ited
DEPARTMENT OF SOCIAL AND HUMAN DEVELOPMENT
SCCD: G. G.
OSHD
AUGUST 2006

TABLE OF CONTENTS
List of Tables, List of Annexes, Project Information Sheet, Currency and Measures, List of
Abbreviations and Acronyms Basic Data Sheet, Project Matrix, Executive Summary …………………………. i-xii
1.
INTRODUCTION.........................................................................................................................................................1
2.
POVERTY AND VULNERABILITY IN THE GAMBIA .......................................................................................1
2.1.
S TATUS OF H OUSEHOLD V ULNERABILITY IN T HE G AMBIA ...................................................................................1
2.2
T HE S ECTOR D EVELOPMENT G OALS AND P OLICY F RAMEWORK ..........................................................................2
2.3
I NSTITUTIONAL F RAMEWORK ................................................................................................................................3
2.4
T HE F INANCIAL S ECTOR IN THE G AMBIA ..............................................................................................................4
2.5
G ENDER I SSUES ......................................................................................................................................................5
2.6
HIV/ AIDS AND M ALARIA ....................................................................................................................................5
2.7.
D ONOR I NTERVENTIONS .........................................................................................................................................5
2.8
C ONSTRAINTS TO S ECTOR D EVELOPMENT ............................................................................................................6
3.
THE ENTREPRENEURSHIP SUB SECTOR ..........................................................................................................7
3.1.
S ALIENT FEATURES .................................................................................................................................................7
3.2.
M ICRO AND SMALL ENTERPRISES IN THE G AMBIA .................................................................................................7
3.3.
T HE M ICRO -F INANCE I NDUSTRY IN THE G AMBIA ...............................................................................................10
3.4
L ESSONS L EARNT FROM THE P OVERTY R EDUCTION P ROJECT AND OTHER D ONOR I NTERVENTIONS .................13
4.
THE PROJECT ...........................................................................................................................................................14
4.1
P ROJECT C ONCEPT AND R ATIONALE ...................................................................................................................14
4.2
P ROJECT A REA AND B ENEFICIARIES ....................................................................................................................15
4.3
S TRATEGIC C ONTEXT ...........................................................................................................................................16
4.4
P ROJECT O BJECTIVE .............................................................................................................................................16
4.5
P ROJECT D ESCRIPTION .........................................................................................................................................17
4.6
E NVIRONMENTAL I MPACT ....................................................................................................................................27
4.7
P ROJECT C OSTS ....................................................................................................................................................27
4.8.
S OURCES OF F INANCING AND E XPENDITURE S CHEDULE : ...................................................................................28
5.
PROJECT IMPLEMENTATION.............................................................................................................................29
5.1
E XECUTING A GENCY ............................................................................................................................................29
5.2.
O RGANISATION AND M ANAGEMENT ....................................................................................................................30
5.3.
S UPERVISION AND I MPLEMENTATION S CHEDULE ................................................................................................31
5.4.
P ROCUREMENT A RRANGEMENTS .........................................................................................................................32
5.5.
D ISBURSEMENT A RRANGEMENTS ..........................................................................................................................2
5.6.
M ONITORING AND E VALUATION ............................................................................................................................3
5.7.
F INANCIAL R EPORTING AND A UDITING .................................................................................................................3
5.8
A ID C OORDINATION ...............................................................................................................................................4
6.
SUSTAINABILITY AND PROJECT RISKS............................................................................................................4
6.1.
R ECURRENT C OSTS ................................................................................................................................................4
6.2
P ROJECT SUSTAINABILITY ......................................................................................................................................5
6.3
C RITICAL R ISKS AND M ITIGATING MEASURES ......................................................................................................5
6.4.
S OCIAL I MPACT A NALYSIS .....................................................................................................................................6
7.
CONCLUSION AND RECOMMENDATIONS .......................................................................................................7
7.1
C ONCLUSION ..........................................................................................................................................................7
7.2.
R ECOMMENDATIONS ..............................................................................................................................................7
This report was prepared on the basis of the Appraisal Mission that visited The Gambia from 7 th
to 21 st
April 2006. The
Mission comprised of Ms. Sunita Pitamber (Principal Socio Economist), OSGE.2, Ms. Assietou Helene Sow-Dahou
(Senior Micro Finance Expert), ORPC.4, and Mr. Serge N’Guessan (Principal Procurement Expert). OSHD.0. Enquiries relating to this report may be directed to Mr. Etienne Porgo, Acting Division Manager, OSHD.1, and Ms. Alice Hamer
Director, OSHD (Ext. 2046).

i
CURRENCY EQUIVALENTS (April 2006)
Currency Unit Gambian Dalasi(GMD)
UA 1
UA 1
USD 1
GMD 45,0084
USD 1.51083
GMD 25.68501
GoTG Fiscal Year
1 July - 30 June
Weights and Measures
Metric systems
LIST OF TABLES
3.1
4.1
Micro Finance Market in the Gambia …………………………………………..
Summary of Project Cost Estimates by Component ……………………………
Page
11
28
4.2 Summary of Project Cost Estimates by Category of Expenditure ……………. 28
…………………………………………………………….. 28
4.4 Estimated Cost by Source of Finance and Components ……………………….
4.5 Estimated Cost by Source of Finance and Category of Expenditure ………….
28
29
5.1 Expenditure Schedule by Category of Expenditure ……………………………
5.4 Other Methods of Procurement ………………………………………………..
32
5.2 Expenditure Schedule by Source of Finance ………………………………….. 32
…………………………………………………… 33
34
LIST OF ANNEXES
Annex I:
Annex II:
Annex III:
Annex IV:
Annex V:
Annex VI:
Map of the Gambia
Bank Group Operations in the Gambia
Summary of Micro-credit Service Providers in the Country
Implementation Schedule
Selection Criteria for Outreach and Expansion support
Selection Criteria for Participating Financial Intermediaries
Annex VII: NBFIs Performance Reporting Framework
Annex VIII: Brief Analysis of SDF
Annex IX: SDF Financial Projections
Annex X: SDF - Trust Deed for Fiduciary Financial Institution (Draft)
Annex XI: NBFIs Performance Reporting Framework
Annex XII: SDF – FFI Organogram
Annex XIII: Provisional List of Goods and Services

ii
AFRICAN DEVELOPMENT FUND
Temporary Relocation Agency (TRA)
B.P. 323, 1002 Tunis Belvedere - TUNISIA
TEL: (216) 71 10 2804- FAX: (216) 71 33 22 10- EMAIL : afdb@afdb.org
PROJECT INFORMATION SHEET
7.
8.
9.
The information given hereunder is intended to provide some guidance to prospective suppliers, contractors and consultants and other persons interested in the procurement of goods and services for projects approved by the Board of
Directors of the ADF. More detailed information may be obtained from the executing agency.
1.
2.
3.
COUNTRY
TITLE OF PROJECT
BORROWER
:
:
:
REPUBLIC OF THE GAMBIA
Entrepreneurship Promotion and Microfinance Development
Project (EPMDP)
The Government of the Gambia
4.
5.
6:
PROJECT AREA
EXECUTING AGENCY
PROJECT DESCRIPTION
:
:
5 Divisions: LRD, URD, NBD, WD, CRD
Social Development Fund (SDF)
Banjul, The Gambia
E-Mail: dsfea.1@gamtel.gm
- Tel : (220) 227221/(220) 227954
: The Project will support 24,000 rural women, men and youth in five
Divisions for training in entrepreneurship and skills development. The project will further enable access to financial services for 116,000 microfinance clients and create 14,345 new rural micro-finance loans while enabling savings mobilisation of up to GMD 108 million. The project will comprise three components: (A) Entrepreneurship and Markets
Development, (B) Micro-finance Scheme, and (C) Project Management.
TOTAL COST
Foreign Cost
Local Cost
:
:
:
UA 8.97 million
UA 3.75 million
UA 5.22 million
ADF GRANT
Other Sources of Finance: GoTG million
10. ESTIMATED STARTING
: 60 calendar months
11. PROCUREMENT OF GOODS: Procurement of goods and services financed from the ADF grant will be in accordance with the ADF's Rules and Procedures for Procurement of Goods and Works, and the ADF’s Guidelines for the use of Consultants, as follows: WORKS: Procedures set out in the Project Implementation Document (PID) based on the ADF’s Guidelines for Procurement Under Community-Based Investment Projects (September 2000 edition) :
Procurement of works related to entrepreneurship and skills development, marketing promotion, and training at community level, such as the rehabilitation of selected training centres and key markets in the 5 Divisions, as well as the rehabilitation of the SDF offices. GOODS: International Competitive Bidding (ICB ): Procurement of computers, laptops, their accessories and related equipments for the training centers/institutions and motorcycles for rural training supervision. National Competitive Bidding (NCB) : Contract for motor vehicles, computers, laptops, printers, scanners and other accessories for the SDF’s Project Management Team and DOSTIE. National Shopping (NS) : Contracts Standby power generators, furniture, fax machines, and photocopiers for the SDF, “one-stop-shops”, and other implementation partners. International Shopping (ISH) : Contracts for loans and accounting software. Procedures set out in the Project
Implementation Document (PID) based on the ADF’s Guidelines for Procurement Under Community-Based Investment
Projects (September 2000 edition) : Procurement of goods related to Entrepreneurship and skills development, and training at community. SERVICES: Short-Listing : Contracts for financial and procurement audit services; consultancy services for all the project’s studies/assessments/Guidelines development & surveys; consultancy services for curricula review and development and training manuals elaboration, and training related activities; consultancy services for
MSME Regulatory framework development and review and National Microfinance Policy development consultancy ; consultancy services for One-Stop-Shop development and management; and technical assistances including consultancy services provided SDF, Procurement and a Monitoring and Evaluation consultancy services; Consultancy services required for the community based entrepreneurship and skills development and training initiatives. Direct Negotiation :
Contract for organizing and managing the training in entrepreneurship, skills development, and technology extension with UNDP/ FASE; contract for the administration and guidance of the Microfinance Policy Development and regulatory framework with UNCDF (Dakar). MISCELLANEOUS: Direct negotiations to the NBFIs and innovators by SDF in accordance with the selection criteria set up in the PID for Micro-Finance Funds for Wholesaling, Outreach and Business
Expansion Grant, and Innovation grant.
12. CONSULTANTS REQUIRED : Technical assistance services would be required for 48 person months each starting PY1, for the expertise of Micro-finance specialist and Micro-enterprise Development and Training Expert. Various short term consultancies will be required for limited durations throughout the project life.

iii
ACRONYMS AND ABBREVIATIONS
ADF
AFDP
African Development Fund
Artisanal Fisheries Development Project
APPF Annual Portfolio Performance Review
BDS Business Services
CBG Central Bank of The Gambia
CBOs
CDA
Community Based Organisations
Community Development Agents
CDP Community Project
CEO Chief Executive Officer
CRD
CSD
CSIP
DfID
DOSA
DOSFEA
DOSTIE
Central River Division
Central Statistics Department
Community Skills Improvement Project
Department for International Development
Department of State for Agriculture
Department of State for Economic and Financial
Affairs
Department of State for Trade, Industry and
Employment
Entrepreneurship Development Facilitators EDFs
EDTs
EMT
FFI
Entrepreneurship Development Trainers
Entrepreneurship Master Trainers
Fiduciary Financial Institution
MSEs
MSEPT
NACCUG National Credit Cooperative Union of Gambia
NBD
NBFIs
NGOs
NHDR
NHPSR
NMFPS
NSFP
NYSS
OSS/ JC
PC
PCR
PID
Micro and small enterprises
Micro and Small Enterprise Promotion and Training
North Bank Division
Non-Bank Financial Institutions
Non Governmental Organisations
National Human Development Report
National Household Poverty Survey Report
National Micro-Finance Policy and Strategy
National Strategic Framework Paper
National Youth Service Scheme
One-Stop-Shop/ Job Centre
Project Coordinator
Project Completion Report
Project Implementation Document
PMT
PRGF
PRSP
PSC
Project Management Team
Poverty Reduction Growth Facility
Poverty Reduction Strategy Paper
Project Steering Committee
FIA Financial Institutions Act PSIP Peri-urban Smallholder Improvement Project
GAMSAVINGS Development
GAMSEM
GAWFA
Gambians for elf-Employment
Gambia Women Farmers Association
ROSACAs Rotating Savings and Credit Associations
SACAs Savings and Credit Associations
GCCI
GDP
GIPFZA
GMD
GoTG
GTTI
HIPC
Gambia Chamber of Commerce International
Gross Domestic Product
Gambia Investment Promotion and Free Zones
Agency
Gambia Dalasi (national currency)
Government of The Gambia
Gambia Technical Training Institute
Highly Indebted Poor Country
SCCs/FCs Savings and Credit Companies/ Finance Companies
SDF Social Development Fund
SDR Special Drawing Rights
SME
SPA
SPACO
SSA
Small and Medium Scale Enterprise
Strategy for Poverty Alleviation
Strategy for Poverty Alleviation Coordinating Office
Sub-saharan Africa
IBAS
IDA
IFAD
Indigenous Business Advisory Services
International Development Agency
International Fund for Agriculture and
Development
TOT
UA
UFF
Training of Trainers
Unit of Account
Unified Funding Framework
ILO
LGA
LGFAA
International Labour Organisation
Local Government
Local Government Finance and Audit Act
UNDP
UNFPA
UNHCR
United Nations Development Programme
United Nations Fund for Population Development
United Nations High Commission for Refugees
MDFT
MDG
MDI
MICROFIMS
MISACIs
MMD
MOU
Multi-disciplinary Facilitation Team
Millennium Development Goals
Management Development Institute
Micro Finance Service & Market Developer
Micro Savings and Credit Institutions
Microfinance Management and Development
Memorandum of Understanding
URD
VDC
WAAP
WDI
Upper River Division
Village Development Committee
West Africa Productivity Agriculture Support
Programme
World Development Indicators
WFP
WHDR
World Food Programme
World Human Development Report
WHO World Health Organisation
WISDOM Women in Service Development, Organisation and
Management

i
COMPARATIVE SOCIO-ECONOMIC INDICATORS
AFR
Year
The
Gambia
Africa
Develo- ping
Countrie
Develo- ped
Countrie
Basic Indicators
Area ( '000 Km²)
Total Population (millions)
Urban Population (% of Total)
Population Density (per Km²)
GNI per Capita (US $)
Labor Force Participation - Total (%)
Labor Force Participation - Female (%)
Gender -Related Dev elopment Index Value
Human Dev elop. Index (Rank among 174 countries
Popul. Liv ing Below $ 1 a Day (% of Population)*
Demographic Indicators
Population Grow th Rate - Total (%)
Population Grow th Rate - Urban (%)
Population < 15 y ears (%)
Population >= 65 y ears (%)
Dependency Ratio (%)
Sex Ratio (per 100 female)
Female Population 15-49 y ears (% of total populatio
Life Ex pectancy at Birth - Total (y ears)
Life Ex pectancy at Birth - Female (y ears)
Crude Birth Rate (per 1,000)
Crude Death Rate (per 1,000)
Infant Mortality Rate (per 1,000)
Child Mortality Rate (per 1,000)
Total Fertility Rate (per w oman)
Maternal Mortality Rate (per 100,000)
Women Using Contraception (%)
2005
2005
2005
2004
2003
2003
2003
2003
2000
2005
2005
2005
2005
2005
2005
2001
2000
2005
2005
2005
2005
2005
2005
2005
2005
11
1.5
25.8
134.3
290
50.6
45.2
0.464
155
69.0
58.2
33.8
11.3
71.6
118.3
4.4
730
9.6
2.6
2.5
40.1
3.7
78.1
98.3
27.3
56.8
30 307
904.8
38.9
29.9
811
43.4
41.1
0.460
n.a.
45.0
52.0
36.8
15.0
83.6
139.6
4.8
622.9
26.6
2.1
3.4
41.5
3.4
81.4
99.8
26.7
51.2
80 976
5 253.5
43.1
60.6
1 154
45.6
39.7
0.694
n.a.
32.0
65.9
22.8
8.7
59.4
89.3
2.8
440
59.0
1.4
2.6
32.4
5.5
57.8
102.7
27.1
64.1
54 658
1 211.3
78.0
22.9
26 214
54.6
44.9
0.911
n.a.
20.0
1000
800
600
400
200
0
G N I p er cap i t a U S $
The Gambia Af rica
79.7
11.0
10.4
7.5
9.4
1.6
13
74.0
0.3
0.5
18.0
15.3
47.8
94.2
25.0
76.0
3 .5
3 .0
2 .5
2 .0
1.5
1.0
0 .5
0 .0
Po p ul at i o n G r o w t h R at e ( %)
The Gambia A f rica
Health & Nutrition Indicators
Phy sicians (per 100,000 people)*
Nurses (per 100,000 people)*
Births attended by Trained Health Personnel (%)
Access to Safe Water (% of Population)
Access to Health Serv ices (% of Population)*
Access to Sanitation (% of Population)
Percent. of Adults (aged 15-49) Liv ing w ith HIV/AID
Incidence of Tuberculosis (per 100,000)
Child Immunization Against Tuberculosis (%)
Child Immunization Against Measles (%)
Underw eight Children (% of children under 5 y ears
Daily Calorie Supply per Capita
Public Ex penditure on Health (as % of GDP)
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total
Primary School - Female
Secondary School - Total
Secondary School - Female
Primary School Female Teaching Staff (% of Total)
Adult Illiteracy Rate - Total (%)
Adult Illiteracy Rate - Male (%)
Adult Illiteracy Rate - Female (%)
Percentage of GDP Spent on Education
2003
2003
2002
2002
2000
2002
2003
2003
2004
2004
2003
2003
2002
2002/03
2002/03
2002/03
2002/03
2002/03
2005
2005
2005
2000
10.9
119.6
55.0
82.0
90.0
53.0
1.0
337.0
95.0
90.0
27.0
2 288
3.3
85.0
84.0
34.0
28.0
29.0
57.5
50.1
64.6
2.70
38.2
110.7
43.7
64.5
61.7
42.4
6.4
406.4
78.2
68.8
39.0
2 439
2.7
96.7
89.3
43.1
34.6
44.1
35.0
26.9
42.9
4.7
78.0
98.0
56.0
78.0
80.0
52.0
1.3
144.0
82.0
73.0
31.0
2 675
1.8
91.0
105.0
88.0
45.8
51.0
26.6
19.0
34.2
3.9
287.0
782.0
99.0
100.0
100.0
100.0
0.3
11.0
93.0
90.0
…
3 285
6.3
102.3
102.0
99.5
100.8
82.0
1.2
0.8
1.6
5.9
71
61
51
41
31
21
11
1
100
90
80
70
60
50
40
30
20
10
0
Li f e E xp ect ancy at B i r t h
( year s)
The Gambia
I nf ant M o r t al i t y R at e
( P er 10 0 0 )
Environmental Indicators
Land Use (Arable Land as % of Total Land Area)
Annual Rate of Deforestation (%)
Annual Rate of Reforestation (%)
Per Capita CO2 Emissions (metric tons)
2005
2000
2000
2005
19.5
-0.99
…
0.21
6.0
0.70
10.9
1.0
9.9
0.40
…
1.9
11.6
-0.20
…
12.3
The Gambia
Source : ADB Statistics Division databases; UNAIDS; World Bank Live Database and United Nations Population Division; Country Reports
Notes: n.a. Not Applicable ; … Data Not Available. * : latest data available within 1995-2000
Af rica
Af rica

vii
LOGICAL FRAMEWORK: THE GAMBIA ENTREPRENEURSHIP PROM OTION AND MICROFINANCE DEVELOPMENT PROJECT
HIERARCHY OF
OBJECTIVES
The sector goal of the project is to contribute to poverty reduction in a sustainable way
Project Objective
EXPECTED
RESULTS BY
Sector And
Theme
1. Increased income generation opportunities and related rural income
REACH
1. Rural economically active poor
Beneficiaries
PERFORMANCE INDICATORS. Source And
Method
Proportion of households below the poverty line
Source : Integrated Poverty Survey Reports,
National statistics; PRSP progress reports; Impact assessment study
Indicators. Medium term Outcome:
INDICATIVE TARGETS TIMEFRAME
1.
Proportion of rural poor households reduced from 69% to 65% by 2011;
2.
Rural household income increased from GMD 6,000 per year to GMD 10,000 per year by 2011
Source: Annual and quarterly progress reports, MTR, PCR,
Government census and livelihood surveys ( For all indicators) .
Target indicators and timeframe:
Main Assumptions And Risks
Assumption: That not much reshuffling of decision making officials of the partner
Ministries takes place. Risk Mitigation: The project implementation will take place within
SDF and thus not requiring day-to-day involvement of GoTG officials.
To support diversification of rural income generation sources, provide increased access to financial services.
ACTIVITIES
Sector/theme:
Medium term outcome:
1. Increased numbers of rural poor involved in off-farm businesses and increased use of financial services
Sector theme: short term
Outputs
Rural women, men and youth
Beneficiaries
1.1. Numbers of rural poor trained in entrepreneurship and skills development;
1.2. Numbers of new micro loans for MSMEs and emerging entrepreneurs;
1.3 Percentage growth in savings mobilisation;
1.4. Number of NBFI staff whose capacity has been strengthened;
1.5 MF and MSME policy and regulatory framework developed
1.6 Project baseline survey undertaken
Indicators: short term outputs
1.1.1 24,000 rural poor (70% women/ 30% men) trained in entrepreneurship development and business management by
2011;
1.1.2 12,000 rural poor (70% women/ 30% men) trained in skills development by 2011;
1.1.3 14,345new micro loans (70% women/ 30% men)for
MSMEs by 2011;
1.1.4 GMD 108 million additional savings mobilisation by
2011;
1.1.5 Capacity of staff of 28 NBFIs strengthened by 2011;
1.1.6 One project baseline survey undertaken, with gender disaggregated data reporting, by 2007;
Target indicators timeframe. Assumption Statement/ Risk Mitigation
Entrepreneurship and
Markets Development
1. Deliver basic business management and entrepreneurship promotion training
2. Deliver technical skills development training
3. Innovator’s Platform established
1) Rural women, men and youth trained in entrepreneurship development
2.1) Rural women, men and youth trained in diverse technical skills for production and manufacturing
3.1) Rural men, women and youth become innovation oriented and
Rural women, men and youth
Rural women, men and youth
Rural, men, women and youth
1.1.1) Number of EDTs trained;
1.1.2) Number of rural people trained in entrepreneurship development;
1.1.3) Number of SBAs established;
1.1.4) Number of “one-stop-shops” established and functioning;
1.1.5) MSEPT diploma training institutionalised
2.1.1) Number of rural people trained in diverse technical skills;
3.1.1) Number of innovation grants disbursed;
3.1.2) Number of resulting innovations found marketable;
3.1.3) Number of innovations commercialised
1.1.1.1) 150 EDTs trained by 2011;
1.1.1.2) 24,000 rural poor (70% women/ 30% men)trained in entrepreneurship development by 2011;
1.1.1.3) At least 35 new SBAs registered by 2011;
1.1.1.4) 5 “one-stop-shops/ job centres” established and functioning by 2011;
1.1.1.5) At least 140 individuals (50% men and 50% women) trained in MSEPT and will become eventual BDS providers;
2.1.1.1) 12,000 rural poor (70% women/ 30% men) trained in technical skills development by 2011;
3.1.1.1) 35 innovation grants disbursed by 2011;
3.1.1.2) At least 15 innovations marketed by 2011;
3.1.1.3) At least 3 innovations commercialised by 2011;
Assumption: That communities respond effectively to the trainings offered. Risk mitigation: The trainings are identified after a lengthy consultation with the community representatives, and will be offered at a time and place convenient to the beneficiaries and in the vernacular languages where necessary.
Moreover, extensive community mobilisation will be undertaken.
Assumption: That there are no delays in the implementation of the various trainings to be offered. Risk mitigation: The training implementation partners will run parallel sessions and will benefit from institutional capacity building to strengthen their delivery.
Moreover, the respective institutions have participated in other similar training arrangements.

viii
4. Markets
Development
5. MSME Regulatory framework review
6. Market surveys and research development
7. Divisonal markets rehabilitated
8. Feeder roads rehabilitated
9. Institutional and technical capacity strengthening.
UA 3,669,063 resulting innovations are commercialised
4.1) Rural men, women and youth are able to market their products in major urban centres, as well as regionally and internationally
Rural men, women and youth
5.1) Rural women, men and youth,
DOSTIE.
6.1) Rural women, men and youth,
SBAs
6.1) Rural men, women and youth have access to major rural, and town and city markets
7.1) Rural men, women and youth able to easily access markets and increase sales of their products locally and nationally;
9.1) DOSTIE strengthened to implement MSME policy/action plan;
GTTI/ /MDI strengthen to implement the
MSME/ MF diploma curriculum;
Rural women, men and youth
Rural women, men and youth
Rural men, women and youth
Rural men, women and youth
Staff of DOSTIE,
GTTI and MDI
4.1.1) Number of SBAs linked to private sector operators in respective manufactured products;
4.1.2) Number of SBA representatives participated in national trade fairs;
4.1.3) Number of SBA representatives participated in regional trade fairs;
4.1.4) Number of SBA representatives participated in 2 networking visits;
4.1.5) Number of SBA representatives participating in regional study tours;
4.1.6) Number of national marketing forums undertaken;
4.1.7) Number of radio teaching and advocacy spots transmitted;
4.1.8) Number of success stories identified, documented, published and disseminated;
5.1.1) Revised and update of existing legal and regulatory framework for MSME development.
4.1.1.1) 50 SBAs linked to at least 10 private sector operators in respective manufactured products by 2011;
4.1.2) 1 representative of 10 SBAs will participate in 2 national trade fair by 2011;
4.1.1.3) 1 representative from 10 SBAs will participate in 2 regional trade fair by 2011;
4.1.1.4) 1 representatives from 10 SBAs will be part of 4 regional networking visits by 2011;
4.1.1.5) 1 representative from 12 SBAs will be part of 4 annual regional study tours by 2011;
4.1.1.6) 3 national marketing forums undertaken by 2011;
4.1.1.7) 200 radio teaching and advocacy spots transmitted by 2011;
4.1.1.8) 5 success stories identified and documented by
2011;
4.1.1.9) 4000 pamphlets documenting the success stories published and disseminated by 2011.
5.1.1.1) MSME regulatory framework paper prepared for presentation to Cabinet by 2009;
(Same as above)
6.1.1) Number of market surveys undertaken;
6.1.2) Number of local industry feasibility and promotion research undertaken.
6.1.1) Number of Divisional markets rehabilitated;
6.1.2) Number of entrepreneurs accessing these markets;
6.1.1.1) 2 market surveys undertaken by 2011;
6.1.1.2) 8 local industry feasibility and promotion research undertaken by 2011.
6.1.1.1) 5 Divisional markets rehabilitated by 2011;
6.1.1.2) Number of entrepreneurs accessing these markets increased by at least 25% by 2011;
7.1.1) Number of Kilometres of feeder roads rehabilitated;
7.1.2) Number of entrepreneurs enabled to access markets for increased product sales farther than
5Km;
91..1) Number of short and long term studies supported;
9.1.2) Number of equipment supported:
9.1.3) Required technical experts in place;
7.1.1.1) 60 km feeder roads rehabilitated in by 2011;
7.1.1.2) Number of entrepreneurs enabled to access markets for increased product sales farther than 5Km increased by at least 15% by 2011;
9.1.1.1) 1 regional Masters studies undertaken as follows: 1 each for GTTI, MDI and DOSTIE by 2011;
9.1.1.2) 2 computer sets each for GTTI, MDI, and DOSTIE by 2011;
9.1.1.3) 1 MSME regional framework expert in place and regulatory framework reviewed by 2011;
9.1.1.4) MSME policy implementation expert in place and
MSME policy operationalisation recommendations in placer by 2011;
9.1.1.5) 2 motorbikes for DOSTIE procured by 2009;
Assumption: That trained staff do not leave their employment after having been trained.
Risk mitigation: Training opportunities will only be granted to individuals on condition that they sign a written undertaking to return to their positions of employment or reimburse the project the cost of training.

