AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND

REPUBLIC OF CONGO

ECONOMIC AND SECTOR STUDY:

COUNTRY GOVERNANCE PROFILE

COUNTRY REGIONAL DEPARTMENT, CENTRE (ORCE) GOVERNANCE, ECONOMIC & FINANCIAL REFORMS

DEPARTMENT (OSGE)

DECEMBER 2008

TABLE OF CONTENTS

ACRONYMS AND ABBREVIATIONS ............................................................................................ i EXECUTIVE SUMMARY................................................................................................................. ii I. INTRODUCTION................................................................................................................... 1 1.1 Preamble................................................................................................................................ 1 1.2 Country Context .................................................................................................................... 1 II. DIAGNOSIS OF GOVERNANCE ...................................................................................... 2 2.1 Governance and Accountability............................................................................................ 2 2.2 Governance and Transparency.............................................................................................. 8 2.3 Governance and Participation ............................................................................................. 10 2.4 Governance, Legal and Judicial Reforms ........................................................................... 13 2.5 Combatting Corruption ....................................................................................................... 14 III. PRIORITY AREAS AND RECOMMENDATIONS FOR STRENGTHENING

GOOD GOVERNANCE..................................................................................................... 16 3.1 Need to Provide the Country with a Coherent Good Governance Strategy....................... 16 3.2 Priority Areas to Improve Governance in the Republic of Congo..................................... 16 3.3 Areas of Donor Intervention ............................................................................................. 17 3.4 Potential Areas of Intervention of the African Development Bank Group......................... 18 IV. RISKS RELATED TO GOVERNANCE SHORTCOMINGS ......................................... 19 V. CONCLUSIONS AND RECOMMENDATIONS................................................................ 19 5.1 Conclusion .......................................................................................................................... 19 5.2 Recommendations............................................................................................................... 20 The Governance Profile was prepared following a Bank mission to Brazzaville in April 2008 in collaboration with the ACBF and the UNDP Field Office. The mission was composed of Messrs. P. Yembiline, Economist ORCE, T. Houeninvo, Macroeconomist OSGE.2; and I. Zampaligré, Consulting Expert GECL.1.

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ACRONYMS AND ABBREVIATIONS ACBF : African Capacity Building Foundation ADB : African Development Bank ADF : African Development Fund ANIF : National Financial Investigation Agency APC : Association of Accounting Professionals of Congo APRM : African Peer Review Mechanism BPW : Building and Public Works CCCE : Congolese Foreign Trade Centre CCMCE : Public Procurement Commission CDLP : Departmental Poverty Reduction Committee CEMAC : Economic and Monetary Community of Central Africa CFA F : CFA Franc CFCO : Chemin de Fer Congo Ocean (Railway Corporation) CFE : Business Registration Centre CGA : Approved Management Centres CLLP : Local Poverty Reduction Committee CNC : National Audit Commission CNCCF : National Commission against Corruption, Misappropriation and Fraud CNLP : National Poverty Reduction Committee CSM : Higher Judicial Council DCMCE : Central Directorate for Public Procurement DGB : Directorate-General of the Budget DGCF : Directorate-General of Financial Control DGCP : Directorate-General of Public Accounts DGDDI : Directorate-General of Customs and Indirect Duties DGGT : General Delegation for Major Works DGI : Directorate-General of Taxes EDF : European Development Fund EITI : Extractive Industries Transparency Initiative EPA : Economic Partnership Agreement EU : European Union FGS : Guarantee and Support Fund FLEGT : Forest Law Enforcement, Governance and Trade GDP : Gross Domestic Product HIPC : Heavily Indebted Poor Countries IGF : Inspectorate General of Finance IMF : International Monetary Fund MTEF : Medium-term Expenditure Framework NEPAD : New Partnership for Africa’s Development NGO : Non-Governmental Organization OHADA : Organization for the Harmonization of Business Law in Africa OIC : Anti-Corruption Observatory PACDIP : Expenditure Circuit and Poverty Indicators Improvement Support Project PNBG : National Good Governance Programme PRCTG : Transparency and Governance Capacity Building Project PRGF : Poverty Reduction and Growth Facility PRSP : Poverty Reduction Strategy Paper SME : Small and Medium Enterprises SMEDA : Small and Medium Enterprise Development Agency SNDE : National Water Distribution Company SNE : National Electricity Company TGI : Regional Court TI : District Court UA : Unit of Account UNDP : United Nations Development Programme UNOC : National Union of Congolese Economic Operators VPA : Voluntary Partnership Agreement

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EXECUTIVE SUMMARY 1. The preparation of the 2008 Country Governance Profile of Congo addresses the concerns of the Government of the Republic of Congo which has made promoting good governance the main strategic thrust of its 2008-2010 Poverty Reduction Strategy Paper (PRSP) and which intends to provide the country with a National Good Governance Programme. The 2008 Country Governance Profile of Congo is also in keeping with the African Development Bank Group’s Strategic Directions on Governance and the Fight against Corruption in its Regional Member Countries over the 2008-2010 period. Lastly, it addresses the concerns of the other development partners such the ACBF and UNDP which partnered with the Bank within the framework of a joint mission. 2. This study which falls within the framework of the actions undertaken by the Government and Bank policy on good Governance seeks to ensure progress in the field of Governance, identify the major related constraints and define the broad outlines of a good governance policy which would contribute significantly to poverty reduction in Congo. In the absence of a National Good Governance Policy, the study has examined, in light of discussions and existing reports the five main pillars underpinning the good Governance policy of the ADB Group, namely: (i) level of accountability; (ii) transparency status; (iii) stakeholder participation; (iv) progress regarding judicial and legal reforms; and (v) anti-corruption efforts. 3. Concerning governance and political accountability, the Congolese system of democracy is based on the strict separation and balance of the executive, legislative and judicial powers. The constitution provides for the appropriate mechanisms of control and accountability (question time, written questions, oral questions, topical questions, committee hearings and parliamentary inquiries) of the executive power. However, the weakness of the institutional, human, logistic and financial capacities due to constraints inherited from the period of internal conflicts and the recentness of the Congolese democratic institutions make it impossible to give an effective and efficient report on the actions and activities of the political authorities. As regards accountability for public sector management, on the whole, the weakness of the managerial capacities of the Congolese government services makes them unable to contribute effectively to accountability for public sector management. 4. The management of the public service is marked by the use of ill-adapted instruments (manual management of the civil service file) and ineffective provision of public services. However, reforms are under way with the assistance of development partners. A Directorate-General for State Reform has been set up to take measures aimed at correcting the shortcomings. As concerns accountability in public finance management, internal as well as external controls are still handicapped by human, logistic, institutional and financial constraints. The majority of the staff of the control institutions have received no specific training in financial control. Besides the problems of qualifications, the Congolese control institutions are understaffed. The absence of procedures manuals also constitutes a constraint which limits the efficacy of the control bodies. The lack of computer equipment and the weakness of the computer networks make it impossible to ensure proper coordination and enhance the efficacy of the controls. However, efforts are under way within the framework of the Government’s Public Finance Management Action plan, which is backed by Congo’s partners. Its objective is to build the capacities of the institutions charged with the preparation, execution and internal and external auditing of public finances.

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5. To strengthen accountability in the management of public enterprises, the National Audit Commission (CNC) has been set up. It has contributed to financial auditing and to operational and accounts auditing and to the training of staff of audited public enterprises. However, given the weak organization of the accounting profession in the Republic of Congo, the lack of book-keeping in the majority of public enterprises and delays in drawing up financial statements, the contribution of the CNC to accountability has been limited. The Government’s efforts, in particular between 1995 and 1999, were geared towards the privatization of public enterprises under the supervision of the Prime Minister and the coordination of a privatization committee backed by the World Bank. The ongoing reforms are aimed at reducing the factors of inefficacy and inefficiency of the enterprises that are still in the State portfolio, delegating the provision of certain public services to private initiative and putting in place a system of competition, in order to prepare them for privatization or contracting their management to the private sector. Accountability for the management of public enterprises is limited by the weakness of the institutional framework of the accounting profession in the Republic of Congo and the absence of financial statements in most of the enterprises, which constitute a major constraint. 6. Substantial progress has been made as regards transparency. Freedom of information and communication as well as free access to sources of information is guaranteed by the Constitution of 20 January 2002 which also prohibits censorship. However, the inadequacy of the training of information and communication professionals, and of technical, material and financial resources, the outdated equipment, the precarious working conditions and the persistence of various pressures on journalists, constitute major constraints that need to be removed in order to promote real media freedom. Furthermore, the procurement system currently in force is obsolete, non-transparent, lacks competition and does not meet international norms and standards. Dialogue continues between the Government and the World Bank within the framework of the Public Procurement Code Reform Committee set up in order to prepare a new code. The transparency of the public spending review suffers from the overuse of special procedures (advance payments), the majority of the payments carried out using such procedures neither being justified nor regularized ex post. The Republic of Congo has made efforts in putting in place institutions charged with implementing the EITI. However, there are still challenges to be met regarding the transparency of exploration and exploitation contracts. The country was reinstated in the Kimberley process in 2007, but efforts are required for the training of staff involved in the application of the new system of certification and the improvement of the identification and organization of artisanal diamond miners to improve the traceability of Congolese diamonds. Lastly, discussions are under way between the Republic of Congo and the European Commission with a view to improved transparency in the exploitation of forest resources following the country’s joining of the FLEGT (Forest Law Enforcement Governance and Trade) initiative. 7. Stakeholder participation in the preparation of national policies has made remarkable progress. Efforts have been made as concerns the creation of a legal framework designed to guarantee impartiality, transparency and regularity of elections through the putting in place of a National Commission for the Organization of Elections. However, the weakness of the human resource capacities (including training) and financial and logistic means of the bodies charged with the preparation, coordination and supervision of elections as well as electoral disputes constitutes a constraint on the transparency and regularity of elections. Civil society participation in decisions concerning the economic and social priorities of the government and public investment strategies was affected by its weak organization. Concerning gender equity, it should be noted that women’s representation in

