations and/or downscale; (iii) supported MSMEs with better access

to finance, business development services, and improved investment climate; and (iv) the

government with better regulatory framework in selected areas, improved capacity, and expected

healthier fiscal position resulting from the growth of private sector.

1.5 Original Components

8. The project included five components: (i) access to finance; (ii) business development

services; (iii) investment climate; (iv) public-private sector partnership development; and (v)

project management, monitoring and evaluation.

9. Component 1: Access to Finance (IDA US$10 million, Other US$23 million). This

component aimed to improve access to financial services available to MSMEs. This objective was

to be achieved by using grants to support the creation or strengthening the capacity of

microfinance institutions and banks to serve the MSME segment. The component envisaged

support for the following activities: i) establishment of local commercially viable, regulated,

micro-finance companies; ii) technical skills transfer programs that incorporate new systems and

lending methodologies to support commercial banks to expand their loan portfolio to MSMEs; iii)

support for the establishment of private credit bureaus over an initial set-up period until a bureau

establishes a revenue flow from its services; and iv) specialized technical assistance to selected

firms providing long-term leasing services.

10. Component 2: Business Development Services (IDA US$12 million, Other US$4

million). This component intended to develop the market for business development services

(BDS) by supporting qualifying intermediaries via grants and technical assistance to respond to

unmet MSME demand for BDS. The component focused in the three target States. Two types of

TA and trainings were funded under this component: (i) TA and training on specific value chains;

and (ii) TA and trainings on more general business functions (i.e, accounting, marketing,

management etc). In addition, towards the very end of the project, support was provided for

implementation of two special programs – the Grooming Enterprise Leadership Program (GEL)

and the Youth Enterprise with Innovation in Nigeria (YouWiN). These two programs were not

captured under impact assessment surveys, because they were included in the project only in

2011.

11. Component 3: Investment Climate (IDA US$5.1 million, Other US$0.7 million). This

component was intended to support the Government of Nigeria in: (i) reforming the business

registration process, including upgrading and decentralizing the information systems of the

Corporate Affairs Commission (CAC); (ii) introducing and strengthening the alternative dispute

4

resolution (ADR) in three states; (iii) enhancing the existing leasing framework by providing

technical assistance for developing the laws and regulations together with a training program to

ensure full understanding by relevant stakeholders; (iv) supporting the required legal reforms for

the establishment of credit bureaus; and (v) introducing a new secured transaction system

including the laws and regulations, hardware, and software system that could be used for an

integrated registration covering various forms of moveable collateral.

12. Component 4: Public-Private Sector Partnership Development (IDA US$1 million).

Resources were allocated to fund learning events (study tours, trainings, conferences) and reports

to facilitate dialogue between the public and private sector, and thus support reforms for MSME

development. Key beneficiary institutions under this component were the Small and Medium

Scale Enterprises Development Agency of Nigeria (SMEDAN) and the Nigerian Investment

Promotion Commission (NIPC). SMEDAN would take the lead on a dialogue with business

associations, private sector and government stakeholders with a view to preparing MSME

competitiveness report on an annual basis utilizing the cost of doing business surveys and other

evaluations generated by the project and research undertaken by SMEDAN itself.

13. Component 5: Project Management, Monitoring and Evaluation (IDA US$2.3

million) Due to limited government capacity to implement the project, a decision was made to

select a private sector entity on a competitive basis, and entrust it with the management of the

project, with the exception of disbursement and FM functions which were performed by the

government run PIU. This component funded the operational cost of the PMU, as well as

equipment and other financial, audit, training and consultant assignments for both the PMU and

PIU.

1.6 Revised Components

14. The program components remained unchanged throughout the project. However, the

scope of some activities was broadened to respond to client demand and country needs. For

example, during implementation two new BDS programs were added: (i) Grooming Enterprise

Leadership Program - GEL to provide training to SMEs in 24 locations across the country; and

(ii) Youth Enterprise with Innovation in Nigeria - YouWiN to support business plan competition

for young entrepreneurs. These programs were requested by the Ministry of Finance to support

its jobs and growth agenda.

1.7 Other Significant Changes

15. The project was extended from the originally scheduled closing date of June 30, 2009 to

December 31, 2011 due to implementation delays. The project was extended three times. An

initial request was made to extend the closing date from June 30, 2009 to June 30, 2010 to ensure

completion of planned activities which were behind schedule due to delayed effectiveness. The

second extension moved the closing date to June 20, 2011 to enable the team to conclude several

activities which were already in advanced stages (i.e., $900,000 worth of matching grants under

the three value chains). A final six month extension request was made to complete the remaining

project activities, including Grooming Enterprise Leadership (GEL) program, which was included

in the project in 2011. The reasons for these delays are further set out below, section 2.2.

5

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design, and Quality at Entry

16. The Nigeria MSME Project was one of seven joint IDA/IFC MSME pilot projects for

Africa designed to support MSME growth in a comprehensive fashion. Specifically, the projects

under this IDA-IFC program included: (i) access to financial services; (ii) business development

services and entrepreneurship development, including strengthening inter-firm linkages (both

domestic and foreign) and information access; and (iii) improvements in the business

environment for MSMEs, including strengthening business associations. An additional objective

of the pilot program was to leverage IDA and IFC resources to support project implementation.

As a result, the project was designed based on the framework for pilot programs and tailored to

respond to specific MSME needs in Nigeria.

17. The project objective was relevant to the country‟s goals and development priorities.

This was reflected in the IDA‟s Interim Strategy Update from February 2002, highlighted in

analytical work which preceded preparation, and confirmed in FY10-13 CPS and recent

analytical work6.

18. The project design was based on considerable Economic and Sector Work7 which

revealed that the non-oil private sector in Nigeria faced major development challenges. The

findings revealed that Nigerian private sector firms suffered from high costs and lack of

competitiveness. Following a due diligence process, the Project team identified the following

MSME issues in Nigeria: (i) poor access to finance; (ii) lack of access to business development

services; (iii) constraint in the investment climate; and (iv) limitations to public-private sector

dialogue. As a result, four corresponding project components were designed.

19. The project focused on three pilot states of Lagos, Abia, and Kaduna. The PAD did not

provide detailed information about the selection process of targeted states. It is understood

however, that the geographic focus areas were previously agreed between the Government of

Nigeria and the World Bank. The three pilot states were selected to ensure geographic and socio-

economic diversity, with Lagos being the commercial capital of the country, Abia an

underdeveloped and poor, and Kaduna as an industrial center in northern Nigeria.

20. In addition, the business development services component focused on four target

industries, based on a set of selection criteria identified in the PAD. The criteria included: high

growth potential; size of the industry (contribution to GDP) and geographical distribution;

number of MSMEs in the value chain and MSME employment; potential for local MSMEs to

6 Financing SMEs in Nigeria By Gunhild Berg, Michael Fuchs, Leonardo Iacovone, Thomas Jaeggi, Andrew Lovegrov, and Carolina

Villegas Sanchez, 2012. 7 Bank Staff Assessments: 1) Results of the Nigeria Firm Survey, Regional Program on Enterprise Development (RPED Paper #118,

April 2002), World Bank. 2) The Implementation Completion Report (ICR) on the World Bank Small and Medium Enterprise Development Project (Loan 2995-UNI), Report #16811, June 1997. 3) Africa Program Framework Paper for a Joint IDA/IFC Micro,

Small and Medium Enterprise Development Pilot Program for Africa, World Bank JIFC (considered by the Board of Executive

Directors, June 19,2003). 4) SME mapping exercise undertaken in parallel with a survey on Nigerian firms conducted under the WED of the World Bank, October 2001. 5) “Joining the Race for Non-Oil Foreign Investment, ” conducted by the Foreign Investment

Advisory Services; 6) “Direct Support to Private Firms - Evidence of Effectiveness”, G. Batra and S. Mahmood, 2001 and „YDA ‟s

Partnership for Poverty Reduction (FY94-FY00): An Independent Evaluation ”, OED, 200 1 , pp 31-33. Other: 1) “Evaluation of the Mekong Project Development Facility ”, Nexus and Assocs., June, 2002 with important insights into the

best design parameters for BDS provider capacity building. 2) Guiding Principles for Donor Intervention Business Development

Services for Small Enterprises: Guiding Principles for Donor Intervention, Committee of Donor Agencies for Small Enterprise Development, February 2001.

6

capture more value added; the potential for technical assistance to help MSMEs achieve the

above goal; and, commitment of key industry stakeholders. In this regard, catfish farming was

identified in the PAD as the first target industry, while the selection of other industries was to be

made during project implementation and based on assessment of their potential. Eventually, rice,

palm oil, and tourism sectors were included in the project.

21. The project may have been too ambitious in terms of the number of planned activities and

their scope, given its pilot nature and the challenging implementation environment. The project

design, including both IDA and IFC inputs, was consciously attempting a comprehensive

approach to MSME development in order to leverage the interrelationships of policy, institution

building, finance and technical upgrading, rather than a piecemeal approach. The team wanted to

ensure implementation of a reform agenda to address obstacles and nurture MSME development.

However, this approach came up against the inevitable problem of a complex management

structure, and it proved difficult in practice. Implementation rested on a variety of institutions

and required a high level of coordination which was difficult to ensure in a complex

implementing environment

2.2 Implementation

22. The commencement of implementation experienced significant delays and the project

lagged behind the original schedule ever since. This project faced a difficult implementation

environment which was to a significant extent outside the control of the project management. The

delay factors which impacted implementation and outcomes, included the following: (i) delayed

effectiveness; (ii) delays with the establishment of the Project Management Unit (PMU); (iii)

limited capacity of the government Project Implementation Unit (PIU) in implementing World

Bank financial management guidelines and related FM in-depth review; (iv) PMU‟s limited

exposure to World Bank‟s procurement procedures; (v) low interest from vendors to bid for

project funded activities; (vi) an amendment to the Development Credit Agreement due to lack of

counterpart funding; (vii) delayed approval of regulatory framework for MFIs; and (viii) the

security situation in Abia State. Below is a brief summary outlining each of the highlighted

factors.

23. The Project was declared effective six months after the originally planned effectiveness

target date of June 2004, which delayed commencement of project activities. Amongst other

issues, the conditions of effectiveness included signing of management contract between NIPC

and the firm appointed for project execution services, which required completion of procurement

for the private PMU. Given that the procurement process took an extended period of time, due to

low technical capacity, the effectiveness was delayed until December 2004.

24. The establishment of the privately managed Project Management Unit (PMU) took nearly

two years to complete. The PMU became fully operational only in June of 2005. This was largely

due to Nigerian Investment Promotion Commission‟s (NIPC) insufficient procurement capacity at

the time. Following a lengthy international procurement process, the contract with the winning

bidder - Nathan Associates – was signed in November 2004. However, the staffing of the PMU

took another six months and was completed only in June 2005, when the PMU finally became

fully operational.

25. Project implementation was temporarily delayed due to the PIU‟s lack of full compliance

with World Bank‟s FM guidelines, which triggered an in-depth FM review. The World Bank‟s

FM supervision mission in 2007 and 2008 flagged non-compliance with some of the FM

guidelines, such as travel without proper recording of receipts, lack of purchase orders, and so

7

forth. As the project failed to comply with required financial management procedures by the time

of expected extension in 2009, it was subject to the World Bank‟s FM review process. The FM

review included several stages and involved a dynamic interaction between the PIU and the

Bank‟s FM team. Specifically, as the PIU had to respond to FM team‟s inquiries with additional

clarifications and/or documents in each of the stages of the review, the whole process took

approximately four months to complete. According to the project team, during this period some

contractors engaged to support rice and palm oil value chains stopped working temporarily given

that their payments were not processed in a timely fashion. While the World Bank did not impose

an explicit disbursement ban during this period, withdrawal applications could not be prepared

promptly until the project financial records were sorted out internally. Following completion of

FM review, the project received a clean bill of health and implementation was put back on track.

26. Initially, the PMU had limited familiarity with the Bank procurement guidelines. At the

outset, the PMU staff responsible for procurement did not have adequate knowledge of World

Bank procedures. This translated into slower than expected implementation. The Bank‟s

procurement team reported that it took nearly two years until sufficient capacity was created with

the assistance of World Bank procurement staff who delivered training to the PMU.

27. International vendors exhibited low initial interest to bid for project work. Initially the

interest to bid for project work in Nigeria was low and a number of tenders received only limited

response. In some cases this led to retendering, which caused implementation delays. This

particularly affected the implementation of the rice and catfish value chains. This issue was not

specifically related to this project as it also affected other projects being implemented in Nigeria

over this period.

28. Project implementation was slowed down by lack of counterpart funding. This issue was

eventually addressed with the amendment of the Development Credit Agreement (DCA). In 2005,

the DCA had to be amended because the counterpart funding from the government was not made

available regularly. Initially, the DCA envisaged a split of 80 percent IDA and 20 percent

counterpart funding, but as the counterpart funds were not readily available the DCA was

amended to include 100 percent IDA financing in order to facilitate implementation.

29. Slow approval of the regulatory framework for MFIs delayed implementation of the

access to finance component. Component 1 – Access to Finance - could not commence until the

regulatory framework for microfinance, which would allow for licensing of microfinance banks,

was put in place. While the Project provided support to the development of regulatory framework

for microfinance, the Central Bank of Nigeria issued its Microfinance Guidelines (a prerequisite

for implementation), only in December 2005, and proceeded with implementation in 2006. Thus

real activity in the MFI sector only started in 2006, and the first MFI – Accion - opened in July

2007, while the last one – Microcred - was established in early 2010.

30. The deterioration of the security situation in Abia State delayed the project

implementation in the state. The challenging security situation in one of the project focus areas

between 2008-2011, including high incidence of violent crime and kidnappings, negatively

impacted project implementation. Project beneficiaries were affected by a risky environment, and

the World Bank project team could not supervise implementation in the field due to security

concerns.

31. The global financial crisis of 2008 severely affected the Nigerian financial sector. In

addition to the exceptionally difficult implementation environment, the project had to contend

with the global financial crisis at about mid-term which adversely impacted on the fulfillment of

8

some components and in particular access to finance. Nevertheless, four of the six MFIs

supported by the project withstood the crisis. Starting from November 2009 the banks‟ balance

sheets were severely affected by the drastic drop in oil prices (from $147 to $39 per barrel) and a

considerable depreciation of the Naira (from N117 to N190 to the US$ before stabilizing at

around N150)8. Further, the volume of non-performing loans (NPLs) started to rise following the

crash of the Nigeria Stock Exchange (NSE) which, by 2008, was dominated by banks accounting

for around 70 percent of market capitalization. Project implementation was thus unavoidably

affected. Out of 6 MFIs established with the project support, two failed (IMFB and MIC). In

addition, the one commercial bank – Oceanic Bank - which successfully downscaled as a result of

project support, experienced difficulties during the crisis and was acquired by another

commercial bank (Ecobank), which however maintained its MSME focus.