Micro-Finance
10. Micro-credit Fund delivered by the FFI
11. Micro-finance policy development support.
12. Support to microcredit regulatory framework
13. Outreach and
Expansion Grant
14. MF sector coordination
15. Institutional Support for NBFIs and NGOs.
10.1) Increased and improved access to microfinance services and savings mobilisation to the rural poor.
11.1) Clear and transparent
National Microfinance policy in place
12.1) New regulatory framework in place enabling easier entry for new operators into the industry, and
CBG’s supervision capacity improved.
13.1) Rural people have increased access to microfinance services and secure savings mobilisation.
14.1) Improved sector coordination, information exchange, monitoring and evaluation of the industry potential for increased foreign and national investments.
15.1) Improved microfinance services, demand driven loan and savings products, made accessible to rural folk and
Rural men, women and youth
Communities, entrepreneurs,
MSMEs, & NBFIs benefit from clear policy environment leading to sector transparency & growth
Communities, entrepreneurs,
MSMEs, and NBFIs benefit from clear regulatory environment
Rural, men, women, youth, and MSMEs
Rural men, women, youth, MSMEs, and
NBFIs.
NBFIs, CBG, SDF,
MSMEs and other entrepreneurs ix
10.1.1) Micro-credit fund established;
10.1.2) Number of NBFIs/ NGOs undertake retail lending from the micro-credit Fund;
10.1.3) Number of new loans delivered to MSMEs and other entrepreneurs;
10.1.4) Number of new financial products identified and made available for the low income population.
11.1.1) The National Microfinance policy draft finalised for validation;
11.1.2) The National Microfinance Law draft finalised for consultation process;
11.1.3) MOU with UNCDF-Dakar in place;
10.1.1.1) Micro-credit fund established by 2011;
10.1.1.2) 28 NBFIs/ NGOs undertake retail lending from the micro-credit fund 2011;
10.1.1.3) 14,345 women, men and youth (70% women and
30% men) have access to new loans by 2011;
10.1.1.4) 100% of the micro credit fund is disbursed by
2011.
11.1.1.1) The National Microfinance policy draft is submitted for national consultation and validation by 2009;
11.1.1.2) The National Microfinance Law submitted for
Cabinet Approval by 2011;
11.1.1.3) An MOU signed with UNCDF-Dakar by 2007;
Assumption: That all the funds on-lent are recovered through timely repayments by
NBFIs. Risk Mitigation : An in-depth institutional assessment will be undertaken before delivering funds for on-lending and there will be a close monitoring and reporting of loans made by NBFIs.
Assumption: That the macroeconomic monetary and financial environment remains stable. Risk mitigation: close follow up of the country’s financial indicators will be undertaken by the country economist with continued policy dialogue with the GoTG in collaboration with SNRO.
12.1.1) Number of NBFI prudential rules and guidelines revised and amended;
12.1.2) Number of new NBFIs registered at CBG;
12.1.3) Number of CBG microfinance sector supervision reports are produced;
12.1.4) CBG microfinance sector promotion information publications are published.
12.1.1.1) The NBFI prudential rules and guidelines are revised and amended by 2011;
12.1.1.2) At least 3 new NBFIs registered at CBG by 2011:
12.1.1.3) Publication of CBG microfinance sector supervision reports increased to bi-annual by 2011;
12.1.1.4) CBG microfinance sector promotion publications and newsletters increased to 4 per year by 2011.
13.1.1) Number of NBFIs supported to expand microfinance services and operations to rural areas;
13.1.1.1) At least 4 NBFIs supported to expand microfinance services and operations to rural areas by 2011;
14.1.1) Number of MF industry reports produced
14.1.2) Number of NBFIs using the
Microfinance Management and Database
Software
14.1.3) Number of NBFIs post performance indicators on the MIX website.
14.1.1.1) At least 3 annual reports published on the MF industry in the Gambia for the period 2009, 2010, 2011
(inclusive).
14.1.1.2) At least 15 NBFIs using the Microfinance
Management and Database Software.
14.1.1.3) At least 15 NBFIs will post their performance indicators on the MIX website
15.1.1) Number of NBFIs exposed to various short term national trainings;
15.1.2) Number of communities exposed to microfinance access and management training;
15.1.3) Number of improved loan appraisal guidelines and tools developed;
15.1.4) NBFIs institutional assessment
15.1.1.1) NBFIs trained in 12 sessions of various short term national trainings by 2011;
15.1.1.2) 20 sessions for communities exposure in microfinance access and management undertaken by 2011;
15.1.1.3) At least 3 improved loan appraisal guidelines and tools in place by 2011;

MSMEs, in addition to competitive interest rate determination, client oriented and gender responsive service delivery
UA 3,533,472
Project Management
16. Awareness raising sessions in cross-cutting issues
16. Project staff, technical assistants and consultants recruitment
Rural men,women, community leaders, & local government staff and authorities, sensitised on key cross-cutting issues
15.1) Project activities implementation is facilitated and made sustainable
Rural men, women, community leaders,
LGAs staff and authorities
SDF x undertaken;
15.1.5) Microfinance baseline survey undertaken; by 2009;
15.1.6) Microfinance promotion diploma curricula developed;
15.1.7) Microfinance Database and Management software procured and trainings in its use for NBFIs undertaken.
15.1.8) Number SDF Strategic Framework and
Business Plan;
15.1.9) Number of Fund Sustainability study
16.1.1) Number of awareness raising sessions
15.1.1.4) NBFIs institutional assessment study undertaken by 2011;
15.1.1.5) 2 Microfinance baseline survey undertaken by
2011;
15.1.1.6) Microfinance promotion curricula developed and in place by 2009;
15.1.1.7) 1 Microfinance Database and Management software and 15 licenses procured with accompanying NBFI staff trainings undertaken by 2011;
15.1.1.8) 1 SDF Strategic Framework and Business Plan completed by 2009;
15.1.1.9) 1 Fund Sustainability study completed by 2009;
16.1.1.1.) 200 awareness raising and sensitisation campaigns in gender equality issues, HIV/ AIDS, and environmental management undertaken by 2011.
15.1.1) Appropriate staff, consultants and technical assistants recruited;
15.1.2) Financial Auditing firm selected
15.1.3) Procurement auditing firm selected
16.1.1) Equipment procured and in place
15.1.1.1) A project coordinator, financial controller, microfinance expert, chief administration officer, accountant, procurement expert consultant, M&E expert consultant, additional SDF Divisional officers, entrepreneurship development and training TA, micro finance Policy development TA, recruited by 2011,
15.1.1.2) Auditing firm selected and in place by 2011.
15.1.1.3) Procurement audit firm selected and in place by
2011:
16.1.1.1) 2 computer sets for each SDF Divisional officer, and 2 sets for PMT, purchased by 2007.
16. Project office equipment purchased
17. Vehicle purchased
16.1) Project activities implementation is facilitated and made sustainable
17.1) Project activities implementation is facilitated and made sustainable
18. Project staff trained 18.1) Project activities implementation is facilitated and
UA 1,774,805 made sustainable
SDF and Divisional officers
SDF and Divisional
Officers
SDF and, Divisonal office staff,
17.1.1) Vehicle purchased and in place;
17.1.2) Motorbikes purchased and in place.
18.1.1) Appropriate training undertaken
17.1.1.1) 1 vehicle for PMT purchased by 2007
17.1.1.2) 18 motorbikes for DFOs and SDF purchased by
2007.
18.1.1.1) SDF and Divisonal office staff, workers trained in computer proficiency, project design and implementation,
M&E by 2011.
18.1.1.2) The FFI is covering 100% of its operating costs by year 2011.

xi
THE GAMBIA ENTREPRNEURSHIP PROMOTION AND MICROFINANCE
DEVELOPMENT PROJECT
Executive Summary
Project Background
1. Poverty in the Gambia manifests itself in the form of multiple deprivations where 53% of the population is food poor while 61% is categorised as absolute poor of which 74% is in the rural areas. The rural population is overly dependant on agriculture as the single source of income generation for which they are poorly equipped and lack sufficient coping mechanism. Moreover while about 59% of the population is categorised as potential labour force, only 14% is actually employed, of which 79% is operating in the informal sector (National Economic Census, 2005). Furthermore, the rural agriculture population is reported to earn a mean annual income of only GMD 2,742 as compared to those in the business and finance services who earn an annual mean income of GMD 14,990. The major constraint for the rural poor is the dependence on single economic activity, lack of skills to diversify source of income to supplement household livelihoods, insufficient access to financial and technical resources to engage in other productive activities, and lack of market opportunities for diversified products and services. This indicates that the Gambian population is unable to effectively reduce their poverty and as a result are increasingly vulnerable to external shocks which push them further into poverty and household livelihoods insecurity.
Purpose of the Grant
2. The purpose of the grant is to provide resources not exceeding UA 8 million to meet all the foreign exchange and some of the local cost requirements (training, information material and advocacy, as well as procurement of office equipment and other technology) for the proposed project activities.
Sector Goal and Project Objective
3. The sector goal of the project is to contribute to poverty reduction in a sustainable way and the project objective is to support diversification of rural income generation sources, provide increased access to financial services.
Project Description
4. The Entrepreneurship Promotion and Microfinance Development project will support the training of rural women, men and youth in entrepreneurship and skills training to become economically empowered and contribute to their household poverty reduction. The project will comprise three components: (A)
Entrepreneurship and Markets Development will provide entrepreneurship and business management training, technical skills training in selected trading and manufacturing activities, and support to marketing activities and private sector linkage development. The technical skills training will be demand driven in that the rural population will select the activity of their interest from a menu of training activities. (B)
Micro-finance Scheme will put in place revolving fund of UA 1.0 million for wholesaling to experienced and qualified NBFIs in the country. Moreover, the component will support the development of the
National Micro-finance Policy as well as the strengthening of micro-finance regulatory environment and capacity building of NBFIs/ NGOs as well as support the expansion of financial services into rural areas enabling improved access to finance by the rural population. (C) Project Management will ensure adequate staff and technical assistants are in place to support project implementation and coordination activities.

xii
Project Cost
5. The total cost of the project net of taxes and customs duties is UA 8.97 million, comprising UA 3.75 million in foreign exchange and UA 5.22 million in local currency. A provision of 5% for physical contingencies and 5% for price escalation in local currency and in foreign exchange has been factored into the project cost. Cost estimates were established during the preparation and appraisal missions.
Sources of Financing
6. The ADF resources will be used to finance all the categories of expenditure, with 44% of the funds to be used to pay for the services of specialists in capacity building; 24% to finance the microfinance fund as well as the outreach and expansion grant to increase access to MFI services in the rural areas. The
GoTG’s contribution will finance the project’s overall operating costs while the beneficiaries counterpart funding will include community participation in local market and training centres rehabilitation.
Project Implementation
7. The Social Development Fund (SDF) will be the executing agency. By this the Project Management
Team will be located in the SDF and its role will be to coordinate the day-to-day implementation of the activities under the project for the different target beneficiaries. SDF has gained extensive experience in project management and implementation under the Poverty Reduction Project (1997 – 2004) which established the SDF and empowered it to play a central role in the micro-finance industry in the country as well as ensured coordination and implementation of other activities related to entrepreneurship and social infrastructure development. The project will sign MOUs with specialised agencies such as UNDP/ FASE and UNCDF in the delivery of specific project related activities. Moreover, the project will support various technical assistance and consultancy services needed for the implementation of the various activities.
Conclusions and Recommendations
8. The capacity of rural poor to improve their household livelihood security has been found to need urgent attention and strengthening in The Gambia. The proposed project will help to establish entrepreneurial knowledge and technical skills amongst rural the population to empower them for increased income generating opportunities to enable them better access to sustainable financial services in order that they may reduce their dependency on single sources of income. It is recommended that a grant not exceeding UA 8 million from ADF resources be provided to the Government of The Gambia for the purpose of implementing the project as described in this report, subject to conditions specified in the
Protocol of Agreement.

1
1. INTRODUCTION
1.1 The Gambia is a West African country that straddles the Gambia River 450 km eastwards from the Atlantic Ocean. Surrounded by Senegal to the North, East, and South, the total land area of 11,285 sq. kilometres consists mainly of riverine flats, swamps and tidal creeks, although over
54% is good quality arable land. The population of 1.48 million is administratively distributed into
5 Divisions, comprising 35 districts.
1.2 Poverty in the Gambia manifests itself in the form of multiple deprivations where 53% of the population is food poor while 61% is categorised as absolute poor of which 74% is in the rural areas. The rural population is overly dependant on agriculture as the single source of income generation for which they are poorly equipped and lack sufficient coping mechanism. Moreover while about 59% (National Household Poverty Survey Report - NHPSR) of the population is categorised as potential labour force, only 14% is actually employed, of which 79% is operating in the informal sector (National Economic Census, 2005). The highest percentage (71%) of economically active women was found to be in North Bank Division (NBD) where the poverty level is reported to be the highest (80%); the highest percentage (77%) of economically active men was found to be in Central River Division (CRD) where the reported poverty level is 74%.
Moreover, 55% of the male youth are unemployed as compared to 45% of female youth. In the
Gambia, 70% of persons involved in the agricultural sector are categorised as being extremely poor of which 71% are women. Furthermore, the rural agriculture population is reported to earn a mean annual income of only Gambian Dalasi (GMD) 2,742 as compared to those in the business and finance services who earn an annual mean income of GMD 14,990. The major constraint for the rural poor is the dependence on single economic activity, lack of skills to diversify source of income to supplement household livelihoods, insufficient access to financial and technical resources to engage in other productive activities, and lack of market opportunities for diversified products and services. This indicates that the Gambian population is unable to effectively reduce their poverty and as a result are increasingly vulnerable to external shocks which push them further into poverty and household livelihoods insecurity.
1.3 In this regard, the Government of The Gambia (GoTG) requested the AfDB for support in developing employment and income generation opportunities for the Gambian population in the entrepreneurship sector particularly aimed to improve household disposable income and income diversification strategies. The AfDB mounted a preparation mission in June 2005, and a preappraisal mission was mounted in September 2005 to concretise the activities under the proposed components and to further dialogue with the GoTG and donor community. This report is the result of an appraisal mission undertaken in April 2006.
2. POVERTY AND VULNERABILITY IN THE GAMBIA
2.1. Status of Household Vulnerability in The Gambia
2.1.1 The Gambia is characterized by a dual economy: a large rural, mostly agricultural-based traditional sector, which encompasses about three-fifths of the country's population, and a relatively modern formal but smaller peri-urban sector. Overall, the economic performance in 2004 was positive as tight fiscal and monetary policies prevailed. The overall fiscal deficit as a percent of
GDP (including grants) was 4.5% in 2004 (reduced from 4.7% in 2003); by the end of 2005, the average annual inflation further declined to 4% in 2005, while the treasury bill rate significantly came down to 12% from 27% a year earlier.
2.1.2 In the Gambia, food poverty
1
(also referred to as extreme poverty) has increased markedly from 15% in 1992 to 51% in 1998 (latest Integrated Household Survey), whilst overall poverty
2 more than doubled to 61% in 2003. Poverty prevalence also varies across the Divisions, with the
1
Food poverty is defined as the cost of a basket of food providing 2,700 calories. (SPA-II/PRSP, 2006).
2
Overall poverty is defined as GMD 4,200 per capita (i.e. about US$150). (SPA-II/PRSP, 2006)

2
Central River Division reporting 71% of the population being poor in 2003. The increasing poverty in the rural areas is the direct result of over-dependence on agriculture as the only income generating activity, lack of diversification from agriculture based activities, decreasing agriculture production, insufficient post-harvest storage, processing, marketing and technical skills development opportunities. This, coupled with insufficient access to microfinance services, lack of appropriate technology, and inadequate access to entrepreneurial knowledge and opportunities, has led to increasing poverty and destitution in the Gambia, especially in the rural areas.
2.1.3 Women’s vulnerability to poverty is much higher, due to the fact that they continue to have lower social status in the Gambian society. Women have no right to own productive assets including land, in particular in rural communities, and they are forced out of family properties in times of death of their spouses or divorce. Over 78% of women who are economically active are engaged in agriculture, as opposed to 57% of men. Women are mainly engaged in the production of food crops mostly for consumption, such as rice.
2.2 The Sector Development Goals and Policy Framework
The Strategy for Poverty Alleviation (PRSP II – 2007 to 2011)
2.2.1 The long-term goal of PRSP II (2007 – 2011) is to eradicate poverty by significantly increasing national income through stable economic growth and reducing income and non-income inequalities through specific poverty reduction priority interventions. The poverty reduction focus targets the education and health social sectors for priority development interventions as well as entrepreneurship development and promotion of self-employment for the economic empowerment of the poor. The Government’s priorities for poverty reduction follow five objectives: (i) create an enabling policy environment to promote economic growth and poverty reduction; (ii) enhance the capacity and output of productive sectors with emphasis on productive capacities of the poor and vulnerable populations; (iii) improve coverage of the basic social service and social protection needs of the poor and vulnerable; (iv) enhance governance systems and build the capacity of local communities and Civil Society Organisations (CSOs) to play an active role in economic growth and poverty reduction, and (v) support cross-cutting issues.
The National Strategy paper for Microfinance Development (NSMD) in the Gambia
2.2.2 Although the drafting of the NSMD was completed in 2005, through support of RFCIP/
IFAD, it has yet to be validated by the stakeholders in the country. The NSMD aims to start the process for a conducive policy, regulatory and legal environment for the promotion and development of the industry in the Gambia. Moreover, it stresses the importance of building the capacity of NBFIs and their staff as well as communities in order to enable increased access to micro finance services to the Gambian population. The priority activities identified in the NSMD action plan are: the development of the policy, legal and regulatory environment together with streamlining existing policies, institutional development and capacity building, improving microfinance coordination and linkages nationally and internationally, and mainstreaming gender issues in the industry’s performance.
Policy guidelines for Non-Bank Financial Intermediaries (NBFIs)
2.2.3 In the absence of an overall micro finance policy and accompanying legal framework, the
Central Bank of The Gambia (CBG) uses the Financial Institutions Act (FIA) of 1992 (revised in
2003), together with the Financial Regulations Act of 1994, as the guiding legal and regulatory framework for microfinance activities. Furthermore, the CBG has put in place prudential guidelines to guide the activities of NBFIs. These prudential guidelines are based on the principles of reducing barriers to entry of new NBFIs in the sector, regulating the service providers through licensing and financial reporting and accountability and making savings mobilisation mandatory for all NBFIs.

3
These prudential guidelines are set out in a set of six volumes for five categories, namely: (i)
Savings and Credit Associations (SACAs); (ii) Micro Savings and Credit Institutions (MISACIs);
(iii) Community Finance Bureaus (COFAL Bureaus); (iv) Savings and Credit Companies/Finance
Companies (SCCs/FCs); and (v) Fiduciary Finance Institutions (FFIs). In addition NBFIs can also be registered under the Cooperative Act of 1955 which regulates the cooperative societies and unions, the credit unions and the worker cooperatives. The legal framework that applies to the
NBFIs is thus fragmented and falls under numerous government authorities, such as: DOFSEA,
Central Bank of Gambia (CBG), Department Of State for Agriculture (DOSA), Department of
State for Trade and Industry (DOSTIE), of Department of State for Justice, and the Department of
Cooperatives.
The National Employment Policy
2.2.4 The National Employment Policy (NEP), developed in 2001 within DOSTIE, is based on the principle of employment creation for poverty reduction of the vulnerable population which would be empowered to take advantage of the emerging opportunities in the regional and national private sector. Moreover, it emphasises the need to establish an entrepreneurial culture with a focus on self-reliance and inducing a healthy job-creation environment. The key strategies identified to achieve this are: putting in place a conducive sectoral policies and legal and regulatory framework, promoting skills development and training, private sector led employment generation; and institutional development and capacity building of the stakeholders to efficiently lead the process.
The National Micro and Small Enterprise (MSE) Policy
2.2.5 The National MSE policy (2004) aims to establish an enabling environment for MSE development and promotion as the main vehicle for poverty reduction for the vulnerable and poor
Gambian population. In particular, it aims to enhance the process of equitable participation of indigenous entrepreneurs in the economy, to put in place efficient regulatory and legal framework, enable increased access to microfinance by entrepreneurs, establish an entrepreneurship culture, and to build local capacities to provide BDS and training opportunities. The Policy promotes the simplification of the administrative and regulatory environment dictating MSE growth to enable free competition and easy entry into the sector. In particular, the policy stresses the need to organise entrepreneurs in small business associations (SBAs) which can be empowered for collective benefits in terms of access to information, markets, financing, etc. Last but not least, a key aspect of
MSE development and promotion identified in the policy is the establishment of a well coordinated marketing system to stimulate demand for local products and industries both regionally and internationally.
The Department of State for Finance and Economic Affairs (DOSFEA)
2.3.1 The Department of State for Finance and Economic Affairs (DOSFEA) is the institution for the overall financial and economic planning as well as monitoring poverty reduction in the country. The
Strategy for Poverty Alleviation Coordination Office (SPACO) is the component unit of the National
Planning Commission (to be established under the PRSP II) responsible for the implementation of the
PRSP II.
2.3.2 The was established under the ADF funded Poverty
Reduction Project (PRP approved in 1997) as the project implementation unit as well as the Gambian social fund under DOSFEA (see Annex VIII). A Project Completion Report (PCR –
ADF/BD/IF/2006/68) conducted revealed that the project was highly successful in supporting community micro-projects, on-lending of credit to NBFIs and to individual clients, capacity building for NBFI staff, and coordinating entrepreneurial training for select beneficiaries. The SDF used a participatory and demand driven approach as its main intervention strategy in channelling resources to