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political, elective and administrative offices is still poor in the Republic of Congo. Efforts have been made establish a legal framework of decentralization. However, the effective participation of the population in development actions through decentralization is constrained by the slowness of the process of real transfer of authority and human, material and financial resources to the local communities, and the absence of decentralization support bodies. 8. Substantial efforts are still required as regards legal and judicial reforms. The legal and judicial system suffers from inefficiency, malfunctioning and the weakness of legal infrastructure. A diagnosis reveals at the legal level the obsolescence of the Criminal, Family, Criminal Procedure and Civil Procedure, Commercial, Administrative and Financial codes, the need to make Congolese law compliant with the provisions of the OHADA Uniform Acts and the absence of a legal framework for the exercise of the profession of public accountant. The legal system is constrained by: (i) insufficiency of judicial/legal officers and their uneven geographical distribution, (ii) lack of specialization, especially in the accounting and financial domains, (iii) insufficiency and obsolescence of infrastructure, and the insufficiency of the budgetary resources allocated to Justice. As for the legal and institutional framework of the private sector, it suffers from a multitude of constraints and deficiencies, including non-compliance with the OHADA Acts, which make it unsuitable for the promotion of private initiative. 9. As concerns the fight against corruption, investigations conducted in the Republic of Congo reveal the existence of endemic corruption. There is an internal anti-corruption legal framework which was reinforced by the ratification in 2005 of the United Nations Convention against Corruption and the African Union Convention on Preventing and Combating Corruption. Two institutions have been set up by the Government to examine corrupt practices, namely the National Commission against Corruption, Misappropriation and Fraud, and the Anti-corruption Observatory. However, these institutions are not operational given their very recent creation and the insufficiency of human, financial and logistic means. A decree laying down modalities for the organization, operation and financing of the National Financial Investigation Agency (ANIF) was also issued in March 2008 by the Government as part of the fight against money laundering and the financing of terrorism. 10. The Republic of Congo does not yet have a national programme for the promotion of good governance. However, according to the Interim PRSP (2004-2007) and the full-fledged PRSP (2008-2010) the improvement of governance and the consolidation of peace and security constitute the main thrust of the Government’s strategy. The Republic of Congo’s policy of promotion of good governance seeks to: (i) improve political governance, (ii) consolidate peace and security, (iii) put in place good administrative and judicial governance, and (iv) promote better economic and financial governance.

I. INTRODUCTION 1.1 Preamble 1.1.1 The preparation of the 2008 Country Governance Profile of Congo addresses the concerns of the Government of the Republic of Congo for which the promotion of good governance constitutes the main thrust of its Poverty Reduction Strategy Paper (PRSP). Similarly, Congo has acceded to the New Partnership for Africa’s Development (NEPAD) and is preparing to participate in 2009 in the African Peer Review Mechanism (APRM) which is aimed at accelerating socio-economic development through the promotion of appropriate policies, standards and practices for democracy and good political and economic governance. It against this backdrop that the Bank Group is providing assistance towards the preparation of the Country Governance Profile of Congo, in accordance with its Strategic Directions on Governance and the Fight against Corruption in Africa. 1.1.2 Indeed, having learned lessons from the implementation of the Bank Group Policy on Good Governance prepared and implemented as from 2000, the Bank has refocused its support to Regional Member Countries on the following four pillars: (i) strengthening of budgetary control and monitoring institutions; (ii) prevention of corruption and wastage in the infrastructure sector, through increased support to the procurement systems in force in the countries; (iii) enhancement of capacities, transparency and accountability with respect to financial governance, especially in natural resources management; and (iv) promotion of international and regional charters, standards and codes likely to contribute to the strengthening of financial governance. The objective of such refocusing of the activities of the Bank is to help meet the three major challenges which are: (i) improvement of the vision and leadership as regards governance; (ii) the putting in place of stronger institutions focused on the inclusion of non-State actors, and (iii) building of African capacities. 1.2 Country Context 1.2.1 Since 1993, the Republic of Congo has been facing problems of political governance against a backdrop of the struggle for the control of the exploitation of its natural resources, in particular oil, by the various political factions. The struggle degenerated into internal wars in 1993, 1997, 1998/99 and 2001/2003 leading to the destruction of the country’s economic, administrative and social infrastructure. The period of conflict resulted in the decline of per capita income and the worsening of the incidence of poverty, the deterioration of the public debt profile as well as of the social indicators in the areas of health, education and human development. Peace was gradually restored as from the Year 2000 cease-fire and the March 2003 peace agreement. A constitutional referendum was organized in January 2002, followed by presidential, legislative, local and senatorial elections from March to June 2002. Peace building, the putting in place of a post-conflict program backed by the Republic of Congo’s key partners and the rise of oil prices contributed to economic recovery and the improvement of macroeconomic indicators during the 2004-2006 period enabling the country to reach the decision point of the HIPC initiative in March 2006. 1.2.2 Despite this recent progress, the country’s development remains constrained by numerous governance-related challenges which are impeding progress towards the completion point of the HIPC initiative. Efforts have been made as regards oil sector transparency (joining in 2004 by Congo of the Extractive Industries Transparency Initiative, certification of oil receipts and audits of the accounts of oil companies since 2003); however,

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major challenges remain as regards putting in place the rule of law and reform of the legal and judicial system, accountability, combating corruption, and participation. As regards accountability, these challenges result from the weaknesses of the public finance control mechanisms, of control bodies and political accountability and those of the organizational structures of civil society and NGOs with regard to participation. 1.2.3 The purpose of this study, which falls within the framework of the actions undertaken by the Government and Bank policy on good Governance, is to conduct a diagnosis of the status of Governance, identify the major related constraints and highlight in the form of recommendations, the broad outlines of a good governance policy that would significantly contribute to poverty reduction in Congo. However, the idea is not to draw up an exhaustive list of Governance problems in Congo. The study rather seeks to further analyze certain specific issues selected on the basis of discussions with the Congolese authorities, the results of the Congolese Household Survey conducted in 2005 (ECOM 2005) and the strategic thrusts of the 2008-2010 PRSP. The conclusions presented are therefore not final, taking into account the selectivity of the subjects covered, the insufficiency of existing data and the limitations of the techniques (questionnaires) used. They do, however, constitute a non-negligible basis for guiding the important debate on alternative scenarios for a medium and long-term vision of Governance and poverty reduction issues in Congo. 1.2.4 The Governance Profile is the outcome of work jointly carried out by the Congolese authorities and the Bank team. It was prepared in collaboration with the ACBF and UNDP following a Bank mission to Brazzaville, Republic of Congo, from 7 to 21 April 2008. A questionnaire was drawn up for this purpose and was used as framework for the discussions with the political authorities, senior officials of the administration, representatives of the private sector and employers' organizations, civil society and other development partners of the Republic of Congo. The report focuses on the following five areas underpinning Bank policy on good governance: accountability, transparency, participation, judicial and legal reforms and the fight against corruption. The Country Governance Profile also focuses on efforts aimed at mitigating the governance deficiency-related risks for the country’s development objectives and for Bank interventions. II. DIAGNOSIS OF GOVERNANCE 2.1 Governance and Accountability

Political Accountability and Obligation to Render Account 2.1.1 The Constitution of 20 January 2002 provided Congo with an institutional framework characterized by a strict separation and balance of the executive, legislative and judicial powers: "The President of the Republic cannot dissolve the National Assembly" and " the National Assembly cannot dismiss the President of the Republic” no more than can the judicial power encroach upon the powers and duties of the executive power or those of the legislative power". The Constitution of 20 January 2002 also envisages mechanisms of control and accountability (question time, written questions, oral questions, topical questions, committee hearings and parliamentary inquiries) of the Executive by Parliament (National Assembly and Senate). It proclaims the independence of the judiciary whose judges are, in principle, subject only to the authority of the law. However, as in most French-speaking countries, the Conseil Supérieur de la Magistrature (Higher Judicial Council); which is the guarantor of the independence of the judges is chaired by the President of the Republic, the

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Graph 1: Political Context

Politicaly Stability

Civil LibertyPolitical Rights

Congo Sub Sahara

Chief Executive. Judicial power is exercised by the Supreme Court, the Audit and Budgetary Discipline Court, Courts of Appeal and other national courts. The Constitutional Court, whose functions are incompatible with those of the Government, Parliament and the Supreme Court, is responsible for ensuring the constitutionality of laws, international treaties and agreements. Lastly, the President of the Republic, ministers and members of the National Assembly and the Senate may be tried before the Court of Impeachment in the event of high treason and for crimes and offences committed in the exercise to their functions. The Constitution of 20 January 2002 thus has a whole set of formal and appropriate mechanisms of control and political accountability. 2.1.2 In practice, there are still discrepancies between the official texts on legislative and judicial controls. The insufficiency of the human (in terms of staffing and training), logistic and financial resources placed at the disposal of the legislative power and the judicial power limit the effectiveness of their actions as regards accountability of the executive power. The Technical Commissions of the Parliament face difficulties preparing the reports for Parliamentary plenary sessions and do not have the information enabling them to make in-depth analyses of the choices of the Government. The Commissions also suffer from the insufficiency of human and material resources that would enable them to carry out an effective control of the complex specific issues relating to debt, loan agreements, oil and mining contracts, environmental issues etc. 2.1.3 Political accountability requires developing the institutional, human (in terms of staff strength and training), financial and logistic capacities of Members of Parliament (National Assembly and Senate), of the structures in charge of the judicial power (Constitutional Court, Supreme Court, Audit and Budgetary Discipline Court, Courts of Appeal and other courts), as well as political parties in order to foster better ownership of the principles of democracy and separation of powers.