32. Some of the above cited implementation delays and issues may have warranted a project

restructuring. Restructuring may have been an effective measure to address the challenges that the

project experienced. This was considered at various times. However, it was decided to maintain

the integrity of the project as it was first designed, because it was considered that the issues were

associated with delay factors rather than inability to fulfill component objectives as such. The

delays in fact affected all components, ranging from funding of BDS providers to promulgation

of MFI regulations so restructuring was not indicated. However, in practice there was a

reallocation of funds introduced at the closing phase to ensure fulfillment of targets.

2.3 Monitoring and Evaluation, M&E Design, Implementation and Utilization

33. The results framework was designed to measure outcomes which extend beyond the

immediate impact on project beneficiaries. Not uncommon for projects designed 10 years ago,

both the PDO and PDO indicator lacked specificity and would have benefitted from a more direct

causal link with the supported activities. The PDO aimed to achieve the increase in the

performance and employment levels of MSMEs in participating states and sectors. Given that the

project focused on relatively limited number of beneficiaries, in line with the available resources,

and that it was designed to reach to MSMEs via intermediaries (i.e., BDS providers, microfinance

banks, etc.) the PDO was probably too ambitious. Similarly, the PDO indicator aimed to measure

MSMEs value-added in participating states and sectors, which is not necessarily directly

attributable to interventions funded under the project. In retrospect intermediate outcome targets

could have been included for capacity building activities within the MFIs and within the BDS

suppliers, as well as final outcome or impact targets in terms of performance improvement in the

MSMEs themselves.

34. Two impact assessments were commissioned to gauge direct impact on project

beneficiaries for the two largest planned components - access to finance and business

development services. In keeping with the outcome objectives these assessments focused

primarily on determining the impact that MFI finance and business development services had on

beneficiary MSMEs‟ sales and employment levels. However, ultimately the original BDS

component and the ATF component comprised a substantially lower proportion of project

expenditure than originally planned. It is important to note that the grants under these

components were performance based and were disbursed only upon meeting of certain targets. In

8 Making Finance Work for Nigeria, 2009

9

regards to ATF component, some of the initially approved grants could not be fully disbursed

given that certain grantees could not meet the performance targets (i.e. IMFB and MIC lost their

licenses to operate as microfinance banks). As far as BDS is concerned, the number of qualifying

applicants was lower than expected, and moreover these grants were also based on meeting

performance targets which in some cases could not be met. At the same time, the Investment

Climate and Public Private Sector Partnership Development components ended up comprising a

relatively larger share of project expenditures than originally planned. A review of achievements

under these two components is provided below in section 3.5.

35. To assess progress towards the achievement of PDO, sales revenue of beneficiary

MSMEs was used as a proxy to measure their performance. While the PDO indicator was

originally designed to capture MSME value added as a means of measuring performance, in

practice it was difficult to calculate. More specifically, value-added is defined as the difference

between sales revenues and purchased inputs. Because the MSMEs surveyed did not use a

standardized accounting approach for measuring these inputs, it was difficult to obtain reliable

and comparable value added calculations which would have required a detailed survey of MSME

operations. This data obstacle was addressed by tracking MSME sales as a more reliable indicator

even though it is does not measure efficiency/profitability. This was reinforced by employment

data for the beneficiary MSMEs to indicate progress towards the PDO.

36. The two impact assessments demonstrated an association between the funded

interventions under the access to finance and BDS components and the increase in employment

and sales of beneficiary MSMEs. Obtaining a loan from project supported MFIs was associated

on average with a 44 percent increase of respondents‟ monthly sales compared to the pre-

intervention time. In addition, the average monthly sales of MSMEs benefitting from BDS

supported by the project increased by 84.4 percent, while their employment level increased by

41.7 percent.

37. While the impact assessments were prepared in 2008 and 2009, a significant portion of

grants utilized to support access to finance and business development services was disbursed by

the time of the reports‟ completion. Out of the total amount of US$7.8 million and US$3.1

million9 of grants actually paid to support establishment of MFIs/bank downscaling and matching

grants for business development services respectively, 80 percent of grant resources under access

to finance and 37 percent for BDS were utilized by the time each of the impact assessments were

completed. It should also be noted that that matching grants for BDS were paid in tranches based

on performance, and so the actual disbursements may underestimate the magnitude of BDS

because the total grants were fully disbursed only after verification of agreed targets.

38. An additional source of evidence is the study Financing SMEs in Nigeria10

conducted by

the World Bank in 2012 which showed sustained gains in access to finance, the crisis

notwithstanding. Specifically, it indicated that 9.5 percent of surveyed firms (other than project

beneficiaries) had access to loans or lines of credit in 2011 compared to 5.1 percent in 2007.

Based on this information, it seems that, while still at the low overall level, access to finance for

MSMEs continued to increase from 2007 despite the crisis which severely affected the financial

sector. It is reasonable to conclude that part of this gain can be attributed to the effects of the

project.

9 This excludes a final grant of $2.5 million which was approved and disbursed only in 2011 to support implementation of new

initiatives (i.e., YouWin). This grant was for a special project which was not originally planned and which did not include a matching

component. Also, this activity was not covered with impact assessments. 10 By Gunhild Berg, Michael Fuchs, Leonardo Iacovone, Thomas Jaeggi, Andrew Lovegrove, and Carolina Villegas Sanchez, 2012.

10

2.4 Safeguards and Fiduciary Compliance

Safeguards

39. The project did not trigger any safeguards policies.

Fiduciary Compliance

The project broadly complied with FM and procurement requirements. The government PIU was

tasked with FM functions, while the private contractor (PMU) was responsible for procurement,

once it became operational. In turn, the firm managing the PMU was procured by the PIU. By the

closing date, project implementation in both procurement and FM was rated moderately

satisfactory.

40. Due to poor record keeping and high staff turnover, the project was subject to a FM

review. In 2009 the FM rating in implementation supervision report (ISR) was downgraded to

moderately unsatisfactory due to: poor filing system; high turnover of FM staff of the project;

breakdown in the computerized accounting system; delays by project management to resolve

issues identified in audited financial statements and FM supervision mission reports; absence of

internal audit activities, and inadequate staffing for the FM function.

41. However, the FM review concluded that the PIU had addressed all the previously

identified shortcomings and the project was upgraded. Following an in-depth FM supervision

mission, project compliance improved; this was formally recorded in the ISR, and FM rating was

upgraded to moderately satisfactory in May 2010. Accountability and internal controls were

improved with the hiring of two additional FM staff in the accounts unit, redeployment of the

project accountant who had been transferred to another assignment earlier, and addressing of

internal control issues raised by the previous FM supervision mission. The project rating during

the most recent FM supervision mission was moderately satisfactory.

42. While it took some time for the PMU to build internal procurement capacity, the project

in general complied with World Bank requirements in this area. The initial issues identified by

Bank‟s procurement review mission (e.g., procurement of equipment without formally approved

procurement plan, delays in payments, short deadlines for submission of bids, and inadequate

staffing of procurement function) were addressed as implementation progressed and internal

capacity was built. To address these shortcomings, the World Bank procurement team delivered

training for project procurement staff. The Bank's procurement team rated overall procurement

compliance as moderately satisfactory.

2.5 Post Completion Operation Next Phase

43. Various government institutions will continue to oversee implementation of the reforms

initiated under the project.

44. Business Registration. The project supported the development of streamlined and

common business registration procedures linking the Corporate Affairs Commission (CAC) and

Federal Inland Revenue Service (FIRS). These procedures were adopted by the relevant entities

and the agreement was formalized in a memorandum of Understanding between the CAC, FIRS,

and NIPC. Additionally, various workshops were organized to build client awareness and

institutional capacity to implement these reforms. The necessary hardware was also funded under

11

the project. However, the physical link between the databases of CAC and FIRS was not finalized

by the closing date. Final testing of the software and installed systems is underway and it is

expected that the business registration streamlining will be completed by summer, 2012, when the

new system is expected to go live. Once implemented, the time required to register a new

company will significantly decrease.

45. Secured Transactions. The Project supported the drafting of the Law on Secured

Transactions, but the Law has not been approved by Parliament. The Central Bank FSS 2020

Working Group11

has adopted the Project‟s supported draft Law and included it in the package of

laws that the Central Bank will nominate for Parliamentary approval in 2012.

46. In addition, the World Bank will continue close policy dialogue with the authorities in the

area of access to finance. Specifically, the upcoming Financial Sector Assessment Program will

cover access to finance issues, which will provide an opportunity for further engagement in the

policy area which has received project support.

47. Finally, the World Bank will also conduct a review of the joint IDA/IFC MSME pilot

program for Africa.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

Relevance of Objectives

48. The development objective of the project was to “increase the performance and

employment levels of MSMEs in selected non-oil industry sub-sectors and in pilot areas of the

country.” The private sector is widely considered a key generator of economic growth and

MSMEs account for the vast majority of private sector activities and employment in Nigeria. As

such, the project rightly focused on supporting MSMEs to promote private sector led growth.

The development objective was also consistent with the Joint Interim Strategy Update for the

Federal Republic of Nigeria of February 2002, which identified private sector led growth of the

non-oil economy as key to reduce poverty (second pillar of the Strategy Update). The

Government‟s priorities in this sector were reflected in the above-mentioned strategic documents,

and in its original request for this project which specifically focused on MSMEs development.

49. This objective continues to be relevant today; hence, the project is rated high in terms of

relevance of objectives. The relevance of the project objective was confirmed in the FY 10-13

Country Partnership Strategy (CPS). Amongst others, the CPS recognized the importance of

maintaining non-oil growth and called for targeted interventions to promote private sector

involvement. In addition, the 2011 CPS progress report also stated that Nigeria requested donor

support to increase MSME access to finance. Listed instruments include: partial credit risk

guarantees, bank downscaling, entrepreneurial training and business development services, and

credit lines to support MSMEs. Finally, according to recently completed World Bank Study

Financing SMEs in Nigeria12

, 96 percent of firms in the manufacturing sector are SMEs, and

while they account for 70 percent of employment they contribute only 1 percent, of GDP which

11 FSS 2020 is an independent unit of the CBN tasked with the responsibility to support Nigeria‟s transformation into one of the

twenty largest economies in the world by the year 2020. 12 By Gunhild Berg, Michael Fuchs, Leonardo Iacovone, Thomas Jaeggi, Andrew Lovegrove, and Carolina Villegas Sanchez, 2012.

12

reflects partly the country‟s dependency on extractive industries and the continuing relevance of

the project‟s focus on MSMEs and non-oil industry subsectors.

Relevance of Design and Implementation

50. The project was designed around four themes: (i) improving access to finance; (ii)

enhancing business development services; (iii) improving the investment climate; and (iv)

promoting public-private sector dialogue. These themes are essential for MSME development.

Accessible financing enables entry of start-ups and expansion of existing firms by facilitating

investments in inputs, equipment, technology, and/or labor which are all essential for growth.

Business development services are important as they contribute to improvement of management

practices which in turn have positive impact on productivity. Finally, an unfavorable investment

climate can stifle MSME growth and public-private sector dialogue can help promote business

environment reforms.

51. The importance of these themes for MSME growth was also identified in the IDA IFC

framework paper of 2003. Projects under the IDA-IFC framework recognized the need to address

obstacles for MSMEs growth in a holistic manner, specifically in three areas: i) access to finance;

ii) business development services; and iii) investment climate. The framework was designed to

respond to common issues affecting MSME performance across Africa and it envisaged relying

on private sector partners to enhance implementation. The MSME project was designed as one of

IDA-IFC pilots and as such it incorporated the recommended instruments aimed at nurturing

MSME growth. As a result, this contributed to higher relevance of project design to identified

MSME development agenda.

52. Recent analytical work confirmed the importance of investment climate and access to

finance for Nigerian MSMEs. Therefore relevance of design is rated substantial. Access to

finance remains the second largest obstacle for MSMEs according to 2011 Investment Climate

Assessment, and the importance of investment climate reforms was highlighted in the CPS as

means to support non-oil growth. Finally, the previously cited study Financing SMEs in Nigeria13

found that only 9.5 percent of surveyed SMEs had a loan or line of credit from a financial

institution in 2010. While this was a significant increase compared to 2007 when this percentage

was 5.1 percent, this nevertheless highlights the relevance of MSME access to finance agenda.

53. To implement the ambitious reform program, the project relied on implementation

mechanisms which placed private sector at the center. First, recognizing the limitations of

government capacity to implement complex projects, a decision was made to engage a private

sector project management unit. Second, the access to finance component was designed to

support the creation of a market leader (a new microfinance bank or bank that downscales) that

would eventually serve as a demonstrator to other market participants and prove that lending to

the MSME segment is a profitable venture. Third, the Bank and IFC partnered to support the

creation of a commercial microfinance bank. Fourth, the project provided support to BDS

providers (rather than MSMEs directly) to create a market for BDS providers. The innovative

design for access to finance and BDS components was instrumental for achieving the PDO.

54. Rating: Based on high relevance of objectives and substantial relevance of design and

implementation, overall relevance is rated substantial. More weight was placed on project design

and implementation, as these two areas are instrumental for achieving the stated objectives.

13 Ibid.

13

3.2 Achievements of Project Development Objectives

55. The Project Development Objective was to increase the performance and employment

levels of MSMEs in selected non-oil industry sub-sectors and in pilot areas of the country which

was largely confirmed. As stated previously, while originally the PDO monitoring indicator was

designed to capture MSME value-added, the project eventually monitored sales revenue as a

more accessible indicator of impact on MSME performance. This approach was used because

MSMEs do not use a standardized accounting approach to report on purchased inputs which is, in

addition to sales revenue, used to determine value added. Consequently, the progress towards the

PDO was measured by tracking beneficiary MSME sales and employment levels.

56. The two independent impact evaluation studies14

largely confirmed achievement of the

PDO. The studies were based on the surveys of MSMEs benefitting from activities supported

under Access to Finance and BDS Components. Both impact assessments found an association

between accessing a loan and receiving business development services, on the one hand, and an

increase in sales and employment levels of target MSMEs on the other, thus confirming the pilot

approach and likely confirming the achievement of the PDO in a sample of surveyed enterprises

by 2009. While the impact assessments were prepared in 2008 and 2009, as previously discussed

in paragraph 37, a significant portion of total grants utilized to support access to finance and

business development services were disbursed by the time impact assessments were completed.

57. The following review of achievement of PDO is divided in two parts, each focusing on

one of the specific targets, namely: (i) increase in beneficiary MSME performance measured by

increase in sales levels; and (ii) increase in beneficiary MSME employment levels.