4 the poor which had extensive positive impact at the grassroots level which made SDF synonymous with community empowerment through out the country. Under the PRP, SDF supported 560 community based micro-projects in demand driven social infrastructure ranging from schools, health clinics, markets, village mills, community centres, etc. Moreover it made direct loans to 51,837 individual clients (79% women) in 828 groups, as well as 65,918 clients (80% women) in 1,006 groups through NBFIs. In addition, SDF is currently managing the micro-credit component for the following ADF projects: (i) the Community Skills Improvement Project, (ii) The Peri-urban
Smallholder Improvement Project, (iii) and the Artisanal Fisheries Development Project. approved the transformation of SDF into a Fiduciary Financial Institution (FFI) in April 2006. By this the SDF will not cease to exist physically or financially, but will be incorporated as a Not-For-Profit
Fiduciary Financial Trustee Company (see Annex X) to be registered under the Gambian
Companies Act (Cap 95.01) and the Financial Institutions Act (1992) as an Apex Funding
Institution for the development of the micro finance industry in the Gambia. As an FFI, it will have the mandate to mobilize resources for wholesaling to NBFIs as well as coordinating policy issues within the industry. The FFI will continue to be governed by the Board of Directors, and the dayto-day operations will be executed by the Executive Director with the support of Fund Management
Team (see Annex XI for organogram).
The Central Bank of the Gambia (CBG)
2.3.4 The CBG has the overall role for monetary control and policy implementation as well as coordinating, licensing and supervising the banking and financial intermediation sector. The CBG includes a microfinance department which includes two divisions: the Development Unit and the
Supervision Unit. The Supervision Unit deals with registration, licensing and supervision of MFIs to promote safety and ensure sufficient transparency and accountability of all stakeholders. The
Unit is responsible for collecting, analysing and disseminating data relating to MFIs financial performance and to prescribe corrective action for MFIs. The Department is relatively small in terms of staff who are qualified but do not have sufficient experience in issues pertaining to the microfinance sector. Moreover, the department lacks adequate tools for undertaking its supervision and microfinance regulation function effectively. The microfinance information management system is weak, is not standardized and does not conform to international microfinance reporting standards.
2.4 The Financial Sector in the Gambia
2.4.1 The Gambia has a small financial system that is dominated by the banking sector which is regulated by the GoTG through the Central Bank of Gambia. The CBG issues banking licenses under the Financial Instructions Act of 1974 and monitors, regulates, and supervises the banking system. Besides the central bank, the banking system is built around several financial institutions, mainly six commercial banks, five insurance companies, a number of foreign exchange bureaus and pensions, and provident and housing finance funds. The Gambian banking sector as a whole is healthy, with non-performing loans as a percent of total loans falling to 5.5% in 2003. The bulk of commercial bank lending is concentrated in the distributive trade sector, due to the low risks and quick returns from this sector. Commercial banks are not allowed to offer deposits in foreign currencies and they do not provide long-term financing and their interest rates for short-term financing are usually over 20%. In June 2005
3
, the commercial banks’ outstanding loan portfolio was GMD 1.8 billion with 32% distributed for consumption and personal loans, 26% allocated to the distributive trade sector and only 14.8% financing agriculture.
3
Central Bank of the Gambia Bulletin April - June 2005

5
2.5.1 The Gambian rural household livelihood is highly dependant on women’s labour, while men are charged with the commercial activities. In this sense, women’s economic empowerment and capacity to improve household livelihood security is challenged by their lack of access to education, training, productive assets including land, technology and credit. Rural women in the
Gambia are engaged in agricultural production, unpaid domestic work, petty trading, agroprocessing, crafts production and in some cases home based businesses such as preparing meals and snacks or producing handicrafts. Constraints faced by women in the establishment of economic operations relate to the structural environment such as distortions in some policies that favour formal and large scale enterprises in terms of credit, export markets, human capital, support services, market information. Moreover, factors related to the state of poverty and underdevelopment has led to weak capacities of women at the enterprise levels resulting in low levels of productivity, insufficient access to factors of production, obsolete production techniques, unorganized work processes, low levels of skills and education and inadequate access to a viable market. Lack of managerial and entrepreneurial skills, lack of access to appropriate technologies as well as lack of professional and technical related knowledge, and inadequate access to credit are considered to be the biggest constraints to the development of women entrepreneurs. One of the biggest challenges to economic empowerment of business women in the Gambia is the undeveloped capacity to create “value” in the products/ produce they manage. The most urgent need identified by rural women already producing a good/ service at the informal level is the need to transit to higher levels of business operations entering high-value production sectors, especially related to exports, with appropriate skills for packaging, labelling, marketing and sales and after sales service. The potential role of information, communication and technology and the electronic commerce for economic growth and sustainable development is widely recognized.
2.6 HIV/ AIDS and Malaria
2.6.1 Classified as a low HIV-prevalence country, The Gambia has nevertheless witnessed a tripling of infection rates over the past decade (0.7% in 1995, 1.2% in 2001, and 2.5% in 2004).
The loss of adults of a working age means lower agricultural production, more households being headed by elderly people or children, and a breakdown in transmission of livelihood skills.
Preventive campaigns are carried out by the various ministries, including DOSA, through the extension workers. The National HIV/AIDS Control Program carries out health worker training, extending to Traditional Birth Attendants and village health workers. Mother to child transmission occurs during pregnancy, delivery, or breastfeeding. Malaria accounts for nearly 78% of all outpatients and 40% of all visits to Maternal and Child Health Centres (MCH). Implemented by the
District Development Committees, the Malaria Control Program conducts awareness campaigns and promotes impregnated bed nets. However, malaria remains a serious health burden in rural areas where access to appropriate therapy is less, affecting productivity.
2.7.1 The World Bank (including IDA) as at August 2002 had approved 30 credits for a total amount of about US$271 million. The World Bank is currently in the process of supporting a
Community Driven Development Project (CDDP) to the tune of USD 17 million (USD 12 million from IDA resources and USD 5 million from Japanese Trust Fund resources). The CDDP aims to empower local government authorities and communities to identify, plan, implement and monitor their social, economic and environmental management priorities and needs. The project is envisaged to consist of three main components, namely: A) Community Development Facility which will provide grant resources to communities to finance community based sub-projects; (B)
Strengthening Capacity for Community Development component will provide resources to capacity building for communities in development planning and implementation as well as to local government authorities; (C) The Project Coordination, Monitoring and Evaluation component will

6 provide support to ensure effective project implementation. The CDDP will be implemented through the Department of Community Development under the Department of State for Local
Government and Lands. The AfDB and the WB have coordinated closely in the design of the present project to ensure that there is effective complementarity of planned activities and to eliminate all overlaps in the interest of efficient service delivery and highest positive impact at the community level (see section 4.1.5 for details). Following the successful implementation of the
PRGF I (2001), the IMF approved PRGF-II amounting to SDR 20.22 million (US$ 27 million).
2.7.2 The EU has earmarked approximately EURO 4.4 million to support the capacity building activities under the decentralisation process, envisaged to begin in March 2007. Department for
International Development (DfID) team during the design of the present project. In addition to other on-going programmes, DfID intends to allocate about GBP 3 million per year for the support to the education sector, capacity building of legal/ judiciary sector, as well as support financial governance and civil society development. The AfDB has coordinated closely with the EU and
DfID resident team to ensure that the present project does not overlap with EU planned activities.
2.7.3 The has recently completed its
Rural Finance and Community Initiatives Project (RFCIP), whose implementation began in 1998 for a total value of USD 10 million. IFAD intends to introduce a phase II of RFCIP in late 2007 for an approximate amount of USD 3 million which will be mainly targeting capacity building of the
VISACAs and other institutions established under Phase I.
2.7.4 The International Labour Organisation (ILO) has had several activities in the country, specifically aimed at the development of the non-agriculture employment sector. The ILO has supported the development of the National Employment Policy (2001) as well as the National
Micro and Small Enterprises (MSE) Development Policy (2005). The Fight Against Social and
Economic Exclusion project (FASE) was established by UNDP in 2000, and executed by the ILO, as part of its contribution to the poverty alleviation programme of the government of the Gambia.
The AfDB has coordinated closely with the ILO to align the present project design along the proposed activities of the ILO programme. Moreover, the present project builds on the lessons learnt by the ILO and UN supported FASE project.
2.8 Constraints to Sector Development
2.8.1 Weak regulatory and policy framework: Although the MSE policy was approved in
2004, its operationalisation in terms of institutional framework and coordination mechanisms has not been achieved. Similarly, the NSMD has also been finalised since over a year and has yet to be validated at the national level. As a result the entry of new service providers is constrained while the supervision and promotion of existing institutions is limited because of the lack of transparency of the legal requirements they are required to follow both for NBFIs and MSMEs.
2.8.2 Insufficient access to micro-finance: Due to the growing population and lack of jobs in the formal sector, informal businesses and entrepreneurship are growing. However, their operations are highly constrained by insufficient and ineffective access to micro-finance (see section 3.3).
2.8.3 Weak coordination mechanisms and guidance: The country suffers from lack of effective coordination and lead agency guidance both for the MSE and the microfinance sub-sectors, respectively. Institutions which are meant to provide these services do not have institutionalised networking mechanisms. While the microfinance industry has established the Gambia Microfinance
Network (GAMFINET) to facilitate, coordinate and enhance collaboration amongst NBFIs, the network is still in its infancy and lacks capacity to execute its mandate.
2.8.4 Insufficient BDS training: The existing BDS providers suffer from capacity constraints which restricts their outreach to clients, and reduces the number of training sessions offered. Some of the existing training curricula have not been updated for some time and therefore do not always meet the needs of the trainees. In the microfinance industry, local microfinance expertise is limited to the

7 provision of basic training modules and is generally provided by NGOs or projects and on an irregular basis by selected Government agencies. Private service providers are absent in this market and no specific education curricula exists in microfinance which constrains the entry of young and qualified human resources as trainers to the microfinance industry.
2.8.5 Ineffective operational capacities : NBFIs are unable to meet the increasing demand for internal training and capacity building, as well as developing management tools and organization systems which address risks and external shocks. Security is also becoming an important issue due to the amount of resources handled by the sector mainly in the area of reducing the risks of financial fraud or mismanagement due to poor governance, unprofessional accounting and financial practices. Interest rate policies and costing of products are not based on adequate financial calculations and are a major reason for client drop out. The outreach of the institutions to rural areas and their expansion is constrained by high expansion costs.
2.8.6 Weak market development: The Gambian entrepreneurs suffer from weak market linkages internally and outside the country. Internally, the country suffers from bad road and river networks, poor development of market infrastructure, and lack of access to market information and pricing systems for most MSEs. The Gambian products and services also suffer from lack of diversity and concentrations in uncompetitive in markets.
3. THE ENTREPRENEURSHIP SUB SECTOR
3.1.1 In the Gambia, while about 59% (NHPSR) of the population was categorised as active labour force, only 14% is actually employed, of which 79% is operating in the informal sector
(National Economic Census, 2005). While there is significant variation in mean annual incomes between the sectors, the lowest is reported in agriculture sector and the highest being in transport,
40% of income derived from non-farm enterprises is reported to be used for direct household consumption. Those groups in the Gambia whose livelihood security is at risk may be classified as those who have no steady income either through formal or informal employment, depend solely on agriculture for livelihoods, and those whose incomes are below poverty lines. Women, as breadwinners, have very low incomes due to their low levels of literacy, poor skills and heavy involvement in maintenance of the family as result of the high fertility levels. Non-farm economic activities in The Gambia include handicraft and cottage industry operations such as tie and dye, soap-making, sewing/tailoring and embroidery. The main handicraft economic activities comprise pottery, weaving and basketry. The informal sector is a key source of income for the rural and urban poor. Those in the informal sector are engaged in: retail trade, carpentry and joinery, metal work/ fabrication, building industry, housing production, motor vehicle repairs and car wash, electronics repairs and electrical works, refrigeration and air conditioning repairs, fishing and fish smoking, food vending, transport (taxis and hand drawn carts), tour guides, dancing troupes and peri-urban agriculture.
3.2. Micro and small enterprises in the Gambia
3.2.1 The Gambian economy thrives on micro and small enterprises (MSEs) which employ the largest share (60%) of the 15 to 64 years age bracket active labour force of which 70% are selfemployed, contributing an estimated 20% to GDP. A Micro enterprise is defined as an informal economic activity with typically weak compliance to labour legislation and may use informal accounting and operational procedures. Micro enterprises typically require an average investment of less than GMD 75,000. Small enterprises are defined as slightly more formal, may employ up to five workers and may have an average investment of below GMD 150,000. Medium enterprises are bigger than small enterprises and employ more than five workers with an average investment of more than GMD 150,000.

8
The Legal and Regulatory Framework
3.2.2 The sector is regulated by the Business Registration Act of 1990 which does not cater specifically for the needs of MSEs. The business registration process is still centralised in the
Greater Banjul Area and is therefore very difficult for rural entrepreneurs to access these services.
Moreover, registration processes are reported to take up to three to four weeks, which is identified as a constraint for rural entrepreneurship development. The registration fees are also viewed by some entrepreneurs as a constraint. Presently the registration process can be charged anything between GMD 500 to GMD 10,000 depending on the nature of the business and other criteria which are not clearly transmitted to the entrepreneurs.
Access to Markets
3.2.3 Market transaction costs are prohibitively high, as a result of inadequate rural infrastructure, in particular transport and market infrastructure, communication facilities and power and water supply. Although the main road network has recently been rehabilitated and upgraded, road maintenance, in particular of rural feeder roads, is inadequate. Limited storage and processing capacity leads to high losses, as well as surpluses leads to depressed prices. In addition, produce quality is usually poor and the potential for adding value to the production is not exploited.
Vegetable and other perishable crop production are particularly affected by the poor infrastructure.
3.2.4 The main marketing outlets in rural areas are the weekly or periodic markets (‘lumoos’), that are held in towns and bigger villages. Important markets in the urban and peri-urban settlements are to be found in Brikama, Serrekunda, Bakau and Banjul. A number of agencies and cooperatives assist their members to market their products. The main markets in the sub-region are
Senegal, Guinea Conakry, Guinea Bissau and Mauritania. Traders travel to these countries either to buy input items or to sell products. Groundnuts dominate the direct domestic goods exports. Reexport activity is a cornerstone of the national economy as The Gambia supplies large quantities of re-exported foreign-manufactured goods and essential items to countries in the sub-region.
Training Institutions and Service Providers
3.2.5 The BDS sub-sector in The Gambia is highly under developed. It is expected that with increasing numbers of micro and small businesses establishing themselves in the country, more
BDS providers will offer these services. This would ensure that BDS is effectively available to all segments of the population in most parts of the country and in the different sectors and sub-sectors of the economy.
3.2.6 The Gambia Technical Training Institute (GTTI) was established in 1980 to provide training opportunities to satisfy the middle level technical and vocational human resource requirements of the country. The GTTI provides training in Business Studies, Further Education
Teacher training, Higher Teacher training, Construction Management conducted in collaboration with the University of the Gambia and South Bank University in the United Kingdom. Plans are underway to offer programs in Construction and Engineering and a post graduate Advanced
Diploma in Further Education in collaboration with the University of the Gambia.
3.2.7 The GTTI registered student population in 2003/ 2004 was 1611 of which 34% were women. In 2006, it is expected that the student population will reach about 2000. The Institute gets one third of its annual budget from the GoTG funds, while the other two thirds come from tuition fees and contracts/ assignments that the Institute may be granted. Currently the GTTI has a staff strength of 228 persons full time lecturers.
3.2.8 The Management Development Institute (MDI) is an in-service management training, research and consultancy institution established in 1982. The MDI has a Board of Governors consisting seven members and the Director General. The Institute currently has a total of 56 full time employees, from senior Managers to Professional and support staff. MDI currently has 3,000

9 students, in 2006 (no sex disaggregated data is available) enrolled in the various departments, with the high concentration in the accountancy and business studies programmes. MDI has six departments: Business Studies; Accounting; Information Technology; Management Studies;
Gender and Development Studies; and Common Wealth Youth Programme. Each department offers Certificates and Diplomas upon completion of the programs. MDI also provides specially designed courses for middle and top-level managers in the civil service. MDI has sufficient teaching equipment, classroom space and research facilities to meet the current needs of students.
3.2.9 In the Gambia, GTTI and MDI have the necessary experience in training delivery, staffing, physical infrastructure, and outreach to implement the short term training envisaged under this project. These institutions are well established, have proven record in delivering training both on and off campus, and have also been part of other donor projects previously indicating their proven experience in activity implementation, monitoring and follow-up.
Small Business Associations
3.2.10 The exact number of Small Business Associations (SBAs) in the Gambia is not known due to lack of updated statistics. However, SBAs in the Gambia exist in almost all sectors such as tourism, agriculture, fishing and livestock, petty-trade, etc. The SBAs usually range from a membership of about 10 persons to about 200 persons, the latter being a kind of an apex SBA for small business groups, mainly in the fishing sub-sector. Most members of SBAs recognise the advantages mainly in the area of accessing technical knowledge and information as well as facilitation of accessing financing.
The UNDP/ FASE Project
3.2.11 The Fight Against Social and Economic Exclusion project (FASE) was established by
UNDP in 2000 as part of its contribution to the poverty alleviation programme of the government of the Gambia and was executed by ILO. FASE focuses on strengthening community responses to poverty, on promoting full participation by the poor in the life of the nation, and on the development of national policies favourable to the poor. The FASE project has six staff members in
Banjul as follows: a National Coordinator, a National Expert Enterprise Development and Social
Marketing, a National Expert Social Protection, and support staff. Moreover, there are three divisional offices, each with a field officer equipped with appropriate vehicles and support staff.
The FASE project started in 2000 and the approximate project budget for 2005 was $320,212.
3.2.12 The FASE approach is to train Entrepreneurship Master Trainers (EMTs) who would consequently undertake TOTs called Entrepreneurship Development Facilitators (EDFs) in the communities. These EDFs are usually successful entrepreneurs living in the communities, which ensures trust and confidence of community members as well as continuous follow-up, monitoring and further support during the establishment of new enterprises. The FASE has already trained about 10 EMTs who will further train the EDFs as trainers at the divisional level. The training of
EDFs includes a four session module per day and the duration of the training course is five days.
Each training session is conducted with at least 20 participants. Furthermore, the training is conducted using the Micro-enterprise Development Training Manual, which has proven success in appropriate information and knowledge dissemination. Under the existing FASE project, a total of
174 members of Multi Disciplinary Facilitation Teams (MDFTs) (extension workers in various divisions earlier trained for the implementation of the decentralization programme) were trained as trainers in Enterprise development and group management in 2001. Since their training, these
MDFTs have provided training to 12,500 FASE beneficiaries at Divisional level.

10
3.3. The Micro-Finance Industry in the Gambia
3.3.1 The Microfinance industry in the Gambia is mainly driven by the promotion and development of micro and small enterprises as well as entrepreneurs both in the formal and informal sectors. Current statistics from some NBFIs in (especially those with rural outreach) report an informal sector clientele of up to 65% and which is further growing with the increased demand for value added products both within the country and in the region. Therefore, the development of the microfinance industry is directly linked to poverty reduction through the growth of micro and small enterprises in the country.
The Microfinance Service Providers in the Gambia intermediary in the country is SDF which hosts the microfinance schemes from three ADB projects and one from the Taiwan Government. The other major intermediary is the IFAD supported RFCIP which put in place a network of VISACAs and provided them with funds for on-lending as well as capacity building to run their operations successfully. Although the RFCIP project has currently been completed, the fund is continuing to rotate under the guardianship of DOSA.
3.3.3 Retailer Non Bank Financial institutions: Currently there are about twenty microfinance retailers who make loans and provide savings mobilisation to various clientele (see Annex III for details). The three largest NBFIs are: The Gambia Women Farmers Association (GAWFA) which is the oldest one and targets only women farmers. The other large NBFI is The National
Association of cooperative Unions of the Gambia (NACCUG) which is an apex organisation of professional credit cooperatives. Other NBFIs, which are legally recognized and also provide non financial services in addition to credit and savings products are listed in Annex III. The informal microfinance providers: it consists of money lenders and rotating savings and credit associations
(ROSACAS). The money lenders may charge interest rates between 100 and 120 percent per annum. ROSACAS are informal organizations where members periodically save a certain amount of money and the total amount is then loaned to members in turn. supporting the microfinance sector in The Gambia. While the IFAD supported RFCIP focuses on the provision and strengthening of financial services, AfDB has supported the Community Skills
Improvement Project (CSIP), the Peri-Urban Smallholder Improvement Project (PSIP) and the
Artisanal Fisheries Development Project (AFDP), using microfinance as a tool to achieve their overall development objectives. The microfinance component of the IFAD funded RFCIP concentrated in Lower River Division (LRD) and CRD. The project is reported to have promoted
80 VISACAs under the project, reaching an estimated at 100,000 ‘clients’, including 45% women.
3.3.5 Commercial Banks: Recently two commercial banks have entered the microfinance industry, Arab Gambian Islamic Bank (AGIB), with its wholesale concessionary credit to the
National Youth Service Scheme (NYSS); and Standard Chartered Bank (Gambia) Limited with a line of credit to GAWFA. The schemes they offer are limited to the urban areas and focus on formal sector entrepreneurs and businesses, and are unsuitable for the emerging entrepreneurs of micro-enterprises. This is mainly due to the fact that these commercial banks are not motivated to increase their outreach in the absence of a clear and transparent micro finance policy environment, in addition to the lack of coordination and monitoring mechanisms which makes the rural based entrepreneur riskier than those in the urban setting.
Microfinance Market and Products
3.3.6 In The Gambia, the main existing financial services/ products offered are: (i) savings mobilization (voluntary or compulsory, passbooks and term deposits); and (ii) credit delivery
(short/ medium/ long-term loans; cash/ in-kind credit; production/consumption credit; and working

11 capital/investment credit). The products offered cover only a small portion of the demand and need further improvements in order to address the recognized need for bigger amounts relevant to diverse economic activities. Table 3.1 below shows the actual size of the Gambian microfinance market according to the market share of the different operators between 2000 and 2004:
Institutional Type
WHOLESALERS
SDF
RFCIP
AGIB
NBFIs
GAWFA
NACCUG
GAMSAVINGs
NGO/ NBFIs-TSPs
AFET
GAMSEM
WISDOM
GARDA
NASACA
NYSS
PAS
TARUD
AGE
IBAS
FACs and ACP
VISACAs
Credit Unions *
Kafo CBOs
Total Microfinance excluding commercial banks
Commercial Banks
Table 3.1: Microfinance Market in the Gambia
TOTAL credit (GMD) Credit (%) Total net savings (GMD) Savings (%)
69,250,000
48,000,000
11.33
69.3
NA
NA
NA
NA
21,000,000
250,000
68,569,540
33,766,169
34,803,371
NA
24,696,400
4,180,000
30.3
0.4
11.22
49.2
50.8
NA
4.04
16.9
NA
NA
63,985,983
9,700,000
45,666,983
8,619,000
514,000
NA
NA
NA
5.34
15.2
71.4
13.4
0.04
625,000
300,000
1,500,000
389,400
300,000
50,000
250,000
252,000
10,000,000
6,850,000
2.5
1.2
6.1
1.6
1.2
0.2
1.0
1.0
40.5
27.8
NA
192,000
200,000
NA
NA
NA
100,000
22,000
NA
NA
NA
37.4
38.9
NA
NA
NA
19.5
4.2
NA
NA
52,320,596 8.56 174,454,810
34,803,370 5.69 45,666,983 -
338,600 0.06 NS NS
215,175,136 35.20 238,954,793 19.93
396,187,650
TOTAL (DALASI)
USD Equivalent
611,362,786
21,081,475.38
Source: National Microfinance Strategic Framework. December
Unmet Demand for Microfinance Services
64.80
100
960,148,000
1,199,102,793
41,348,372.17
80.07
100.0
3.3.7 A study carried out in 2002
4
concluded that the demand for microfinance in the Gambia by far exceeds the supply. The credit demand for rural microfinance services in 2002 was estimated to be GMD 234.25 million (UA 5.21 million), corresponding to GMD 302 million (UA 6.711 million) in 2005 (adjusted for inflation). The “RFCIP Refinancing/ Guarantee/ Insurance Funds Study”
(2005) estimated that the total credit supply in The Gambia in 2005 is about GMD 220 million (UA
4.89 million). This would imply a credit shortfall of over GMD 80 million (UA 1.7 million), assuming zero-real growth of demand between 2002 and 2005. However, based on the assumption that demand over that period increased in real terms by five percent per annum, the shortfall would be GMD 133.5 million (UA 2.966 million). This means that an increase in credit supply of 60% would be needed to meet existing demand. At the same time, it should be noted that presently only about 30% of rural households are receiving credit
5
. Moreover, the average inflation rate in 2005 was 4% as compared to 8% in 2004 indicating a prudent macroeconomic management policy by
GoTG and which continued to remain favorable enabling a more accurate analysis of these financial projections. In addition to clients’ requirements for more credit, there also is a need for different products, which are not yet sufficiently offered by existing NBFI service providers. Some
4
A Proposal for Transforming the RFCIP Revolving Fund into an Agricultural Development Fund (ADF).
Development Management Consultants International (2002).
5
Report of the 2003/2004 National Agricultural Sample Survey (NASS). DOSA (2004).