Accountability and Obligation to Render Account in Public Sector Management 2.1.4 As concerns the management of the administration and the public service, accountability of the public administration and its contribution to the obligation to render account depend on the quality of management of State personnel, the efficiency and competence of civil servants and other employees, and the effectiveness of the services provided to users. Regarding the management of State personnel, the Congolese administration is constrained by deficiencies marked by the use of ill-suited instruments, insufficiency and inappropriateness of the organic laws and regulatory texts of the majority of the Ministries in relation to their missions and current objectives. Staff management is done manually, making it difficult to coordinate between the name files of government employees and the payroll file of the services in charge of payment. Such manual management makes the Directorate-General of the Civil Service and the General Inspectorate of Services unable to effectively control and supervise recruitments which are in certain cases carried out by various ministries with ex post-regularization by the Civil Service. Concerning the efficiency

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Graph 7: Governance (Score 0-3)

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0.5

1.0

1.5

2.0

2.5

3.0

Government Effectiveness

Voice and Accountability

Corruption Perception

Rule of Law

Congo Sub Sahara Highest Africa

D. Management of Public Sector and Institutions Ownership rights &Rules based on

governance

Quality of budgeting& Financial Management

Effectiveness of revenue mobilization

Quality of

Public Administration

Transparency,accountability &corruption in thePublic sector

Congo Africa

and competence of the government officials, they have for long been affected by demotivation as a result of the freezing of the financial impact of advancements since 1994 leading to a loss in the purchasing power of civil servants, logistic problems (insufficiency of buildings and equipment), lack of a method of systematic evaluation of the performance of State employees in order to promote them, and lack of training and retraining schemes. 2.1.5 Furthermore, the Congolese civil service is ageing and is characterized by slowness of administrative procedures and weakness of the operational relations between departments. These constraints have led to low efficiency and productivity of the services provided to users. In a bid to meet these challenges, a Directorate General for State Reform has been set up. Its main role is to formulate and implement a National State Reform Plan. As part of efforts to improve the quality of management of the administration, there are plans to computerize the Central Civil Service records and unify them with the payroll file. Also, there is ongoing consideration, with support from the French Cooperation, of the reform of the legal framework (Act 021/89 concerning Reform of the General Orders of the Civil Service) governing the employment of State employees. The Government also plans to change the recruitment system by generalizing competitive examinations and implementing an incentive programme likely to encourage voluntary and early retirement. On the whole, the success of the civil service and State reform will depend on the technical assistance mobilization efforts to build the capacities of the Directorate General of State Reform and on the State’s commitment to the said reform. 2.1.6 Accountability for public finance management is ensured by the internal and external control bodies. Ex ante internal administrative control is the responsibility of the Directorate-General of Financial Control (DGCF) and the Directorate-General of the Budget (DGB), while ex post internal control is that of the General Inspectorate of Finance (IGF). The Audit and Budgetary Discipline Court on the one hand, and the Economy and Finance Commissions of the National Assembly and the Senate on the other hand deal with external controls. The General State Comptroller, who is under the Head of State, oversees all the controls of the Executive. The control of revenue collected (by the Directorate-General of Taxes–DGI- and the Directorate-General of Customs and Indirect Duties –DGDDI -) is carried out by the Directorate-General of the Treasury. In fact, the duties validated by the DGI and the DGDDI are collected directly by a Treasury revenue collector and transferred daily to the Treasury. The reorganization of the Directorate-General of Taxes in 2004 has improved its efficacy and performance in the collection of non-oil revenue even if efforts are still required concerning the forestry tax system.

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2.1.7 The obligation to render account was impeded during the 1992-1999 period, marked by political conflicts, due to the disorganization of the administration and the departure abroad of many qualified civil servants. With the end of the war and the gradual return of peace, the authorities are determined to ensure accountability which is however constrained by the weakness of human, logistic, institutional and financial capacities available to public finance control bodies. Due to institutional (division of powers as regards annual programming of public investments, in particular between the Ministry of Finance and the Ministry of the Plan) and data processing constraints, the D.G.B. incurs delays in the budget preparation and implementation procedures. In addition, the wide use of special procedures (advance payments) of expenditure, the lack of a reliable computer network and of a connection between the file of public service employees and that of the payroll services, the non-representation of the Directorate-General of Financial Control on the Public Procurement Commission have affected the quality of ex ante internal control. The ex post internal control is impeded by the insufficiency of financial resources and the low quality of the human resources assigned to the General Inspectorate of Finance (IGF). The loss of the impromptu nature of controls and inspections (the failure to release the subsidy envisaged by Decree 99-202 of 31October1999 to the IGF) has also reduced the efficacy of ex post internal control. 2.1.8 The very recent establishment of the Audit and Budgetary Discipline Court, the insufficiency of human resources at its disposal, the cumulative delays of the Directorate-General of Public Accounts in preparing budget review bills have negatively impacted jurisdictional control and the parliamentary control of budget implementation. As of now, the 2002 budget review law has been submitted by the Audit Court to the Parliament and those of 2003 to 2005 are being finalized at the level of jurisdictional control. The difficulties of centralization of the accounting records due to the non-existence of a reliable data-processing network, the total non-agreement between the nomenclature of the budget estimates and that of the administrative and management accounts, the logistic problems (insufficient space in the buildings), the quantitative and qualitative insufficiency of human resources are the constraints which have slowed down the preparation of budget review laws by the Directorate-General of Public accounts (DGCP). However, the progressive acquisition of experience has enabled the DGCP to accelerate the preparation of budget review laws. Thus, as of now, the budget review laws for the years 2002 to 2005 have been submitted to the Audit and Budgetary Discipline Court and that of 2006 is being prepared. 2.1.9 The opaqueness of loan conditions and the weakness of the mechanisms of accountability as regards the contracting of loans and public debt management had resulted in debt overhang and the problem of speculative funds (vulture funds). However, the authorities have redoubled efforts in order to lay a solid basis for better accountability for the management of public finances in general and debt in particular. Efforts have been made in recent years to improve the debt profile thanks to the sound economic performances obtained between 2004 and 2006, with the relief secured from the Paris Club creditors, the interim aid under the HIPC initiative and the clearance of the domestic debt. Furthermore, Decree N° 2008-56 of 31 March 2008 on the establishment duties and composition of a National Public Debt Committee was issued to strengthen the mechanisms of accountability as regards the public debt and to prevent situations such as those created by the debts held by vulture funds. This decree was issued by the Government pursuant to regulation N° 12/07/UEAC/186/CM/15 on the reference framework of public debt and national debt management policy in CEMAC Member States. Similarly, the Government has decided that in future, the National Public Debt Committee will develop a national public debt strategy

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that is consistent with the country’s development objectives and financial capacity and will be appended to the Budget Act. That will help strengthen parliamentary control over borrowing mechanisms and conditions. With regard to public finance in general a decree of 31 March 2008 on the functional classification of State budget operations was issued, making it possible to ensure agreement between the institutional nomenclature of the budget estimates and that of budget execution for better monitoring of pro-poor expenditure. The said classification which was tested during the preparation of the 2008 Budget Bill will be applied during the preparation of the 2009 budget. 2.1.10 In practice, and despite these efforts, internal as well as external controls continue to be impeded by human, logistic, institutional and financial constraints. The majority of the staff of the control institutions did not undergo specific training in financial control before joining their respective structures. Besides the problems of qualifications, the Congolese control institutions also suffer from understaffing. The non-existence of procedures manuals also constitutes a constraint on the effectiveness of the financial control bodies. The insufficiency of vehicles, computer equipment and the weakness of the computer network, if any, make it impossible to ensure proper coordination between the various institutions and improve the effectiveness of controls. Owing to the weakness of the control bodies, the bulk of public expenditure does not go through the various controls envisaged by the normal expenditure circuit. Expenditure is thus carried out within the framework of the policy of accelerated municipalization and by the General Delegation for Major Works (DGGT), resulting in overruns of the budget estimates most often without the envisaged works and services being completed. 2.1.11 To address this situation, a Governmental Public Finance Management Action Plan (Decree N° 2008-84 of 15 April 2008) has been prepared with the support of Congo’s partners in order to build the capacities of the institutions charged with the preparation, implementation and the internal and external control of the budget. The efforts aimed at building the capacities of public finance control bodies should be geared towards: (i) rationalization of the budget processing and implementation procedure by adopting an appropriate sharing of responsibilities as regards annual programming and execution of public investments between the Ministry of Finance (DGB) and the Ministry of the Plan (DGPD) to cope with budget adoption delays; (ii) formulation of sector policies to support the preparation of a Medium-term Expenditure Framework (MTEF); (iii) building the capacities of internal (DGB, DGCF and IGF) and external (Court of Audit and Disciplinary Offences [Budget], Economy and Finance Commissions of the National Assembly and the Senate) control institutions while providing them with sufficient human, financial and logistic resources to fulfill their missions. 2.1.12 Accountability in the management of public enterprises: Public enterprises were the order of the day in the Republic of Congo prior to the advent of multi-party democracy. Thus, in 1987 during the implementation of the first structural adjustment program, there were over 100 enterprises in the public sector portfolio ,81 of which were exclusively State-owned and 15 with State participation of at least 50%. A National Audit Commission (CNC) was set up under Act 13/81 of 14 March 1984 establishing the State Enterprises Charter, and was attached thereafter to the Office of the President of the Republic by Decree N° 2005-85 of 03 February 2005. The National Audit Commission was to contribute to the accountability of State enterprises through financial auditing, operational and accounting audits and the training of staff of audited enterprises in the domains of internal audit, control of accounts and organization. However, given the poor organization of the accounting profession in the

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Ease of Doing Business

Starting a business

Dealing with licenses

Employing Workers

Registering property

Getting creditProtecting investors

Paying taxes

Trading across borders

Enforcing contracts

Closing a business

Graph : Ease of Doing Business (Rank)