Increase in MSME performance

58. The beneficiary MSMEs which obtained a loan from microfinance institutions

established with project support on average increased monthly sales by 44 percent compared to

pre-intervention time. According to an independent impact assessment study prepared by IFC‟s

Results Measurement Unit in 2009, based on the data collected by BDO OFO consulting covering

a stratified random sample of 450 borrowers (out of 11,000) of three microfinance institutions

supported by the project (Susu, Accion, and MIC), the Project recorded substantial impact in

improving performance of participating MSMEs. The relevant results are as follows: (i)

obtaining a loan seems to have had a substantial effect on borrowers‟ monthly sales; on average,

the monthly sales increased by NGN 197,385 or 44 percent per respondent compared to pre-

intervention time from NGN 455,388 in 2007 to NGN 652,773 in July 2008; further, more than

80 percent of respondents agreed that obtaining a loan affected their business sales and

profitability in the past year; (ii) the project succeeded in increasing access to finance for 25

percent (88 out of 354 people) of respondents who had been unable to access the loans before;

(iii) respondents reported positive change in business practices, as 94 percent agreed with a

statement that obtaining a loan led to improvements in their businesses, such as changes in

14 i) Impact Evaluation of Borrowers from Accion , Susu, and MIC Microfinance Banks, by Luba Shara, IFC with data collection

conducted by: BDO OFO CONSULTING LTD, 2009; and ii) Impact Survey of MSME Beneficiares, by BDO OFO CONSULTING LTD, 2008.

14

keeping business records and preparing end of the year accounts15

. It should be noted that while

the study of MFIs did not directly estimate a counterfactual through interviews with non-assisted

MSMEs, the interview questions did elicit views on the probable „with-without‟ scenario, so that

the stated sales increases were indicative of significant net effects.

59. The issue of attribution was addressed by directly asking respondents about the extent to

which the changes in sales were caused by obtaining the loan, and the majority of project

beneficiaries confirmed a positive link. Based on this approach, 25.5 percent of respondents

attributed the change in sales completely or to a large extent to the loan, another 39 percent stated

that accessing the loan had some effect on sales, while 36 percent claimed that the loan had no or

little effect on sales.

60. MSMEs which benefited from project supported business development services reported

an 84.2 percent increase in average monthly sales in the observed period. According to an

independent impact survey of 183 MSMEs serviced under the project, conducted by BDO in

conjunction with the IFC in 2008, the project also had a significant positive impact on sales of

MSMEs which received project supported BDS. In this case the study used a matched control

group of MSMEs to estimate net effects. Specifically, beneficiary MSMEs reported an increase of

84.2 percent on their average monthly sales (from about N243,840.58 to N449,270.4) in the

observed period, compared to an increase of only 6.2 percent (from N401,713.5 to N426,466.2)

for the control group of 72 MSMEs benefiting from other BDS providers in non-pilot states.

Further, the corresponding quarterly sales figures of beneficiary MSMEs increased by 112

percent (from N1,023,884 to N2,172,799), while the control group recorded a decrease of 3.7

percent. According to the study, and based on statistical test of significance, the changes in

beneficiary MSMEs monthly and quarterly sales were found to be statistically significant at 95

percent confidence level. At the same time, increase in monthly sales of the control group was

not statistically significant while their decrease in quarterly sales was significant16

.

61. To verify findings, the survey included two other matched control groups: 225 MSMEs

without any BDS in pilot states and 295 MSMEs without any BDS assistance in non-pilot states.

In both cases, the beneficiary MSMEs experienced higher impact on sales than control groups.

Specifically, the MSMEs that operated in the same environment as beneficiary MSMEs but did

not receive any BDS, experienced a slight increase in average monthly sales of 3.5 percent (from

N263,667 to N273,008) and 11.2 percent increase in quarterly sales (from N723,000 to

N812,462); however, these increases in monthly and quarterly sales were not statistically

significant at 95 percent confidence level17

. Finally, the MSMEs with no BDS in non-pilot states

recorded an insignificant decrease in monthly and quarterly sales of 16 percent (from

N1,229,584.6 to N1,022,741) and 3.6 percent (from N3,558,134 to N3,429,624) respectively18

.

Issues such as attributability and sampling method remain in question as always, but even though

the trend in sales may be attributable to various factors, the finding that the increase in sales

performance of beneficiary MSMEs was significantly higher than that of three other matched

control groups suggest a robust result.

15 The number of respondents who keep business records increased by 23.4% as compared to the pre-loan time period (a rise from

66.0% to 89.4%), while the number of those who prepare end of the year accounts increased by 3.9% compared to pre-term time

period (from 31.9% to 35.8%). 16 The computed t-statistics for target group‟s monthly and quarterly sales figures was 2.021 and 2.249 respectively, and for the

control group it was 1.681 and 2.340 respectively. 17 Computed t-statistics for monthly and quarterly sales increase was 1.369 and 1.454, respectively. 18 Computed t-statistics for monthly and quarterly sales were 0.426 and 1.929, respectively.

15

Increase in MSME Employment Levels

62. According to the same independent impact survey focusing on BDS, the trend in

employment before and after BDS showed that beneficiary MSMEs experienced an increase of

about 41.7 percent in employee numbers (rising from a mean of 5.8 workers to 8.3 workers). The

control group of MSMEs that received BDS in non-pilot states experienced an increase of 16

percent (from 10.9 to 12.7). Since the control group enterprises were on average larger than the

assisted enterprises the results are not watertight. However, they are instructive since they show a

net additional employment effect of some 25 percent and they also show an absolute positive net

effect in increased number of workers (2.5 vs. 1.8). The other two control groups which did not

receive BDS (in pilot and non-pilot states) did not provide additional data for the observed

periods to enable a comparable calculation, though their average employment increased as well.

Overall, based on the employment results from the survey, it could be concluded that as a result

of project-supported BDS, beneficiary MSMEs recorded significantly greater increases in

employment than the different control groups.

Box 1: Access to Finance – Context and Achievements:

According to the PAD, even prior to commencement of project activities the Nigerian financial system

consisted of a diverse universe of banking and non-banking financial institutions. As of end 2001, it

included 89 commercial and merchant banks, over 1,000 rural-oriented community banks, 7 development

finance institutions, 229 licensed finance companies, about 195 primary mortgage institution, over 100

insurance companies, 5 discount houses, various pension schemes and over 100 exchange bureaus.

At the same time, the financial sector was overwhelmingly dominated by commercial banks, which

accounted for 93 percent of non-central bank assets. While several commercial banks began with micro-

finance pilot projects in 2001 and approximately 17 major NGOs were providing microfinance services,

there was no commercially viable and sustainable microfinance sector in Nigeria. In 2004, the Central

Bank of Nigeria raised the minimum capital requirements for commercial banks from N 2 to 25 billion,

and consolidated and strengthened the banking sector by reducing the number of banks from 89 to 25 by

2005.

The global crisis of 2008 significantly impacted Nigeria with massive drop in oil prices, currency

depreciation, crash of stock exchange, increasing NPLs, and overall pressure on the private sector. As an

illustration, out of total of 25 banks, eight experienced severe capital deficiencies and liquidity problems,

and three of those ended up being nationalized. Despite this challenging financial sector context, the

Project managed to catalyze the emergence of a growing commercial microfinance industry in Nigeria on

a sustainable basis

The project supported the Central Bank of Nigeria in developing a regulatory framework for

microfinance, which was a prerequisite for setting up commercial microfinance industry. Once the

regulatory framework was in place, the Project administrated competitive performance grants scheme

combined with first-mover approach which facilitated the establishment of 6 de novo microfinance

institutions (Accion, AB, Susu, and Microcred, IMFB, and MIC) and supported downscaling of one

commercial bank (Oceanic Bank).

The following grant amounts were disbursed: i) AB - $ 1.5 mn; ii) Accion – $ 1.5 mn; iii) Susu –

1.196mn; iv) Microcred - $ 1.5 mn; v) Oceanic - $975 k; vi) MIC - $528 k; vii) IMFB - $ 650k. Due to

the shocks caused by the global financial crisis two out of six established MFIs – IMFB and MIC – failed

and lost their license. Susu and Accion microfinance banks underwent a process of consolidation to deal

with portfolio quality problems, while AB and Microcred continue to expand. While Oceanic Bank also

experienced difficulties following the crisis, it has been recently taken over by Ecobank and thus its

microfinance portfolio has been sustained.

16

In conclusion, despite the massive financial crisis, four new MFIs (Accion, AB, Susu, and Microcred)

were established and remain in operation and this achievement was at least partly attributable to the

project. This was achieved with a total $5,696,000 in grants which in turn mobilized over $30 million of

private equity contribution and resulted in their current loan portfolio of nearly $50 million. A grant of

$975k to Oceanic Bank supported its downscaling efforts and resulted development of microfinance

portfolio of nearly $8 million.

63. Finally, the project achieved synergy with IFC which originally committed to investing

$1.5 million and ended up committing US$10 million. The original IFC commitment was meant

to support Accion‟s venture into microfinance sector. However, this contribution was

significantly exceeded with a total IFC investment of around US$10 million. Details of IFC

project related investments are presented in the table below:

Activity Debt Equity Advisory

AB Microfinance Bank N475mn ($3.2mn) N150m ($1.03mn) -

Accion Microfinance Bank - $1.89mn -

Microcred Microfinance Bank $2mn $1mn $700k

CRC credit bureau Ltd. - - N34.5mn ($ 238k)

Total IFC Investment $5.2 mn $3.92mn $938k

64. Overall, the studies from 2008 and 2009 have confirmed a link between the project

supported activities and the impact on beneficiary MSMEs performance and employment levels.

This conclusion is always subject to caveats in terms of attribution and counterfactuals but there

is sufficient evidence to indicate that the project resulted in significant improvements in MFI and

MSME operations and profitability.

65. Rating: The results framework of the project measured outcomes which extended

beyond the immediate project beneficiaries. Nevertheless, the team measured the direct impact of

the activities funded under the two largest components through two impact assessments. While

the assessments were completed in 2008 and 2009 (three years prior to project closing), a

significant portion of grants utilized to support these two components had been utilized by then.

Intermediate outcome indicators for the other components are less closely linked to PDO

achievement, hence only the outcome of the largest two components is used in the rating. Based

on this, the achievement of PDO is rated moderately satisfactory.

3.3 Efficiency

Efficiency of Project Implementation

66. As mentioned previously this project faced some unusually difficult implementation

problems, both internal and external, which impacted on the ability of the project‟s management

to oversee rapid implementation.

67. The project experienced numerous delays throughout its lifecycle. Following Board

approval on December 16, 2003 the Project became effective only on December 13, 2004.

Further, the closing date was extended by 2.5 years, from the originally scheduled June 30, 2009

to December 31, 2011. Finally, at completion out of the total available SDR 22.3 million, SDR

473,181.82, or about 2.1 percent, remained undisbursed.

68. The delays experienced extended the planned implementation schedule by 2.5 years,

which in turn translated into significantly higher project implementation costs. Specifically, the

17

disbursements under Project Management, Monitoring and Evaluation component reached $8.6

million as of June 2012, up from originally planned US$2.3 million. Even without the delays and

associated project extension which caused the increase in implementation costs, the original

implementation budget seems to have been underestimated. The reasons for the increase in

Management costs were because the original five year contract for the project managing firm was

extended by three years and adjusted for inflation in seven contract amendments. In addition,

provision under this component was made for provision of additional technical expertise in areas

such as secured lending, in resolution of IT issues affecting the business registration databases,

and providing communications facilities which had not been originally budgeted. To cover these

additional requirements the actual cost of project management rose from the original contract

value of US$3.07 million equivalent to US$6.45 million equivalent over the project period. The

overall project budget was not however exceeded as a transfer was made from other components.

69. Some of the major delays affecting implementation were beyond the control of the

project team. For example, initial delays were related to late project effectiveness which was the

primary responsibility of the government. Further, CBN‟s slow implementation of microfinance

framework resulted in delays with implementation of access to finance activities. In addition, the

complex security situation in Abia state delayed implementation in this location.

70. The cost benefit analysis conducted at appraisal stage estimated a net present value of

about US$35.6 million corresponding to an internal rate of return of 26.2 percent. The cost-

benefit analysis as presented in the PAD included all project components as follows: (i) BDS,

which factored in some elements of the micro finance and commercial bank downscaling sub-

components; (ii) access to finance; and (iii) investment climate, which included public-private

partnership and project management components, and unallocated resources. It was also assumed

that the BDS component would create a multiplicative effect on MSME output of about five

times the norm (which resulted in a greater IRR for the BDS component, i.e., 5 percentage points

higher than the access to finance component) and produce a lasting effect for up to seven years

after project completion. Separate IRRs were calculated based on relative size of each

component: 24.3 percent for access to finance, 29 percent for BDS, and 19.5 percent for

investment climate (and other activities as listed). In summary, the weighted average of the

individual components‟ IRR of 26.2 percent was produced.

71. For the purpose of this report, and due to limited availability of data, a new cost benefit

analysis model was developed based on actual data, and focusing on two main project

components - access to finance and business development services. The new model focused on

these two components as they offered quantitative data necessary for the ex-post calculation of

the net present value and internal rate of return. It was not possible to determine direct economic

output of the investment climate and public private partnership development activities even

though the latter also had tangible impact as discussed in section 3.5.

72. Equal weights were used for both components as they ended up disbursing similar

amounts. The new model does not calculate separate economic IRRs for each component as it is

difficult to allocate the project management overhead costs by component. Finally, in

determining the direct attributable benefit flows for these two components, based on the available

data, the following variables were applied: (i) MFI equity investment inflows; (ii) the increase in

sales of borrower MSMEs; (iii) the increase in sales of MSMEs benefitting from BDS; and (iv),

the BDS providers‟ matching of received grants.

73. According to the new model and based on available data, the calculated net present value

and internal rate of return for Access to Finance and BDS components were US$11.8 million and

18

28 percent respectively. While the net present value is below the original calculation, the

combined IRR of 28 percent exceeds the overall project target of 26.2 percent. At the same time it

is important to recall that the NPV and IRR in this model are based on the outcomes of two

components only, whereas the original one focused on the entire project. Further, the new model

was based on available actual data, while the original one relied on assumptions which could not

take into account factors such as the global crisis. If data had been available to quantify the

impact of the investment climate and public private partnership development components, it is

likely that the NPV and IRR would have been higher. The details of this analysis are presented in

Annex 3. It is important also to note that the original objectives of the project included generation

of indirect output and employment resulting from the external effects on the MSME sector from

BDS upgrading. If such effects were quantified they would most likely also increase the

measured return to the project.

74. The two main components significantly exceeded the expected targets which were aimed

to be achieved with the initial investment. In support of the strong economic IRR estimate it is

worth reiterating that, while the access to finance component was aimed at supporting the

establishment of two commercially viable MFIs, the actual achievement was double the target.

Further, the BDS component reached around 3,400 MSMEs as opposed to 1,000 initially planned.

75. The project facilitated mobilization of IFC resources of around $10 million, thus far

exceeding the initially planned IFC commitment of $1.5 million. This was achieved with the

project support for the establishment of three MFIs (Accion, AB, and Microcred) which

subsequently received IFC investment. To the extent that the IDA commitment mobilized the

IFC investments this may be credited as a benefit to the project.

76. Rating: Overall, while the project experienced delays it also exceeded the originally

planned targets regarding access to finance and business development services components, and

planned IFC investments, and it achieved a substantial Economic IRR of 28 percent without

exceeding the originally planned total project budget. On the basis of these factors, efficiency is

rated substantial.