12 of the products identified by emerging MSEs and rural entrepreneurs under the PRP are: (a) Bigger loans, especially for economic activities with initial investment capital of more than GMD10,000
(US$350); (b) Long-term credit and longer grace periods for specific economic activities (e.g. livestock and tree crop production and beekeeping); (c) Seasonal credit for horticulture and crop production activities; and (d) Adequate savings products combining proximity to the clients and attractive remuneration. The unmet needs for financial services listed above clearly suggest a considerable potential for growth of the microfinance industry in The Gambia in support of poverty reduction and employment generation.
Outreach and sustainability.
3.3.8 In June 2005, it was estimated that the outreach in microfinance was around 232,000 clients
(about 17% of the total population) with over GMD 215 million credit disbursed and GMD 238 million savings mobilized. The microfinance clientele served is mainly rural poor, 70% of whom are women. The repayment rates are between 80% to 90%. The microfinance industry in The
Gambia is still at an infancy stage compared to its neighbouring countries who report that almost
57% of its population have access to an average loan amount of GMD 12,500 compared to GMD
1,500 in Gambia.
6
NBFIs in the Gambia are concentrated in the Western part of the country mainly in the GBA and NBD administrative divisions. Very few microfinance operators are available in the URD and the CRD mainly due to infrastructure constraints and unaffordable costs of expansion.
3.3.9 Currently, very few NBFIs in the country are self-sufficient both financially and operationally. GAWFA, NACCUG and the VISACAs are the only NBFIs and credit unions which have continued to expand their operations, sustainably while charging interest rates close to the
CBG discount rates. This indicates that GAWFA, NACCUG and its credit unions, as well as the
VISACAs, are presently the most efficient NBFIs, meeting the demand of large sections of the rural population for microfinance products. These three institutions have benefited from the support of an international partner (Women World Banking, IFAD, and WOCCU) which have provided the necessary expertise and back stopping to launch and develop the institution which indicates that their efficiency is mainly due to well identified outreach programmes based on client needs while working together with the clients with close technical assistance and guidance. Moreover, sustainability is greatly ensured due to the high level of ownership and participation in decision making by the clients themselves where these institutions are covering an unmet demand for credit in the most remote parts of the country thereby directly supporting poverty reduction.
Interest Rate Determination
3.3.10 The CBG’s policy on interest rates is to leave their determination to the market forces of demand and supply. Nonetheless, the CBG’s discount rate is used as a benchmark for microfinance interest rates. Developments in the CBG discount rate in recent years has had an impact on the lending rates for microfinance activities in the country. In the late 1990s, the CBG discount rate was 12% per annum and this increased to 14-15% per annum between 2001 and 2003. Factors such as the worsening fiscal deficit, exchange rate instability of the Dalasi and the increasing inflation rate from 4-5% to 18% (between 2000 and 2003), all contributed to the increase of the discount rate to a high of 31% per annum in 2004. The discount rate during the first six months of 2005 varied between 12% and 18%.
Support services to the microfinance institutions
3.3.11 NBFIs cannot develop and expand their services without a supporting industry, which provides expertise and services essential to their development. This meso level can include regional and international institutions comprising technical service providers and trainers,
6
Banque Centrale des Etats de l’Afrique de l’Ouest – Direction des systèmes financiers décentralisés – données décembre 2004.

13 information technology firms, credit bureau, professional networks, rating agencies, specialized auditors, etc. Apex agencies are also common for supporting refinancing and/or technical assistance to the retail NBFIs. This segment of the microfinance sector is very limited in Gambia. Some seven qualified microfinance facilitators/ promoters exist in the country whose expertise in microfinance is limited and excludes more technical services as computerization, organizational development, marketing and strategic planning, rating services. The main network institution in the country is
Gambia Microfinance Network (GAMFINET) whose capacity needs to be further strengthened to enable it carry out its other mandates effectively.
3.3.12 The UNCDF programme on Building Inclusive Financial Sectors in Africa (BIFSA) is implemented through two regional units, one in South Africa and the other one in Senegal to support microfinance development and promotion on the African continent using a sector development approach. The BIFSA Programme aims to build inclusive financial sectors in sub-
Saharan Africa that provide sustainable access to financial services for poor and low income people and for small and micro enterprises. Moreover, the programme aims to contribute to generating employment, economic growth, and human development by increasing access to financial services for poor and low income people and by encouraging and supporting micro and small enterprises.
The UNCDF has gained extensive experience through the BIFSA programme in maximising national ownership during the microfinance policy development process which is ensured through multi-stakeholder, participatory dialogue which includes: dialogue, assessment of the state of financial sector development, analyze constraints to sector growth, analyze policy options and formulate policy, and assist in developing policy implementation structures.
3.4 Lessons Learnt from the Poverty Reduction Project and other Donor Interventions
3.4.1 Client orientation : The PRP was highly successful in making credit available to rural areas both directly and through other financial intermediaries mainly because the microfinance scheme featured products and services that suited the needs of women, who have the responsibility for household livelihoods.
3.4.2 Unmet demand for microfinance : The successful outreach of microfinance scheme enabled the growth of economic activities and entrepreneurs from micro levels to small and medium entrepreneurship. This expansion in the MSME sector led to the realisation of a new demand for microfinance services for a specific segment of clients mainly for larger loan amounts with longer repayment durations (also demanded by on-going ADF agriculture projects). This new microfinance market could not be covered under PRP, but has been integrated in the present project.
3.4.3. Training needs : As a consequence of putting in place MSME enabling mechanisms, a growing number of MSMEs and emerging entrepreneurs demanded appropriate business management and skills training accompanied by well defined credit products. Under the PRP this growing demand could not be satisfied before its completion and has thus been integrated into this project design.
3.4.4. Markets Development : The rejuvenation of the rural economy through an enabling business development environment and services led to increased production and offer of market driven entrepreneurial services. However, this was not accompanied by appropriate marketing support which led to the quick slow-down of the economic revival in experienced under PRP. The present project has taken this into consideration and developed a comprehensive marketing development sub-component.
3.4.5. Business registration : The PRP realised a growing number of emerging entrepreneurs, especially women, who organised themselves as small business associations (SBAs) to take advantage of the microfinance scheme and other services. However, these informal SBAs found it extremely difficult to register due to the complex web of legal requirements, application forms, clearance forms, and multitude of offices where these processes need to be fulfilled. In order to

14 support the formalisation of these SBAs, the present project design has integrated activities for the simplification of the registration processes decentralised at the Divisional level.
3.4.6. Community mobilisation : The successful outreach to communities for all project activities under PRP was due to the comprehensive information dissemination and advocacy campaigns undertaken by the project. SDF gained the confidence and trust of the communities and could be easily mobilised to take advantage of project activities. The present project design builds on this successful outreach to communities.
3.4.7. Monitoring and evaluation: One of the weaknesses identified by the PRP-PCR was the insufficient monitoring and evaluation of project activities’ achievements. This was the result of lack of a comprehensive M&E system in place as well as lack of sensitisation of field staff to continue to collect and compile data on project beneficiaries and achievements. Moreover, the PRP did not establish base-line data in order to clearly identify measurable targets angainst which project achievement and impact could be measured and analysed. This M&E weakness has been corrected under the present project design.
4.1 Project Concept and Rationale
4.1.1 The Gambian rural areas suffer from lack of opportunities to engage in entrepreneurial activities in a systematic and organised manner. Those engaged in entrepreneurial activities face several constraints resulting in low profits. Main constraints identified from lessons learnt from previous projects are lack of access to entrepreneurship and skills training as well as micro finance.
Past donor support has been sporadic and often concentrated on individual financial institutions and/or the financing of credit activities within stand-alone sectors without a comprehensive planning and strategic policy framework, related to the development and promotion of MSMEs.
4.1.2 The project has been designed on proven experiences within the region in the area of
MSME development with related access to microfinance services. Moreover, the project has incorporated lessons learnt from the previous ADF funded Poverty Reduction Project (PCR reference ADF/BD/IF/2006/68) which comprised three components, namely: (i) Outreach and
Monitoring, (ii) The Social Fund, (iii) Project Implementation. The present project is a more targeted intervention which focuses on promoting entrepreneurship development combined with enhancing access to microfinance. In particular the microfinance scheme and community capacity building activities are based on the positive gains made under the past project with a special focus on community mobilisation through advocacy. Moreover, the micro-finance products to be offered under the project are designed to support the growth of MSMEs, especially those clientele which fall between NBFI and commercial banks financing. The project has designed an extensive marketing sub-component to support entrepreneurs in business growth; this aspect was recognized as a short-coming in the past project. Moreover, the project will help establish one-stop-shops to facilitate the business registration process particularly in the rural areas.
4.1.3 The project is further built on the increasing interest by regional private sector entities to invest in the Gambia. This emerging interest will require the Gambian population to be trained in entrepreneurship and skills which are competitive. The EPMDP is a holistic intervention that will address fundamental issues for the promotion and growth of a sustainable micro-finance industry which is responsive to the needs of a range of client MSMEs. The design of the project will work with existing approaches to micro-finance and support the development of new products and approaches aligned to emerging MSMEs. The Project design is based on extensive consultations and participation from stakeholders during the identification and preparation phases of project development. The project teams met with women and farmer associations, micro credit beneficiary

15 groups, and NGOs brought together by TANGO. Individual and group discussions were held with bilateral and multilateral donors, and during the appraisal mission.
4.1.4 The AfDB commenced its lending operations in the Gambia in 1974 and to-date has approved 52 operations with total commitments, net of cancellations, amounting to UA199.3 million. In the social sector, the ADF has to date approved 11 projects for the Gambia, totalling about UA 46.000 million. 8 Projects have been completed and closed and the current portfolio comprises three on-going projects amounting to UA 22.85 million (47.9% of the active portfolio as at June 2006). Problems related to project implementation include: (i) delays in fulfilling loan and grant conditions; (ii) non-adherence to the AfDB procedure for procurement and disbursements;
(iii) delays in submitting regular audit and quarterly progress reports. The present project has integrated the main lessons learnt from the past AfDB interventions, (i) the number of grant conditions have been reduced, (ii) a procurement consultant will be recruited to establish the procurement systems, (iii) an expert financial accounting software will be procured and installed in the SDF for timely accounting and preparation of audit reports.
4.1.5 Design Considerations and Alternatives: Initially the project had considered including a grant for activities in support of community driven social infrastructure development and promoting nutrition awareness raising. However, these activities were dropped because of the forthcoming World Bank CDDP which will address these areas.
4.2 Project Area and Beneficiaries
4.2.1. The Project will support the training of at least 24,000 rural men, women and youth nationwide in the area of entrepreneurship and skills development during the project life. In the interest of reaching the most vulnerable group the following targets will be maintained in all training activities: at least 70% trainees will be women and female youth, and 30% trainees will be adult and youth men. Moreover, the project will facilitate micro-finance and savings mobilization access to at least 116,000 new clients while creating at least 14,345 new loans.
4.2.2. The project will target the most vulnerable and poor segments of the population, in the five
Divisions with special focus on the rural population. The youth entrepreneurs from the Banjul City
Council and Kaninfing Municipal Council will be limited to 25% of the total beneficiaries in order to provide more project resources outside the urban centres. The beneficiaries of this project will be from rural households whose poverty situation is exacerbated due to lack of diversification in their economic activities and these will be identified through a community based demand driven approach which will ensue after extensive information dissemination on project activities. Thus, the project will offer, on a demand-driven basis, entrepreneurship and skills development training, including training in accessing and managing micro-finance for business start-up to rural community members, especially women and youth. The offer of training opportunities will be demand-driven in that initially the rural population will be sensitised on the project activities and mobilised at the Divisional level to benefit from the training offered, specifically with regards to the type of skills they would be interested to learn.
4.2.3. The total population of the five rural Divisions is 1.1 million approximately constituting
70% of the total population. Recent population figures show that almost 40% of the Gambian population is in the age group Zero to 15 years and 44% in the age group 15 to 40 years. This indicates a growing burden on the youth and adult population to provide for household survival needs. The Gambian rural women are the major providers of household food and livelihood needs, with men’s participation being limited to seasonal activities. In this sense, the women’s work includes long hours in the field during the agriculture season, and involvement in petty trading activities during off-season (detailed socio-economic profile is explained in chapter two).

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4.3.1 The Gambia Vision 2020, a long-term strategy (1996-2020) that envisions transforming the
Gambia into a dynamic middle-income country, is based on four strategic development areas; a) accelerating private sector development, b) restructuring economic management, development human capital base, and d) institutionalizing decentralized and democratic participatory government structures, processes and systems.
4.3.2. The project concept is based on the strategies outlined in the PRSP II (2007 – 2011) and falls within Pillar two: “ Enhance the capacity and output of productive sectors” and Pillar three:
“ Improve coverage of basic social services and the social protection needs of the poor and vulnerable” . The project is line with National Micro and Small Enterprise Development Policy, the
National Strategic Framework Paper for Micro-finance, National Youth Policy, and the National
Women’s Development Policy, which all emphasize the need to address rural poverty and livelihood security issues by empowering communities to diversify economic activities and generate income sustainably. Thus, the project is also in line with ADF policy on Poverty
Reduction. The selection of interventions is also underpinned by the ADF X Plan of Action with respect to poverty reduction and rural entrepreneurship development, which include support for institutional capacity building and promoting rural households’ access to assets, technology, markets, and improved livelihood security. Last but not least, the Project is in line with the Bank’s
CSP for the country under pillar two related to enhancing production capacity of the poor.
4.3.3 The project is in conformity with The Bank’s Microfinance Policy
(ADF/BD/WP/2006/08/rev1) and applies all its recommendations. It will intervene at the three levels of the Gambian microfinance sector and adopt on overall and coherent strategy to tackle the issues related to legal and regulatory environment, infrastructure and support services and retail capacity of NBFIs. It addresses specifically the recommendation 4.5.2.: “ The Bank will primarily support investments in building the capacity of retail intermediaries to increase their sustainability and outreach to people who do not have access to quality financial services, improve the quality and increase the variety of their services, make them ratable by competent rating agencies, and assure their financial self-sufficiency”. Moreover, it applies the recommendations of CGAP relating to best practices under the constraint of the Gambian specific environment and size of the institutions: all NBFIS supported are legally registered by the CBG, are submitted to national prescriptions relative to the exercise of financial services and to production of financial statements.
The loans to NBFIs will respect best practices related to interest rate determination. The interest rate to be charged to NBFIs will be the CBG discount rate. Moreover a well defined set of criteria of eligibility for the accessing loans by NBFIs will guarantee the integrity of the fund and transparency in the funds allocation.
4.4.1. The sector goal of the project is to contribute to poverty reduction in a sustainable way and the project objective is to support diversification of rural income generation sources, provide increased access to financial and build the capacity of NBFIs in order to avail increased access to the rural population and MSMEs to micro-finance services in a sustainable way.

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The Project will comprise three components: A) Entrepreneurship and Markets
Development, B) Micro-Finance Scheme, and C) Project Management.
A) ENTREPRENEURSHIP AND MARKETS DEVELOPMENT
4.5.1 This component is designed to support entrepreneurship development for poverty reduction amongst the rural poor, including women and youth. In this regard, the component will comprise of three sub-components: (i) entrepreneurship and skills development, (ii) market development, and
(iii) capacity building.
(a) Training in Basic Business Management and Entrepreneurship promotion
4.5.2 The activities under this component will seek to deliver knowledge and managerial competencies required to manage a wide range of IGAs efficiently and profitably. A Micro, Small and Medium Enterprise (MSME) training expert consultant will be recruited and located in SDF to coordinate the implementation of the entrepreneurship related activities for the Entrepreneurship
Development Trainers (EDTs) and the training of entrepreneurs at the community level. The
Project will draw on the positive experiences of the UNDP/ FASE project and will use the training methodology and training manuals already published by the FASE project. In this regard, the project will enter into a Memorandum of Understanding (MOU) with FASE to back-stop and advise the SDF-MSME training expert in the implementation of the relevant activities under this component. In order to mobilize the communities in the Divisions, SDF Divisional Officers will be responsible for information dissemination on the project activities and the availability of entrepreneurship training through the Project.
4.5.3 The project will train 150 Entrepreneurship Development Trainers (EDTs) as Training of
Trainers (TOTs, in PY1) who will be men and women who are interested in becoming Trainers, who have at least high school education, and may have some basic experience in business management and where possible be running a business in the community where training is to be delivered. These EDTs will be trained in groups of not more than 10 persons each per training session. In order to deliver the entrepreneurship training to the communities, the SDF Divisonal
Officers will prepare lists of interested community members in groups of not more than 20 per session, for training by the EDTs starting PY2. 100 EDTs (it is envisaged that there will be some drop-out during the training of EDTs in PY1 due to various reasons, such as lack of interest, inability to fulfil criteria to certify as Master Trainer, etc.) will be supported by the project for transport and subsistence allowance, professional fees, and sufficient training material and supplies order for them to conduct the training sessions in the communities. Thus each EDT will undertake three training sessions per year (starting PY2) in respective Divisions, enabling the training of at least 6,000 women, men and youth per year in entrepreneurship development, with a total of at least 24,000 individuals trained at the end of the Project (PY2 to PY5 inclusive). The trainees from the community will be those women, men and youth who: (i) may have had at least one previous experience in income generation activities, (ii) will not have benefited from any other project driven trainings, (iii) will not have any outstanding loan default with any NBFIs in the country, and
(iv) may be willing to work in groups where necessary. In order to ensure the inclusion of the most vulnerable groups in the training, the Project will maintain and monitor the following specific indicators per training session: at least 70% trainees will be women and female youth, and 30% adult and youth men. These targets will be enabled by continuous advocacy and awareness raising on opportunities available for MSME development training. Monitoring of the training delivery and technical follow-up will be key to the effective implementation of the training and thus FASE field

18 officers and SDF-MSME expert will be supported with field allowances to conduct regular monitoring of the training delivered by the EDTs and prepare regular progress reports on activities implemented.
4.5.4 The training in basic business management and entrepreneurship promotion is aimed at improving the target groups’ comprehension, their participation and understanding of their obligations in business and enterprise operations. The training will comprise of participatory group formation and dynamics, basic principles of business management, laws and procedures of business registration, rural marketing strategies, basic book-keeping, human resource management, and leadership and communication skills. The training will also introduce participants to micro-finance operations, basic principles of savings and credits, managing credit and repayments, conditions and procedures of applying for credit, obligations and responsibilities of the borrower and the lender, and principles and conditions for repeat borrowing and graduating to higher credit ceilings. The basic business management training will be for two (2) weeks, located in an area close to the community and at a time suitable to the beneficiaries, in order to increase attendance by women.
The training in micro-finance management will be undertaken in coordination with the participating
NBFIs.
4.5.5 The institutionalisation of entrepreneurship development is crucial to establishing a critical mass of trainees who can engage in business development services (BDS) as a source of business for themselves while providing the services to emerging entrepreneurs both rural and urban. To this end, the project will support the institutionalisation of entrepreneurship training as a regular diploma course training module offered by GTTI and MDI, respectively. The project will support a short term consultancy to develop the curricula for the Micro and Small Enterprise Promotion and
Training (MSEPT) which is aligned to the needs of the changing Gambian population and poverty reduction dynamics. The MSEPT diploma curriculum and training materials will be developed in consultation with GTTI, MDI, DOSTIE and other stakeholders. The course is envisaged to offer a diploma for a 3 month resident training, initially, and starting PY 3 a long distance training opportunity will be considered in two Divisions (depending on the availability of off-site computer, internet, and guidance facilities), on a pilot basis. The Project will enter into an MOU with GTTI and MDI with specific terms of reference for delivery of the MSEPT diploma training. In order to facilitate the hosting of the diploma course, the project will support limited staff training, support for computers and internet facilities, basic rehabilitation of training facilities where needed, as well as support the dissemination of training material to participants for GTTI and MDI. The institutional based entrepreneurship training will start in PY2 and will be offered once in PY2 and twice in PY 3, 4, and 5. It is expected that at least 20 participants will attend this training and therefore the Project will enable the training of 140 BDS entrepreneurship providers by the end of the project. All training will be coordinated and monitored according to agreed work plans by SDF project coordinator with the assistance of the MSME expert.
(b) Technical Skills Development Training
4.5.6 Entrepreneurship training has to be accompanied by skills training in order for potential entrepreneurs to engage in businesses that offer product or services in demand by the local population and consumers. To enable this, the project will offer skills development training, on a demand driven basis, to at least 6,000
7
trained entrepreneurs organised in groups of not more than
15 persons per session. The interested entrepreneurs will be offered a menu of technical skills from which they may select a skill of their interest to be trained upon. Based on lessons learned from other ADF projects, such as the CSIP, The Poverty Reduction Project, and other donor projects, a menu of training activities, from which the women, men and youth will choose the activity of their
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It is assumed that not all the community level target groups trained in basic business management will require skills development training immediately, for various reasons, such as: they may already have good skills for production, they may not be prepared to go into production and manufacturing, or they may wish to wait and learn from the experience of other trainees who go into production.

19 interest are: grain milling, bread and other bakery items, jams and fruit juice concentrate processing, cheese and yoghurt processing, tomato paste and sauce making, fruit and vegetable dehydration and preservation, edible oil processing, peanut butter making, ready made snacks and meals, wood and metal works, basic repairs of electronic technology (cellular phones, irons, household equipment, etc.) auto, motorcycle, and bicycle repairs, soap making, batik, brickmaking, etc. Technical skills training will be delivered by qualified skills training institutions which will enter into a MOU with the Project to undertake the required services. These skills training institutions are numerous in the Country and will have the following criteria to qualify to deliver skills training under the project: (a) will have the necessary qualified training staff, required equipment and facilities for training beneficiary groups, (b) will be able to offer skills training follow-up visits to the communities for the duration of the project, (c) will prepare and provide to the trainers written guidelines, and (d) will prepare annual workplans and quarterly progress reports for submission to the Project for approval. The Project will seek the Bank’s “no-objection” prior to entering into an MOU with the selected skills training institutions. The respective MOUs will be subject to an annual performance review based on which the service delivery contract may be renewed.
4.5.7 Other technical training activities, not mentioned in the project design, may emerge during the project life that are of interest to a significant number of entrepreneurs, specifically women and youth in the project area. This may be raised with the Bank for discussion on cost implications and if found feasible may be accommodated within the project. The Project will mobilise the entrepreneurs for skills training through information dissemination and awareness raising conducted by the SDF Divisional Officers, similarly to the entrepreneurship training mentioned above. The SDF Divisional Officers will be provided with field allowances to mobilise the entrepreneurs to identify their interest in specific skills development. A comprehensive programme of activities for the skills training development will be prepared and submitted by the
Government for approval by the Bank after the commencement of the project.
(c) Regulatory Framework and Promotion of Small Business Associations
4.5.8 One of the key aspects of promoting entrepreneurship development is the review of the business regulatory framework which in its current state is a constraining factor. Thus, the Project will support an MSME Regulatory Framework expert consultant to review and update the existing regulatory framework which will include the review of existing scale of registration fees, taxation processes, municipal and police clearance processes, and the Business Registration Act. The output of this review will be a paper outlining the constraints, gaps, and opportunities for enhancing the process of registration and regulation of MSMEs with specific and concrete proposals for amendments in the existing regulatory framework to be presented to the Cabinet for consideration.
4.5.9 Entrepreneurship development is further strengthened through the timely registration of rural businesses. To this end, the project will support the establishment of five (5) “One-Stop-
Shops/ Job Centres” (OSS/JC) for supporting registration processes for new entrepreneurs. The short term MSME Institutional Development expert will outline the institutional and operational framework for the OSS/ JCs. In addition to the responsibility of facilitating business registration, the OSS/ JCs will also function as job centres which will be modernized local exchanges, which act as labour market intermediation process of matching demand and supply. Job centres will provide assistance to youth and other job-seekers in job searching, guidance and counselling in planning a career or support for transition from school or college to the world of work. The EDTs in coordination with FASE, SDF and DOSTIE, will advise the trained groups on the advantages of
SBAs and through the SDF Divisional officers entrepreneurs who wish to come together in groups will be listed. Special attention and priority will be given to women’s entrepreneurial groups who want to form an SBA. Due to the fact that the on-going decentralisation process is not yet complete and that the proposed reforms to undertake business registration at the Divisional level will still need time to become operational (estimated not before 2010), the OSS/ JCs will be outsourced to a

20 qualified and experienced private sector operator with specific terms of reference and contracts signed with the project which will be subject to annual performance review and renewal. The TOR
(to be further detailed in the Operations Guidelines) of the OSS/ JC will include identifying entrepreneurs needing business registration services, explaining the process to them, assisting them to compile the necessary documentation, and complete the registration process on their behalf. The project will assist in the registration of at least 35 new rural based SBAs.
(a) Product Promotion and Marketing
4.5.10 A marketing expert consultant will be recruited by the project for 18 person months to oversee the implementation and coordination of all marketing related activities under this sub-component. A central focus of product promotion under the project will be to ensure extensive exposure of Gambian products and entrepreneurs and link them with private sector operators, both national and regional, in the respective product industry (agri-business, metal workers, furniture and wood works operators, etc.) for sustainable and increased sales. To this end, the project will support the recruitment of an experienced and specialized training service provider who will be responsible for developing these linkages between the SBAs and the private sector operators, through networking, product display and sampling, price and contract negotiation, etc.. Extensive product promotion and marketing strategies will be applied to further expose trained entrepreneurs to tap into new and existing markets while attracting local and regional buyers to increase purchases of Gambian products. The project will achieve this by supporting 10 members of SBAs (established under the project) to participate in 2 national and 2 regional trade fairs per year (starting PY2). Furthermore, 10 entrepreneurs and members of SBAs will participate in 1 regional networking visit per year to source new niche markets and opportunities for increased sales. 12 members of SBAs will participate in 4 study tours (3 persons per study tour) to learn from regional success stories in different entrepreneurial areas, learning and adoption of improved processing and packaging technologies, etc.. 3 National marketing exhibitions will be supported by the project (1 per year starting PY3) where local producers and entrepreneurs (not limited to project beneficiaries) can meet and network with national and international companies for information exchange and dissemination and tapping into potential markets. The project will liaise with GIPFZA for the implementation of the national marketing exhibitions, the participation of the members of SBAs in study tours and trade fairs and to identify new markets for products manufactured under the project by the women and youth groups.
4.5.11 Local marketing strategies to be applied under the project will include the development of an
MSME promotion radio advocacy campaign at least 200 radio spots for transmission of entrepreneurship oriented advocacy messages, containing information on availability of types of local produce, respective prices, markets, etc. during the project life. Increased exposure for local entrepreneurs and SBAs will be further achieved by the publication of at least 5 success story cases as means of advertising their products. The success story cases will be captured in the form of 4000 pamphlets, in English and French languages, to be distributed for increased networking within the country as well as abroad. The project will also support basic rehabilitation of key markets in the 5 rural Divisions as an added strategy to further improve marketing of local products to regional markets.
(b) Innovators’ Platform
4.5.12 The Project, in coordination with DOSTIE, will promote entrepreneurship development through innovation in any area of technology development, manufacturing processes, service sector, new products or by-products, new ways of doing business, etc. The aim of this activity will be to encourage the new and existing entrepreneurs who may have an idea for a new product, technology, manufacturing process or service and who need support to develop prototypes and operationalise their ideas. This will encourage research and development in the country while also