Congo Sub Sahara Highest Africa

Republic of Congo, the absence of book-keeping in the majority of public enterprises and the delays in preparing financial statements, the contribution of the CNC to the obligation to render account was limited. 2.1.1.3 Following the structural adjustment programs, the portfolio of public sector enterprises was reduced in 1991 to 71, 27 of which were semi-public. To rationalize the use of the financial resources of the State, a programme of State divestiture from the productive sector was implemented between 1995 and 1999 under the oversight of the Prime Minister and under the coordination of a privatization committee with World Bank support. This policy which continued after 2000 resulted in the privatization of a number of public enterprises and the liquidation of those which were no longer viable. There are ongoing efforts to reduce the factors of inefficacy and inefficiency, especially in the sectors of water (SNDE), electricity (SNE), transport (CFCO) and telecommunications, due to the delegation of the supply of certain public services to private initiative and the introduction of a system of competition, the objective being to improve these public enterprises and prepare them for privatization or for the contracting of their management to the private sector. Accountability for the management of private enterprises of the formal and informal sector 2.1.14 Accountability of stakeholders of the private sector assumes the existence of a reliable legal and regulatory framework and efficient organization of the accounting profession, the keeping of accounts and the preparation of certified financial statements accurately reflecting the transactions and assets of enterprises. The legal and regulatory framework of private sector accounting in the Republic of Congo is governed by the provisions of the OHADA Uniform Act on the organization and harmonization of accounts. However, the non-existence of an Association of Public Accountants recognized by the authorities, the insufficiency of the financial resources and the ineffective organization of the Association of Accounting Professionals in Congo (APC) constitute constraints on the preparation of reliable financial statements. Thus, apart from the large enterprises, the majority of Congolese companies have no financial statements. This constitutes a major obstacle to accountability in the private sector. Efforts must, therefore, focus on the improvement of the institutional framework of the accounting profession, by adopting the bill on the establishment of the Association of Certified Public Accountants of Congo, improving the initial and continuing training of accounting professionals and sensitizing private sector operators to the production of accounting and financial statements. 2.1.15 In the informal sector, accountability is even more difficult on account of the informal nature of activities. However, there are ongoing efforts by the Government at the level of the diamond sector where artisanal operators obtain identification cards issued by the Directorate-General of Mining. Furthermore, the Government has a project to organize these artisanal miners into co-operatives in order to ensure their training and optimize the traceability of diamonds within the framework of the Kimberley process into which the Republic of Congo was reinstated in 2007.

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2.2 Governance and Transparency Freedom of the media and access to information 2.2.1 The freedom of information and communication as well as free access to the sources of information is guaranteed by the Constitution of 20 January 2002 which also prohibits censorship. The media freedom is based on a legal framework comprising Act 8-2001 of 12 November 2001 on the freedom of information and communication, Act 15-2001 of 31 December 2001 on pluralism in public broadcasting and the Charter of the professionals of information and communication. Organic Act 4-2003 of 18 January 2003 established an independent administrative authority, the Higher Council of the Freedom of Communication, charged with regulating the freedom of communication and ensuring the sound exercise of the freedom of information and communication. However, free access to information by the citizens is impeded by the inefficiency of the distribution system which makes it impossible to cover the entire national territory. With regard to public broadcasting, only the large urban centres are better covered. The press suffers from non-compliance with professional, ethical and deontological standards resulting in considerable drift. The inadequate training of information and communication professionals, of technical, material and financial resources, the obsolescence of equipment, the precarious working conditions and the persistence of various pressures on journalists also constitute major constraints that need to be removed in order to promote true media freedom. The sensitization of information and communication actors to compliance with professional, ethical and deontological standards, support to their training and the financial support of the State for the profession are measures which can help remove the constraints on media freedom and free access to information. Transparency and Public Procurement 2.2.2 The Procurement Code in force in the Republic of Congo was established by Decree 82/ 368 of 29 April 1982. Procurement was the responsibility of the Central Public Procurement Commission (CCMCE) supported by a technical body, the Central Public Procurement Directorate (DCMCE). A revision of the code in 2002 (Decree 2002/371 of 3 December 2002 and Decree 2003/62 of 7 May 2003 on the reorganization of the DGGT) set up, alongside the DCMCE, another technical support body known as the General Delegation for Major Works (DGGT). Public contracts in amounts less than CFA.F 500 million fall within the remit of the DCMCE while those of CFA F 500 million and above fall within the remit of the DGGT. In practice, the centralization of all the stages of the procurement process within the DGGT (bid preparation and opening, bid evaluation, control of delegated works, appeal channels, control of works implementation) have reduced the efficiency of the Congolese goods and services procurement system. Furthermore, the concern of accelerating the reconstruction of the country after the period of internal conflicts has led public procurement system officials to favour the direct negotiation procedure at the expense of competitive bidding. 2.2.3 In the majority of cases, the award of contracts bears no relation to the real capacity of the bidder to perform the contract and the contractor pre-qualification mechanism is weak. Apart from the seed money, the successful bidders who are awarded contracts lack sufficient own-funds to start performing their contracts and only do so once funds are made available to them by the Treasury, thus contravening the principle of services rendered and authorization before payment. Thus, the entire amount of the public contract is sometimes disbursed without the works having been completed. Such was the case of the works completed in

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2005 within the framework of the policy of accelerated municipalization in the Department of Likouala (Impfondo), where nearly CFA.F 67 billion was paid whereas work of an amount of more than 43 billion was unfinished. This situation occurs both at the level of DGGT and of DCMCE. 2.2.4 The poor management of projects under the oversight of the DCMCE was the subject of the Council of Ministers meeting of 30 April 2008. Efforts must be made to clarify the situation at the level of the DGGT through which the bulk of public investments pass. The low level of competence as regards procurement, the inadequacy of training and capacity building facilities, the insufficiency of specific public contracts control mechanisms and the weakness of public expenditure control bodies (Audit and Budgetary Discipline Court, IGF, DGCF, etc.) constitute the constraints which limit the performances of the Congolese public procurement system. The Country Procurement Issues Paper prepared in 2006 by the Republic of Congo with the support of the World Bank highlighted the weaknesses of the procurement system in Congo. To overcome these weaknesses, the authorities have put in place a Procurement Code Reform Committee. Transparency and Public Spending Review 2.2.5 The use of standard procedures (commitment, validation, services rendered and authorization and payment) of the public expenditure chain and the limitation of extrabudgetary expenditure and exceptional procedures help ensure, in principle, the transparency of the public spending review. In practice, the overuse of exceptional procedures, namely advance payments and cash advances do not contribute to the transparency of the public spending review in Republic of Congo. Moreover, the fact that the payments carried out within the framework of such exceptional procedures are generally neither justified, nor subject to ex post regularization by the Directorate-General of the Budget further reinforces the non-transparency of the public spending review. Transparency of the National Policies Formulation Process 2.2.6 The interim PRSP of the Republic of Congo was approved in December 2004 by the Executive Boards of the IMF and the World Bank, thus enabling the country to reach the decision point of the HIPC initiative in March 2006. However, it had the disadvantage of weak civil society and grassroots community participation in its preparation. To address this shortcoming, the Government organized participatory consultations to enable the population to be involved in the diagnosis of poverty and contribute to the formulation of strategies and priority actions to reduce poverty. Moreover, to improve the quality of the grassroots participation, training on the methodology of participatory consultations took place from 4 to 14 July 2006 in Brazzaville for central administration officials, Departmental Directors and members of 14 selected civil society platforms. This operation continued with the organization and control of the participatory consultations of grassroots communities in 44 districts and communes, 132 villages and subdistricts that is 4214 persons consulted. In September 2006, restitution and validation workshops on the outcomes of the consultations were organized in the twelve (12) Departments of the country. The reports of these workshops served as a working basis for the national workshop held in Brazzaville from the 13 to 18 December 2006. These participatory consultations helped to establish greater transparency in the preparation of the final Poverty Reduction Strategy Paper (PRSP) of the Republic of Congo and enabled civil society, grassroots communities and the private sector to gain insights into the Governmental development strategy. However, the conditions necessary for monitoring the implementation of this strategy and for the assessment of its impact have not yet been put in place by the Government.

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Transparency in Natural Resource Management 2.2.7 The Republic of Congo has made efforts as regards transparency in natural resource management by adhering formally in June 2004 to the Extractive Industries Transparency Initiative (EITI) and by certifying since 2003 the oil receipts and auditing the accounts of oil companies. The putting in place of Institutions charged with implementing the EITI, namely an Executive Committee and a Consultative Committee, during the years 2006 and 2007, enabled the Republic of Congo in 2008 to become an EITI Initiative Candidate Country. Accordingly, a three-year (2008-2010) Action plan has been prepared to: (i) identify and make available to the Executive Committee the tools necessary for the implementation of the EITI, (ii) build the capacities of the members of civil society and representatives of the State in the areas of communication and those related to mining, and (iii) prepare, publish and disseminate the EITI reports of the Republic of Congo. 2.2.8 In the meantime, the priority actions of the Executive Committee concern the development of the terms of reference and the recruitment of an independent arbitrator as well as the capacity building of the committees to better understand the problems of the oil sector and to objectively analyze transparency in oil exploitation. These problems include the assessment of the real production of oil companies compared to the declared production, improvement of transparency of oil exploration and production contracts and the revision of the contracts in order to improve the financial resources of the State. Regarding diamond mining, the reorganization of the control and certification system enabled the reinstatement of the Republic of Congo in the Kimberley process in 2007 after its suspension in 2004. Despite this reinstatement, there are still challenges to be met as concerns operationalizing the new Congolese system of diamond certification; these include, ensuring an appropriate training of the personnel involved in applying the new system and improving the identification and organization of the artisanal diamond miners into co-operatives in order to optimize the traceability of Congolese diamonds. Furthermore, to ensure greater transparency in the exploitation of forest resources, discussions are under way with the European Commission for the conclusion of FLEGT (Forest Law Enforcement, Governance and Trade) Voluntary Partnership Agreements 2.3 Governance and Participation Participation in the Electoral Process 2.3.1 The legal framework of the electoral process is organized by Act 9/2001 of 10 December 2001 on the electoral law as amended and supplemented by Act 5/2007 of 25 May 2007. These two Acts lay down the provisions common to all elections, namely: Presidential, legislative, senatorial and local. In addition, Act 9/2001 of 10 December 2001 set up an independent national commission for the organization of elections, endowed with financial autonomy (Act 5/2007). The main objective of this national commission for the organization of elections is to guarantee the impartiality, transparency and regularity of elections at all levels. Decree N°2001-587 of 20 December 2001 laying down the methods of organization and operation of the national commission for the organization of elections and the methods of designation of its members, as amended and supplemented by Decree N°2007-281 of 26 May 2007, takes into account the participation of political parties or groupings of both the majority and the opposition as well as civil society. The Members of the National Commission for the organization of elections were appointed by Decree N° 2007-287 of 31 May 2007.