3.4 Justification of overall outcome rating

77. Despite the delays and other shortcomings, the project recorded significant achievements.

Moreover, this was accomplished in the context of the project‟s pilot nature, ambitious

development agenda, and a complex implementation environment, including a massive financial

crisis and serious security challenges. Further, the project demonstrated flexibility and was able

to quickly respond to government‟s request and broaden the scope with GEL and YouWiN

initiatives. In conclusion, based on substantial relevance, moderately satisfactory achievement of

PDO, and substantial efficiency, the overall outcome rating is moderately satisfactory.

3.5 Overarching Themes Other Outcomes and Impacts

78. The central theme of the project was focus on and engagement with the private sector,

both in terms of final beneficiaries and service providers. Whereas some programs primarily

focus on tackling institutional change as means to facilitate private sector development, the

MSME project focused directly on extending support to the private sector itself, as well as

supporting investment climate and other relevant policy reforms. As a result, the project

facilitated the creation of a commercial microfinance industry in Nigeria and introduced a new

supply model for business development services to MSMEs. Ultimately nearly 3,400 MSMEs

benefitted from the Project and a further significant number would have benefited indirectly. It

19

should also be noted that implementation of activities which relied on the private sector were

ultimately more successful than those that tried to facilitate institutional change within the

government structures.

79. The project also used the opportunities to broaden the scope of engagement. In this

regard, it supported the development of catfish value chain activities in Oyo state as well as

tourism value chain activities in Cross River state, which were not initially envisaged. As

previously mentioned, it also responded to government request to implement GEL and YouWin

programs, the latter of which had a strong focus on youth entrepreneurship. While no clear

quantifiable outcomes of this additional engagement are available at this time, the activities they

supported seem to have been well received by the government and beneficiaries.

80. While the outcomes under the Investment Climate and Public Private Partnership

Development Components could not be quantified to establish a direct link to PDO, they

nevertheless provided a significant contribution to the sustainability of MSMEs in Nigeria and

can be assessed qualitatively. The activities sponsored under these two components (as listed in

Annex 10) in the form of various capacity building workshops, training events, and study tours

directly reinforced the technical capacity of the institutions responsible for project

implementation and MSME development (i.e. NIPC, SMEDAN). Below is a summary of the

main achievements under these two components which could not be captured by the two impact

assessment studies.

81. The principal outcomes of Investment Climate component include the establishment of

Credit Bureaus (CB) and Alternative Dispute Resolution (ADR) mechanisms. By supporting the

development of a regulatory framework for CBs, and thus facilitating creation of three new CBs

in Nigeria, this component has helped to reinforce the foundations of a commercial microfinance

industry established under the project‟s access to finance component. In addition, access to

finance infrastructure in Nigeria will be further strengthened once the new Law on Secured

Transactions, also prepared with the project support, is enacted. Further, the achievements under

this component included introduction of novel dispute resolution mechanisms in Kaduna and

Abia states by supporting the establishment of two multi-door ADR courthouses, and

strengthening the existing one in Lagos, thus facilitating faster and cheaper dispute resolution

process for MSMEs.

82. In addition, noticeable progress was made regarding comprehensive reform of the

business registration process in Nigeria. As discussed in paragraph 44, the project supported the

development of streamlined and common business registration procedures which were approved

and adopted by relevant entities, organized stakeholder workshops, and provided the necessary

hardware. The only remaining activity is the establishment of a physical link between the

databases of CAC and FIRS which is expected to be completed by the summer of 2012. Once this

is done, the business registration process will be significantly enhanced. It should also be

reported that over the course of the project life, the process of business registration in Nigeria has

improved. At the beginning of project implementation, and as recorded by Doing Business 2004

Report, it took 44 days and ten procedures start a business. Today, according to Doing Business

2012 Report, it takes 34 days and eight procedures. Also, according to Nigeria‟s sub-national

Doing Business 2010 results, the same indicators for the project target states are as follows: 33

days and 9 procedures for Abia; 31 days and nine procedures for Kaduna; and 31 days and eight

procedures for Lagos. While the intended streamlining of the business registration process has yet

to be completed, these improvements may be partially attributed to the project as it has actively

supported this agenda.

20

83. The activities sponsored under Public Private Partnership Development component

supported capacity building of relevant authorities and facilitated dialogue with the private sector

to advance development of MSMEs. Under this component, 247 courses and 38 study tours

focusing on the reform topics targeted by the project, were organized for NIPC, SMEDAN, and

other federal and state level authorities. An MSME competitiveness report was also prepared, and

a national competitiveness conference was organized in September 2011. Further, an additional

18 events supporting public private dialogue were held. These included three roundtables for

MSME financial service providers, two stakeholder forums on private credit bureaus, one

consultative forum on commercial bank downscaling, two roundtables on investment climate, two

knowledge sharing alternative dispute resolution events, co-sponsoring of three annual Nigerian

Economic Summits, three BDS fairs, and two stakeholder forums on rice and tourism sectors.

4. Assessment of Risk to Development Outcome

84. While the MSME sector in general tends to be dynamic in terms of entry and exit, the

project supported activities in the area of access to finance and business development services

which seem to have had a largely sustainable impact. The gains from exposure to the project

have already been accrued in target MSMEs, as recorded in the evaluation survey. In addition, the

project supported the establishment of previously embryonic financial infrastructure in the form

of a commercial microfinance industry, which shows evidence of sustainability, thus at least

partially addressing the low access to finance which was identified as one of the principal

constraints for development of enterprises in Nigeria19

. In addition, it could be argued that four

supported MFIs have already sustained the ultimate test caused by global financial crisis.

85. Further, the network of business development service providers which received project

support, and ultimately supported some 3,400 MSMEs, is expected to continue to introduce better

management practices which should in turn positively impact productivity. This causal

relationship between improved management practices and productivity increases has been

illustrated in an example from India. According to Improving Management in India20

case study21

a sample group of companies which received five months of intensive management consultancy

showed that improvements in management practices led to large increases in performance.

Specifically, their productivity levels rose by about 15% and profits by about 24 percent (an

increase of US$474,000 per firm). Based on this, it could be assumed that a similar relationship

would apply to Nigerian MSME sector as well.

86. Even in the case of exit of some MSMEs, an externality may persist in that the owners,

managers, and employees who benefitted from business development services should still be

equipped with skills to deal with business challenges and/or embark on new ventures.

Nevertheless, the potential risks for continued MSME development in Nigeria exist. They could

be broadly divided into exogenous and endogenous risks.

87. Exogenous Risks. These are the risks of a slow recovery from the global crisis and oil

price volatility. Negative trends could weaken the Nigerian economy and pose significant

19 According to the most recent World Bank Investment Climate Assessment study from 2011, low access to finance was the second

most important constraint for Nigerian SMEs, following the shortage of electricity. 20 Improving Management in India by Nick Bloom, Benn Eifert, Aprajit Mahajan, David McKenzie, and John Roberts. Finance & PSD Impact ; Issue no. 10. April 2010. “The Lessons from DECRG-FP Impact Evaluations".

http://imagebank.worldbank.org/servlet/main?pagePK=64140839&piPK=64140842&theSitePK=501889&siteName=IMAGEBANK&menuPK=64154240&callBack=&colTitle=%22Finance+%26+PSD+Impact

http://imagebank.worldbank.org/servlet/main?pagePK=64140839&piPK=64140842&theSitePK=501889&siteName=IMAGEBANK&menuPK=64154240&callBack=&colTitle=%22Finance+%26+PSD+Impact

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pressures on MSME activities and overall sector sustainability. On the other hand a sustained

reduction in the price of oil could improve the environment for MSMEs by allowing depreciation

of the real exchange rate and improving competitiveness.

88. Endogenous Risks. These are risks of failure to achieve needed policy and institutional

reforms. The extent of institutional and policy reforms in the area of business environment both at

the federal and state levels, macroeconomic stability, quality of prudential supervision, and the

access to infrastructure (such as electricity), as well as political and security situation could all

pose potential risks to the MSME sector.

89. The prospects of gradual global recovery and government announced commitment to

pursue comprehensive reforms serve as mitigating factors. Further, the recorded gains in MSMEs

sector have already been achieved in a challenging environment and in light of materialization of

practically all of the risks listed above to a certain extent. Finally, all of the mentioned challenges

are ongoing country risks endemic to Nigeria.

90. Rating: Overall, the risk to sustainable development outcomes beyond the project life is

rated as moderate.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

a) Bank Performance in Ensuring Quality at Entry

91. The project was designed to address the key obstacles to MSME development, as

identified by considerable Economic and Sector Work22

which preceded preparation. The

representative analytical work underpinning project design included Results of the Nigeria Firm

Survey and SME mapping exercise. These reports revealed that Nigerian private sector suffered

from high costs and lacked competitiveness due to: (i) limited access to finance; (ii) lack of

access to adequate business development services; and (iii) investment climate non conducive to

MSME growth. The project was designed to tackle specifically these obstacles. Finally, the

operation was in line with joint IDA/IFC pilot program for Africa, which aimed to develop

MSMEs in Sub-Saharan Africa by addressing obstacles to MSME growth in a comprehensive

manner.

92. The project objective was and still is highly relevant to the country‟s goals and

development priorities. This was reflected in the IDA‟s Interim Strategy Update from February

2002, highlighted in analytical work which preceded preparation, and confirmed in FY10-13 CPS,

and confirmed in recent analytical work (e.g., Making Finance work for Nigeria, 2009).

22 Bank Staff Assessments: 1) Results of the Nigeria Firm Survey, Regional Program on Enterprise Development (RPED Paper #118,

April 2002), World Bank. 2) The Implementation Completion Report (ICR) on the World Bank Small and Medium Enterprise Development Project (Loan 2995-UNI), Report #16811, June 1997. 3) Africa Program Framework Paper for a Joint IDA/IFC Micro,

Small and Medium Enterprise Development Pilot Program for Africa, World BankJIFC (considered by the Board o f Executive

Directors, June 19,2003). 4) SME mapping exercise undertaken in parallel with a survey on Nigerian firms conducted under the WED of the World Bank, October 2001. 5) “Joining the Race for Non-Oil Foreign Investment, ” conducted by the Foreign Investment

Advisory Services; 6) “Direct Support to Private Firms - Evidence of Effectiveness”, G. Batra and S. Mahmood, 2001 and „YDA ‟s

Partnership for Poverty Reduction (FY94-FY00): An Independent Evaluation ”, OED, 200 1 , pp 31-33. Other: 1) “Evaluation of the Mekong Project Development Facility ”, Nexus and Assocs., June, 2002 with important insights into the

best design parameters for BDS provider capacity building. 2) Guiding Principles for Donor Intervention Business Development

Services for Small Enterprises: Guiding Principles for Donor Intervention, Committee of Donor Agencies for Small Enterprise Development, February 2001.

22

93. The project design relied on then innovative design features, which have by present day

become the mainstream approach for MSME projects. Specifically, this included providing direct

assistance to BDS providers, as opposed to MSMEs, in order to expand their services and

outreach, to support development of the market for business development services. Further, by

supporting first-movers in the microfinance sector and commercial bank downscaling, the project

probably created a demonstration effect. For example, following downscaling of Oceanic Bank,

at least four more banks (Stanbic, First Bank, Diamond, and UBA) followed suit without direct

project engagement.

94. The project tried to address identified problems in a very comprehensive way. This may

have been too ambitious in the context of complex implementing environment. Such a

comprehensive project required significant coordination across different government agencies,

which in practice proved difficult to achieve. In this regard, limited government capacity to

ensure implementation of a complex and comprehensive reform agenda may have been

underestimated. At the same time some issues with project management from the side of the Bank,

in particular the time required for a FM audit, and delay in procurement training, added to the

complex nature of the Bank-Government dialogue.

95. The choice of specific investment loan (SIL) was appropriate for the access to finance

and business development services components which were the main focus of the project. It was

also appropriate for delivering technical assistance to the authorities to improve business

environment (i.e. drafting laws, exposure to best practices, etc). However, a SIL may not have

been the most appropriate instrument to support approval of some of the attendant legal reforms.

A development policy loan (DPL) may have been more appropriate in this respect. However, at

the time of project approval the government was not interested in a development policy loan.

Further, a Federal level DPL supporting financial sector reforms, approved during the period of

project implementation, was processed as an emergency operation and as such had a very specific

and sharp focus. As a result, the option of including investment climate reforms could not be

considered. In light of this, and given the focus of the project on access to finance and BDS, the

choice of instrument was appropriate.

Rating: Overall, the quality at entry is rated moderately satisfactory.

b) Quality of Supervision

96. Implementation Supervision Reports (ISRs) were filed regularly and the ratings largely

reflected the project performance. The project was rated unsatisfactory from June 2005 until

April 2006 (when it was upgraded to moderately unsatisfactory) due to delays in meeting

effectiveness conditions and approval of the necessary MFI framework and licensing of Accion,

which prevented earlier commencement of access to finance activities. Additional reasons

included PMU's slow implementation progress, including inadequate procurement staff, and the

ability of NIPC to disburse resources due to a requirement to obtain its management approval on

implementation matters, contrary to agreed project implementation manual. Also, following

implementation support provided by the project team, and agreement on remedial actions with the

government and implementing entities, overall implementation progress was rated moderately

satisfactory in June 2006. At the time of FM review, due to temporary non-compliance with FM

procedures, the FM rating was justifiably rated moderately unsatisfactory.

97. At the same time, it may have been appropriate to use a more conservative rating in the

final ISR. Since the last ISR was not based on new, end-project impact assessment to reconfirm

23

previously recorded progress and given that some of the planned investment climate reforms were

not completed by that time, a more proper rating for the final ISR may have been moderately

satisfactory as opposed to the awarded satisfactory rating.

98. On account of the delays experienced, the costs under the Project Management,

Monitoring and Evaluation component reached US$8.6 million as of the June 2012 FM report, up

from the originally planned US$2.3 million. As explained in section 3.3, one of the principal

reasons for the increase was the overall extension of project by 2.5 years and adjustment for

inflation. The bulk of these costs (i.e. US$5.9 million) were project management associated costs

accrued by the PMU to cover both the extensions and some additional technical assistance. An

additional US$1.1 million was also incurred for general office expenses. The Bank supervision

team approved the increase in operating costs resulting from the delays experienced in order to

ensure the functioning of the PMU and continued implementation. Given the magnitude in the

switch in funding, a formal restructuring proposal may have been appropriate.

99. Despite the views of the dedicated project supervision team, the shortcomings during

implementation might have warranted project restructuring. The shortcomings included the FM

deficiency which triggered an in-depth FM review, performance problems with the investment

climate component, and, the substantial increase in costs for Project Management, Monitoring

and Evaluation. Early restructuring might have reduced the scale of the planned activities to

conform more to operational constraints and to allow for better monitoring of the project.

Further, restructuring might also have helped to address the identified implementation issues and

challenges, including: (i) streamlining of project components by removing underperforming

activities and providing additional support for successful pilots; and (ii) revising the PDO and

results framework to ensure that they measure direct impact of the supported activities.