21 contributing to developing an entrepreneurial culture with a view to innovating and/ or discovering new markets through innovation. To enable the innovation oriented entrepreneurship development, the
Project will provide an innovation grant , of a maximum of USD 7,000, to at least 35 potential innovators during the project life to enable her/ him to develop an innovative idea and operationalise it.
Interested entrepreneurs will provide a brief write-up of their idea with related costs (specific guidelines will be established to provide such a write-up) to an Innovation Promotion Committee
(IPC) who will assess the various applications according to specific criteria before approving the grants to the individual applicants.
4.5.13 The IPC will be chaired by the PS-DOSTIE, and will consist of the Project
Coordinator, Executive Director of TANGO, and the Executive Director of the GCCI as permanent members, and other two members will be invited to sit-in on the committee on a rotation basis, to be selected for each meeting depending on the application to be reviewed; e.g. if the application is related to an engineering innovation then a member from the Faculty of Engineering and another from a leading private sector engineering services firm could be invited to participate in the assessment of the application. The IPC will seek the Bank’s no-objection before disbursing the grant. Each grant will be for a maximum of USD 7,000 (costs related only to materials needed for developing the idea are eligible for this grant). The different finalised innovations will be tested under the guidance of DOSTIE and project coordinator for its effectiveness, usefulness, value added, and commerciability. The Project will, through its marketing expert, support the promotion of those finalised innovative ideas which prove to be economically viable and technically feasible to regional and international innovators’ platforms, private sector companies in related industries and other agencies with a view to assist the innovator in promoting her/ his idea for commercialisation. The Project will support the advocacy and awareness raising on this subcomponent activity, nationwide with a view to mobilise potential innovators both from the rural and urban areas to develop their ideas.
(c) Research and Market Surveys
4.5.14 In order to address the gap in market information for further enhancing marketing of local products, the project will support two market research and surveys during the project life (PY1 and
PY4). The market surveys, in the form of a report, will clearly profile the Gambian market, the relevant stakeholders, potential constraints and opportunities, as well as understanding the structure of the market with a view to identifying efficient and targeted marketing strategies by new and emerging MSMEs.
4.5.15 Moreover, the promotion of local industries and entrepreneurs will be supported by the project through developing 8 Local Industry Promotion Feasibility Studies and related business plans which will be used to attract foreign and national investments in the local small scale industry; for example promotion of small scale agro-industry, wood-works, pottery and glass painting, handicrafts making, etc. The business plans will contain information necessary for investors to decide on investing in specific industries and their expected costs and profitability of the investments. The business plan may contain information such as: background on the industry and opportunities, business structure and investor profile, market structure, raw material supply sources, production process description, management and workforce, constraints and risks, links and support networks, assumptions and preliminary financial projections and sensitivity analysis, etc. Such a business plan will make it easier for the country to attract local and foreign investors in local industries which need to be promoted in support of poverty reduction. The finalised feasibility studies will be widely disseminated to regional and international private sector associations, chambers’ of commerce, development agencies, international marketing forums, and specialised firms to further attract investors in the country.

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4.5.16 The project will support one technical assistant specialised in MSE Policy Implementation to assist DOSTIE in operationalising the MSMEs policy with a special focus on establishing a special MSMEs promotion unit with the Department. The TA will also undertake to update the recommendations of the IBAS restructuring report. Provision has also been made for study fellowships in response to the need for human resource capacity building for the implementation of the PRSP II vis-à-vis DOSTIE which will benefit from 1 regional Masters level study fellowships in the area of MSME promotion and development and other relevant areas for DOSTIE, GTTI, and
MDI (one each). Furthermore, DOSTIE, GTI, and MDI will each be supported with two (2) computer sets and other relevant office equipment to assist in coordinating the MSME development and training activities under the project.
4.5.17 The Micro-finance component is designed to provide increased financial services to enable the clients to utilize the knowledge and skills acquired under the basic business management and appropriate skills development activities of the project to establish profitable MSMEs. The component will also support the development of sustainable and self-sufficient financial intermediaries that can effectively increase outreach to marginalized communities to increase their economic productivity. This component will have two sub-components: (i) The Micro-credit Fund and (ii) Capacity Building and Institutional Development.
(i) The Micro-credit Fund
4.5.18 To help fill the gap between the high level of demand (identified at UA 6.7 million) and the constrained supply (identified at UA 4.8 million) of microfinance services and to increase the outreach of the Gambian NBFIS to emerging and existing MSMEs, the Project will provide a revolving fund of maximum UA 1.0 million to be wholesaled to licensed and eligible financial intermediaries/ organizations acceptable to the Fund.
4.5.19 The core objective of this sub-component is to make loan resources available to that segment of the population which currently has no access. In this sense, the Fund will wholesale resources progressively as the capacities of the NBFIs in the country are strengthened to deliver the loans to new and existing clients. Therefore, the project micro finance fund will be accessible to all eligible NBFIs (see eligibility criteria annex VI) for on-lending to end clients. This is expected to enable the maximum outreach nationwide during the project life while at the same time allowing the sector and the NBFIs to grow.
4.5.20 The refinancing fund will be hosted by the Social Development Fund (SDF). The Cabinet has approved the transformation of SDF into a semi-autonomous FFI with an independent Board of
Directors registered as a company limited by guarantee, not having a share capital (charitable association). Institutional support will be provided to reinforce SDF’s management systems. In this regard, the SDF will receive 6 person months of short-term consultancy services in PY1 in organizational development through an institutional assessment of SDF which will determine its strengths, weaknesses and reinforcement needs. The outcome of this study will be a business and strategic plan that determines the institutional improvements to be implemented for SDF’s successful transformation into an FFI. SDF will recruit a specialized accounting/ audit firm to put in place a financial management system allowing a proper control and management of its funds and which will set up appropriate financial rules and procedures. In line with the Bank’s audit recommendation (2005) for Poverty Reduction Project, SDF will be equipped with an accounting software and the relevant staff will be trained in its use.

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4.5.21 This component will also finance a micro-finance baseline assessment study of the project, the findings of which will be used to define the baseline monitoring indicators for the impact assessment of the micro-finance scheme clients and MSMEs in the Divisions. In this regard, the
Project will also support two impact assessment studies, in PY2 and PY4 each respectively. A recognized poverty impact assessment methodology will be used and detailed terms of reference for this consultancy service will be part of the PID.
4.5.22 The proceeds of the micro-credit fund will be “wholesaled” to licensed and eligible financial
NBFIs, acceptable to the Fund, which meet the eligibility criteria and will be further detailed in the manual of operational guidelines (see Annex VI). The credit fund will be on-lent to legally registered
NBFIs that have proven experience in lending to small and medium enterprises effectively. One of the criteria for eligibility to the micro-finance fund will require that the NBFI have a demonstrated track record in financing MSMEs. The eligible NBFIs will have to submit a request including a business plan detailing their portfolio financing’s needs. An institutional assessment study will determine the capacity constraints of the NBFIs and ensure that acceptable systems of control and financial management are in place to guarantee the integrity of the Bank’s funds which would be on-lent through them. Preference will be given to those institutions that target women, youth, rural zones, poor population, and promotion of MSMEs.
4.5.23 The performance of the partner NBFIs will be closely monitored through a signed MOU between SDF and the NBFIs. A performance reporting framework (see Annex VII) will be provided to partner NBFIs making reporting compulsory, as part of the terms of the MOU. A main condition of the agreement will be that each of the intermediaries will be contracted to administer credit operations for an initial period of one year. These contractual arrangements will be renewed on the basis of the performance as well as submission of financial accounts of the utilisation of resources of the project micro-credit fund, by each individual intermediary at the end of each year.
4.5.24 The CBG’s discount rate will be the basis for the interest rate charged by SDF to whole sale funds to partner NBFIs, which will then lend at interest rates according to their loan policy and will charge market interest rates. The interest rate determination practice by each NBFI will be thoroughly analysed during the institutional assessment study to identify operational inefficiencies and unjustifiable operating costs. In order to avoid excessive interest rates due to inappropriate costing methods, a total of five training sessions on modalities of interest rate determination and product costing will be provided to the NBFIs during PY1 and PY2. NBFIs will also mobilize savings from the clients as a way of creating a pool of funds for on-lending and to reduce their dependence on external funding. The savings could also be used as a form of eligibility for small loans, which is especially suitable for women who do not own land or any other form of assets to be used as guarantee. It is envisaged that the loans given under the project will fund income generating activities ranging from trading to manufacturing, agro-businesses, general services, tourism promotion, carpentry, etc. The NBFIs will be expected to reimburse the SDF, with interest, on terms specified in the protocol of agreement between the SDF and each NBFI.
4.5.25 The Fund will continue to be hosted by SDF (at the end of the project) which is the
GoTG preferred institution in the country for microfinance coordination and wholesaling. The SDF is already managing microfinance funds for other Bank funded projects and has proven experience in managing and continues to on-lend funds for a total amount estimated at UA 1.5 million (see annex IX on financial projections). The financial projections show that at the end of the project,
SDF will be able to lend successfully to NBFIs, meeting their operational costs and making net profit, including provision for loan losses. However, in the interest of financial prudence, this strategy will be reconfirmed during the MTR, through a Fund Sustainability Study which will be supported by the project before the MTR to further detail the arrangements for the final hosting of the fund. In the event that SDF is found not suitable based on justifiable reasons, an alternative institution could be considered to manage the funds provided that it continues to support the

24 microfinance sector and MSME development. The proposal for an institution other than SDF to host the fund will also be outlined by the Fund Sustainability Study.
4.5.26 It is expected that the project’s interventions will result in the growth of the micro-finance industry by at least 10% per year with regards to the NBFI loan portfolios in the Gambia. This growth is expected to result in at least 14,345 new loans during the project’s implementation period. In order to further increase outreach to the emerging MSMEs and rural entrepreneurs, training sessions will be organized in PY1 and PY2 in developing new micro-finance products.
This training will enable the NBFIs to design appropriate financial products adapted to their clientele’s needs. New loan products may include deposit savings at competitive interest rates and voluntary savings allowing better management of the client’s revenue. New loans products may comprise of loans of bigger size and longer term to allow entrepreneurs to satisfy bigger investment needs and enter into new and profitable sectors while taking advantage of the new skills acquired.
Special attention will be given to the design of loan products adapted to the financing of profitable rural activities.
4.5.27 The modalities of implementation of the main activities of the micro-finance scheme will be further detailed in the manual of operations guidelines.
Thus, the Operations Guidelines will feature the following aspects related to lending: (i) general policy framework for administering the
Fund: the options for the general administration of the fund, selection’s criteria of the partner
NBFIs, disbursement of the Fund to partner NBFIs, eligible uses of the fund by the partner NBFIs, etc, (ii) operational modalities of the Fund: responsibilities for loan screening, application and processing of applications, loan monitoring, reporting, recovery and auditing of the micro-credit scheme. The sections on microfinance in the project operations guidelines will be reviewed by the micro finance division of the Bank before it is given to the selected NBFIs for the administration of the project credit operations.
(ii) Microfinance Institutions’ Capacity Building and Institutional Development
4.5.28 This sub-component will support activities aimed at creating a conducive environment for the development and provision of microfinance services, and in organising poor households to improve their access to financial services. This sub-component will include three activities: (i)
Micro-finance Policy Development Support, (ii) Support to Regulatory Environment, (iii)
Institutional Support to NBFIs and rural Communities.
4.5.29 (a) Micro-Finance Policy Development Support: the Project will assist DOSFEA to establish the necessary policy and legislative framework in the country. The Project will support a
Microfinance Policy Development technical expert in PY1 to analyse the existing National
Strategic Framework for Micro Finance, and engage all micro finance’s stakeholders: (NBFIs,
NGOs, FSPs and TSPs, Donor and development partners, Civil Society and Consumers,
Government and Legislators, Central Banks, Financial Institutions, etc.) in policy dialogues to identify key policy issues (and possible solutions), constraints, gaps and opportunities in current microfinance policies and legislation and outline the priority actions for industry growth and development. The Project will therefore support policy user dialogue sessions with all stakeholders over a four year period to create micro finance awareness amongst decision makers, involving presentations and interactive sessions with Members of Parliament, senior Divisional officials and politicians; awareness raising sessions for communities and rural NBFI clients; two national propoor workshops to align the micro-finance policy framework to the needs of the poor communities and their financing requirements. Moreover, two national and regional exchange visits for a crosssection of policy makers; and one stakeholder forum for financial intermediaries, NGOs, donors, civil society and government will be supported to discuss pressing micro finance issues and to arrive at common understandings and solutions within the industry, and propose feasible and sustainable recommendations. The outcome of this consultation process will be the drafting of the
National Micro-finance Policy Document for presentation to the Gambian Cabinet. The project

25 will sign an MOU with UNCDF-Dakar to back-stop the process of micro-finance policy development during PY1, PY2 and PY3.
UNCDF has extensive experience in micro-finance policy development in Africa and in particular in the region, through the programme called Building
Inclusive Financial Sectors in Africa (BIFSA) program.
4.5.30 (b) Support to Regulatory Environment: To enable the CBG to respond effectively to the growth of the microfinance sector through the creation of a conducive regulatory environment. The ADF Project will also support the recruitment of a Microfinance Regulation
Specialist, with experience in central banking and microfinance regulation. The expert will assist
CBG in reviewing the legal, regulatory and prudential framework and the NBFI prudential Rules and Guidelines, amending them as necessary in order to enhance microfinance development. The expert will also propose recommendations for the revision of the FIA using an integrated approach and these recommendations will provide the basis for regulatory and prudential aspects of the
Microfinance Law to be presented to the Cabinet for approval. The Project will support a consultant in PY1 to undertake a training needs assessment in microfinance related fields for CBG; two exchange/ exposure visits for staff and management of CBG to share experiences with other central banks and regulators, participation of three of its staff members in various short-term training courses and management seminars in micro-finance promotion. The Micro finance regulation expert will work closely with the consultant assisting the Micro-finance policy development.
4.5.31 (c) Institutional Support for NBFIs will be provided to foster their sound development and expand their services to the rural areas. The Project will support the institutional development and capacity building of NBFIs based on a demand driven approach. The project will recruit a specialized microfinance training firm that will provide training of trainers’ sessions in the following areas: MFI internal control systems, accounting revision, interest rates and product costing, market led product development, accounting and financial statements, marketing strategies, and gender and rural participatory approach. These sessions will be opened to relevant NBFIs’ as well as to TSPs. Microfinance training manuals and modules will be part of the training package. A contribution amounting to 25% of the training costs will be paid by NBFIs to ensure commitment and these fees will be pooled for supporting further trainings sessions . Moreover, institution specific training in marketing and accounting revision will be designed and provided to NBFIs for designing adequate marketing products and for reviewing the NBFIs financial information. A total of 28 institutions will benefit from this assistance.
4.5.32 The project will also support the design of a microfinance curriculum which will be offered as a Microfinance Management and Development (MMD) diploma course by GTTI, and
MDI (similar to the MSEPT curricula). Moreover, starting in PY2, the project will support 2 persons months (annually) of national consultancy to respond to demand-driven and unprogrammed NBFIs training needs with a view to continue to enhance the performance of NBFIs and build their capacity for increased outreach to rural areas. NBFIs will also be trained in development of loan appraisal tools and guidelines for assessing client’s economic activities. These sessions will be repeated in PY 3 to include new loan products developed under the project. Since both NBFIs and their clients must run profitable operations for the financial system to be sustainable, there is also a need to address the constraints on the demand side by linking the community members with the NBFIs. Thus, communities will be exposed to a refresher training, to be undertaken by the participating NBFI staff, on basic bookkeeping, producing basic financial statements with a view to determine their assets, net income, cash flows and financing needs, in addition to sensitising the clients on the NBFI specific repayment requirements, applications etc..
Training will also be given to improve their access to NBFIs by improving their comprehension of basic financial concepts, such as determinants of interest rate and formulation of a loan request, etc.
Training of NBFI staff, both at Divisional and National level, will be supported to equip them with skills which will help link them with communities such as group mobilization, negotiation skills, community and group participation skills. Special training will be provided to equip NBFI staff with competencies in rural participatory methods and gender sensitive approaches in order to

26 ensure gender responsive NBFI service delivery and new product development. Skills training in identification, formulation, and rapid appraisal of small and micro projects, entrepreneurial skills development and gender roles and decision making will also be provided.
4.5.33 An outreach and expansion grant worth a total of UA 960,000 will be made available to encourage qualified and experienced NBFIs to extend their operations into rural areas where financial services are not yet provided. This outreach grant will cover eligible (see Annex V) operating costs necessary for the opening of new branches of existing NBFIs in Divisions with insufficient access to NBFI services. The grant will be linked to specific reporting requirements related to outreach of these new branches and their sustainability potential. The amount will be granted to NBFIs based on applications outlining client outreach targets, including MSMEs and vulnerable groups, financial projections, determining the costs and revenues expected from this financial services expansion and sustainability of operations. The same conditions that apply to the delivery of the credit fund will also apply for this grant, such as legally registered NBFI, will have a sustainable operations, and adequate financial records keeping system, etc. The operations manual will further elaborate on the terms, conditions and requirements for eligibility under this grant.
Sector Coordination and Information Sharing
4.5.34 One of the more weaker aspects of the Gambia microfinance industry is the lack of coordination mechanisms and a lead coordination institution. GAMFINET has been identified by key stakeholders in the industry as the institution best placed to play this role. Thus, GAMFINET’s capacity will be strengthened by providing them with two computers, 1 person month consultancy to develop a strategic plan of action with built in sustainability mechanisms. In order to further address the existing constraints to access and availability of quantitative and qualitative information on the sector’s performance, the project will support the procurement of a recognized Microfinance
Database Management software which will be introduced into the country. 15 licenses to this software will be bought for NBFIs and adequate training will be provided to NBFI staff and TSPs interested in using it for data collection and reporting. The software will be chosen for its adequacy to the Gambian microfinance and/ or for its exposure the region. It will produce different levels of reports and will be configured to conform to accounting standards and loan tracking and performances monitoring, as prescribed by the Microfinance Information Exchange (MIX
8
) market platform initiated by UNCTAD and supported by CGAP. This will allow the information on the
Gambian NBFIs to be put on the MIX market and thus be available to international microfinance investors further promoting the growth of the industry. Initially SDF will host and manage the microfinance database and information dissemination until PY3. Starting PY4, GAMFINET which is the national microfinance coordination agency will manage the information database.
4.5.35 No new project management unit will be created under this project. The project will be managed by the Social Development Fund (SDF) established under the Bank’s PRP (see Annex
VIII). The SDF has proven experience in delivering community empowerment microfinance and socio-economic development services and is known nationwide, especially in the rural areas, as the institution supporting poverty reduction efforts in the country. Thus, the project will build on this positive experience to reach communities effectively. Moreover, SDF already has in place experienced DFOs, as well as core staff competency to implement project activities.
4.5.36 In view of the fact that the volume of activities under the project is extensive, a dedicated and full-time Project Coordinator (PC) will be recruited from project resources to head the Project
Management Team. The Project Coordinator will have sufficient experience in MSME development and Micro Finance. Core SDF staff to be retained under the project are: the financial
8
A global web based microfinance information platform. www.mixmarket.org

27 controller, micro finance expert, chief administrative officer/ procurement expert, six DFOs, and selected support staff. The project will further support a project accountant, a short term procurement consultant, a short term monitoring and evaluation consultant, twelve DFOs, a secretary and a driver, and a short term consultant to develop the project operational guidelines. In the interest of sustainability, the project will support the salaries of these staff fully up to PY 4; in
PY 5 the project will support 8 person months of the salaries of each staff and SDF will contribute
4 person months towards the salaries from the income generated from the on-lending of the credit funds. The project will also support the costs of annual financial and procurement auditing of project accounts. These experts will be headed by the PC and together they will comprise the
Project Management Team (PMT). Thus, the Project Management Team will be located within
SDF. The GoTG will contribute towards the rent of the SDF office space, basic running costs, as well as repairs and maintenance of old and new SDF vehicles and office equipment.
4.5.37 Therefore, the PMT will be provided under this project with office technology and equipment, field allowances for community mobilisation and monitoring and evaluation visits for some of the staff and some specific office running expenses. Two vehicles will be needed for the project coordination and field monitoring and evaluation visits at SDF. Since most of the project activities will be implemented at the community level, the 6 SDF Divisonal Offices will benefit from office technology, office supplies and furniture, as well as limited number of motorbikes for supporting the project in planning, implementation, monitoring and evaluation of the project activities at the local level. The project will also provide for training of selected staff of Divisional offices in project planning, management and implementation, leadership and communication skills, different computer software such as Excel, PowerPoint, Word, SPSS, internet and email services.
SDF staff as well as SDF Divisional Officers will benefit from some regional training to build human resources capacity for project implementation.
4.5.38 Furthermore the project will support 200 training and awareness raising sessions in the following cross-cutting issues : gender mainstreaming and sensitisation, HIV/ AIDs, malaria and basic environmental management and awareness. These awareness raising activities will be focused on Division level technical and administrative staff, community leaders, VDCs, WDCs, DCCs as well as community members in the project area.
4.6.1 The project is classified in environmental category III. It is not expected to have adverse physical effects on the environment nor be detrimental to the life of women or men, the poor, vulnerable groups or less organized segments of society. Project activities are not expected to result in significant negative environmental effects, for which an environmental assessment would be necessary. Most of the informal sector enterprises comprise of activities at small scale, which requires proper management and placing in the sector in order to be harmonious with other rural entrepreneurial functions.
4.7.1 The total cost of the project net of taxes and customs duties is UA 8.97 million, comprising
UA 3.75 million in foreign exchange and UA 5.22 million in local currency (Tables 4.1 and 4.2). A provision of 5% for physical contingencies and 5% for price escalation in local currency and in foreign exchange has been factored into the project cost. The 5% price escalation has been calculated based on an annual inflation rate of 2% internationally and 4% locally during project implementation. Cost estimates were established during the preparation and appraisal missions.