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2.3.2 The National Commission for the Organization of Elections is supported by local commissions whose members are appointed from among the parties of the majority, the opposition and civil society (Order No. 5045 MATD-CAB of 9 June 2007 of the Minister of Territorial Administration and Decentralization). All the elections also saw the participation of civil society observers both national and foreign. Despite all these efforts, the current institutional capacities of the National Commission for the Organization of Elections are far from ensuring real transparency and regularity of elections. It is in this light that the observers denounced the poor organization of the legislative elections of 24 June 2007. The latter, which returned the presidential majority (125 seats out of 136), were marked by many irregularities which highlighted the administrative dysfunctions and the weakness of political governance at Congo. The country prepared the local elections of June 2008 and is about to prepare the Presidential election in 2009. Building the institutional and human capacities of the structures involved in the preparation, control, supervision and settlement of electoral disputes will help ensure equitable participation of all stakeholders. 2.3.3 Within the framework of civil society participation in decisions relating to the economic and social priorities of the government and public investment strategies, the participatory process of formulation of the full-fledged PRSP enabled an active involvement of the other government departments, civil society and development partners through direct consultations, seminar workshops, etc. Hence, in the architecture of the implementation of the PRSP, civil society is a stakeholder at the level of the National Poverty Reduction Committee (CNLP), the permanent technical secretariat, the Departmental Poverty Reduction Committee (CDLP) and the Local Poverty Reduction Committee (CLLP). Participation and Gender 2.3.4 Gender equality is enshrined in the legal instruments. The same applies to international instruments on the issue. In practice, there are discriminations in the tax laws, criminal law, social and economic rights and the family code. In addition, there are inequalities based on customs and practices such as dowry, widowhood rites, food taboos, right to succession, wife abuse and other unpunished acts of violence against women. 2.3.5 Several Non-Governmental Organizations and women’s associations have been set up and put in place, mainly in the socio-cultural domains. They have micro finance institutions intended to collect savings and grant micro-credits, in particular to women traders. These structures now constitute opportunities which enable Congolese women to take an increasingly active part in economic development actions and to ensure their own development. However, women’s representation in political, elective and administrative offices is still weak. Indeed, women occupy only eight (8) seats out of sixty (60), that is, 13.3% in the Senate; ten (10) out of a hundred and thirty-seven (137), or 7.3 % in the National Assembly; five (5) out of thirty-nine (39) in the government, that is, 12.8%; four (4) out of twenty-one (21), or 9.5% at the Supreme Court; six (6) out of thirty-six (36), i.e. 16.7% in the Court of Impeachment; one (1) out of nine (9), or 11.1% at the Constitutional

C. Social Integration Policies / Equity

Gender Equality

Use of Public Property

Strengthening of human capital

Social Security and Labour

Environmental Policy &regulations

Congo Africa

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Court; and three (3) out of eighteen (18), that is, 16.7 % at the Court of Audit and Disciplinary Offences (Budget) to give but a few examples. Furthermore, it is should be mentioned that there is no female mayor of a commune, Prefect of a Department or President of a Departmental or Communal Council. However, within the Departmental or Communal Councils, women represent 12 % of staff. In teaching, there are disparities between girls and boys which appear at various levels of education. Administrative Deconcentration and Decentralization 2.3.6 Decentralization started in Congo with Orders 16/73 and 17/73 on the establishment of people’s regional and district councils and municipal organization. It is the constitution of 20 January 2002 which laid down the key principles of decentralization in Part XVI dealing with local authorities, the objective being the full and complete participation of the people in the management of public affairs. The battery of laws and regulations indicates that at the legal level, work is completed. Article 39 of Act 3/2003 of 17 January 2003 provides that the decentralized administration shall be characterized by the free administration of authorities separate from the State, endowed with legal personality and financial autonomy and managed by elected authorities. 2.3.7 Article 1 of Act 3/2003 of 17 January 2003 determining the territorial administrative organization provides that "the territorial administrative organization shall be structured according to principles of deconcentration and decentralization". The Department and Commune are both administrative units and local authorities. The administrative units comprise the Department, the Commune, the District, the Subdivision, the urban commune, the rural commune, the subdistrict and the village. Act 11/2003 of 6 February 2003 on the special status of the cities of Brazzaville and Pointe Noire raises these cities to Departments, while being administrative districts and local authorities. 2.3.8 However, the effective participation of the population in development actions through decentralization is constrained by the slowness of the process of real transfer of authority to the local communities, due to the fact that there are no decentralization support bodies. The prerogatives recognized by the numerous legal instruments are not being granted by the State. The effective transfer of authority and human, material and financial resources to elected local authorities remain a concern. The process of decentralization deserves to be accelerated by building the capacities of elected authorities and putting in place mechanisms for the effective participation of citizens in the management of local affairs (local civil service, participation in PRSP monitoring and evaluation). Participation in the Regional Integration Process 2.3.9 The Republic of Congo is a member of the key African organizations of economic co-operation and integration including CEMAC, OHADA, and NEPAD and its African Peer Review Mechanism (APRM). The principal objective of these organizations is to stimulate, through the adoption of appropriate laws, policies, and standards and practices, political stability, good governance and economic growth, and thus accelerate sub-regional and continental integration. Within the framework of CEMAC, apart from progress regarding monetary integration, the results obtained concerning harmonization and convergence of economic policies are below expectations. The positive results obtained regarding certain convergence criteria and multilateral monitoring indicators are not irreversible and are due to spin-offs from the healthy oil situation. The persistence of intra-regional trade restrictions

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contrary to the provisions of the common external tariff, delays in the implementation of structural reforms, weaknesses of the transport system between Member States, problems of security as well as delays in preparing the APRM review report, planned for 2009, and non- harmonization of internal laws with OHADA uniform acts have limited the economic integration of the Community. 2.4 Governance, Legal and Judicial Reforms 2.4.1 The legal and judicial system suffers from inefficiency, malfunctions and the weakness of its judicial infrastructure. The legal and institutional framework of the private sector it suffers from a multitude of constraints and is not therefore conducive to the development of private initiative. The legal system of Congo is based on an array of texts divided mainly into two codes, namely: the " les Codes d’Audience"(Codes on Court Hearings) and "the OHADA Code", which is a collection of the uniform Acts resulting from the Treaty on the Harmonization of Business law in Africa, signed in Port Louis on 17 October 1993 and of which the Republic of Congo is a State Party. A diagnosis reveals at the legal level: (i) the obsolescence of the Criminal, Family, Criminal and Civil Procedure, Commercial, Administrative and Financial Codes, (ii) the non-conformity of certain provisions of Congolese law with those of the uniform acts of OHADA and the delay incurred in the drafting of the implementing texts for the uniform Acts, (iii) the absence of a legal framework for exercising the occupation of certified public accountant and (iv) non-integration into the national laws of certain ratified international instruments relating to human rights. The legal reform efforts of the Government are impeded by a lack of logistic and financial resources. 2.4.2 Within the Framework of Legal Reforms - Act 022/92 of 20August, 1992, as amended and supplemented by Act 19/99 of 15 August 1999, subject to the military and administrative tribunals, establishes the judicial map of the Republic of Congo as follows: a Supreme Court, a Court of Audit and Disciplinary Offences (Budget), 4 Courts of Appeal (Brazzaville, Pointe-Noire, Dolisie and Owando), 14 Regional Courts (TGI) 10 of which are operational, 74 District Courts (TI), only 6 of which are operational, 2 employment tribunals in Brazzaville and Pointe-Noire and 4 Juvenile courts. The Supreme Court, in principle, ensures unity in the application of legal rules. It is the highest national court and its seat is in Brazzaville. The TGI are established in the district headquarters. They are competent to hear and determine in civil matters principal, additional, counter or set-off claims. They are also competent as regards divorce, criminal and under certain conditions administrative matters. TI, which are district courts function with difficulty due to lack of premises and shortage of judges. The Congolese legal system suffers from: (i) the quantitative and qualitative insufficiency of judicial/legal officers and of their uneven geographical distribution, (ii) the lack of specialization, in particular in the accounting and financial areas, (iii) the inadequacy and obsolescence of infrastructure, and (iv) the insufficiency of the budgetary resources allocated to Justice. These constraints have affected the organizational and operational capacities of the legal system and resulted in the existence of overpopulated prisons partly filled with juvenile delinquents, extended police custody and preventive detention periods due to the lack of criminal hearings and the appearance of phenomena of corruption among the judicial personnel. 2.4.3 The legal and institutional framework for private sector development suffers from a multitude of constraints and is hence not conducive to the development of private initiative. In general, enterprises as well as private individuals, suffer enormously from the insufficiency of infrastructure, in particular as regards electric power and water supply. At the