100. Finally, implementation was hampered by the global crisis, which severely affected

Nigeria, and by significant security challenges. The global crisis severely hit the Nigeria financial

sector. As a result, two project supported MFIs failed and lost their license. Moreover, significant

security threats in one of the pilot states (Abia) further complicated supervision activities as the

project team could not provide on-site implementation support for extended period of time due to

high incidence of crime and kidnappings. Nevertheless, supervision was thorough and involved

adequate staffing and resources. The project team provided regular implementation support to

address the identified technical challenges; further, special procurement training was designed

and delivered to increase the capacity of implementing entities and facilitate implementation. In

addition to formal missions, the task team leader was based in the field for about three years and

was thus able to provide ongoing implementation support. The team displayed commendable

adaptability to ever changing situation and responsiveness to the client. The support for GEL and

YouWin projects is a testament of team‟s responsiveness.

101. Rating: Overall, based on the above, the quality of supervision is rated moderately

satisfactory.

c) Justification of Rating for Overall Bank Performance

102. Rating: Based on moderately satisfactory quality at entry and moderately satisfactory

quality of supervision, overall Bank performance is rated moderately satisfactory.

5.2 Borrower Performance

a) Government Performance

24

103. Due to lack of initial government pro-activity, project implementation was off to a late

start. This is illustrated by the fact that Credit Effectiveness was achieved six months after the

target date, or a year following Bank approval. In addition, the Government did not provide

agreed co-financing which then required amendment to legal documents, causing additional

delays. Also, some of the key investment climate reforms were not fully completed despite

several project extensions, while implementation of access to finance activities was initially

delayed due to slow implementation of microfinance framework. Overall, it seems that high-

level institutional coordination and the government‟s strategic guidance for project

implementation was missing. In practice, political commitment when the project was conceived

did not adequately translate into strong implementation performance – partly the result of a

fragmentation of agencies at the federal level. The lack of commitment tended to have general

effects across the project as a whole.

104. The project addressed MSME obstacles in a very comprehensive manner. The

implementation of such program required full commitment of a range of institutions, well beyond

the implementing agency. While overall commitment may have been lacking, the Nigerian

Investment Promotion Council (NIPC), where the government Project Implementation Unit was

housed, itself showed strong commitment throughout project implementation. However, NIPC

had to build its capacity upfront, and it did not have the institutional mandate and power to push

through legislative reforms which depended on actions by other entities and/or the National

Assembly. As a result, delays were recorded in implementation of the access to finance

component due to CBN‟s slow implementation of microfinance framework and subsequently

delayed licensing of Accion. Also, only partial reforms were implemented under the investment

climate component, as some of the required regulatory reforms, such as the Law on Secured

Transactions, were not enacted. Finally, streamlining of business registration process was not

fully completed.

105. Rating: Based on the above, the government performance is rated moderately

unsatisfactory.

b) Implementing Agency Performance

106. Low initial capacity of PIU and PMU in implementing some of the World Bank

procedures led to delays with project implementation, though most issues were resolved as

implementation progressed. The project implementation rested on the government PIU and

private sector PMU. The PIU was housed in the NIPC and was responsible for implementation of

IDA credit, including overseeing PMU operations, and approving its annual work plan and

budgets. Further, the PIU was responsible for financial management and disbursement. A private

firm hired under the project managed the PMU which was tasked with overall project

administration, including monitoring and evaluation, reporting, procurement, and outreach and

communications activities. During the lengthy period of selection of PMU, PIU was fulfilling this

role in the interim. The procurement process was in some cases lengthier than expected, largely

due to lack of procurement capacity within PIU/PMU, but it was generally compliant with

procedural requirements. In terms of financial management, as discussed, project implementation

was substantially delayed as a result of temporary non-compliance with FM requirements.

However, following the FM review, the project received clean bill of health, and implementation

continued.

107. Once both entities were fully operational, and following training provided by the Bank

team, project implementation was generally adequate. This was also achieved in the context of

25

objective shortcomings such as security threats in one of the targeted states. Implementation of

the investment climate reforms experienced some difficulties. Although significant preliminary

work was done, including drafting of regulations and studies, certain actions under this

component were not implemented. It should however be highlighted that this was beyond control

of the PIU, PMU, and Bank team. Finally, monitoring and progress reports were detailed and

prepared on regular basis.

108. Rating: As a result, primarily due to temporary non-compliance in relation to required

FM practices and delays in procurement, the implementing agency performance is rated

moderately satisfactory.

c) Justification of Rating for Overall Borrower Performance

109. Rating: Based on the moderately unsatisfactory government performance and

moderately satisfactory implementing agency performance, overall Borrower performance is

rated moderately satisfactory. Greater weight was placed on implementing agency performance

as it had a greater impact on achieving the PDO. This is confirmed with the fact that significant

measurable achievements were recorded in the context of challenging and complex

implementation environment.

6. Lessons learned

110. Results framework should be designed to measure direct impact of the project. This

includes ensuring that monitoring and impact indicators directly correspond to the project

objective and are easily measurable. This is essential not only to assessing whether project

objectives have been achieved, but also to ensuring that the targets are practically achievable and

within the control of the project management.

111. In case of significant project delays (i.e., delay in effectiveness, implementation, etc.),

which may affect implementation of original project design, a review of planned project activities

should be conducted to confirm that they can be practically implemented. As a result of long

delays, operational and political circumstances may change. This could inhibit implementation in

line with the initial design. If these changes are substantial, project restructuring should be

considered to ensure that the operation fits the new implementation environment.

112. Implementing entities should include key staff with required qualification and experience

with World Bank procedures from the very start of the project. As there was no suitable entity

within the government, and based on previous experience with government run projects in

Nigeria, a private entity was tasked with project management. The PMU also employed national

staff in some key positions thus building local capacity, while the PIU was staffed with civil

servants. As a result, it is likely that the local staff capacity to implement complex projects was

increased, and should provide a significant human resource for future projects. While the

engagement of a private sector operator may have increased overall implementation capacity in a

complex implementation environment, the private PMU has also experienced initial challenges

with applying World Bank procurement guidelines. In this regard, to alleviate the initial capacity

issues in the future, the Bank should ensure that implementing entities include key staff with

required qualification and experience from the very beginning. In addition, all key staff should

undergo additional task specific technical trainings – designed and delivered by the World Bank -

during the first six months of project implementation. Finally, the World Bank project teams may

26

need to provide more intense implementation support during the first year of implementation,

especially related to compliance with Bank‟s fiduciary standards.

113. All core project management functions should be within a single implementing entity.

Implementation arrangements envisaged both the private PMU and government led PIU. While

most of the project management functions were with the PMU, including procurement, the

responsibility for financial management and disbursements and compliance with World Bank

rules in these areas rested with the PIU. The split of the core functions proved to be ineffective, as

overall project implementation depended on synchronized performance of both entities which

could not always be ensured due to different capacity levels and/or procedural requirements.

114. Building commercially viable microfinance institutions under the project required

funding and experienced technical knowhow. The latter had to be imported to Nigeria from

reputable international companies. While the commercial banking sector was expanding and

diverse in 2003, the microfinance market was embryonic and did not contain adequate local

expertise. In the absence of local capacity a “first mover” approach involving reputable

international partners/investors (i.e., IFC, Accion, Microcred, etc.) was necessary and the use of

performance grants was an effective approach to using such expertise to jumpstart the industry.

115. Piloted approach of targeting BDS providers, as opposed to MSMEs, can facilitate

creation of market for BDS. While a demand driven approach has a sound rationale, targeting

existing BDS providers has advantages in terms of avoiding intervention in market transactions

and ensuring the accumulation of skills from outside rather than the recycling of existing skills.

Following the latter approach the project built the capacity of BDS suppliers and expanded the

services, thereby potentially attracting a broader customer base, and increasing cost-effectiveness

and outreach to MSMEs. It would have been beneficial if the project also facilitated more

interaction and networking between the BDS providers to allow for more knowledge exchange.

116. The Specific investment loan may not be the most suitable tool for facilitating

comprehensive policy reforms. All envisaged project activities that depended on the PMU/PIU

and private sector engagement were relatively successfully implemented (i.e., ATF, BDS, etc.).

By contrast activities which required wider government actions or parliamentary approval, such

as certain investment climate reforms, were delayed, or only partial progress was achieved.

When wider policy reforms are necessary, investment loans may have to be coupled with budget

support operations. Alternatively, dated legal covenants underpinning planned reforms could be

considered as well. Finally, the government oversight (i.e., PIU) should ideally be housed with

an institution with a clear mandate for the project supported activities (i.e., MSME development)

and a high level of authority. While such institution did not exist in Nigeria at the time of design,

identifying an influential champion institution remains a key to operations timely success.

117. Though it was a pilot project, which allowed for a more flexible design and testing of

new approaches, the breadth of the operation may have been too ambitious. This is especially

true with regard to numerous activities aimed at reforming the investment climate which required

wide institutional support which could not be fully secured. With regard to support provided to

value chains, it may have been beneficial if the project concentrated on one value chain

intervention initially, and scaled up only following successful implementation. In addition,

delays related to capacity issues and slow administrative procedures further complicated

achievement of some of the planned activities which depended on many stakeholders, and which

could not be achieved despite three extensions. Thus simplification of both the component and

the management structure of the project could have been worthwhile.

27

118. While IFC investments in the microfinance sector were larger than estimated at design, it

seems that this was achieved with very limited IDA-IFC coordination. No regular reporting and

interaction mechanisms were established at the design stage, and no periodic operational

meetings were organized during implementation. It is likely that in-depth collaboration with IFC

may be difficult given the different approaches of the two organizations, but nevertheless a more

structured form of coordination would be beneficial in joint projects.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

119. Overall, the borrower, implementing agencies, and beneficiaries all highly rated project

activities and outputs. They felt that tackling MSME issues in Nigeria was highly relevant for

addressing economic growth and employment issues. In regards to their experience with project

implementation they all cited lengthy and often complex administrative procedures regarding

implementation of World Bank funded projects. Further, it was suggested that any future

operation should have a well developed publicity strategy to properly educate the stakeholders

about the project and build consensus about the importance of reforms. To ensure proper

involvement of all relevant government stakeholders, including those who may not be directly

involved with the project but whose action may be critical at certain occasion, it was suggested

that liaison officers are appointed by all relevant/participating agencies who could follow up on

all pending issues.

120. Access to finance was identified as a key constraint for Nigerian MSMEs by all

stakeholders. This is consistent with the findings of the most recent World Bank Investment

Climate Assessment study from 2011 which identified low access to finance as the second most

important constraint for Nigerian SMEs, following the shortage of electricity

121. Not surprisingly, all consulted stakeholders expressed strong interest in a follow up

project focusing on access to finance and expanding to other areas of the country. Stakeholders

also highlighted that access to finance is more restricted in rural areas. The following topics were

identified as potentially relevant to future operations: (i) technical assistance for MFIs to improve

their operations and better serve their clients; (ii) access to a MSME credit lines for qualifying

MFIs and banks interested in downscaling; (iii) country wide consumer financial

education/literacy program; and iv) support with improved regulation and supervision of growing

MFI sector to ensure stability, transparency, and to prevent public‟s loss of confidence in

financial system due to failure of some MFIs in recent years.

.

28

Annex 1. Project Costs and Financing

The following information is based on Financial Management report as of June 2012.

Project Cost by Component (in US$ million equivalent)

Components Appraisal Estimate

(US$ million)

Actual Latest

Estimate

(US$ million)

Percentage of

Appraisal

Access to Finance 10 7.9 79%

Business

Development

Services

12 7.4

61.6%

Investment Climate 5.1 6.6 129.4%

Public/Private

Partnership

Development

1 2.3

230%

Project

Management,

Monitoring

Evaluation

2.3 8.6

373%

Unallocated 1.6

TOTAL 32.0 32.8

29

Annex 2. Outputs by Component

Below is a summary of the most significant project outputs:

Component 1: Access to Finance

The project supported the establishment of four MFIs (Accion, Susu, Microcredit, and

AB) and thus facilitated subsequent mobilization of US$30.8 million of private equity

investment

Total number of borrowers and savers in 4 MFIs as of end September 2011 was 35,232

and 144,683 respectively

Downscaling of one commercial bank (Oceanic Bank)

Total disbursed loan portfolio for four MFIs and a commercial bank of around US$57.4

million

Component 2: Business Development Services

Support provided to 69 BDS providers (45 under general BDS Fund and 24 through 4

value chain interventions – catfish, rice, palm oil, and tourism) which in turn introduced

25 new products and services

Approximately 3,360 MSMEs received BDS, and a total of 20,161 MSME attendants of

which 17,358 were covered under the general BDS program and 2,803 in 4 supply chains

New jobs in supported supply chains estimated at around 1,168

Component 3: Investment Climate

Law on Secured Transactions drafted

Legal and regulatory framework for credit bureaus was established

Central Bank of Nigeria Staff trained in supervising credit bureaus

Three new Credit Bureaus (CB) are operational

Two new multi-door alternative dispute resolution (ADR) court houses established in

Kaduna and Abia State, while the existing ADR centers in Lagos was strengthened

Report on integrating registration process was prepared and disseminated, workshop held,

and hardware delivered

Component 4: Public/Private Partnership Development

15923

public sector personnel from NIPC, SMEDAN, and federal and state level

governments received advanced project related training through 285 training activities

(247 courses and 38 study tours)

Three roundtables for MSME financial services providers

Two stakeholder forums on private credit bureaus

One consultative forum on commercial bank downscaling

Two PPD roundtables on IC

Two knowledge sharing ADR events;

23 Some trainees benefited from more than one training/study tour.

30

Co-sponsored three annual NESG NES;

Three BDS fairs;

Two stakeholder forums on rice and tourism values chains

One MSME Competitiveness report prepared

One Competitiveness Conference organized

Component 5: Project Management, Monitoring and Evaluations

N/A - This component ensured implementation of the four program components above.

31

Annex 3. Economic and Financial Analysis

1. The primary focus of the Economic and Financial Analysis was on the two main project

components: (i) access to finance; and (ii) business development services. The reason for this

approach is that these were the only two components offering quantitative data necessary for

calculating net present value and internal rate of return.

2. For the Investment Climate and Public Private Sector Partnership Development

components a qualitative analysis of costs and benefits has been presented in the main text.

Access to Finance

3. In determining the direct attributable cash flows for this component, two variables were

applied: (i) equity investment; and (ii) increase in sales of beneficiary MSMEs.

i) Equity Investment: These figures used as they represented direct investments facilitated by the

MSME Project, and were derived from the four supported MFIs. For purposes of this analysis, it

was assumed and reflected in the table below, that the equity investments were made at the time

of establishment of each of the MFIs (i.e., Accion and AB were established in 2007, Susu in 2008,

Microcred in 2010).