28
Table 4.1: Summary of Project Cost Estimates by Component
Entrepreneurship And Markets Development
Micro Finance Scheme
Project Management
Total Base Cost
Physical Contingencies
(Dalasi (GMD) Million) (UA '000)
Local Foreign Total Local Foreign Total
92,541 54,463 147,004 2,056,466 1,210,279 3,266,745
95,733 58,976 154,709 2,127,399 1,310,581 3,437,980
27,197 48,379 75,577 604,386 1,075,094 1,679,480
215,471 161,818 377,289 4,788,251 3,595,954 8,384,205
1,126 375 1,502 25,031 8,344 33,375
18,270 6,742 25,012 406,003 149,818 555,821
234,868 168,935 403,803 5,219,285 3,754,116 8,973,401 Total Project Cost
Table 4.2 Summary of Project Cost by Category of Expenditure
(Dalasi (GMD) Million) (UA '000)
C. Services
D. Miscellaneous
Local Foreign Total Local Foreign Total
22,528 7,509 30,038 500,625 166,875 667,500
7,137 20,807 27,944 158,591 462,379 620,970
79,058 89,107
67,804 29,059
168,165 1,756,850 1,980,160
96,863 1,506,750 645,750
3,737,010
2,152,500
Total Base Cost
38,945 15,336 54,280 865,435 340,790 1,206,225
215,471 161,818 377,289 4,788,251 3,595,954 8,384,205
Physical Contingencies 1,126 375 1,502 25,031 8,344 33,375
Price 18,270 6,742 25,012 406,003 149,818 555,821
Total Project Cost 234,868 168,935 403,803 5,219,285 3,754,116 8,973,401
4.8. Sources of Financing and Expenditure Schedule:
4.8.1 ADF and the GOTG will finance the project jointly. The ADF grant will be UA 8.0 million and will finance 90% of total project cost. The ADF resources will finance 90% of the foreign costs constituting 42% of the project cost. The overall counterpart funding amounts to UA 0.89 million constituting GoTG contribution of 10% of the project’s cost and UA 78,608 constituting beneficiary contribution amounting to 0.9% of project cost. GoTG contribution will cover some local staff salaries, administration of the MSEPT and MMD curricula, publication of the MSEPT and MMD curricula, SDF office rent, PMU miscellaneous running costs, SDF operating costs, and operations and maintenance of vehicles. The sources of finance are summarized in Tables 4.3, 4.4 and 4.5.
Table 4.3: Sources of Finance (UA Millions)
The Government of The Gambia
African Development Bank
Beneficiaries
Foreign Local Total %
334,029
3,384,105
560,544
4,616,115
894,573
8,000,220
10
89
35,981 42,626 78,608 1
3,754,116 5,219,285 8,973,401 100
Table 4.4: Estimated Cost by Source of Finance and Components (UA Millions)
Entrepreneurship And Markets Development 111,848 3,431,266
Micro Finance Scheme
Project Management
29,277
753,448
3,504,194
1,064,760
Total PROJECT COSTS 894,573 8,000,220
78,608 3,621,721
- 3,533,472
- 1,818,208
40
39
20
78,608 8,973,401 100

29
Table 4.5: Estimated Project Cost by Source of Finance and Category of Expenditure
%
A. Civil Works
B. Goods
C. Services
D. Miscellaneous
E. Operating Costs
Total Project Costs
-
0
711,409
612,816
0 4,075,640
- 2,152,500
894,573 447,856
894,573 8,000,220
40,042
38,565
-
-
-
78,608
751,452
651,381
4,075,640
2,152,500
1,342,429
8,973,401
8
7
45
24
15
100
4.8.2 The ADF resources will be used to finance all the categories of expenditure, with 44% of the funds to be used to pay for the services of specialists in capacity building; 24% to finance the microfinance fund as well as the outreach and expansion grant to increase access to MFI services in the rural areas, this category also includes the innovation grant for the promotion of innovation based entrepreneurship small-scale business development. The GoTG’s contribution will finance the project’s overall operating costs (such as MSEPT and MFI curriculum administration costs, operations and maintenance of cars and motorbikes, rent of SDF premises), Beneficiaries counterpart funding will include community participation in local market rehabilitation, training centres rehabilitation and feeder roads rehabilitation. MFIs participating in the project will contribute about 25% of their training costs.
5.1.1 The Social Development Fund (SDF) will be the executing agency. SDF has gained extensive experience in project management and implementation under the Poverty Reduction
Project (1997 – 2004) which established the SDF and empowered it to play a central role in the micro-finance industry in the country as well as ensured coordination and implementation of other activities related to entrepreneurship and social infrastructure development. The project completion report for the Poverty Reduction Project concluded that the SDF was highly successful in raising awareness on opportunities for accessing micro-finance for entrepreneurship as well as providing support for social and community infrastructure. In that sense, SDF had established an outstanding track record in the rural areas and gained the full confidence and trust of the rural communities. The present project will capitalise on this success which will further enhance community mobilisation and participation. Moreover, SDF has one Divisional Officer in each Division, respectively, who have the responsibility of community mobilisation, follow-up and supervision of community level activities such as implementation of sub-projects, training, as well as assisting in the monitoring and evaluation of project activities. These Division Officers will have the responsibility of coordinating activities at the Divisional level.
5.1.2 The Project Management Team will be located in the SDF and its role will be to coordinate the day-to-day implementation of the activities under the project for the different target beneficiaries. SDF’s current staff strength is 6 Divisonal Field Officers (DFOs) who are responsible for liaising with communities for loan applications, repayments, monitoring and follow-up activities.
The DFOs coordinate closely and work together with other Divisional staff such as extension officers, health and education officers, community development agents and the Divisional Chief Executive
Officer for community mobilisation. The PRP-PCR concluded that there was a need for at least three
DFOs in each Division due to the remote locations of communities in each Division resulting in increased time needed for reaching them for loan application follow-up, monitoring and providing technical guidance. The SDF main office is located in Banjul and is staffed by four core staff, namely the financial controller who is currently the acting director, a chief administration officer who is in charge of accounting and procurement, a microfinance officer and a community development officer, together with support staff.

30
5.1.3 The Bank conducted a sector audit mission (2005) to the Gambia in which no major discrepancies or irregularities were found concerning the performance of SDF. The mission, however, recommended that SDF must put in place a more updated and efficient accounting system and which is preferably computer based. Moreover, it recommended that due to the fact that SDF manages several microfinance schemes for several Bank funded projects, it should have separate local accounts for hosting repayments under each scheme. These recommendations have been integrated into the present project design. The GoTG has recently approved the transformation of
SDF into a Fiduciary Financial Institution (FFI). As an FFI, SDF will be registered as a semiautonomous institution under the supervision of DOSFEA. It is expected that as an FFI, SDF will have a catalytic and capacity building role for the micro-finance and MSME development industries, respectively (see Annex X).
5.2. Organisation and Management
5.2.1. A Project Coordinator will be recruited from project resources to head the project management team (PMT). The PC will be supported by a financial controller, a micro-finance expert, a chief of administration, an accountant, a procurement expert consultant, a monitoring and evaluation expert consultant, and other relevant support staff. The PC will also be supported by a number of technical assistants, such as: a marketing expert, SBA/ Private Sector Linkages Expert,
MSME Development expert, MSME Regulatory Framework expert (DOSTIE), Microfinance
Policy Development expert, Microfinance Regulatory and Legal environment expert, procurement consultant and monitoring and evaluation consultant, as well as other short term consultants to ensure project implementation is carried out effectively. The Project Coordinator will be responsible for the coordination and implementation of the project activities for all the beneficiaries under the project, as well as preparation and submission of the relevant progress reports and
Quarterly Progress Reports (QPR) to the Bank. Furthermore, the Project Coordinator will oversee the recruitment of relevant individual consultants and/ or firms or NGOs for the implementation of the training activities. The Project Management Team will report regularly to the Steering
Committee and receive feedback, and undertake all procurement and disbursement functions under the project.
5.2.2 The SDF will enter into a Memorandum of Understanding with the Fight Against Social
Exclusion (FASE) project to back-stop and advise the SDF, through the MSME training expert, on the implementation of the activities related to TOTs for the EDTs as well as entrepreneurship and skills training at community level. In this regard, SDF, in collaboration with FASE, will oversee the process of selection of trainers to undertake the training for the EDTs as well as identify the candidates to be trained as EDTs; this will be done in collaboration with SDF, as well as guide the implementation of the TOTs. An MSME training expert will be recruited for 42 person months to be hosted by SDF to undertake the implementation of the entrepreneurship development training and related activities in collaboration with FASE.
5.2.3 The SDF Divisional officers will disseminate information amongst the community members on the opportunities and activities of the project. SDF divisional officers together with FASE field staff will conduct regular and timely technical follow-up and monitoring, in collaboration with
DOSTIE. FASE will also guide the updating of the training manuals and materials to be undertaken by SDF.
5.2.4 The project will sign an MOU with both MD and GTTI to host the two 3 month diploma courses on Micro and Small Enterprise Promotion and Training (MSEPT) and another on Micro-
Finance Promotion, the curricula for which will be developed through project support. GTTI and
MDI will benefit from staff training, computers and minor campus facilities’ rehabilitation resources for the housing and implementation of this course. During the project life the institutions will charge only a nominal fee to the interested students in order to facilitate wide reaching access.

31
5.2.5 SDF, under the guidance of the PC, will recruit the services of an MSME Institutional
Development expert to review and make recommendations on the MSME development regulatory framework in the Gambia as well as undertake the establishment of five (one in each Division)
“one-stop-shops”. SDF will further recruit the services of a local Marketing Expert to conduct the various market surveys and research as well as undertake other marketing related activities such as identifying and coordinating local, regional and international trade fairs for the participation of the entrepreneurs trained under the project and other related activities.
5.2.6 The micro-finance fund will be managed by SDF which has gained extensive experience in wholesaling and retailing micro-finance under the previous Poverty Reduction Project. The microfinance fund will be wholesaled to qualified and experienced NBFIs in the country for further onlending to rural clients. The criteria for selection and eligibility of NBFIs to benefit from the project microfinance fund are outlined in Annex VI. An NBFI institutional assessment study to be conducted in PY1 will outline the profile of NBFIs in the country with critical information on performance, sustainability, outreach, etc. on each institution whose findings and conclusions will further inform the assessment, eligibility and selection of NBFIs for on-lending project resources to rural clients.
5.2.7 The performance of the partner NBFIs will be closely monitored through a performance reporting framework (see Annex VII). The main condition of the agreement will be that each of the intermediaries will be contracted to administer credit operations for an initial period of one year.
These contractual arrangements will be renewed annually on the basis of the performance as well as submission of financial accounts of the utilisation of resources of the project micro-credit fund, by each individual intermediary at the end of each year.
5.2.8 An international Microfinance Policy Development technical assistant will be recruited within SDF to coordinate the process of the Microfinance policy consultation and development and the TOR for whom will be further elaborated in the Project Operations Manual. In order to ensure a comprehensive policy environment review and consultation process, the project will sign an MOU with UNCDF-Dakar to assist and backstop the microfinance policy development process.
Furthermore, the project will recruit an international Microfinance Regulatory and Legal
Framework expert technical assistance to be placed within CBG to review and update the microfinance regulatory framework and eventually to draft a Microfinance Law to be submitted to the Cabinet for consideration.
5.2.9 Resources have been allocated for the extensive project implementation monitoring which will be done, monthly, by SDF Divisional officers in collaboration with FASE field officers,
MDFTs, SDF MSME expert TA, MF policy development TA, representative of DOSTIE, and representative of DOSFEA where necessary.
5.3. Supervision and Implementation Schedule
5.3.1 The overall Programme will be implemented over a 5 year period (2007 - 2011, see Annex
IV). Summary of the Expenditure Schedule for the ADF Project by Component and by Sources of
Finance is given in Table 5.1 and 5.2 respectively.

32
Table 5.1: Expenditure Schedule by Category of Expenditure (UA Millions)
A. Civil Works
B. Goods
C. Services
D. Miscellaneous
E. Operating Costs
Total Base Cost
2007 2008 2009 2010 2011 Total
335,000
340,070
811,840
61,000
125,000
93,900
938,480
307,500
87,500
82,000
819,420
454,000
60,000
70,000
632,950
625,000
60,000
35,000
534,320
705,000
667,500
620,970
3,737,010
2,152,500
235,185 255,135 241,435 234,875 239,595 1,206,225
1,783,095 1,720,015 1,684,355 1,622,825 1,573,915 8,384,205
Physical 16,750 6,250 4,375 3,000 3,000 33,375
Total Project Cost 1,831,337 1,808,090 1,810,875 1,772,071 1,751,028 8,973,401
Beneficiaries
Table 5.2: Expenditure Schedule by Source of Finance
The Government of The Gambia
2007 2008 2009 2010 2011 Total
0 0 - - - 0
1,581,473 1,521,596 1,522,894 1,479,544 1,446,859 7,552,365
9,657 14,521 19,658 20,381 14,391 78,608
Total Investment Costs
Operating Costs
The Government of The Gambia
1,591,129 1,536,117 1,542,551 1,499,925 1,461,250 7,630,972
168,151 173,310 179,559 183,832 189,721 894,573
Total Operating Costs 240,208 271,973 268,324 272,146 289,778 1,342,429
Total Project Costs 1,831,337 1,808,090 1,810,875 1,772,071 1,751,028 8,973,401
5.3.2 The project will be implemented over 5 years and will be in accordance with the schedule of expenditure for each category of expenditure (Table 5.1 and 5.2).
5.4.1 Procurement arrangements are summarized in Table 5.3. All procurement of goods, works and acquisition of consulting services financed by the Bank will be in accordance with the Bank's
Rules of Procedure for Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of Consultants , using the relevant Bank Standard Bidding Documents.

33
Table 5.3: Procurement Arrangement (UA Million)
Non-
PROCUREMENT CATEGORY TOTAL
1. WORKS
1.1 Works under entrepreneurship & skills development, and training at community level
2. GOODS
2.1 Computers & accessories for & training centers 0.16 [0.16]
2.2 Motorcycles and Motor vehicles
2.3 Computers & accessories and photocopiers for
SDF and DOSTIE
2.4 Standby power generators for SDF’s offices
2.5 Office equipment and furniture for SDF
0.08 [0.08] 0.04 [0.04]
0.06 [0.06]
2.6 Loans and accounting software
2.7 Goods under entrepreneurship & skills development, and training at community level
3. CONSULTING SERVICES AND TRAINING
3.1 Curricula &training manuals development
3.2 MSME Regulatory framework dev.& review
3.3 Microfinance Policy development
3.4 One-stop-shop development
3.5 Studies& strategy& guidelines development
3.6 Technical Assistance
3.7 External financial Audit services
3.8 Procurement Audit services
3.9 UNDP/FASE and UNDCF backstopping
3.10 SDF Managerial consultants
3.11 Consultancy Services under Community Based entrepreneurship & skills development, and training
4. OPERATING COSTS
4.1 General Operating costs
4.2 Staff allowances, backstopping by training institutions (GTTI, MDI), increment, transport, sundries, study tours, marketing & Trade fairs &
0.22 [0.22] 0.04 0.26[0.26]
4.02[3.99]
0.05 0.05[0.05]
0.31 [0.31]
0.20 [0.20]
0.19 [0.19]
0.37 [0.37]
0.04 [0.04]
0.05 [0.05]
0.19 [0.19]
0.71
0.03
0.02
0.05
0.05
[0.71]
[0.03]
[0.02]
[0.05]
0.27 [0.27]
[0.05]
2.04 [2.04]
0.75[0.71]
0.04 0.75[0.71]
0.70[0.70]
0.16[0.16]
0.12[0.12]
0.06[0.06]
0.03[0.03]
0.02[0.02]
0.05[0.05]
0.31[0.31]
0.20[0.20]
0.19[0.19]
0.37[0.37]
0.18[0.18]
0.04[0.04]
0.05[0.05]
0.27[0.27]
0.24[0.24]
2.12[2.04]
0.14
1.35[0.45]
0.14
4.3 O&M of equipment, vehicles & building
4.4 SDF Office Rent
5. MISCELLANEOUS
5.1 Micro-credit fund
5.2 MFIs Outreach & business expansion Grant
5.2 Innovation Grant
0.04 [0.04]
1.00 [1.00]
0.96 [0.96]
0.19 [0.19]
0.21 0.25[0.04]
0.47 0.47
2.15[2.15]
1.00[1.00]
0.96[0.96]
0.19[0.19]
TOTAL PROJECT COST 0.24 [0.24] 0.10 [0.10] 1.58 [1.58] 6.09 [6.09] 0.98 8.97[8.00]
ICB and NCB respectively mean International Competitive Bidding, National Competitive Bidding. *Others include National
Shopping, International Shopping, Direct Negotiation, according to Project Implementation Manual (PID). Figures in brackets [..] are amounts financed by ADF Loan
Civil Works
5.4.2 Procurement of works related to entrepreneurship and skills development, marketing promotion, and training at community level, such as the rehabilitation of selected training centres and key markets in the 5 Divisions, as well as the rehabilitation of the SDF offices, valued in aggregate at UA 0.75 million would be in accordance with procedures set out in the revised Project
Implementation Document (PID), which will comply with the applicable Bank rules of procedure for procurement. The PID will be subject to Bank approval before use. These procedures shall be

34 based on the Bank’s Guidelines for Procurement Under Community-Based Investment Projects
(September 2000 edition) . For speedy implementation of the civil work activities, several packages may be combined in single contract package but such packages should not exceed UA 0.2 million.
Towards latter objective no contracts are expected to be procured on the basis of ICB procedures.
Contracts below UA 5,000 would be awarded through Direct Purchase. Ten (10) such contracts are envisaged, which represent about 6% of the Project’s budget for Works. Contracts between
UA 5,000 and UA 30,000 would be awarded following shopping for contractors at national level.
Contracts with value above UA 30,000 will be awarded through National Competitive Bidding
(NCB) procedures, as there are enough qualified national contractors to ensure adequate competition. Ten (10) contracts amounted to UA 0.04 million as part of the rehabilitation of feeder roads using labour-intensive approach and financed by the GOTG would be procured in accordance with the Gambian Procurement Act 2001.
Goods
5.4.3 Procurement of computers, laptops, their accessories and related equipments for the training centers/institutions under one package valued in aggregate at UA 0.16 million and motorcycles for rural training supervision in one package estimated at UA 0.08 million will be carried out under
International Competitive Bidding (ICB).
5.4.4 Contracts for motor vehicles, computers, laptops, printers, scanners and other accessories for the SDF’s Project Management Team and DOSTIE, valued in aggregate at UA 0.10 million will be procured through National Competitive Bidding (NCB) in two packages. Given the limited cost of each package of goods and the dispersed nature of their delivery locations around the country, it is unlikely that these activities will attract international tenders. There are also local suppliers sufficiently qualified and in a number sufficient to ensure competitive bidding. However, the advertisement of the different Invitations to Bid will be put in a newspaper of general circulation in the ECOWAS region to attract foreign suppliers that would wish to participate.
5.4.5
Other various items will be procured through other procedures, as follows:
Table 5.4
PROCUREMENT MODES
Other Methods of Procurement (UA Million)
ACTIVITIES Max.per contract Max. aggregate
National Shopping
International Shopping
Standby power generators for SDF and “one-stopshops” offices. Office equipment and furniture for SDF, one-stop-shops, Ops & Maintenance
Loans and accounting software
UA 0.03
UA 0.05
UA 0.34
UA 0.05
According to POM Goods for entrepreneurship & skills development, and training at community level
UA 0.03 UA 0.22
5.4.6 Standby power generators, furniture, fax machines, and photocopiers for the SDF, “one-stopshops”, and other implementation partners and institutions under three packages valued in aggregate at
UA 0.05 million, which is required at the initial project’s implementation stage, would be procured through National Shopping procedures. The items are standard and readily available off-the-shelf goods, which can be purchased locally. These are also small contracts, which would not attract international bidders.
5.4.7 Contracts for loans and accounting software valued at UA 0.05 million will be awarded through International Shopping (ISH) procedures, as the item is a readily available off-the-shelf good, specialized in nature and suppliers are limited in the country.

35 community level valued in aggregate at UA 0.25 million would be in accordance with procedures set out in the revised PID. These procedures shall be based on the Bank’s Guidelines for Procurement
Under Community-Based Investment Projects (September 2000 edition) . Mindful of local economic capacities, the following procurement methods, dictated by the amounts involved, will be used: (i) contracts for goods for amounts below UA 1000, the procurement will be by Direct Purchase. A dozen
(12) such contracts are envisaged, which represent about 2% of the Project’s budget for Goods; (ii) contracts for goods valued between UA 1000 and UA 5,000 will be awarded following shopping for suppliers at national level; and (iii) contracts for goods for amounts exceeding UA 5,000 but below
UA 20,000 will be awarded through local competitive bidding. These procurement methods will necessitate: (i) compiling a long list of suppliers and enterprises in accordance with a process approved by the Bank (calls for expressions of interest); and (ii) advertisements locally in Division Capitals by using standard documents contained in the Guidelines for Procurement Under Community-Based
Investment Projects (September 2000 edition) .
Several packages may be combined in single contract package but such packages should not exceed UA 0.1 million. Therefore, no contracts are expected to be procured on the basis of ICB procedures. Contracts with value above UA 20,000 will be awarded through NCB procedures, as there are enough qualified national contractors to ensure adequate competition. About fifteen (15) contracts valued in aggregate at UA 0.04 million for small goods related to the rehabilitation of community-markets and funded by the beneficiaries would be procured using the national tender procedures and regulations.
Consulting Services and Training
5.4.9 Consultancy services, valued in aggregate at UA 1.21 million will be procured through
Short Listing (SL), in accordance with the Bank’s Rules of Procedure for the Use of Consultants .
They include (i) curricula review and development and training manuals elaboration consultancies
(UA 0.05 million), (ii) MSME Regulatory framework development and review consultancy
(UA 0.31 million), (iii) National Microfinance Policy development consultancy (UA 0.20 million),
(iv) One-Stop-Shop development and management (UA 0.19 million), (v) Studies, strategy and guidelines development consultancies (UA 0.37 million), (vi) external financial and procurement audit services (UA 0.09 million). The selection procedure for these consulting services will be based on the Technical Quality with Price Consideration. For contract amounts below UA 0.35 million the Borrower can limit the advertisement to national and regional newspapers.
5.4.10 Technical Assistance at SDF and CBG, valued in aggregate at UA 0.37 million, would also be procured through Shortlist of individual consultants. They include the services of: (i) a project coordinator, (ii) twelve Division-Officers (two per Division), (iii) a project accountant, (iv) a
Marketing Expert, (v) a CBG regulatory framework review expert, and (vi) a MF and MSEPT curricula development expert. All the specialists will have a one-year service contract renewable on the basis of a satisfactory performance.
5.4.11 Consultancy services required for the community based entrepreneurship and skills development and training initiatives, valued in aggregate at UA 2.04 million including: (i) consultancy services for design and supervision of civil works (UA 0.04 million), (ii) community advocacy, Gender and HIV/AIDS awareness raising including radio programmes production and other modes of communication (UA 0.03 million), (iii) training for NBFIs and community
(UA 0.28 million), (v) success stories publication (UA 0.02 million), and (vi) telecommunication and internet installation (UA 0.02 million) would be procured in accordance with the PID, on the basis of shortlists and the selection procedure based on the evaluation based on Comparability of
Technical Proposals and Least Cost Consideration. Contracts of individual consultants for specific assignments required on need-basis (professional masters and short term study fellowships,

36 monitoring and evaluation consultant, procurement consultant and other support services, SBAs
Linkage to private sector, etc.) and valued in aggregate at UA 0.17 million, would be procured through Shortlist following the Bank’s procedures for the use of individual consultants.
Entrepreneurship development training for communities (UA 0.82 million) will be procured based on Direct Negotiations because it will be carried out by the EDTs who will be trained under this project as TOTs under the guidance of UNDP/ FASE.
5.4.12 Consultancy services valued at UA 0.05 million of nine (9) Specialists of SDF core project management team that had been recruited through Short Listing and approved by ADF under the previous Bank’s financed Poverty Reduction Project and who have had a satisfactory performance will be procured through direct negotiation. They are the Financial Controller, the Chief
Administrative/ Procurement Officer, the Micro-finance Expert and 6 Division-Officers (1 per
Division). These specialists will also have a one-year service contract renewable on the basis of a satisfactory performance.
5.4.13 Contracts for organizing and managing the training in entrepreneurship, skills development, and technology extension would be awarded through direct negotiation to UNDP/ FASE (UA
0.14 million) under the ADF Grant financing. A contract for the administration and guidance of the
Microfinance Policy Development and regulatory framework will be awarded to UNCDF (Dakar)
(0.13 million) because UNCDF has the needed experience and knowledge in micro-finance policy development in the region. The UNDP/FASE has acquired a reputable and recognised experience in the training in entrepreneurship and skills development since 2000 and has been assessed to be the most qualified institution to oversee the implementation of the respective trainings. The institutions will sign Memoranda of Understanding (MOUs) with the SDF, which would have prior approval of the Bank.
Miscellaneous
5.4.14. Micro-Finance Funds for Wholesaling to NBFIs valued in total at UA 1.0 million will be provided by direct negotiations to the NBFIs by SDF in accordance with the selection criteria set up in the PID . SDF will disburse tranches from the micro-finance fund to qualified NBFIs upon receipt of an approved lending work-programme, applications trend from the NBFIs and up to date quarterly progress reports, and annual audit reports. The NBFIs will be selected according to criteria outlined in the Operational Manual to be designed under this project.
5.4.15. Outreach and Business Expansion Grant The MFIs Outreach and Business Expansion
Grant of UA 0.96 million will be provided by direct negotiations to the NBFIs by SDF in accordance with the selection criteria set up in the PID . The amount will be granted to NBFIs based on applications outlining financial projections and determining the costs and revenues expected from this financial services expansion. The same conditions that apply to the delivery of the credit fund will also apply for this grant, such as legally registered NBFI, will have a sustainable operations, and adequate financial records keeping system. The operations manual will further elaborate on the terms, conditions and requirements for eligibility under this grant.
5.4.16. Innovation grant valued in total at UA 0.19 million will be provided by direct negotiations to innovators by SDF in accordance with the selection criteria set up in the PID to enable them to develop and operationalise their innovative business ideas in the area of technology development .