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strictly legal level, there are still regulations in Congolese substantive law that are contrary to certain imperative provisions of the OHADA uniform Acts regarding the creation of commercial companies and exercise of business activity. At the fiscal level, the tax burden is deemed too heavy by Congolese private sector companies. Proportional tax which is applied to corporate capital transactions, constitutes a major obstacle to the development of SMEs and that of companies involved in real estate development. 2.4.4 Indeed, transactions concerning business creation, capital increase, acquisition of real property and access to land title are subject to an extremely high rate of proportional tax. In the Republic of Congo, the national and foreign investments is they private or public are regulated by Act 6/2003 of 18 January 2003 on the Investment Charter, which envisages a number of measures intended to create an enabling environment for investment. However, some entrepreneurs regret the lack of visibility of the conditions of investment in Congo owing to the presumed discriminatory application of measures of this regulation. The main obstacles of a strictly institutional nature which hinder the growth of private companies concern above all the shortcomings of business creation and project financing support structures. The private sector support structures in Congo are: the SME Development Agency (ADPME), Support and Guarantee fund (FGS), Congolese Foreign Trade Centre (CCCE) and the Business Formalities Centre (CFE). However, the actions carried out by the ADPME and the FGS, charged respectively with providing the necessary assistance to SME/SMI and guarantees for investment loans granted as well as financing of preliminary studies for their activities, remain insufficient to create the conditions for the development of SMEs in Congo. Despite the existence of a National Union of Congolese Economic Operators (UNOC) and an Employers' Federation of Private Companies (UNICONGO), the private sector also lacks a real forum for dialogue and for a more consolidated partnership with the State in order to find consensual and practical solutions to the many challenges facing private initiative in the Republic of Congo. 2.5 Combating Corruption Public Perception of the Phenomenon of Corruption 2.5.1 As part of the days of national reflection on fraud and corruption organized from 11 to 13 December 2003, a study on corruption and fraud in Republic of Congo was carried out by the Ministry attached to the Presidency in charge of State Control following a survey conducted with the financial and technical support of UNDP. This study reveals that 97% of respondents are convinced of the reality of the existence of corruption and fraud in Republic of Congo. Concerning the sources of corruption, the Customs, taxation services, the police force, the courts, education, the Treasury, public procurement and other government contracts, etc, are mentioned in descending order with frequencies ranging from 86% for the Customs to 30.1% for public procurement and other government contracts as being the worst affected by the phenomenon. The inefficacy and inefficiency of administrative controls and of the judicial system are mentioned (37.8%) as the most significant causes of the phenomenon of fraud and corruption, followed by economic causes (low wages, freezing of the financial impact of advancements, poverty, etc.) with a frequency of 33% and political causes (18%). Concerning Transparency International’s Corruption Perceptions Index (CPI) which ranks countries on a scale ranging from zero (high degree of perceived corruption in the public administration and political establishment) to 10 (low degree of perceived corruption), the Republic of Congo fell from an index of 2.3 in 2004 (114th out of 145) to 2.1 in 2007 (150th out of 179), a rating of below 3 indicating corruption perceived as endemic.

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The Legal Framework for Combating Corruption 2.5.2 The fight against corruption in the Republic of Congo is based on a legal and judicial mechanism based on the following internal legal sources: (i) Order 45 of 8 February, 1945 on the Criminal Code and its implementing decree 56 of 1 March 1956 (ii) Act 021/89 of 14 November 1989 governing the reform of the general rules and regulations of the public service, (iii) Act 9/2001 of 10 December 2001 on the electoral code, (iv) Act 1/2000 of 1 February 2000: organic law governing the State financial system, and (v) Decree 2003/327 of 19 December 2003 on the code of conduct of public employees. This internal mechanism was supplemented and reinforced by the ratification of the International Conventions on the fight against corruption: (i) the United Nations Convention against Corruption (ratified by Act13/2005 of 14 September 2005), and (ii) the African Union Convention Preventing and Combating Corruption (ratified by Act 14/2005 of 14 September 2005). The Institutions Put in Place to Examine Corrupt Practices 2.5.3 Within the framework of its anti-corruption and good governance promotion policy, the Government has set up two institutions charged with examining corrupt practices: the National Commission against Corruption, Misappropriation and Fraud, and the Anti-corruption Observatory. Established in 2004 (Decree 2004/323 of 8 July 2004), the National Commission against Corruption, Misappropriation and Fraud was reorganized in 2007 (Decree 2007/155 of 13 February 2007) and its role is to implement the Governmental anti-corruption action plan. As concerns the Anti-corruption Observatory, it is an independent organization endowed with financial autonomy, established by virtue of Act 16/2007 of 19 September 2007. It comprises 9 members representing the public administration, Parliament (National Assembly and Senate), trade unions, civil society, the private sector and the World Council of Churches. Its role is to monitor and evaluate measures to fight against corruption as well as governance reforms implemented by the Government, and more particularly those which will be contained in a government action plan which will be crafted under the oversight of the CNCCF following an independent diagnostic study on governance and corruption. In the meantime, these institutions are not operational, given their very recent creation and the insufficiency of human, financial and logistic resources. The Government will thus have to redouble efforts to operationalize the two institutions (CNCCF and the Anti-corruption Observatory) charged with fighting corruption by providing them with human, logistic and financial resources. Sanctions Designed to Punish Acts of Corruption 2.5.4 In June 2004, the Government of the Republic of Congo adopted a National Plan against Corruption, Misappropriation and Fraud. Besides the sanctions envisaged by the legal framework, this plan first of all focuses on corruption prevention mechanisms in order to: (i) restore State authority and improve human resources management, (ii) reinforce the State audit system, internal administrative controls, external controls (judicial and parliamentary) and international co-operation on combating corruption. Concerning the sanctions envisaged by the legal framework of the fight against corruption, they are criminal, administrative, electoral and financial. Corruption, fraud, misappropriation and like offences are punished in the Republic of Congo by the penal measures envisaged by Order 45 of 8 February 1945 on the Criminal Code and its implementing Decree 56 of 1 March 1956. Moreover, public employees are subject to the code of conduct of State employees the non-

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observance of which is punishable by administrative measures, namely warning, reprimand, assignment change, automatic transfer, temporary expulsion, loss of advancement rights, reduction in grade, demotion and dismissal. Regarding cases of holders of public funds convicted for embezzlement, fake certificates, corruption and influence peddling, Act 9/2001 of 10 December 2001 on electoral law prohibited their registration on the electoral roll. Several other legal instruments ensure the protection of the financial interests of the State against fraud through financial measures. Fight against Money Laundering and the Financing of Terrorism 2.5.5 In 2003, CEMAC adopted a regulation on the prevention of and punishment of money laundering and the financing of terrorism in Central Africa. A Government Decree issued on 31 March 2008 laid down the methods of organization, operation and financing of the National Financial Investigation Agency (ANIF) created by CEMAC for the implementation of this regulation at the national level. The efforts now required concern the appointment of the members of ANIF and the practical organization of their mission. III. PRIORITY AREAS AND RECOMMENDATIONS FOR STRENGTHENING GOOD GOVERNANCE 3.1 Need to Provide the Country with a Coherent Good Governance Strategy 3.1.1 The Republic of Congo does not yet have a national programme on good governance promotion. However, in the final Poverty Reduction Strategy Paper, the main thrust of the Government strategy is the improvement of governance and consolidation of peace and security. The good governance promotion strategy of the Republic of Congo focuses on: (i) improvement of political governance, (ii) consolidation of peace and security, (iii) establishment of good administrative and judicial governance, and (iv) the promotion of better economic and financial governance. 3.1.2 The above factors stemming form the strategic thrust of the PRSP as regards governance, combined with this diagnosis could be used to prepare an orientation document for the development of the National Good Governance Programme for the Republic of Congo. This orientation document will specify the themes and thematic groups that will contribute to the formulation of a programme. A steering mechanism for the development of the programme should be established in order to ensure its supervision and coordination. 3.2 Priority Areas to Improve Governance in the Republic of Congo 3.2.1 At the level of political accountability, the Congolese institutions have appropriate mechanisms. Efforts must be geared towards training political actors and providing them with sufficient means for better ownership of democratic principles, in particular the separation and balance of powers, in order to facilitate political accountability. 3.2.2 Regarding accountability in public sector management, improving the effectiveness of civil service management and the competence of State employees is the key to public sector accountability. A national State reform Plan that takes into account, besides computerization of the State employees’ file, the training and retraining civil servants and improvement of their working conditions, constitutes an essential tool for attaining this objective.

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3.2.3 With regard to public finance management, the rationalization (proper sharing of responsibilities between the DGB and the Ministry for the Plan as regards the programming of public investments) of the budget-making procedure and the strengthening of internal and external control institutions constitute essential measures to avoid delays in the adoption of budget laws and to improve accountability for the management of the financial resources of the State. Furthermore, building the capacities of both internal (DGB, DGCF and IGF) and external (Court of Audit and Disciplinary Offences [Budget], Economy and Finance Commissions of the National Assembly and the Senate) institutions will make it possible to provide them with adequate human resources (including training) as well as adequate financial and logistic resources to fulfill their missions. The preparation by the National Public Debt Committee of a National Public Debt Strategy consistent with the country’s development objectives and financial capacity and appended to the Budget Act will help improve parliamentary control over loan mechanisms and conditions. 3.2.4 Concerning transparency, the strengthening of the freedom of information and communication, the maintenance of dialogue with the World Bank for the adoption of a new Public Contracts Code and the continuation of efforts to improve transparency in natural resources management constitute are crucial to the policy of promotion of transparency and good governance in the Republic of Congo. 3.2.5 As regards participation, building the institutional and human capacities of the structures involved in the preparation, control and supervision, of the electoral process and disputes will help ensure the equitable participation of all stakeholders. Efforts must also focus on building the organizational capacities of civil society and the development and implementation of a true strategy of gender equity. Building the capacities of the services in charge of decentralization and the transfer of authority and human and financial resources to the local authorities will help increase their participation in the country’s development. 3.2.6 As for the legal and judicial reforms, building the financial, human and logistic capacities of the judicial system is a prerequisite for proper consideration of the formulation of a Legal and Judicial Reform Programme taking into account all the malfunctions diagnosed. 3.2.7 Finally, with regard to combating corruption, building the capacities of the National Commission against Corruption, Misappropriation and Fraud, and of the Anti-corruption Observatory, as well as the conduct of an independent inquiry on governance and corruption and the development of a new national action plan against corruption are essential to bolster the fight against corruption. 3.3 Areas of Donor Intervention 3.3.1 The African Development Bank (ADB) Group supports the Government’s Public Finance Management Action Plan through the Expenditure Circuit and Poverty Indicators Improvement Support Project (PACDIP) financed by a grant of the African Development Fund (ADF) in an amount UA 2.55 million. This purpose of this project is to: (i) rationalize the preparation and implementation of the State budget; (ii) strengthen the internal and external budget execution control structures, and (iii) improve the monitoring and evaluation of the impact of budgetary expenditure on poverty reduction. PACDIP will provide the Government with the computer and office automation equipment necessary for the