Equity Investments for MFIs Equity (N) Equity ($)

AB 1,500,000,000.00 10,344,827.59

Accion 1,206,000,000.00 8,317,241.38

Microcred 1,000,000,000.00 6,896,551.72

Susu 773,000,000.00 5,331,034.48

Total 4,479,000,000.00 30,889,655.17

ii) Increase in sales of beneficiary MSMEs: In 2009, an independent impact survey24

was

conducted to measure the impact of the access to finance component. The survey focused on

three MFIs: Accion, Susu, and Mic. It is important to note that while MIC microfinance bank

ultimately failed during the crisis and lost its license, the positive impact on beneficiary

borrowers/MSMEs was confirmed by the cited survey. 4. One of the areas measured by the study was the effect that obtaining a loan had on sales

of beneficiary MSMEs. The study found that on average, the monthly sales of beneficiary

MSMEs increased by NGN 197,385 (from NGN 455,388 in 2007 to NGN 652,773 in July 2008),

or 44% per respondent compared to pre-intervention time. Given that these results were obtained

based on response of 56 percent of the surveyed MSMEs, it was assumed that the same impact

was recorded for 56 percent of the borrowers of three observed MFIs (approx. 11,000 at the

time). Further, as no control groups were used in this part of the study the evaluation team

gauged the attribution effect by directly asking respondents about the extent to which the changes

in sales were caused; as a result 25.2 percent attributed the change completely or to a large extent

to the loan, 39 percent said that it had some effect, while 36 percent said that loan had no or little

effect. Consequently, the change in sales was applied to 64.25 percent of respondents who

confirmed this causation. This number was then multiplied by the average monthly sale increase

24 Impact Evaluation of Borrowers from Accion , Susu, and MIC Microfinance Banks, by Luba Shara, IFC with data collection conducted by: BDO OFO CONSULTING LTD, 2009

32

of NGN 197,385 converted to a US Dollar amount ($1,361.28). According to the study, the

increase was observed from 2007 to mid-2008. As no data was available for subsequent years,

the cash flows were assumed to equal to zero from 2009 to 2011. For purposes of this analysis,

the same assumptions, related to impact of loan on MSME sales, were applied to borrowers MFIs

which were not covered by the study and/or may not have been operational at the time of the

study. Namely, this includes AB which was operational in 2008 but not covered by the study,

Oceanic Bank‟s borrowers resulting from downscaling in 2009, and Microcred which was

established in 2010.

Microfinance Banks

Number of

Borrowers

Respondents

(56% of

borrowers

surveyed)

Attribution

effect

(64.25% of

borrowers

surveyed)

OK

Avg.

Monthly

Sales

Increase ($)

Total Avg.

Monthly

Sales

Increase ($)

Susu, ACCION, and

MIC (in 2008)

11,000 6,160 3,958 1,361.28

5,387,657.61

AB (in 2008)

326 183 117 1,361.28

159,670.58

Microcred (in 2010)

2,886 1,616 1,038 1,361.28

1,678,192.75

Oceanic (2009)

1826

1022.42

657 1,361.28

671,632.66

Business Development Services

5. In determining the direct attributable cash flows for this component, two variables were

applied: i) increase in sales of beneficiary MSMEs; and ii) matching grants.

(i) Increase in sales of beneficiary MSMEs: According to an independent impact survey25

focusing on BDS component, the average monthly sales of beneficiary MSMEs increased from

about N243,840.58 in 2006 to N449,270.4 in early 2008, or by 84.2 percent. The conclusions

were based on a sample of 183 MSMEs from a total population of approximately 3,000 project

beneficiaries at the time. For purposes of this analysis, it was assumed that the measured benefits

could be applied to total population of project beneficiaries (MSMEs) at the time. Accordingly,

the measured increase in sales of N205,429.82 was converted to US Dollars and applied to entire

population of 3,000 beneficiary MSMEs. In addition, it was conservatively assumed that

beneficiary MSMEs continued to record a real annual sales growth of five percent following the

initial increase of 84.2 percent (i.e., from 2009-2011).

25 Impact Survey of MSME Beneficiares, by BDO OFO CONSULTING LTD, 2008.

33

Business Development Services No. of Beneficiaries

Avg. Monthly Sales

Increase ($)

Total Avg. Monthly

Sales Increase ($)

2006-2008 3,000.00 1,416.76 4,250,272.14

2009 3,000.00 331.53 994,591.71

2010 3,000.00 588.7 1,766,097.43

2011 3,000.00 728.13 2,184,383.67

6. Matching Grants: By design, the BDS component required beneficiary BDS providers to

match the received grants. For purposes of this analysis, it was assumed that the total of $3.1

million under the matching grant scheme resulted in mobilization of the equal amount by the

beneficiary BDS providers. According to the information received from the PMU, the

disbursement of BDS grants on annual basis was as follows: 2006 - US$491,150; 2007 -

US$676,606; 2008 - US$758,665; 2009 - US$419,183; 2010 - US$551,255 and 2011 -

US$257,781. Consequently, it was assumed and reflected in the table below, that the same

amounts were matched in each of the project years.

Overall Project Financial Analysis

7. The economic analysis of this MSME project made the following assumptions in order to

produce net present value (NPV) and the internal rate of return (IRR) on project investment:

The considered project life was seven years, beginning in 2005 and ending in 2011. This

was a result of delayed effectiveness which materialized in December 2004, thus

allowing disbursements to begin only in 2005.

The observed increases in sales of beneficiary MSMEs for access to finance and BDS

components were based on the respective impact assessment studies which focused on

specific periods. For the periods not covered by the studies, the cash flows for access to

finance were denoted as zero, while for BDS a real growth of 5% was assumed. The

rationale for assuming continued increase in sales for BDS beneficiaries was that

technical skills they obtained would continue to enhance their business. For access to

finance components, the impact on sales of AB, Microcred, and Oceanic Bank‟s

borrowers resulting from downscaling was assumed to be the same as determined by the

cited studies.

Oceanic Bank was exempted from the analysis of the private equity contribution variable

as it was not possible to obtain data regarding the exact equity investment for the Oceanic

Bank‟s portfolio which was a result of downscaling.

The cash flows were also assumed to equal to zero in all instances/years where

quantitative data was missing.

Finally, all original figures in Nigerian Naira were converted US Dollars using an

average exchange rate of N145/US$1 for the whole implementation period (N130/US$1

in 2007; N160/US$1 in 2011).

Total planned IDA disbursements based on the most recent FM report as of June 2012

(US$23,963,103) for Access to Finance, BDS, and Project Management, and M&E

components were considered to have been expensed in year 1.

The Discount rate used was 12 percent, in line with the original Economic and Financial

Analysis from the Project Appraisal Document.

34

Calculation of NPV and IRR:

2005 2006 2007 2008 2009 2010 2011

In US$ 0 1 2 3 4 5 6

Capital Outlay Investment -23,963,103

Access to Finance Component

Equity Investment 0 0 18,662,068.97 5,331,034.48 0 6,896,551.72 0.00

Increase in sales revenue of Borrower MSMEs 0 0 0 5,547,328 671,632.66 0 1,678,192.75

BDS Component

Increase in sales of BDS Beneficiaries 0 0 0 4,250,272.14 994,592 1,766,097 2,184,384

Matching grants 0 491,150.00 676,606.00 758,665.00 419,183.00 551,255.00 257,781.00

Net cashflow -23,963,103 491,150 19,338,675 15,887,300 2,085,407 9,213,904 4,120,357

Discount Factor 1.00 0.89 0.80 0.71 0.64 0.57 0.51

Discounted Cashflow -23,963,103.00 438,526.79 15,416,673.28 11,308,266.19 1,325,314.08 5,228,216.67 2,087,501.30

NPV 11,841,395.31

IRR 28%

35

Annex 4. Bank Lending and Implementation Support Supervision Processes

(a) Task Team Members

Names Title Unit

Lending

Ismail Radwan Country Program Coordinator ECCUS

Peter J. Mousley Lead Private Sector Development Specialist AFTFW

Chioma Kelechi Nwagboso Consultant AFTFW

Irene F. Chacon Operations Analyst AFTFW

Uma Subramanian Lead Private Sector Development Specialist CICTI

Geeta Batra Chief Evaluation Officer CEXEG

Bayo Awosemusi Lead Procurement Specialist AFTPC

Jennifer Isern Manager CSAAP

Peer Benno Walter Stein Senior Manager CAIDR

Shireen El-Wahab Consultant EASFP

Irene Arias Regional Manager CLACO

Mehnaz S. Safavian Senior Economist SASFP

Hisham A. Abdo Kahin Senior Counsel LEGES

Mary Asanato-Adiwu Senior Procurement Specialist AFTPC

Chaoying Liu Evaluation Officer CDIAS

Luba Shara Senior Monitoring & Evaluation Specialist CAFAF

Thomas Losse-Mueller Senior Financial Sector Specialist AFTFE

Adenike Sherifat Oyeyiola Senior Financial Management Specialist AFTFM

Akinrinmola Oyenuga Akinyele Senior Financial Management Specialist AFTFM

Adewunmi Cosmas Ameer Adekoya Financial Management Specialist AFTFM

Rona P. Cook Program Assistant AFTFE

Yeshareg Dagne Program Assistant AFTFE

Collins S. Umunnah Team Assistant AFCW2

Giula Pellegrini Junior Professional Associate AFTFE

Marilyn Swann Manalo Consultant AFTFW

Karen Alexandra Hudes Senior Counsel LEGST

36

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including

travel and consultant costs)

Lending

FY04 617,717.30

FY05 0.00

FY06 0.00

FY07 0.00

FY08 0.00

Total: 617,717.30

Supervision/ICR

FY04 77,209.92

FY05 243,351.90

FY06 173,232.00

FY07 137,155.53

FY08 209,534.11

FY09 237,160.79

FY10 200,118.16

FY11 153,429.19

FY12 174,685.79

Total: 1,605,877.39

37

Annex 5. Beneficiary Survey Results

1. In order to measure progress with achieving the Project Development Objective, two

impact surveys were commissioned focusing on the impact of Access to Finance and Business

Development Services components respectively. Both surveys focused on determining the

project‟s impact on sales and employment levels of beneficiary MSMEs. Access to Finance

Survey was finalized in 2009 and it focused on impact evaluation of borrowers from Accion,

Susu, and MIC microfinance banks, which were all established with project support. Business

Development Survey was finalized in 2008 and focused on MSMEs which benefitted from

business development services facilitated by the project.

2. The surveys confirmed a link between projects supported activities and increase in sales

and employment levels of beneficiary MSMEs. The results are detailed below:

Access to Finance Survey– Impact Evaluation of Borrowers from Accion, Susu, and MIC,

Microfinance Banks26

3. The survey was conducted on a stratified random sample of 450 out of 11,000 borrowers

of ACCION, SUSU, and MIC microfinance banks. The key objectives of the survey were to

determine the project impact on: (i) increasing access to finance for previously undeserved

MSMEs; (ii) positively affecting borrowers‟ business sales; and (iii) increasing the number of

people borrowers employ. The results are summarized below:

(i) Access to finance increased for previously underserved MSMEs, as the project

succeeded in increasing access to finance for 25 percent (88 out of 354 people) of

respondents who had been unable to access the loans before. The change in access to

finance was calculated by aggregating respondents who did not apply for a loan before

because of perceived difficulties with those respondents who applied but were denied,

and then dividing this value by a total sample size.

(ii) Obtaining a loan on average resulted in 44 percent increase of respondents‟ monthly

sales as compared to pre-intervention time. Respondents reported monthly sales losses as

low as NGN 2,400,000 and sales increases as large as NGN 6,543,333 with almost 20

percent of respondents reported no changes in sales at all. Yet, on average, the monthly

sales increased by NGN 197,385 or 44 percent per respondent compared to pre-

intervention time from NGN 455,388 in 2007 to NGN 652,773 in July 2008. The change

in sales was calculated only for those 198 respondents (56 percent of a total sample) who

provided numbers for both 2007 and 2008 years.

4. The attribution effect was addressed by directly asking respondents about the extent to

which the changes in sales were caused by obtaining the loan, confirming that obtaining a loan

had an effect on sales. Slightly more than a quarter of respondents (25.2 percent) attributed the

change in sales completely or to a large extent to the loan. Another 39 percent claimed that

accessing the loan had some effect on sales, whereas 36 percent stated that the loan had no or

little effect on sales.

26 Prepared by: Luba Shara, International Finance Corporation (World Bank Group); Field Work (Primarily Data Collection)

Conducted by: BDO OFO CONSULTING LTD. July 9, 2009.

38

5. In addition, in responding to a direct question, more than 80% of respondents agreed that

obtaining a loan affected both their business sales and profitability in the past year. Results are

provided in the tables below. (Sales can be attributed to obtaining a loan = “completely agree”

(10.8 percent) + “to a large extent” (14.4 percent) + “to some extent (38.7 percent) + “to a little

extent” (20.1 percent) = 84 percent).

Perceived Effect on sales

Sales were affected by

obtaining a loan? N of cases % Valid % Cumulative %

Agree 153 77.3 82.7 82.7

Disagree 32 16.2 17.3 100.0

Total 185 93.4 100.0

Missing 13 6.6

Total 198 100.0

Perceived effect on profitability

Profitability was affected

by obtaining a loan?

N of cases % Valid % Cumulative %

Agree 162 81.8 85.7 85.7

Disagree 27 13.6 14.3 100.0

Total 189 95.5 100.0

Missing 9 4.5

Total 198 100.0

6. Obtaining a loan seems to have had only a minuscule effect on employment: only about

one percent of respondents reported an increase in hiring completely or largely due to a loan

obtained as a result of the project. The average number of employees hired by respondents has

not changed over the period of 1.5 years (on average, two employees). Only 34 respondents (11.6

percent) stated that they hired new people after obtaining the loan. Of 11.6 percent who did hire

more people, the number of new hires ranged from one to six, with two new employees on

average. More than half of respondents (56.2 percent) hired only one new employee, and majority

(90.6 percent) from one to two employees. However, when asked about attribution of hiring as a

result of a loan, only three respondents attributed the increase in hiring completely or to a large

extent to a loan (10 percent), while 50 percent stated that a loan had little or no effect on their

decision to hire more people. And, 40 percent of those who answered this question attributed

some effect in hiring of new people to a loan obtained from the bank.

7. In addition to confirming improved access to finance and increase in sales, the survey

also confirmed positive change in business practices of beneficiary MSMEs. According to the

survey, 94 percent of respondents agreed with a statement that obtaining a loan led to

improvements in their businesses. Specific examples include changes in keeping business records

and preparing end of the year accounts: the number of respondents who keep business records

increased by 23.4 percent as compared to the pre-loan time period (a rise from 66.0 percent to

89.4 percent), while the number of those who prepare end of the year accounts increased by 3.9

percent compared to pre-term time period (from 31.9 percent to 35.8 percent).

39

BUSINESS DEVELOPMENT SERVICES – MSME BDS Impact Assessment Survey27

8. The objective of the assessment was to conduct a comprehensive survey of MSMEs

which received assistance from the project‟s BDS component, as well as three control groups.