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5.4.17 Procurements necessary for the operation of the project amounted to a total of UA 1.35 million and are in relation to general operating costs (UA 0.14 million), operating costs related to the administration of the entrepreneurship development as well as the micro finance promotion diploma course with GTTI and MDI (UA 0.03 million), SDF office rent (UA 0.47 million),
Operation including insurance and maintenance of vehicles and building (UA 0.22 million) will be financed through the GoTG counterpart funding. Recurrent expenditure and operation and maintenance of office equipments (UA 0.04 million), travel expenses (UA 0.02 million) financed under the ADF Grant will be conducted through National Shopping procedures. Staff increments, transportation and meeting allowances, and sundries for training, allowances for monitoring and evaluation visits, community mobilization visits, marketing and trade fairs, and regional study tours
(UA 0.43 million) also funded through the ADF Grant will be directly provided to beneficiaries.
National Procedures and Regulations
5.4.18 Following the conclusions of the Country Procurement Assessment Report (CPAR) of 1998 conducted by the World Bank in collaboration with the GoTG, which concluded that The Gambia lacked the four basic elements of a sound public procurement system, namely: i) an adequate set of policies and procedures (regulations/codes), ii) strong and effective procurement organization, and iii) a sufficient number of competent and dedicated procurement staff; the GoTG prepared and implemented a public procurement reform program. This reform program led to the elaboration of a
Public Procurement Act (PPA), adopted by Parliament in 2001 and came into force in February
2002, and the creation of a regulatory authority, The Gambia Public Procurement Authority
(GPPA) to supervise the sector, as well as to draft regulations, monitor and evaluate, build capacity, review and adjudicate on complaints filed by bidders. The PPA elaborated with a financial support from the World Bank and a technical assistance from the International Trade Centre (ITC), is inspired from the UNCITRAL Model Law for Public Procurement. It is a modern procurement law which complies with the international best standards with a few exceptions. The PPA does not contradict the Bank’s fundamental procurement principles and rules of procedure, and as such, is acceptable to the Bank.
5.4.19 Under the leadership of GPPA, The Gambia has made slow but steady progress towards a more transparent and more efficient procurement system. However, the performance of the country’s procurement system still needs to be improved. A World Bank’s Post Procurement Review (PPRs) carried out in 2004-2005 and a Country Procurement Issues Paper (CPIP) produced in June 2005, as well as the Bank assessment conducted during the project’s appraisal mission have concluded that (i) procurement planning still needs to be improved, (ii) bidding documents and requests for proposals also need to be improved, (iii) delays in bid evaluation and contract award are still excessive, and (iv) the approval of contract award by Authorities other than those mentioned in the Public Procurement
Act (PPA) should be discontinued. In general, the management of procurement cycle is still weak. A lack of technical qualifications and experience of members of evaluation committees; an inadequate follow-up of contract execution; an absence of a capacity building and training program of procurement staff; and a deficient record keeping which has a direct impact on the quality of audits and reviews to ensure the integrity of the system are some of the deficiencies of the national procurement system that need to be addressed in order to bring it fully to international standard.
Implementing Agency
5.4.20 The project will be managed by the Social Development Fund (SDF) and its Chief
Administrative/Procurement Officer, will have overall responsibility for all procurement activities.

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The SDF’s Division Officers will carry out procurement activities at the local level with backstopping from the Chief Administrative/Procurement Officer. The resources, capacity, expertise and experience of the SDF will be adequate for these tasks. All the SDF’s staffs involved with project procurement activities will be trained on ADF’s procurement rules of procedure to perform their procurement functions. There will be a launching workshop prior to project take-off during which the Bank’s Procurement and Disbursement Units will participate and the various stakeholders will be familiarized with the Bank’s Rules and Procedures for Procurement and
Disbursement. SDF’s headquarter and Division Offices will be equipped with adequate record keeping facilities (filing cabinets, improved storage room, scanners and storage software) and assisted by procurement consultants when needed (i.e: elaboration of specifications/ TORs, bids evaluation, procurement training) to improve the management of the procurement cycle.
5.4.21 Post Review : Given the large number of small contracts that will be required, and the need for project implementation to proceed at a sustained pace, contracts for amounts not exceeding UA
30,000 will be subject to Post Review procedures. The signed contract, the tender evaluation report, the award recommendations, and any such other information as the Bank shall reasonably request, shall be forwarded to the Bank prior to the delivery of the withdrawal application or the first replenishment application in the case of use of a Special Account. The contract documents, particularly the bidding documents, the conformed copy of evaluation reports and contract award documents, will also be kept at SDF and will be consulted periodically by ADF supervision missions and during the annual audit of procurements by a specialised consulting firm. The Post-
Review Procedures shall not be used for the acquisition of any consultancy services and in particular the recruitment of auditors and will also not apply to contracts which are awarded under
ICB and/ or Direct Purchase.
5.4.22 Prior Review : For contracts above UA 30,000, the following documents will be submitted for Bank review and approval before promulgation: (i) the specific Guidelines on the Procurement of Goods and Services; (ii) the pre-qualification documents (if any); (iii) the bidding documents, the terms of reference and letter of invitation to consultants; (iv) the evaluation reports of the suppliers’ bids comprising recommendations on contract awards; and (v) the draft contracts in the event of modification of those included in the bidding documents.
5.5.1. The special account method and the direct payment method will be used for disbursement.
To ensure transparency of resource utilization and quick disbursement of funds to approved activities, SDF will open and maintain 4 (four) accounts in the name of the project to respectively receive: (i) an interest bearing foreign currency special account (SA) for part of the grant resources to finance all project activities except the Micro-credit Fund; (ii) The second SA will be used to deposit the allocated resources for the Micro-credit Fund to be held in foreign currency; (iii) a local currency account for the GoTG Counterpart Funds; and (iv) Local currency account for repayments from the NBFIs on loans awarded by the micro-finance fund. Funds will be withdrawn from the SA concerning the implementation of all project activities (except the micro-credit Fund) to be deposited in the Local Currency Account (LCA) to be maintained for civil works, operating costs, local training and office supplies, etc.. The direct payment method will apply to consultancy services for: (i) Civil works consultancy services; (ii) Civil works contracts; (iii) Supply of equipment and furniture (iv) technical assistance and, v) external auditing. The ADF will replenish the SA after the PMU has provided valid justification for the use of at least fifty percent of the previous deposit. The Project Coordinator will maintain records at all times of all disbursements made by the Bank. The opening of the SA and the LCA will be a part of the Disbursement Letter

3 outlining the disbursement arrangements under the project. The Bank will closely monitor the management of these accounts by the Project through routine desk review, effective technical supervision and prompt and thorough annual audits.
5.6.1 The basis for the overall project monitoring and evaluation will be the logical framework.
In addition the monitoring and evaluation (M&E) officer in the PMU will have overall responsibility for the definition and management of the project monitoring system and will design a comprehensive M&E system which monitors activities at all levels of project implementation, with specific emphasis on gender disaggregated data collection and reporting. A baseline survey will be designed to collect the most relevant information required to allow the PMU and other parties to assess the performance and impact of the project; a further impact assessment will be carried out before the mid-term review. Moreover, the project will put in place a Microfinance Database and
Management software to collect and report on the sector’s performance according to the monitoring framework and to be further detailed in the operations guidelines. Partner NBFIs will submit quarterly Performance Monitoring Framework Reports (annex VII).
5.6.2 The Project will conduct a mid-term review in the 3 rd
year. The review will make a strategic assessment of the performance and impact of the Project progress against the established objectives. To the extent possible, the mid-term review will identify key implementation issues and help orient the strategy for the coming phase, including any necessary modifications to project design, scope and implementation arrangements required to ensure achievement of its objectives.
Key tasks include assessing: the implementation progress against appraisal estimates and work programme; performance of the contracted service providers and financial management; assessing the performance of the micro-finance fund and deciding on the host agency for its final retrocession, geographical/ demographic coverage, with specific focus on gender equitable outreach, of the Project activities and options for the next phase; coordination with other donor supported activities within the project; technical assistance requirements.
5.6.3. Furthermore, quarterly progress reports will be prepared by the Project and forwarded promptly to the Bank for review. These reports will highlight key implementation issues and recommend actions for their resolution. In particular the project will provide gender disaggregated data in the QPRs on project activities’ implementation and achievements. Similarly, the Bank will also closely monitor the project by undertaking regular supervision missions to evaluate implementation progress. The Bank’s Regional Office in Dakar will assist in the regular follow-up of the project. The Project will ensure that the accounts of the project are audited at the end of every year and that the audit report is submitted to the Bank promptly in accordance with the
ADF’s General Conditions relating to financial reporting.
5.7. Financial Reporting and Auditing
5.7.1. The Project will maintain the project’s accounts by category of expenditure and source of funding and put in place a system of internal control to ensure prompt recording of transactions, timely production of accounts and reports and safeguard project assets. Financial records will be maintained in accordance with internationally acceptable accounting procedures. The project will support the purchase of acceptable accounting software to establish and maintain the financial records of the project; appropriate training in the use of this software will be provided to the project accountant and financial controller. The Project Coordinator together with the project financial controller and the accountant will prepare monthly financial statements that will be consolidated by them into quarterly financial statements to be included as a section of the Quarterly Progress
Reports. An independent audit firm acceptable to the Fund will audit the financial statements of the

4 project annually. The Project will submit the audit report to the Fund for review and comments within six months after the end of each financial year. An allocation has been made in the project to cater for the costs of engagement of an independent external auditor.
The Fund will closely monitor project activities and ensure that the Executing Agency unequivocally complies with the
Bank’s Guidelines for Financial Reporting and Auditing.
5.8.1 Very few donors are physically represented in the Gambia. Currently the World Bank and the AfDB are the only active donors supporting community development and employment generation for poverty reduction. All donor activities are coordinated by DOSFEA which intends to establish an Aid Coordination Unit to effectively manage donor interventions in the Country. PRSP monitoring is also undertaken by DOSFEA through SPACO which is expected to be transformed into a National Planning Commission under the PRSP II implementation. UNDP had played the role of holding donor meetings and discussions until 2003, after which such donor meetings became irregular due to the absence of an appointed UNDP resident representative and a deputy.
These positions have now been staffed and it is expected that donor meetings will be carried out regularly. There are no established sector donor coordination mechanisms currently.
5.8.2 During the preparation and appraisal missions, several meetings were held with key donors in the sector, including WB, RFCIP/ IFAD project coordinator, DfID, EU and UN agencies. In particular the meetings focused on harmonising each of the respective planned projects to ensure that they do not overlap or duplicate efforts of any of the donor interventions (see section 4.1.8).
Moreover, close collaboration, coordination, and information sharing will be undertaken with the concerned multilateral and bilateral donors during implementation. The Bank’s regional office in
Dakar will enhance the Bank’s participation in country donor coordination mechanisms and will participate in the project supervision, MTR and project completion missions.
6. SUSTAINABILITY AND PROJECT RISKS
6.1.1 Recurrent expenditure under the proposed project is estimated to amount to UA 1.28 million for the entire five year implementation period. This represents about 14.4% of total project costs.
The recurrent costs are mainly for staff salaries, operation and maintenance of vehicles, motorcycles, office rent, networking activities, as well as office and field expenses. The recurrent costs will be financed mainly by the Government of The Gambia to the tune of 65%, and a small contribution of 35% from ADF resources will support the marketing networking activities and monitoring and evaluation visits. GOTG will finance PIU salaries gradually increasing from PY4 while other expenses related to operations and maintenance of equipment, office expenses, and rent will be finance by GoTG from PY1.
6.1.2 The GOTG contributions to the recurrent costs arise mainly from SDF salary payments for staff at the SDF main office and the Divisions, offices expenses, vehicles maintenance and office rent estimated at UA 80,374 per annum. These expenses will be sustained by income generated through SDF activities at the end of the project (see annex IX for projections). The field allowances and operating expenses for the Government staff to be attached to work on the Project are all due to the incremental responsibilities they will assume only during the Project’s life. Given the GoTG commitment and amount of income generated by SDF through its operations and with regard to the size of the recurrent cost, GOTG should not have any difficulty in meeting its share of the cost.

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6.2.1 The project’s sustainability is ensured because it will be implemented through SDF which has proven its effectiveness and sustainability since the end of the Poverty Reduction Project in
2003. It has since that time continued to make loans both to individual clients and NBFIs, as well as meet its operating costs and mobilise further resources for on-lending from other donors. Moreover, the project has built on the lessons learnt from the Bank’s previous Poverty Reduction Project. In particular, sustainability is ensured because the project uses GoTG recommended and approved salary structures for PIU staff, which will contribute to reducing staff turnover and brain-drain.
Furthermore, the project will support the salaries of key staff for 54 months of the project implementation, after which SDF will be responsible for paying salaries from income generated from wholesaling of micro-finance funds (see annex IX for projections and analysis). Furthermore, the GoTG has approved the transformation of SDF into an FFI which will further strengthen its position as a semi-autonomous financial institution which is mandated to be the central mechanism in the micro-finance industry.
6.2.2 SDF qualified staff at the Divisional level who are highly experienced and have the confidence of the communities will mobilise communities to participate in the project activities.
Moreover, all regional and local training activities for government staff and staff of implementation partners will be conditional upon the trained expert continuing in her/ his position for at least a period of three years. In addition, training for community members will be held within the
Divisions and where possible within the villages in order to facilitate increased participation in training sessions, with specific reference to women and female youth.
6.2.3 The micro-finance fund will be wholesaled to qualified and experienced NBFIs, accompanied by adequate financial audits and backstopping, ensuring that financial products developed and offered under the project best meet the needs of the micro and small entrepreneurs in the country. Moreover, the micro-finance fund will continue to revolve through the close monitoring and checking system which will be put in place ensuring minimum default on payments. The project mid-term review, after thorough analysis of the institutional and policy environment in the country, will recommend the most sustainable mechanism for hosting the fund at the end of the project, thereby ensuring continued access to communities.
6.2.4 Entrepreneurship and skills training will be back-stopped by the FASE project which has gained great experience under the ILO execution team in delivering such training within proven entrepreneurship development and promotion framework and methodology. Both FASE and EMTs assisting the implementation of these activities are already in place and are not being created under this project. Thus, by providing them institutional capacity building support they will be empowered to provide their services more efficiently. The agreement signed by UNCDF will ensure that appropriate expertise is provided for the support to the microfinance sector. The participation of UNCDF will ensure that best practices are put in place and that the project will benefit of the experience capitalized in other countries.
6.3 Critical Risks and Mitigating measures
6.3.1. Achieving the project goals and objectives may be at risk if the GoTG continues to carry out frequent reshuffling of key decision making officials of the partner Ministries because certain policy guidance would be delayed when new officials have to orient themselves on the project activities. However, this risk has been mitigated because project implementation will take place within SDF and no major GoTG direct involvement will be needed.

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6.3.2 One of the risks identified is that should the communities not respond effectively to the trainings offered, there might be some delays in its implementation. However, this has been mitigated by the fact that the trainings are identified after a lengthy consultation with the community representatives, and will be offered at a time and place convenient to the beneficiaries and in the vernacular languages where necessary. Moreover, extensive community mobilisation will be undertaken before the actual implementation of the training. In this regard, any unforeseen delays in the implementation of the various trainings to be offered will prolong overall project implementation. However, the project design has ensured that the training will be implemented in parallel sessions and institutions delivering specialised training will benefit from institutional capacity building to strengthen their service delivery.
6.3.3 Training of government staff may cause a problem of trained staff leaving their original employment for better paid jobs elsewhere. This risk is mitigated in that all government staff selected for training will be required to sign a written undertaking to return to their positions of employment or reimburse the project the cost of training
6.3.4 Due to the nature of the microfinance fund, the project anticipates a risk of delayed recovery of on-lent funds by NBFIs. This risk has been mitigated through undertaking an in-depth institutional assessment to identify the most sustainable NBFIs for on-lending, and by institutionalising close monitoring and reporting of loans made by NBFIs to eventual clients.
6.3.5. Should the macroeconomic monetary and financial environment not continue to remain favourable, there is a risk of increased interest rates and slow down in on-lending. In this regard, the macro-economic climate in the country will be closely followed by the country economist with continued policy dialogue with the GoTG in collaboration with SNRO. Moreover, the actual funds for on-lending are very small and would not delay project implementation in any way.
6.4. Social Impact Analysis
6.4.1. The overall outcome and benefit from the project will be the establishment of an entrepreneurial culture which would empower rural people to diversify income sources and expand their economic opportunities and which would contribute to increased well-being and improved poverty coping mechanisms of all the household members.
6.4.2 The microfinance capacity building activities will allow financial service practitioners to increase their service outreach to those areas and clients who have been previously constrained by geographical and capacity factors. These new and existing microfinance clients will be empowered to engage in entrepreneurial and other related economic activities resulting in reinvigoration of the local economy and increased employment of youth. Improved coordination and information dissemination of MFI performance will help to further regularise and develop the microfinance industry. In particular, it is envisaged that the project will contribute to increased savings mobilisation estimated to be GMD 108 million (UA 2.6 million) over the project life. Moreover, through the continuous revolving of the micro-finance funds, it is expected that 116,000 new clients will have access to financial services in the rural areas of which 70% are expected to be women. In addition to the direct benefits to the average rural household in terms of savings/deposit services, indirect benefits to the same households in greater liquidity in the marketing system through easier access to credit and other financial services for traders and rural enterprise groups will enable sustainable economic growth in the rural areas and contribute to rural poverty reduction through increased investments in improved health, education and nutrition.
6.4.3 Business and entrepreneurial skills enhancement will contribute to establishing better and sustainable entrepreneurial activities, and enable the local people to identify and address local

7 problems with local solutions. Entrepreneurial activities and other support services will lead to job creation for skilled and semi-skilled artisans. The project will train 24,000 men, women and youth of whom it can be assumed that at least 75% will use the newly acquired entrepreneurial management and skills knowledge for starting or improving their economic activities. It is envisaged that promotion of MSMEs will result in at least 4000 MSMEs being established, resulting in the sustainable employment of at least 12,000 salaried employees in the country. With an average salary for semi-skilled individuals of approximately GMD 5,000, it can be expected that the project will help support at least GMD 60 million (UA 1.3 million) in salaries as a result of the project. This will have further macro-economic impact on consumption and savings. Assuming that at least 75% of salary earned will go into consumer goods and livelihoods improvement, there will be a quantitative impact on production of consumer goods, housing, etc., while savings will be further increased and benefit to the local financial institutions.
6.4.4 It is expected the entrepreneurship and skills training together with the enhanced access to micro-finance will increase rural household income. For example, it is estimated that a fishsmoking entrepreneur will experience a net profit increase of GMD 2,150 per week; an entrepreneur involved in preparing snacks and foods for schools will experience an increase in net profit of at least GMD 400 per week; while a micro-entrepreneur involved in preparing ground-nuts for snacks will experience an estimated increase in net profit of at least GMD 50 per day. This increase in net income will particularly benefit women who are the majority in these activities.
Moreover, the increased income is expected to alleviate the stress experienced by women in providing for family and household needs. This would enable them to afford labour saving resources such as intermediate transport for fetching water, fuel wood, going to the market, etc. and as well contribute to their increased participation in community and village decision-making forums. Furthermore, the training and financing provided under the project will contribute to the development and promotion some of the typical micro and small businesses such as vegetable gardening, artisanal fishing, fish smoking, food vending and snacks making, repairs of electronic technologies such as cellular phones, domestic equipment, etc.
7.1 Conclusion
7.1.1 The Gambia Entrepreneurship Promotion and Microfinance Development Project is an important component of the Bank’s Strategy for the Gambia, and critical to the support of the country in enhancing the productive capacity of the poor (PRSP II, Pillar I), building the capacities at local level for people centred development management (PRSP II, Pillar II), and providing economic and social infrastructure support to the poor (PRSP II, Pillar V). It is also critical to achieving the targets set out in the outline of PRSP II and the Gambia CSP (draft, 2005 – 2007).
The project is also in line with the attainment of MDGs and the Vision 2020 of the country.
7.2. Recommendations
It is recommended that an ADF grant not exceeding UA 8 million be granted to The Gambia for the purpose of implementing the project as described in this report, subject to the following specific conditions:
(A) Conditions Precedent to Entry into Force of the Grant Protocol i) The entry into force of the Protocol of Agreement shall be subject to its signature by the Recipient and the ADF;

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(B) Conditions Precedent to First Disbursement of the Grant
The obligations of the ADF to make the first disbursement shall be conditional upon the entry into force of the Protocol of Agreement and the fulfilment by the Recipient of the following conditions:
The Recipient shall have, to the satisfaction of the Fund, provided evidence:
(i) Provide the ADF with proof of the opening, in a bank acceptable to the Fund, of 4 (four) accounts in the name of the project to respectively receive: (a) A foreign currency special account
(SA) for part of the grant resources to finance all project activities except the Micro-credit Fund; (b)
The second SA will be used to deposit the allocated resources for the Micro-credit Fund to be held in foreign currency; (c) A local currency account for the GoTG Counterpart Funds; and (d) Local currency account for repayments from the NBFIs on loans awarded by the micro-finance fund
(Paragraph 5.5);
(C) Other Conditions
In addition, the Recipient shall provide evidence, in form and substance satisfactory to the
ADF:
(i) Within (6) six months of the first disbursement of the grant, for the ADF’s prior approval, a schedule for all the training to be undertaken under the project and the location thereof;
(ii) Within (3) three months of first disbursement of the grant, for the ADF’s prior approval, the draft MOUs with the following implementation partners: UNDP/ FASE, UNCDF-Dakar,
GTTI and MDI; and
(iii) within six (6) months of the first disbursement of the grant, of the recruitment and retention of each of the members of the PMT, which will include the Project Coordinator, financial controller, micro-finance expert, chief of administration, accountant, procurement expert and monitoring and evaluation expert, each with qualifications and terms of reference acceptable to the ADF.

ANNEX I - THE MAP OF THE GAMBIA
This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders
9

ANNEX II
THE GAMBIA: APPROVED BANK GROUP OPERATIONS AS AT 30 JUNE 2006 (UA000)
Sector name
Agriculture
Agriculture
Agriculture X
Agriculture
Agriculture X
Agriculture
Agriculture
Agriculture
Agriculture X
Agriculture X
Agriculture X
Agriculture
Agriculture
Agriculture X
Agriculture X
Agriculture Total
Environment
Environment
Environment Total
Ind/Mini/Quar
Ind/Mini/Quar X
Ind/Mini/Quar Total
Multi-Sector X
Multi-Sector
Multi-Sector
Multi-Sector
Multi-Sector Total
Power
Power
Power
Power X
Source of
Finance
ADB
ADB Total
ADF
ADF
ADF
ADF
ADF
ADF
ADF
ADF
ADF
ADF
ADF
ADF
ADF Total
NTF
NTF
NTF Total
FISHERIES DEVELOPMENT
Project title
COTTON PRODUCTION DEVELOPMENT
FARMER MANAGED RICE IRRIGATION
FISHING DEVELOPMENT PROJECT
INVASIVE AQUATIC WEEDS - GAMBIA
JAHALY PACHARR RICE
LISTOCK DEVELOPMENT
LIVESTOCK DEVELOPMENT STUDY
NERICA DISSEMINATION PROJECT - GAMBIA
OMVG GESTION RESSOURCES NATURELLES
PERI-URBAN AGRICULTURAL DEVELOPMENT PROJECT
PROGRAMME D'AMENAGEMENT AGRICOLE DES BAS-FONDS
RICE DEVELOPMENT PROJECT
ARTISANAL FISHERIES DEVELOPMENT PROJECT
Participatory Integrated Watershed Manag
ADF
ADF
COASTAL PROTECTION PROJECT
COASTAL PROTECTION STUDY
ADF Total
ADF
ADF
GROUNDNUT PROCESSING INDUSTRY (PHASE I)
TOURISM MASTER PLAN STUDY
ADF Total
ADF
ADF
ADF
ADF
INSTITUTIONAL SUPPORT PROJECT FOR CAPACITY BUILDIN
MULTI SECTORAL REHABILITATION
SECOND STRUCTURAL ADJUSTMENT LOAN
SOCIAL DIMENSION OF ADJUSTMENT
ADF Total
ADB
ADB
ADB Total
ADF
ADF
ELECTRICITY DISTRIBUTION IN BANJUL
ELECTRICITY PROJECT (PHASE II)
ENGINEERING STUDY OF RURAL ELECTRIFICATION PROJECT
Renewable Energy Study
Approval date
23-Aug-83
9-Oct-74
27-Apr-05
25-Aug-83
22-Sep-04
18-Mar-82
27-Jan-83
14-Jul-99
26-Sep-03
14-Jun-01
27-Oct-99
19-Nov-96
23-Feb-88
17-May-00
9-Jun-04
13-Sep-01
4-Sep-97
29-Nov-79
22-Nov-00
28-Oct-98
29-Oct-86
16-Jan-90
20-Sep-88
14-Oct-75
23-Jan-79
21-Oct-93
30-Oct-02
Signature date
Amount Approved Amount Signed
Amount
Cancelled
Net Amount Signed Disbursements
Undisbursed
Balance
12-Sep-83 3,437,000.00 3,437,000.00 3,437,000.00 - - -
3,437,000.00 3,437,000.00 3,437,000.00 - - -
Disbursement ratio
0.00%
0.00%
20-Nov-74 1,842,104.00 1,842,104.00 556,194.34 1,285,909.66 1,285,909.66 -
19-May-05 5,500,000.00 5,500,000.00 - 5,500,000.00 - 5,500,000.00
6-Feb-84 7,318,679.00 7,318,679.00 5,598,121.53 1,720,557.47 1,720,557.47 -
100.00%
0.00%
100.00%
0.00% 9-Dec-04 310,000.00 310,000.00 - 310,000.00 - 310,000.00
13-Aug-82 4,236,839.00 4,236,839.00 5,225.16 4,231,613.84 4,231,613.84 -
7-Feb-83 8,593,415.00 8,593,415.00 24,719.56 8,568,695.44 8,568,695.44 -
12-Oct-99
3-Nov-03
576,950.00 576,950.00 216,926.95 360,023.05 360,023.05
1,560,000.00 1,560,000.00
-
- 1,560,000.00 141,922.45 1,418,077.55
28-May-02 2,030,553.00 2,030,553.00 553.00 - - -
100.00%
100.00%
100.00%
9.10%
8-Nov-99
20-Dec-96
29-Mar-88
5,070,000.00 5,070,000.00 - 5,070,000.00 3,521,659.59 1,548,340.41
4,000,000.00 4,000,000.00 354.65 3,999,645.35 3,999,645.35
4,798,681.00 4,798,681.00 58,950.49 4,739,730.51 4,739,730.51
-
-
0.00%
69.46%
100.00%
100.00%
19-Jan-01
9-Dec-04
45,837,221.00 45,837,221.00 6,461,045.68 37,346,175.32 28,569,757.36 8,776,417.96
2,900,000.00 2,900,000.00
4,950,000.00 4,950,000.00
- 2,900,000.00 872,596.13 2,027,403.87
- 4,950,000.00 347,133.03 4,602,866.97
7,850,000.00 7,850,000.00 - 7,850,000.00 1,219,729.16 6,630,270.84
57,124,221.00 57,124,221.00 9,898,045.68 45,196,175.32 29,789,486.52 15,406,688.80
3-Oct-01 9,590,000.00 9,590,000.00 - 9,590,000.00 9,559,822.96 30,177.04
76.50%
30.09%
7.01%
15.54%
65.91%
13-Oct-97 830,000.00 830,000.00 159,481.20 670,518.80 670,518.80 -
10,420,000.00 10,420,000.00 159,481.20 10,260,518.80 10,230,341.76 30,177.04
10,420,000.00 10,420,000.00 159,481.20 10,260,518.80 10,230,341.76 30,177.04
3-Dec-79 4,605,260.00 4,605,260.00 1,150,828.63 3,454,431.37 3,454,431.37 -
19-Jan-01 815,000.00 815,000.00 - 815,000.00 444,909.89 370,090.11
5,420,260.00 5,420,260.00 1,150,828.63 4,269,431.37 3,899,341.26 370,090.11
5,420,260.00 5,420,260.00 1,150,828.63 4,269,431.37 3,899,341.26 370,090.11
99.69%
100.00%
99.71%
99.71%
100.00%
54.59%
22-Jan-99
12-Dec-86
25-Jan-90
760,500.00 760,500.00 121,368.17 639,131.83 639,131.83
9,210,520.00 9,210,520.00 0.02 9,210,519.98 9,210,519.98
6,447,364.00 6,447,364.00 248,557.67 6,198,806.33 6,198,806.33
-
-
-
13-Feb-89 1,998,683.00 1,998,683.00 29,650.85 1,969,032.15 1,969,032.15 -
18,417,067.00 18,417,067.00 399,576.71 18,017,490.29 18,017,490.29 -
18,417,067.00 18,417,067.00 399,576.71 18,017,490.29 18,017,490.29 -
5-Jan-76
21-Feb-79
2,000,000.00 2,000,000.00 4,361.85 1,995,638.15 1,995,638.15
5,000,000.00 5,000,000.00 20,471.76 4,979,528.24 4,979,528.24
7,000,000.00 7,000,000.00 24,833.61 6,975,166.39 6,975,166.39
-
-
-
4-Jan-94 1,370,000.00 1,370,000.00 620,708.85 749,291.15 749,291.15 -
26-Nov-02 749,000.00 749,000.00 - 749,000.00 394,788.62 354,211.38
91.33%
91.33%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
52.71%
1