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computerization of the expenditure circuit, and consultancy services and training. The consultants to be recruited will support: (i) the Directorate-General of the Budget in programming budget execution, (ii) Directorate-General of Financial Control in auditing the State financial system. The training services will contribute to building the capacities of budget programming, and execution, and internal audits and controls of the financial accounts of the State and the public bodies. 3.3.2 The interventions of the European Union in the field of governance fall within the scope of EDF 10 (2008 – 2013) and concern: (i) the governance of public finance, (ii) economic and commercial governance, and (iii) governance of forests and protected areas. The actions adopted under EDF 10 are supported by a National Indicative Programme of €85 million. 3.3.3 The UNDP is preparing, as the area of intervention within the framework of the 2009 – 2013 Country Program Paper for the Republic of Congo, the promotion of good governance, the promotion of democratic governance and the consolidation of peace. The actions adopted concern: (i) support to the electoral process, (ii) support to State reform, (iii) support to democratic institutions, (iv) the fight against corruption, (v) support to the decentralization process, (vi) promotion and protection of human rights, and (vii) building media capacities. 3.3.4 The World Bank is supporting the Government in its policy of good governance promotion through a Transparency and Governance Capacity Building Project (PRCTG) approved in February 2002 and restructured to be closed on 30 June 2010 in order to support the implementation of the Action plan for the fulfilment of the conditions for reaching the HIPC initiative completion point. The Project thus revised aims to strengthen good governance and transparency by improving the efficacy of the management of public finances and the oil sector; it introduces a new component intended to provide financial support to the Government’s efforts in combating corruption, through the National Commission against Corruption, Misappropriation and Fraud (CNCCF) charged with implementing the anti-corruption plan, and the Anti-corruption Observatory, an independent body charged with the monitoring and evaluation of the progress made in the fight against corruption. As regards improvement of the efficacy of public finance management, the priority actions of the PRCTG are efficacy in the management of public investments, reform of the public procurement code, and improved management of the wage bill through the computerization and unification of the files of the civil service and the payment services. 3.4 Potential Areas of Intervention of the African Development Bank Group 3.4.1 On the basis of the diagnosis and assessment of the actions aimed at improving governance in Republic of Congo, the following areas can be considered priorities: (i) improved efficacy of public finance management by strengthening the control of the financial commitments of the State, (ii) reform of the public procurement system and clarification of the role of operational bodies, (iii) improved transparency in natural resource management through the establishment of a formal framework taking into account the management of all natural resources, and (iv) promotion of the private sector and improvement of the business environment. 3.4.2 These areas are in conformity with the priorities identified within the framework of the diagnosis as well as the Bank’s Strategic Directions on Governance and the Fight against

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Corruption in Africa during the period 2008-2010. More specifically, the Bank could, in addition to its support within the framework of PACDIP to the Governmental Public Finance Management Action plan, provide assistance in the following areas: (i) development of a National Good Governance Programme (PNBG), (ii) implementation of the Three-year Action Plan (2008-2010) of the EITI Executive Committee, (iii) the project of identification and organization of the artisanal diamond miners into co-operatives, (iv) with a view to adopting a new Public Procurement Code, support to the development of the standard document, procedure manuals and guidelines, and to the sensitization of State actors, civil society, the private sector, NGOs and external partners on its contents and implementation; and, support to the structures charged with private sector promotion. IV. RISKS RELATED TO GOVERNANCE SHORTCOMINGS 4.1 Governance shortcomings constitute risks for the country’s development objectives and for Bank interventions. The key risks currently impeding the development of the Republic of Congo are: (i) the weakness of the institutional and human capacities of public services, and the resulting weak ownership of the ongoing reform process; and (ii) risks of political and social instability. 4.2 The long period of conflicts from 1993 to 1999 generated an almost complete disorganization of the administration with the departure of many qualified staff and the weakening of the State’s capacity to provide effective public services. The efforts made with regard to economic and social recovery by the Congolese authorities since the end of the conflicts have nevertheless enabled the Republic of Congo to reach the decision point of the HIPC initiative in March 2006. However, the weakness of the institutional and human capacities and the low level of ownership of the structural reforms account for the delay in fulfilling the conditions for reaching the completion point. 4.3 With a view to correcting the weakness of capacities and the low level of ownership of reforms, there are ongoing efforts to build human and institutional capacities by the authorities with the support of various partners. Thus, within the framework of the 2008 staff-monitored program (1 January – 30 June 2008), a new political monitoring and evaluation committee supervised by the Presidency of the Republic was created to improve the ownership and performances of the new program with the support of the IMF and the World Bank and a technical monitoring committee headed by a special adviser to the President. Concerning Bank interventions, an increase in training activities and supervision missions will help mitigate the risks related to ignorance of the procedures. Furthermore, the firm determination of the Government to enhance democratic and political governance and consolidate peace and security with the support of partners will help reduce the risks of political and social instability. V. CONCLUSIONS AND RECOMMENDATIONS 5.1 Conclusion This diagnosis has revealed as the major cause of governance shortcomings the weakness of institutional and human capacities, resulting in delays in the achievement of the country’s development objectives. Building the capacities of the structures charged with implementing the reforms necessary for good governance promotion remains crucial to the success of Congo’s development policy. To that end, the Government must necessarily

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pursue and accelerate ongoing reforms, in particular those seeking to: (i) strengthen transparency in the exploitation of natural resources, (ii) reform the public procurement system, (iii) rationalize budget preparation and implementation, and (iv) strengthen internal and external controls for better accountability. The implementation of the actions contained in the matrix of actions and monitoring indicators will help build the capacities of the structures involved in the implementation of these reforms. The development of a National Good Governance Programme will make it possible to take into account all the shortcomings and malfunctions noted and provide suitable solutions to them. 5.2 Recommendations 5.2.1 For the Government:

(i) Pursue and accelerate ongoing reforms, in particular those seeking to strengthen transparency in the exploitation of natural resources, reform the public procurement system strengthen control of the financial commitments of the State and promote the private sector and improve the business climate;

(ii) Implement the actions contained in the matrix of actions and monitoring

indicators; (iii) Put in place thematic groups and structures for the coordination and

supervision of the formulation of a National Good Governance Programme based on the strategic thrust of the PRSP as regards governance and the outcomes of this governance diagnosis.

(iv) Prepare a National Good Governance Programme.

5.2.2 To the Bank:

(i) Initiate dialogue with the Government in order to assist it in the implementation of reforms aimed at strengthening transparency in the exploitation of natural resources, reforming the public procurement system, strengthening control of the financial commitments of the State, promoting the private sector and at improving the business climate;

(ii) Initiate dialogue with the Government with a view to supporting the

formulation of a National Good Governance Programme; (iii) Strengthen partnership with the ACBF and UNDP for support in formulating

the National Good Governance Programme of the Republic of Congo; (iv) Initiate dialogue with the other partners to develop synergy between the

potential areas of governance that can be supported by the Bank.

Annex I Page 1 of 3

REPUBLIC OF CONGO: COUNTRY GOVERNANCE PROFILE: MATRIX OF ACTIONS AND MONITORING INDICATORS

Areas Objectives Actions Monitoring Indicators I. Governance and Accountability To improve accountability 1.1 Political Accountability

To build the capacities of Members of Parliament (National Assembly and Senate) and strengthen control of the action of the Government by Parliament

Organize training seminars for Members and civil servants of Parliament (National Assembly and Senate) on the budget circuit, the standards of parliamentary control of the State budget as well as training on complex specific issues relating to debt, oil, and mining contracts and the environment. Strengthen collaboration and exchange of information between the Economy and Finance Commissions " EFC " of Parliament and financial services

�Number of seminars organized on the budgetary circuit and parliamentary control during a parliamentary term. �Number of seminars organized on specific questions relating to debt, oil and mining contracts and the environment during a parliamentary term. �Number of reports of control of administrative structures (IGF, DC, IGE) transmitted to the EFC of Parliament

1.2. Accountability in public sector management

To ensure efficient State administrative and financial management

Revise Act 021-89 of 14 November 1989 governing the general civil service rules and regulations and the collective bargaining agreement of 1 September 1960. Promulgate this law and issue the necessary implementing texts.

�Adoption and enactment of the new law on the revision of the general public service rules and regulations and the collective bargaining agreement of 1 September 1960 �Instruments of implementation of the new legal framework of state employees available

1.2.1. Management of the Civil Service To improve efficiency of the management of the civil service and public services

Computerize the public service file and unify it with the payroll file

Single computerized file available

1.2.2. Management of public finance To strengthen accountability in the management of public funds

Build the capacities of control bodies both internal (DGCF, DGB, IGF) and external (Court of Audit and Disciplinary Offences [Budget], Economy and Finance Commissions of the National Assembly and the Senate)

�Number of human resources trained in budgetary programming and execution �Number of human resources trained in internal control and auditing of the financial accounts of the State and public bodies �Reduction of the number of budget review laws adopted by the Audit Court and Parliament belatedly �Application of Decree N° 2008-56 of 31 March 2008 on the creation and duties of the National Public Debt Committee

1.2.3. Management of public enterprises To strengthen accountability in the management of public enterprises

Build the institutional and human capacities of the National Audit Commission

�Number of public enterprises audited by the National Audit Commission per year �Number of personnel of public enterprises companies trained by the CNC per year

1.2 Management of private enterprises To strengthen accountability in the management of private enterprises

Improve the legal, institutional and accounting environment of private enterprises. Building the capacities of the structures in charge of supporting the private sector. Put in place mechanisms for dialogue and consultation between the Authorities and organizations supporting the private sector

�Bill on Establishment of the Association of Certified Public Accountants of Congo passed and enacted �The trades chambers and employers' organizations and public structures of support to SME/SMI are reinforced �A public/private sector consultation Unit is set up and strengthened

Annex I Page 2 of 3

Areas Objectives Actions Monitoring Indicators

II Governance and Transparency To improve the visibility of the policies of the authorities 2.1 Access to information To improve access of the public to information Build the human and financial capacities of professionals of

information and communication Support to the ministries of the economic and financial sector for the publication of annual reports

�Number of sensitization and training seminars on standards, ethics and deontology of the profession organized �Annual reports of ministries published on the Government Web site

2.2. Public contracts To establish greater transparency in the public procurement system

Adopt new laws and regulations guaranteeing the transparency of public contracts and competition between contractors. Build public procurement capacities