The survey locations for the BDS Impact Survey comprised the pilot states of BDS interventions

of Lagos, Kaduna and Abia and control (matching) states of Ogun, Oyo, Kano, Plateau and

Anambra. Ogun and Oyo are the matching states for Lagos; Kano and Plateau for Kaduna and

Anambra for Abia.

The survey was administered on the four groups of enterprises as follows:

9. Based on the results on sales for all the groups and employment results for Groups A and

C it can be inferred that BDS of the supported BDS providers made more positive impact on

performance than the control groups. The measurable impact of BDS on sales and employment

levels was gauged by the trend and changes in sales/employment figures of the MSMEs before

and after they received BDS and whether the changes are statistically significant.

10. The survey confirmed that the average monthly sales of Group A increased by 84.2

percent (from about N243,840.58 in 2006 to N449,270.4) while that of Group C increased by

mere 6.2 percent (from N401,713.5 in 2006 to N426,466.2367,771). The corresponding quarterly

sales figures for group A increased from N1, 023,884 to N2, 172,799 representing 112 percent

increase and for group C it was a decrease of 3.7 percent.

11. Based on statistical test of significance, BDS received by group A impacted positively on

their sales more than that of control group C. When the sales figure before and after BDS were

subjected to statistical tests of significance, the changes in group A‟s monthly and quarterly sales

were found to be statistically significant at 95 percent confidence level. The computed t-statistics

for A‟s monthly and quarterly sales figures are 2.021 and 2.249 respectively. For group C, the

increase in monthly sales was not statistically significant while the quarterly sales decrease was

significant. The computed t-statistics for C‟s monthly and quarterly sales figures are 1.681 and

2.340 respectively. Moreover, only 15(20 percent) of group C attributed changes in their sales

figure to BDS while 86(47 percent) of Group A enterprises attributed their changes in sales to

27 BDO OFO CONSULTING LTD. February 21, 2008.

Treatment Group (A) 183 MSMEs benefiting from BDS grant

services in pilot states of Lagos, Kaduna and

Abia

Control Group (B) 225 MSMEs without any BDS assistance in

pilot states.

Control Group (C) 74 MSMEs benefiting from other BDS

providers‟ (non-clients) services in non-pilot

states of Ogun,Oyo, Kano, Plateau, Anambra,

FCT and Bauchi

Control Group (D) 295 MSMEs without any BDS assistance in

non pilot states.

40

BDS. Group B that operated in the same environment as group A (pilot states) but did not enjoy

any BDS experienced a slight increase of 3.5 percent in their average monthly sales (from

N263,667 in 2006 to N273,008 in 2007) and 11.2 percent increase in quarterly sales(from

N723,000 to N812,462). These increases in monthly and quarterly sales were not statistically

significant at 95 percent confidence level with computed t – statistics been 1.396 and 1.454

respectively.

12. Based on the trend in employment before and after BDS, the survey confirmed that the

target Group A experiencing a 41.7 percent increase in employment (from a mean of 5.8 to 8.3

employees) while Group C experienced an increase of about 16 percent (from 10.9 to 12.7). The

statistical test of employment change in Group A gave a significant difference before and after

BDS while Group C shows an insignificant difference. The computed t-statistics for A and C are

2.405 and 1.335 respectively. This shows that BDS had impacted positively on the employment

performance for the clients of the supported BDS providers more than on the performance of the

clients supported by other BDS providers. The control groups B and D only provided overall

average employment figure for 2006 and 2007 and no separate figures for the periods to enable

calculation of growth rates in their employment. The mean employment figures for B and D are

6.07 and 13.98 respectively. These employment figures are incomparable with that of group A for

the purpose of impact assessment because the changes in employment of groups B and D cannot

be gauged.

13. In addition to impact on sales and employment, the survey recorded additional benefits

from project facilitated BDS. Specifically, based on the analysis of the respondents‟ satisfaction

ratings it was concluded that the quality of BDS received by the treated Group A was higher than

that of the Control Group C. Further, it was found that the BDS providers in the pilot states made

more impacts on knowledge and skills acquisition than the services providers in the Control

states. In terms of acquisition and improvement in skills and knowledge, about 63 percent

respondents from Group A and about 38% from Group C strongly agreed that they obtained new

knowledge by purchasing BDS. In regards to new skill acquisition 50 percent as of Group A

respondents strongly agreed that they acquired new skills, while only 16 percent from Group C

confirmed the same relationship. In regards to application of skills and knowledge in

business/operations, 96% of BDS users in Group A have applied the knowledge and skill gained

to their business practices, as well as 91% of Control group C. The follow up support for both

training and advisory services were rated poor (38% for consultancy and 34 percent for training).

404040 BDS users in Group A have applied the knowledge and skill gained to their business

practices, as well as 91 percent of Control group C.

41

Annex 6. Stakeholder Workshop Report and Results

A final closeout event of the MSME Project was organized by the project‟s communication team

in consultation with the PMU and NIPC. This was held on the 7th of December, 2011 with

attendance from beneficiaries from the states targeted from the Project, government institutions

like the Central Bank of Nigeria, SMEDAN, and the media. The event featured beneficiaries‟

testimonies as well as a preview of the documentary on the Project -- all highlighting the

achievement and lessons learned from the implementation of the project.

42

Annex 7. Summary of Borrower’s ICR and / or comments on Draft ICR

The World Bank has received the project completion report as prepared by the PMU. Below is

the summary of main reported achievements and supported events.

Targets from PIM – Access to Finance Achievements as of 31/09/2011

1.1 At least two new microfinance

institutions are established.

For each MFI:

1.1.1 At least 30,000 active clients by end

of year 4.

1.1.2 At least US$20 million outstanding

portfolio by end of year 4.

1.1.3 Financial self-sufficiency ratio at

least 100% by end of year 4.

1.1.4 Loan loss rate below 5% by end of

year 4.

1.1 Four new MFIs have been established (AB

Microfinance Bank; ACCION Microfinance Bank,

MicroCred Microfinance Bank, and Susu

Microfinance Bank).

1.1.1 Active borrowers and savers for each MFI are: AB

(15,061/38,199); ACCION (12,089/59,084);

MicroCred (5,294/ 10,096) and Susu (2,778/37,304)

as of 31/09/2011. Total borrowers were 35,232 and

total savers were 144,683.

1.1.2 Total outstanding portfolio is US$33.9 million.

Outstanding portfolio for each MFI is: AB (US$18.6

m); ACCION (US$10 m), MicroCred (US$3.3 m);

and Susu (US$2 m) as of 31/09/2011.

1.1.3 Financial self-sufficiency is 89% (AB), 117%

(ACCION), 55.3% (Microcred) and 105% (Susu) as

of 31/09/2011.

1.1.4 Loan loss rate is 0% (Microred), 2% (AB) and 6%

(ACCION) as of 31/09/2011 (the other grantee did

not report). However, it was agreed that portfolio at

risk (PAR) at 30 days was a better indicator: 0.65%

(AB), 3.93% (ACCION), 0.78% (Microcred) and

4.99%* (Susu) as of 31/09/2011.

1.2 New private sector investment in MFIs

at least US$15 million

1.2 New private sector investment in MFIs was US$30

million (N4.5 billion paid up capital) as of 30/06/2011.

Note: This figure does not include paid up capital

from the two microfinance banks that the MSME

Project financed and are now closed.

1.3 At least one commercial bank

establishes an MSME downscaling

programme.

For each commercial bank:

1.3.1 At least 5,000 active clients by end

of year 4.

1.3.2 At least US$10 million outstanding

portfolio at end of year 4.

1.3.3 Financial self-sufficiency ratio at

least 100% by end of year 4.

1.3.4 Loan loss rate below 5% at end of

year 4.

1.3 One commercial bank (Oceanic) established an

internal microfinance section as of 31/09/2011.

1.3.1 3,818 active borrowers and 1,073,429 active savers

as of 31/09/2011.

1.3.2 US$7 million (N 1.017 billion) outstanding portfolio

as of 31/09/2011.

1.3.3 This figure is not available as the microfinance

department is a unit within the bank, but the ratio is

at least 100%.

1.3.4 There is no figure available for this indicator, but it

was agreed that portfolio at risk (PAR) at 30 days

43

was a better indicator: this was 5.9% as of

31/09/2011.

1.4 Bankers are aware of downscaling

programme and develop more positive

perceptions of commercial viability of

downscaling.

1.4 There have been successful meetings with Banker‟s

Committee on downscaling and a number of

commercial banks (Afribank, First Bank, UBA, and

IBTC) have invested in subsidiary banks. Including the

three banks that have invested in ACCION (NIB

[Citibank], Ecobank, and Zenith Bank), seven out of

Nigeria's 22 commercial banks have invested in one

form or another in commercial microfinance.

Targets from PIM – General BDS Fund Achievements as of 31/12/2011

2.1 Assistance provided to at least 20 BDS

providers

2.1.1 At least 20 products or services

improved or developed through Project

support

2.1 Assistance provided to 46 Providers from General

BDS Fund (excluding VC BDS Grants).

2.1.1 63 products or services improved or developed.

2.2 At least 1,000 MSMEs receive BDS from

participating BDS providers

2.2 17,358 MSMEs have received BDS from

participating BDS providers.

2.3 Each assisted BDS provider demonstrates

sustained uptake of supported products and

services:

2.3.1 by end of third year, at least 75% of

clients adopt new behaviors

2.3.2 at least 25% of clients return for

additional services

2.3.3 by end of third year, BDS provider has

at least 75% cost recovery on supported

projects

2.3.1 / 2.3.2 There are conceptual problems with the

measuring criteria 2.3.1 and 2.3.2 but they have been

probably met where appropriate. A certificate course (the

Kaduna Program) could obviously not have repeat

customers. A widely circulated casebook on family

business succession has problems in defining each reader

as a client.

2.3.3 Cost recovery for the specific activities considered

is around 58%.

44

Targets from PIM – Value Chains Achievements as 31/12/2011

2.2 Assistance provided to at least 30 BDS providers

2.2.1 At least 20 products or services improved or

developed through Project support

2.2 A total of 29 BDS providers have been

assisted through the four value chain

interventions – catfish (11), rice (5), palm oil

(3) and tourism (10)

2.2.1 29 products/services have improved or

developed by the BDS grantees.

2.3 At least 1,000 MSMEs receive BDS from

participating BDS providers

2.3 2,803 firms have received BDS from

participating BDS providers – catfish (1,300),

rice (997), palm oil (206) and tourism (300).

2.4 Each assisted BDS provider demonstrates

sustained uptake of supported products and

services:

2.4.1 by end of third year, at least 75% of clients

adopt new behaviors

2.4.2 at least 25% of clients return for additional

services

2.4.3 by end of third year, BDS provider has at least

75% cost recovery on supported projects

2.4.1 Of those BDS providers who successfully

completed their grants there is considerable

sustained uptake.

2.4.2 Not all the services provided require the

provision of repeat or additional services to

be effective (e.g. training). Where repeat

use is relevant, repeat or additional use is in

line with the target of 25%.

2.4.3 The initiatives under tourism (destination

promotion) and palm oil (training) did not

call for cost recovery. In catfish and rice,

where grants were used to provide BDS,

cost recovery was close to 100%.

2.5 Trusted and reliable accreditation process for BDS

providers is created (1st year: stakeholders agree

on accreditation qualifications and criteria)

2.5 This referred to the Catfish Value Chain

Programme in particular. FISONS, a grantee,

was supported by the programme to develop

an accreditation system and has now drafted

law, which it is pushing through Parliament,

to give its accreditation system the force of

law. There were also certification elements in

the tourism VC intervention.

2.6 Catfish association is established in response to

industry-led demand for joint action

2.6 The catfish associations already existed and

were helped to become key BDS providers.

Targets in the PIM – Investment Climate Achievements as of 31/12/2011

3.1 Legal and regulatory framework for credit

bureau established

3.2 Private sector credit bureau is created

3.1 The legal and regulatory framework for credit bureaus

has been established.

3.2 Three private sector credit bureaus have been

established and are functioning.

45

3.3 Bank officers‟ awareness and knowledge of

credit bureau increased

3.3 CBN staff have been trained in supervision of credit

bureau. The awareness of the services offered is spreading

across the banking industry but there is a need for greater

awareness and capacity building to increase usage of

services. The industry association is undertaking this.

3.4 Alternative dispute resolution mechanisms

developed and implemented in up to three

States

3.5 Diagnostic conducted, programme design

completed, and formal agreements reached by

end of year 1

3.6 Time required to resolve commercial

dispute under alternative system at least XX%

less than prior/existing system (target level

contingent on diagnostic)

3.4 Two new ADR Multidoor Courthouses have been

created in Abia and Kaduna, and the existing Multidoor

Courthouse and the Citizen‟s Mediation Center in Lagos

have been strengthened.

3.5 The diagnostic, design and implementation have been

completed, though not within a year.

3.6 The Abia and Kaduna Multidoor Courthouses have

just been established so it is too early to measure impacts.

There is evidence of increased usage of mediation services

at the Citizen‟s Mediation Center in Lagos

Targets in PIM – Public Private Partnership

Development

Achievements as of 31/12/2011

4.1 26 public sector personnel from NIPC,

SMEDAN and state-level ministries (e.g.,

commerce and industry) receive advanced

project-related training.

4.2 Training participants provide at least one in-

house seminar upon return.

4.3 Training participants prepare training

summary report.

4.1 159 unique public sector personnel from NIPC,

SMEDAN, CBN and federal and state-level

ministries have received advanced project-related

training through 285 training activities (247 courses

and 38 study tours).

Note: Some personnel have benefited from more than

one training course/study tour.

4.2 26 of the trainees have conducted post training

seminars.

4.3 66 training summary reports have been prepared

(verbally or written).

4.4 Annual roundtable discussion, beginning 2nd

Qtr 2005, between government and private

sector to establish dialogue on policies and

programs targeted at MSMEs and to

disseminate lessons learned, best practices,

and project success stories.

4.4 The project held three roundtables for MSME

financial services providers; two stakeholder

forums on private credit bureaus; one consultative

forum on commercial bank downscaling; two PPD

roundtables on IC; two knowledge sharing ADR

events; co-sponsored three annual NESG NES;

three BDS fairs; two stakeholder forums in rice and

tourism. There were also several materials

(brochures, documentaries) which were widely

distributed.

Note: This section was redesigned in the period

following the completion of the PIM.

4.5 Project is represented on the programme of

Nigerian Economic Summit (NES) every

4.5 The Project signed a memorandum of understanding

with the NESG and supported the implementation of

46

year beginning 2005.

4.6 Three MSME Competitiveness Reports.

4.7 Three Competitiveness fora.

the NES programme. In addition, the project co-

sponsored the annual NES Summits and the work of

the Non-oil & Agriculture Policy Commission, and

supported representatives from the State

Governments in the project states to participate in the

NES and dialogue.

4.6 One MSME competitiveness report was prepared in

conjunction with the NESG and other stakeholders.

Note: This activity was done late in the project because

the project had been previously directed to drop the

element.

4.7 One Competitiveness forum was organized in

conjunction with NESG and other stakeholders.

Note: This activity was done late in the project

because the project had been previously directed to

drop the element.

47

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders

N/A

48

Annex 9. List of Supporting Documents

1. Project Concept Note (July 2003)

2. Project Appraisal Document (November 2003)

3. Project Implementation Manual (November 2004)

4. Aide Memoires and Implementation Status Reports

5. PMU‟s Project Progress Reports and Completion Report

6. Impact Evaluation of Borrowers from Accion , Susu, and MIC Microfinance Banks, by Luba

Shara, IFC with data collection conducted by: BDO OFO CONSULTING LTD, 2009

7. Impact Survey of MSME Beneficiares, by BDO OFO CONSULTING LTD, 2008.

49

Annex 10. List of sponsored events under each component of the Project:

Component 1: Access to Finance

Date Location

1 First roundtable on Technical Service Provision for

MSME June 2006 Lagos, Nigeria

2 Roundtable on ATF Component for MSME June 2006 Kaduna, Nigeria

3 Roundtable on ATF Component for MSME June 2006 Abia, Nigeria

4 NationaL Stakeholder Workshop on Credit Bureaus June 2006 Lagos, Nigeria

5 Award Ceremony for Access to Finance Grants to Susu

and MIC Microfinance Banks February 2007 Lagos, Nigeria

6 ACCION Microfinance Bank Launching July 2007 Lagos, Nigeria

7 Workshop on External Audit for Microfinance March 2009 Lagos, Nigeria

8 Workshop on Portfolio Quality and Governance March 2009 Lagos, Nigeria

9 External Audit of Microfinance Banks in Nigeria April 2009 Lagos, Nigeria

10 Savings Mobilization for Commercial Microfinance August 2009 Lagos, Nigeria

11 Savings Mobilization for Commercial Microfinance September 2009 Kaduna, Nigeria

12 Workshop on MicroLeasing December 2010 Lagos, Nigeria

13 Workshop on Microinsurance December 2010 Abuja, Nigeria

50

Component 2: Business Development Services

Date Location

1 Training on Market Oriented Small Business

Development Services for BDS Providers February 2007 Abuja, Nigeria

2 Workshop for Catfish VC BDS Grantees June 2008 Lagos, Nigeria

3 Training on Market Oriented Small Business

Development Training for BDS Providers August 2008 Abuja, Nigeria

4 Lagos BDS Fair May 2009 Lagos, Nigeria

5 Kaduna BDS Fair June 2009 Kaduna, Nigeria

6 Abia BDS Fair June 2009 Abia, Nigeria

7 Value Chain Workshop, jointly organised by

MSME Project & DFID October 2009 Abuja, Nigeria

8 Training on Market Driven BDS and Value Chain

Development for BDS Providers November 2009 Abuja, Nigeria

9 Workshop for Tourism VC BDS Grantees November 2009 Calabar, Nigeria

10 Workshop for Tourism VC BDS Grantees January 2010 Lagos, Nigeria

11 Kaduna BDS Fair hosted within the 31st Annual

Kaduna International Trade Fair February 2010 Kaduna, Nigeria

12 Tourism Value Chain Stakeholders‟ Final

Seminar June 2010 Calabar, Nigeria

13 Workshop for Rice VC BDS Grantees July 2010 Kaduna, Nigeria

14 ILO/ITC Training of BDS Providers on Women's

Entrepreneurship Development November 2010 Abuja, Nigeria

15 Rice Value Chain Development Stakeholders

Final Seminar December 2010 Kaduna, Nigeria

16 ILO/ITC Training of BDS Providers on Women's

Entrepreneurship Development May 2011 Abuja, Nigeria

17 Stakeholder Workshop for Palm Oil November 2011 Umuahia, Nigeria

51

Component 3: Investment Climate

Date Location

CREDIT BUREAUS

1 National Workshop on Credit Bureau

Development in Nigeria June 2006 Abuja, Nigeria

2 Implant Training for Credit Bureau Operations

in Nigeria (for CBN staff) March 2009 Abeokuta

3 Study Tour - Regulating Credit Bureaus September – October 2009 Washington and Chicago,

USA / Cairo, Egypt

4 Stakeholders Workshop on Credit Bureau December 2011 Lagos, Nigeria

BUSINESS REGISTRATION

1 Signing of MOU on Business Registration

among NIPC, CAC and FIRS September 2007 Abuja, Nigeria

2 Workshop on Credit Bureau for CBN Staff February- March 2009 Abuja, Nigeria

3 Implant Training for Credit Bureau Operations

in Nigeria (organised solely for CBN staff) February 2009 Kaduna, Nigeria

SECURED LENDING

1 Secured Lending Inaugural Stakeholder‟s

meeting May 2009 Abuja, Nigeria

2 National Workshop on Secured

Lending/Securitization November 2011 Abuja, Nigeria

ADR

1 Study Tour to Uganda on Commercial Court

Practices (ADR) February 2007 Uganda

2 ADR Seminar “Commercial Alternative

Dispute Resolution for Core Stakeholders” November 2007 Abuja, Nigeria

3 ADR Assessment Report Presentation Forum February 2009 Abuja, Nigeria

4 ADR Stakeholder‟s Phase 2/Design Phase

Conference June 2009 Abuja, Nigeria

5 Training - Alternative Dispute Resolution

(ADR) October 2009 Washington, USA

6 Signing of Protocol on ADR by Abia State June 2010 Aba, Nigeria

7 Settlement Week of Lagos Multi-Door

Courthouse July 2010 Lagos, Nigeria

8 Opening ceremony of Abia State Multidoor

Commission December 2011 Umuahia, Nigeria

52

Component 4: Private – Public Partnership

Date Location

1 Intervention Design and Management in BDS –

NIPC and SMEDAN staff

July 2004 Glasgow, UK

2 Microfinance Training – NIPC Project

Coordinator

August-

September 2004

Plokwane City, South Africa

3 Seminar on Model Law on Leasing – Chartered

Inst. Of Arbitrators

October 2004 Rome, Italy

4 Goods and Equipment Procurement Course –

NIPC Staff

November 2004 Durban, South Africa

5 Services Procurement – NIPC Staff NA Lagos, Nigeria

6 Financial Management and Disbursement –

NIPC Staff

November 2004 Malawi

7 Accounting Software System Training - NIPC

Staff

November –

December 2004

Lagos, Nigeria

8 Financial Management & disbursement training

– NIPC Staff

September 2005 Malawi

9 Financial management & disbursement training

II

November 2005 Malawi

10 Workshop on Procurement & Consultancy

Service – NIPC staff

November 2005 Lagos, Nigeria

11 Capacity Building and Needs Assessment

Workshop – NIPC and SMEDAN Staff

December 2005 Abuja, Nigeria

12 Course on The General Manager

Program(TGMP) – NIPC Staff

January 2006 Harvard, US

13 Principles & Practice of MSME Promotion &

Development – NIPC and SMEDAN staff

June 2006 Abuja, Nigeria

14 Summit on Sustaining Reforms and Unlocking

Nigeria's Potential – NIPC and Minister of

Commerce Kaduna/Lagos


15 Collateral Reform and Access to Finance –

NIPC, CBM and FMoJ staff

July 2006 London, UK

16 Creating an Enabling Environment for Small

Enterprise Development – NIPC and SMEDAN

staff

October 2006 Turin, Italy

17 Prevention, Analysis & Detection of Corporate

Fraud – NIPC staff

October 2006 Mombasa Kenya

18 Local Government .Investment Climate Reform March 2007 Tanzania

19 Strengthening OSIC for Accelerated Public

Sector Reform

March 2007 Kaduna, Italy

20 NESG National Forum for Synergy in MSME

Development


21 Phase 1 Study Tour on IPA Strategy for IC

Reforms

July 2007 Botswana

22 Financial Management Training October 2007 Turin, Italy

53

23 NIPC Directors Study Tour to Egypt November 2007 Egypt

24 Training on Project Management – NIPC Staff July 2009 London, UK

25 Results-Based Management Implementation and

Performance Indicators

September-

October 2009

Setym International Training,

Canada,

26 Study Tour for NIPC October 2009 Bangladesh

27 Training -Crown Agents Certificate in

Procurement for Senior Executives – NIPC Staff

November 2009 London, UK

28 Sustainable Microfinance – NIPC Project

Coordinator


29 Training - Results-Based Management

Implementation and Performance Indicators,

November -

December 2009

Setym International Training,

Malaysia,

30 Creating an Enabling Environment for SMEs

Development

November-

December 2009

Turin, Italy

31 Project Budgeting and Cost Control – NIPC

Project Accountant

May 2010 Malaysia

32 Monitoring and Evaluation August 2010 London, UK

33 Project and Program Impact Assessment August-

September 2010

Montreal, Canada

34 Project Budgeting and Cost Control – NIPC Staff October 2010 Malaysia

35 Study Tour – NIPC Staff October 2010 Indonesia

36 Advance Audit Skills – NIPC Internal Audit October 2010 London, UK

37 Project & Programme Management Training –

NIPC Staff


38 Public Financial Management: Planning and

Control – NIPC Staff

November-

December 2010

London, UK

39 Creating and Enabling Environment for

Sustainable Small Enterprise Development –

NIPC Staff

November –

December 2010

Turin, Italy

40 Course on Regulating Financial Markets – NIPC

Project Accountant

March 2011 Washington DC

41 Training course on Monitoring and Evaluation –

NIPC Department Project Coordinator

2011 London, UK

42 Course on Leading a Project Team – NIPC

Project Secretariat

March 2011 Dubai, UAE

43 Study Tour – NIPC Staff July 2011 Ahmedabad, India

44 Study Tour – NIPC Staff July 2011 Chennai, India

45 Leadership for Senior Managers – NIPC Mrs.

Okala

November 2011 Dubai, UAE

WarriWarri

BaroBaro

KontagoraKontagora

IllelaIllela

KauraKauraNamodaNamoda

ZariaZaria

BiuBiu

BaliBali

WukariWukari

ShendamShendam

NguruNguruOamasakOamasak

PokiskumPokiskum

WawaWawa

AbaAba

SapeteSapete

UyoUyo

JosJos

AwkaAwka

YolaYola

GombeGombe

KanoKano

AsabaAsaba

YenogoaYenogoa

LagosLagos

EnuguEnugu

AkureAkure

MinnaMinna

DutseDutse

OwerriOwerri

IbadanIbadan

IlorinIlorin

BauchiBauchi

KadunaKaduna

SokotoSokoto

GusauGusau

LokojaLokoja

Ado-EkitiAdo-Ekiti

CalabarCalabar

AbakalikiAbakaliki

UmuahiaUmuahia

MakurdiMakurdiOshogboOshogbo

JalingoJalingo

KatsinaKatsina

AbeokutaAbeokuta

DamaturuDamaturuMaiduguriMaiduguri

BeninBeninCityCity

BirninBirninKebbiKebbi

PortPortHarcourtHarcourt

LafiaLafia

ABUJAABUJA

B O R N OB O R N OY O B EY O B E

ENUGUENUGU

ANAMBRA

ANAMBRA

ABIAABIA

IMOIMO

AKWA-AKWA-IBOMIBOM

CROSSCROSSRIVERRIVER

RIVERSRIVERS

D E L T AD E L T A

B A U C H IB A U C H I

J I G A W AJ I G A W A

K A N OK A N O

K A T S I N AK A T S I N A

S O K O T OS O K O T O

K E B B IK E B B I

N I G E RN I G E RK A D U N AK A D U N A

FEDERALFEDERALCAPITALCAPITAL

TERRITORYTERRITORY

P L A T E A UP L A T E A U

T A R A B AT A R A B AB E N U EB E N U E

K O G IK O G I

O Y OO Y O

O G U NO G U NLAGOSLAGOS

O S U NO S U N

O N D OO N D O

E D OE D O

AD

AM

AW

A

AD

AM

AW

A

K W A R AK W A R A

Z A M F A R AZ A M F A R A

EKITIEKITI

EBONYIEBONYI

BAYELSABAYELSA

N A S A R AWAN A S A R AWA

G O M B EG O M B E

N I G E RN I G E R

N I G E RN I G E R

C A M E R O O NC A M E R O O N

CAMEROONCAMEROON

Bioko I.Bioko I.(EQ. GUINEA)(EQ. GUINEA)

B E N I NB E N I N

C H A DC H A D

Warri

Baro

Kontagora

Illela

KauraNamoda

Zaria

Biu

Bali

Wukari

Shendam

NguruOamasak

Pokiskum

Wawa

Aba

Sapete

Uyo

Jos

Awka

Yola

Gombe

Kano

Asaba

Yenogoa

Lagos

Enugu

Akure

Minna

Dutse

Owerri

Ibadan

Ilorin

Bauchi

Kaduna

Sokoto

Gusau

Lokoja

Ado-Ekiti

Calabar

Abakaliki

Umuahia

MakurdiOshogbo

Jalingo

Katsina

Abeokuta

DamaturuMaiduguri

BeninCity

BirninKebbi

PortHarcourt

Lafia

ABUJA

B O R N OY O B E

ENUGU

ANAMBRA

ABIA

IMO

AKWA-IBOM

CROSSRIVER

RIVERS

D E L T A

B A U C H I

J I G A W A

K A N O

K A T S I N A

S O K O T O

K E B B I

N I G E RK A D U N A

FEDERALCAPITAL

TERRITORY

P L A T E A U

T A R A B AB E N U E

K O G I

O Y O

O G U NLAGOS

O S U N

O N D O

E D O

AD

AM

AW

A

K W A R A

Z A M F A R A

EKITI

EBONYI

BAYELSA

N A S A R AWA

G O M B E

N I G E R

N I G E R

C A M E R O O N

CAMEROON

Bioko I.(EQ. GUINEA)

B E N I N

C H A D

Benue

Niger

Nig

er

Sokoto

Yobe

Rima

Niger

Kaduna

Bun

ga

Jam

aari

Hadejia

Gongola

Be

nue

Yobe

Komad

ugu Gana

Taraba

Gulf of Guinea

KainjiReservoir

Lake ChadTo

Kandi

To Kandi

ToBori

To Lomé

To Doula

To Tahoua To Agadez To Nguigmi10°E 15°E

5°E 10°E

10°N10°N

5°N5°N

NIGERIA

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 39221

MARCH

2012

MAIN CITIES AND TOWNS

STATE CAPITALS

NATIONAL CAPITAL

MAIN ROADS

RAILROADS

STATE BOUNDARIES

INTERNATIONAL BOUNDARIES

NIGERIA

MICRO, SMALL AND MEDIUMENTERPRISE PROJECT

This map was produced by the Map Design Unit of The World Bank.

The boundaries, colors, denominations and any other information

shown on this map do not imply, on the part of The World Bank

Group, any judgment on the legal status of any territory, or any

endorsement or acceptance of such boundaries.

June 26, 2012 - World Bank

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