�New contracts code adopted �Standard documents, manuals of procedures and directives prepared �A national strategy of capacity building in procurement is developed

2.3 Public Spending Review To streamline the public expenditure chain Build the capacities of the structures in charge of budget preparation and execution. Improve budget estimation and monitoring. Reduce extra-budgetary expenditure, advance payments and payments from imprests

�The training of personnel of the Directorate-General of the budget on the functional nomenclature and the medium-term expenditure framework is carried out �The public expenditure execution chain is simplified and computerized �The amount of advance payments and those from cash advances per year

2.4 National policies formulation process To improve transparency in the process of formulation and monitoring of national policies

Establish an institutional framework of coordination of public policies Build the capacities of the public structures to monitor and evaluate the PRSP outcomes. Ensure the participation of representatives of civil society, private sector and grassroots communities in theme groups

A Decree is issued and published for the creation of the framework A training plan prepared and implemented for the benefit of the CNLP, STP, CNSEE, DGPD and the poverty Observatory Number of representatives belonging to the thematic groups

2.5 Natural resources To improve transparency in the management of natural resources

Establish an institutional framework and build the capacities of the structures in charge of implementing the EITI Coordinate and mobilize the other stakeholders of the process

�The instruments and operating procedures applicable to the EITI structures in Congo are prepared and the executing agencies are functional ��he three-year action plan and a communication strategy is prepared �Training seminars and workshops are organized for members of EITI Executive Committee and other members of EITI Committees. �EITI annual report 2007 et seq. are drawn up and published regularly �Voluntary Partnership Agreement signed between Congo and the EU

III Governance and participation 3.1 Participation in the electoral process To make the process equitable for all stakeholders Build the institutional and human capacities structures charged with

the preparation, control and supervision of elections, and those of the institution in charge of electoral disputes

�Members of these structures trained · Amount of human, logistic and financial resources made available to them

3.2 Participation of civil society To improve civil society participation in the decision-making process

Build the organizational capacities of civil society Project of support to the organization of the civil society formulated and implemented

3.3 Participation and gender To increase women’s empowerment and participation in decision- making

Develop and implement a real strategy of gender equity �Number of women occupying decision-making positions �Financial resources available for the implementation of the

Annex I Page 3 of 3

Areas Objectives Actions Monitoring Indicators

strategy 3.4 Decentralization and deconcentration

To improve the participation of local authorities Build the capacities of the services in charge of decentralization and complete the transfer of authority and resources to the local authorities

�Human resources provided to the local authorities �Number of leaders of local authorities trained �Amount of financial resources transferred to the local communities

IV Legal and judicial reforms To improve the efficacy of the legal and judicial system

Build the human, financial and logistic capacities of the Ministry of Justice and the judicial system Prepare a programme of reforms of the legal and judicial system

�Increase in personnel �Personal trained �Amount of budget adopted and disbursed �Report on the programme of reforms of the legal and judicial system available

V Combating corruption To operationalize the anti-corruption institutions

Provide human, financial and logistic resources to the National Commission against Corruption, Misappropriation and Fraud and the Anti-corruption Observatory. Conduct a survey on governance and corruption Prepare a new national anti- Corruption action plan

�Budgets of the CNCCF and the Observatory adopted and disbursed �Personnel assigned to these two institutions �Final report of the results of the survey available �New national anti-corruption plan available

ANNEX II CHRONOLOGY OF KEY POLITICAL MILESTONES SINCE INDEPENDENCE 1960 Congo becomes independent with Fulbert Youlou as President. 1963 President Youlou is forced to resign following social unrest: Alphonse Massamba-Debat becomes President and Pascal

Lissouba, his Prime Minister. 1968 President Massamba-Debat is toppled by a coup d'etat by Marien Ngouabi, who maintains socialism but creates his own

party, Parti Congolais du Travail (PCT). 1970 President Ngouabi proclaims the People’s Republic of Congo of Marxist allegiance, with the PCT as the single party. 1977 President Ngouabi is assassinated in a plot fomented by Massamba-Debat, who, in his turn, is executed; Joachim

Yhombi-Opango becomes President. 1979 President Yhombi-Opango hands over power to the PCT, which chooses Denis Sassou Nguesso as successor. 1990 The PCT gives up Marxism 1992 The people approve a new Constitution establishing multiparty politics; Pascal Lissouba wins the primaries and is

elected President. 1993 Following disputes concerning the legislative elections, a bloody conflict breaks out between the governmental forces

and the opposition. 1994-95 A cease-fire takes place between the Government and the opposition; posts are allotted to the opposition in the

Government. 1997 Civil war breaks out; the pro-Sassou forces backed by Angolan troops take Brazzaville, the capital, and Pascal Lissouba

goes into exile. 1999 The Government and the rebels sign a peace agreement in the Zambian capital, Lusaka, which allows the opening of

dialogue, demilitarization of the parties in conflict and the reintegration of rebels in the security forces of the country. 2001 Apr. The peace conference ends in the preparation of a new Constitution which should be put to referendum by year end,

thus paving the way for presidential and legislative elections. 2001 Sep. The transitional Parliament passes the Constitution bill. Some 15000 militiamen are disarmed through the money-for-

weapons program. 2001 Dec. President Pascal Lissouba is accused of high treason and gross corruption, and is sentenced in absentia to 30 years’

imprisonment with hard labour by the Brazzaville Court of Impeachment. 2002 Jan. During the referendum, 80 percent of the voters decide in favour of amendments reinforcing the presidential system. 2002 Mar. Sassou Nguesso wins the presidential elections in which his key rivals do not take part. Heavy fighting follows in the

Pool region between the government and rebels- "Ninjas"- named after the famous Japanese warriors, causing thousands of civilians to flee. These “Ninjas” claim to be followers of former Prime Minister Bernard Kolelas, and are led by Pasteur Toumi.

2002 June The governmental troops emerge victorious over the rebel "Ninjas" in Brazzaville. This unusually fierce fighting which Brazzaville had not seen for some years claimed approximately a hundred lives.

2003 Mar. 2005 January 2005 October 2005 December 2007 February 2007 April 2007 June/August

The Government signs a peace agreement with the Ninja rebels putting an end to armed conflicts in the Pool region. Pasteur N’Toumi puts an end to the hostilities, allowing the return to constitutional order. Cabinet reshuffle with the appointment of a Prime Minister (a position not provided for by the Constitution)

By-elections to fill seats in the Senate, in accordance with the 2002 Constitution.

Enactment of an amnesty law for the benefit of the former Prime Minister Bernard Kolélas one of the leading opposition figures

The Head of the main armed rebel movement, Fréderic Bitsangu, alias Pasteur Ntumi, decides to transform his armed movement into a political party and fails to win the 2007 legislative elections. President Dénis Sassou Nguesso and the former Prime Minister Bernard Kolélas conclude an electoral agreement for legislative elections The organization of legislative elections which returned the presidential majority (125 seats out of 136), was marked by irregularities highlighting administrative dysfunctions and the weakness of political governance in Congo. The electoral calendar envisages a presidential election in 2009.

Annex III Page 1 of 2

List of Documents Consulted

1. Bank Group Policy on Good Governance (ADB/ADF, November 1999) 2. Country Governance Profile Evaluation (CGP) ; Checklist/Questionnaire Guidelines for Staff (ADB/ADF, February 2004) 3. African Development Bank’s Vision – Plan of Action for a Reinvigorated Bank 4. Republic of Gabon: - Country Governance Profile (ADB/ADF, October 2005) 5. Republic of Senegal: - Country Governance Profile (ADB, March 2006) 6. ADB Governance Strategic Directions (2008 – 2010), (ADB/ADF, 2008) 7. New Partnership for Africa’s Development (October 2001, www.nepad.org ) 8. Republic of Congo – Consultations under Article IV for 2007 (IMF Report 07/205,

June 2007) 9. Republic of Congo – Report on Progress made towards meeting the conditions for

reaching the completion point of the Heavily Indebted Poor Countries Initiative (IMF Report 07/215,, June 2007) 10. Republic of Congo – Staff-Monitored Programme 2007 IMF Report 07/242, July

2007) 11. Republic of Congo – Statistical Appendix (IMF Country Report, n° 07/207) 12. Republic of Congo – Staff Monitored Program – Letter of Intent – Memorandum

of Economic and Financial Policies, (IMF, March 27, 2008) 13. Republic of Congo – Results-based Country Strategy Paper (2005 – 2007)

(African Development Fund) 14. Republic of Congo – Results-Based Country Strategy Paper (2008 – 2012)

(ADB/ADF, December 2007) 15. Republic of Congo – United Nations System in Congo: Country Report on the

Millennium Development Goals 16. Republic of Congo – European Community: Country Strategy Paper and

National Indicative Programme for the 2008 – 2013 Period 17. The World Bank : Project Paper on a proposed additional financing (grant)... to the

Republic of Congo of a Transparency and Governance Capacity Building Project (March 26, 2007)

Annex III Page 2 of 2

18. UNDP – Brazzaville : Country Program Paper for the Republic of Congo, 2009 – 2013

19. ADB/ADF – Republic of Congo Expenditure Circuit and Poverty Indicators

Improvement Support Project (PACDIP) (Appraisal Report, December 2006) 20. République du Congo – Cour des Comptes et de Discipline Budgétaire : Rapport

sur le contrôle de l’exécution de la loi des finances en vue du règlement du budget de l’Etat exercice 2002

21. République du Congo : Evaluation Intégrée de la Gestion des Finances Publiques

et de la Passation des Marchés (June 2006) 22. World Bank: Country Procurement Issues Paper – CPIP) – Republic of Congo

(June 2006) 23. Republic of Congo: Constitution of 20 January 2002 24. République du Congo – Conseil Supérieur de la Liberté de Communication : Recueil de textes législatifs 25. République du Congo : Les Lois sur la presse au Congo (Institut Panos – Paris,

2004) 26. Extractive Industries Transparency Initiative (EITI) : Three-Year Action Plan (2008 – 2010) of the EITI Executive Comittee for the Republic of Congo 27. FLEGT – Information Note 1 (European Commission, 2007 Series)