Sector name
Power Total
Social X
Social X
Social
Social
Social
Social X
Social
Social
Social
Social
Social
Social Total
Transport
Transport
Transport
Transport
Transport
Transport
Transport
Transport
Transport
Transport Total
Water Sup/Sanit
Water Sup/Sanit
Water Sup/Sanit X
Source of
Finance
Project title
ADF Total
ADF
ADF
ADF
ADF
ADF
BASIC EDUCATION PROJECT (EDUCATIION III)
COMMUNITY SKILLS IMPROVEMENT PROJECT (WID II)
EDUCATION PROJECT II
FEASIBILITY STUDY OF EDUCATION PROJECT
HEALTH SECTOR STUDY
ADF
ADF
ADF
ADF
ADF
ADF
HELTH SERVICES DEVELOPMENT PROJECT II
POVERTY REDUCTION PROJECT
PRIMARY EDUCATION IMPROVEMENT
REHABILIT.OF HEALTH TRAINING FACILITIES
WOMEN IN DEVELOPMENT PROJECT
WOMEN IN DEVELOPMENT PROJECT(GRANT)
ADF Total
ADB
ADB
ADB Total
BANJUL SEA PORT
BANJUL SERREKUNDA HIGHWAY PROJECT
ADF
ADF
ADF
ADF
ADF
ADF Total
NTF
NTF
BANJUL PORT PROJECT II
BANJUL-SEREKUNDA HIGHWAY(SUPPLEMENTARY)
INSTITUT.SUPPORT TO MWC - E.F ROAD(GRANT
LAMINKOTO-PASSIMUS ROAD
ROAD REHABILITATION
YUDUM AIPORT CONSTRUCTION
YUDUM AIRPORT CONSTRUCTION(PHASE IV)
NTF Total
ADF
ADF
ADF
BANJUL SEWERAGE AND DRAINAGE PROJECT
GREATER BANJUL WATER SUPPLY
WATER SUPPLY & SANITAT STUDY FOR PHASE
Water Sup/Sanit Total
ADF Total
Grand Total
Approval date
11-Sep-02
16-Feb-00
24-Aug-92
23-Jun-83
11-Sep-92
10-Dec-97
10-Dec-97
27-Nov-86
27-Jan-92
14-Mar-90
14-Mar-90
22-Jun-82
29-Aug-79
14-Dec-93
22-May-89
30-Oct-91
28-Aug-80
22-Nov-89
28-Oct-76
8-Jun-82
24-Apr-80
25-Nov-87
12-Jun-02
Signature date
Amount Approved Amount Signed
Amount
Cancelled
Net Amount Signed Disbursements
Undisbursed
Balance
9,119,000.00 9,119,000.00 645,542.46 8,473,457.54 8,119,246.16 354,211.38
2,119,000.00 2,119,000.00 620,708.85 1,498,291.15 1,144,079.77 354,211.38
26-Nov-02 10,000,000.00 10,000,000.00 - 10,000,000.00 2,059,191.73 7,940,808.27
24-Mar-00 5,850,000.00 5,850,000.00 (38,885.77) 5,888,885.77 2,707,791.10 3,142,208.90
12-Oct-92 4,973,681.00 4,973,681.00 1,036,087.54 3,937,593.46 3,937,593.46 -
15-Jul-83 635,526.00 635,526.00 247,336.06 388,189.94 388,189.94 -
18-Oct-92 690,789.00 690,789.00 - 690,789.00 690,789.00 -
13-Mar-98 7,000,000.00 7,000,000.00 - 7,000,000.00 4,370,000.35 2,629,999.65
13-Jan-98 3,210,000.00 3,210,000.00 27,769.91 3,182,230.09 3,182,230.09 -
12-Dec-86 4,144,734.00 4,144,734.00 0.04 4,144,733.96 4,144,733.96 -
23-Mar-92 7,092,100.00 7,092,100.00 1,622,717.23 5,469,382.77 5,469,382.77 -
27-Mar-90 460,526.00 460,526.00 261,349.11 199,176.89 199,176.89 -
27-Mar-90 1,943,420.00 1,943,420.00 1,544.03 1,941,875.97 1,941,875.97 -
46,000,776.00 46,000,776.00 3,157,918.15 42,842,857.85 29,090,955.26 13,713,016.82
46,000,776.00 46,000,776.00 3,157,918.15 42,842,857.85 29,090,955.26 13,713,016.82
13-Aug-82 7,000,000.00 7,000,000.00 17,619.99 6,982,380.01 6,982,380.01 -
3-Dec-79 3,900,000.00 3,900,000.00 - 3,900,000.00 3,900,000.00 -
10,900,000.00 10,900,000.00 17,619.99 10,882,380.01 10,882,380.01 -
4-Jan-94 16,000,000.00 16,000,000.00 473,294.56 15,526,705.44 15,526,705.44 -
28-May-89 2,109,209.00 2,109,209.00 4,366.75 2,104,842.25 2,104,842.25 -
31-Jan-92 2,763,156.00 2,763,156.00 7,325.10 2,755,830.90 2,755,830.90 -
17-Sep-80 8,000,000.00 8,000,000.00 8,000,000.00 - - -
4-Dec-89 14,506,569.00 14,506,569.00 28,781.95 14,477,787.05 14,477,787.05 -
43,378,934.00 43,378,934.00 8,513,768.36 34,865,165.64 34,865,165.64 -
11-Mar-77 2,000,000.00 2,000,000.00 17,804.44 1,982,195.56 1,982,195.56 -
13-Aug-82 4,500,000.00 4,500,000.00 785,408.19 3,714,591.81 3,714,591.81 -
60,778,934.00 60,778,934.00 9,334,600.98 51,444,333.02 51,444,333.02 -
6,500,000.00 6,500,000.00 803,212.63 5,696,787.37 5,696,787.37 -
24-Jun-80 7,368,416.00 7,368,416.00 266,618.83 7,101,797.17 7,101,797.17 -
20-Apr-88 5,618,417.00 5,618,417.00 221,868.53 5,396,548.47 5,396,548.47 -
8-Aug-02 1,175,000.00 1,175,000.00 - 1,175,000.00 361,040.71 813,959.29
Disbursement ratio
67.90%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
0.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
30.73%
95.82%
76.36%
20.59%
45.98%
100.00%
100.00%
100.00%
62.43%
100.00%
100.00%
100.00%
100.00%
100.00%
67.90%
14,161,833.00 14,161,833.00 488,487.36 13,673,345.64 12,859,386.35 813,959.29
14,161,833.00 14,161,833.00 488,487.36 13,673,345.64 12,859,386.35 813,959.29
221,442,091.00 221,442,091.00 25,234,481.17 194,177,609.83 163,450,580.62 30,688,143.44
94.05%
94.05%
84.18%
2

Institution Loan portfolio
Summary of Micro credit service providers in the country
Interest rate per annum
Products offered and approach
Government Institutions
SDF
IBAS Total clientele of 5,608.
Active loan portfolio of GMD 4.61 million (about UA 102.444)
Formal/ Professional NBFIs
GAWFA
NACCUG
Number of active savers are 45,468.
Active loan portfolio is GMD 16.9 million (UA 1.4 million) and active savings volume is GMD 10.6 million
(UA 235.55)
Total savings of the credit unions add up to GMD 61 million (UA 1.35 million) and loans amount to GMD 47 million (UA 1.04 million) in 2004.
Between 18% and
25% depending on the type of credit.
SEE ANNEX VII
IBAS is a Government institution which was established in 1975 mainly to provide support and give impetus to the indigenous micro, small and medium-enterprises. The institution has nation-wide coverage. It provides management and entrepreneurship training independent of the micro-credit programme. A collateral/guarantor is required to cover risks on IBAS loans in full.
35% on loans and
5% interest on savings/ deposits
Interest rates of
22.5% on loans and
15% on deposits.
Interest rate of 5% on deposits.
GAWFA was created in 1987 to provide access to credit and savings services to low-income women in order to increase their economic independence and empowerment. GAWFA has twelve provincial branches throughout the country. GAWFA has two main programmes: a Voluntary Savings Programme (VSP), and an Integrated Savings and Credit Programme. The VSP is a savings scheme open to women, men and children, individuals or groups, who want to save small amounts to increase their financial base either for future business investments or for personal or family expenses. Under the Integrated Savings and
Credit Programme, women can save in order to access credit. This programme is not open to men. It is currently acting as an intermediary forward-lending agency for the Social Development Fund (SDF) and the Rural Finance and Communities
Initiatives Project (RFCIP).
NACCUG was established in 1991 as the apex body for all credit unions in The Gambia focusing on institutional development of co-operative credit unions to mobilize savings and deliver credit in the Gambia. As of December 2004, NACCUG has 70 affiliated credit unions with a total membership of 20,244. Credit unions are concentrated in GBA, WD and NBD, which account for almost 75 percent of all credit unions in the country, while CRD-N, CRD-S and URD make up the remainder.
There are no credit unions in LRD. More than 50 percent of members reside in the rural areas. About 42 percent of the members are women, most of them engaged in small-scale farming and farm-related as well as non-farm income generating activities. It supports its affiliates through regular training, education, financial and investment advisory services, regular inspection of credit union accounts and annual audits of credit unions. NACCUG has a Central Finance Facility (CFF) that was constituted in 1996 under the "NACCUG Constitution and Bylaws" with the main objective of facilitating inter-lending among members and receiving funds from societies. The CFF is an independent unit within the overall operation of NACCUG and therefore comes under the jurisdiction of the Board of Directors and its Management Committee.
GAMSAVINGS is a subsidiary of Gamstar Insurance Company Limited, focusing on savings mobilization for the micro enterprise and informal sector. It is licensed as a Savings and Credit Company. Presently it offers voluntary and term deposits/savings schemes, but plans are underway to move into micro credit delivery.
GAM-
SAVINGS
11.332 million (UA 251.822)
Semi-formal Non-Bank Financial Institutions
AFET
Total number of active savers is 2,239 with an active savings volume of GMD
Total membership of 16,238 with an active loan portfolio of GMD 5.18 million (UA 115.111).
GAMSEM Total membership of 11,848 with an active loan portfolio of GMD 1.077 million (UA 23.933)
Interest rate of 17% on its loans
AFET’s main objective is to alleviate poverty by assisting communities in communal vegetable gardens, well-digging, livestock production, literacy classes, savings and credit initiatives and other income generating activities under cottage industries. AFET holds General Assembly meetings once every two years during which officers are elected, the Constitution is reviewed, certain policy directions are given, motions are adopted and the Budget is approved. It has a Board of Directors and a
Secretariat with full-time staff to oversee the daily operations. The National President is the Chief Executive of the Board of
Directors, assisted by 19 Zonal Presidents. Over the past seven years, AFET has been involved in the development of 21
Village Savings and Credit Associations (VISACAs).
Interest rate of 20% on all loans to its members.
GAMSEM is a local NGO, which was founded in 1995, that is involved in the promotion of cooperative ideas and methodologies. It has about 116 grassroots groups spread across the country. Main areas of operation are: (i) micro credit service provision; (ii) provision of marketing outlets for agricultural and horticultural products; (iii) supply of fertilizer to farmers; and (iv) cooperative training.
1

WISDOM
MICRO-FIMS
Total membership of 788 with an active loan portfolio of GMD 1.07 million
(UA 23.777)
Total clientele of 4,309 with an active loan portfolio of GMD 1.2 million (UA
26.667).
Interest rate on loans is 30% per annum
Interest rate of 30% per annum on its loans.
WISDOM is a local NGO operating since 1989, which is engaged in organizing “Osusus” (rotating credit) and providing technical assistance to the groups in urban and peri-urban areas. The services offered could be both short and long-term credit and deposit mobilization, channelled through the WISDOM Indigenous Lending and Savings Societies (WILSS). Loans are only accessible to Osusu group members, while deposits are open to the public. The Osusu groups comprise of between 20 to
30 members.
MICRO-FIMS was set up by the European Development Fund (EDF) as a local NGO under the German Development Bank
(KFW) donor initiative in 1988. It provides services exclusively to its network of VISACAs. MICRO-FIMS has a Board of
Directors and an established Secretariat, which oversees the day-to-day management of the operations. It has served as the apex body for 10 VISACAs in WD. MICRO-FIMS animators are responsible for the on-the-job instruction and monitoring of the
MCs and their cashiers. MICRO-FIMS solicits external loan funds for the member VISACAs, and in this regard it acts as an intermediary agency for institutions such as SDF in the credit delivery process.
Community Based Organisations
VISACAs Total membership 35.000 members.
Savings mobilization: GMD 27 million
(UA 600.000) and loan portfolio of
GMD 14.7 million (UA 326.666)
WASDA Total membership of 5,600 with an active loan portfolio of GMD 467,715
(UA 10.393).
The majority of
VISACAs charge interest rates of
40% on loans and
20% on deposits.
Interest rate of 25% on its loans
VISACAs are small village banks, which are managed by the local community and offer savings and credit products to its members. VISACAs started in The Gambia in 1988 with initial funds provided by KFW to implement three pilot VISACAs in the Jahally/Pacharr area. The VISACA Promotion Centre (VPC) was established in 1992 in Brikamaba (CRD) to train NGO staff interested in the concept. At the end of June 2005 there are six networks in The Gambia, with 64 VISACAs operating in all the Divisions of the country and with a total membership 32,619, of which 55% are female.
WASDA is a Community-Based Organization (CBO) mainly operating in URD. It has only one office at Jaa Kunda and is mainly involved in credit provision, capacity building training of its members, horticultural production and livestock production. Most groups of WASDA are large groups with memberships of above 30.
2

D.
D.1
E.
E.1
E.2
E.3
E.4
B.
B.1
B.2
B.3
B.4
B.5
B.6
B.7
C.
C.1
C.2
E.6
ITEM ACTIVITY
A. ADMINISTRATION
A.2 Effectiveness
ANNEX IV
IMPLEMENTATION SCHEDULE
WORKS
Bidding documents approved (initial contracts)
Bids invited and received
Bids evaluated
Bid evaluation report approved
Contracts awarded
Construction completed (all contracts)
Defects Liability Periods Completed (all contracts)
PROCUREMENT OF GOODS
Equipment for Project Management supplied
Equipment/furniture for project facilities supplied
TRAINING ACTIVITIES
Approval of training programs
CONSULTANCY SERVICES
Shortlists approved
Bids invited and received
Bids evaluated
Bid evaluation reports approved
Auditors approved and appointed
TARGET DATE ACTION BY
09-2006 ADF
02-2007 ADF
12-2011 ADF/DOSFEA
06-2007
06-2007
06-2007
07-2007
07-2007
07-2010
09-2009
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
04-2007
01-2007
01-2007
03-2007
03-2007
03-2007
03-2007
DOSFEA/ ADF
ADF
DOSFEA/ ADF
DOSFEA/ ADF
ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
DOSFEA/ ADF
ADF
DOSFEA/ ADF

ANNEX V
SECLECTION CRITERIA FOR OUTREACH AND EXPANSION SUPPORT
1. Introduction :
While the exact nature of activities and projects that are likely to emerge out of the outreach and expansion approaches, it is useful to review, the kind of support that is likely to be applied for. Based on the present developmental structure of the Gambian financial sector, the current plans of the financial institutions, and the experiences in micro finance development from elsewhere in the region, a number of activities can be identified as innovative approaches to rural finance such as:
•
Schemes to expand the operations of village-based savings and credit activities among low-income population;
•
Schemes to develop group-based savings and credit activities into more permanent financial operators with links to the formal financial sector;
•
Projects to design, pilot and mainstream new products, appropriate for rural environments, for formal, semiformal and informal financial institutions;
•
Establishment of new rural branches for microfinance institutions;
•
Establishment of new rural sub-branches of service points for formal financial institutions;
•
Interventions to support the establishment of new rural finance institutions;
•
Projects to transform the legal/organisational status of existing financial institutions so that they could more effectively provide savings, credit and other financial services in rural areas.
2.1 The criteria will take into account the potential increase in rural outreach that could be achieved through the proposal, the institutional capacity and delivery mechanisms of the applicant institution, and the projected viability of the activity/product once an economic level of operations is achieved. The criteria would also need to deal with the appropriateness and potential impact of the proposed activity to the broad cross-section of the rural population in the area concerned and accessibility to the proposed services by the poor and women. The criteria will form part of the detailed operations manual for the Outreach and Expansion activities. More specifically, for activities eligible for support under the Facility to develop innovative financial products and their delivery mechanisms, the set criteria would require the applicants demonstrate that:
• the proposed products have a rural relevance;
• the products are innovative in their conception or geographic/social application;
• each product would have the potential to respond to the demand of a large number of rural clients either directly or indirectly;
• the delivery of the product has the potential to become profitable in the foreseeable future; and
• the applicant has the intention and capacity to carry out the project and to integrate a successfully tested product into its mainstream operations.
Special positive considerations, which could lead to a partial waiver of one of the above criteria, could be given to:
(i) products with a very strong link to the development of rural MSMEs;
(ii) products and schemes that are particular adapted and accessible to poorer members of society;
(iii) products and schemes that target particularly rural women; and
(iv) products that respond to the particular needs of HIV/AIDS affected families.
3. Evaluation Process:
3.1 For proposals to be considered for eligibility that aim to increase the outreach of the financial institutions in rural areas, at a minimum the following type of information would need to be presented:
• a comprehensive business plan for the proposed expansion, including a detailed budget and cash flow projections for the proposed investment;
• realistic calculations showing that operational sustainability can be reached in the foreseeable future in the new areas of operation;
• evidence of the rural dimension of the expansion (area coverage, estimated clientele profile etc);
• detailed reports on the investing institution’s operational and financial status (does not apply to new institutions), using standard accounting, financial and performance indicators of the industry; and
• information on potential commitments of additional financial and technical support to the expansion plan from other donor organisations.

ANNEX VI
SELECTION CRITERIA FOR PARTICIPATING FINANCIAL INTERMEDIARIES
All the participating institutions will be NBFIs registered with CBG. SDF will wholesale credit funds to qualified
NBFIs in the country for delivery to end-users. SDF will apply the following criteria in selecting the intermediaries to benefit under the scheme. The institution must:
(a) Be in compliance with CBG registration and licensing conditions;
(b) Demonstrate Operational viability;
(c) Be in compliance with external audit requirements;
(d) Have business plans and projections to expand outreach-volume of business and market; penetration to reach sustainability in the near future (3-5 years); An institutional assessment will determine the capacity constraints of the NBFIs and ensure that acceptable systems of control and financial management are in place to guarantee the integrity of the Bank’s funds which would be on-lent through them.
(e)
(f)
Have at least an annual loan recovery rate not less than 90%;
Show evidence of availability of sound governance and management structures;
(g) Have professional management team;
(h) Show the volume of current portfolio in value and number of beneficiaries;
(i) Have a Capital adequacy ratio not less than that prescribed by the CBG if at all.
(j) Charge market interest rates;
(k) Environmental sensitivity
(l) Demonstrate willingness to expand activities in rural areas and expend its outreach to women.
(m) Each of the intermediaries will be contracted to administer credit operations for an initial period of one year. These contractual arrangements will be renewed on the basis of the performance as well as submission of financial accounts of the utilisation of resources of the project micro-credit fund, by each individual intermediary at the end of each year.
(n) Set a ceiling of UA 1,200 per loan in order to avoid mission drift.

ANNEX VII
I General information
NBFIS PERFORMANCE REPORTING FRAMEWORK
1 Total Population
2 Female Population
3 GNI per Capita
II Performance Indicators Current Semester Previous Fiscal Year-end
A Outreach
4 Date
5 Number of Active Borrowers (male/ female)
6 Number of Loans Disbursed (cumulative) (M/F)
7 Value of Loans Disbursed (cumulative)
8 Gross Loan Portfolio Outstanding
9 Number of Loans Outstanding (male/ female)
12 Total Number of Savers (male/ female)
13 Total Value of Savings and Deposits
14 Average Savings Balance per Saver
B Gender Specific Outreach
17 Number of Active Women Borrowers
18 Number of Loans Disbursed to Women (cumulative)
19 Value of Loans to Disbursed to Women (cumulative)
20 Gross Loan Portfolio Outstanding to Women
21 Number of Loans Outstanding to Women
22 Number of Women Savers
23 Total Value of Women's Savings and Deposits
C Efficiency and Productivity
27 Operating Expense/GLP
28 Cost per Borrower
30 Cost per Saver
32 Total Number of Loan Officers
33 Total Number of Staff
D Financial Structure
36 Value of Total Assets
37 Value of Total Liabilities
38 Savings to Liabilities Ratio
39 Capital to Assets Ratio
E Financial Performance
40 Operational Self-Sufficiency
41 Financial Self-Sufficiency
42 Return on Assets (ROA)
43 Return on Equity (ROE)
44 Financial Revenue Ratio
F Portfolio Quality
45 Portfolio at Risk (PAR) > 30 days
46 Value of Loan Loss Provision/Reserve
47 Loan Loss Rate
48 Effective Repayment Rate

ANNEX VIII
BRIEF ANALYSIS OF SOCIAL DEVELOPMENT FUND
1. Organisation The Gambia Social Development Fund (SDF) was created in February 1998 by
The Government of The Gambia (GOTG) as an autonomous charitable umbrella-funding agency for poverty alleviation activities in the country which would work with Microfinance Institutions (MFIs), Community Based Organizations (CBOs),
Non-Governmental Organizations (NGOs) and Public Service Institutions (PSIs). SDF has a seven person Board of Directors and the SDF Executive Director is the secretary to the Board. Members of the Board include the PS of DOSFEA, the executive director of TANGO, the Director of the Women’s Bureau, and the Director of Community Development Department, among others. The Board of Directors monitors the activities of SDF and provides strategic direction to the institution. SDF currently has a staff strength of 16 persons with three professional staff at the main office in Banjul, five field officers in the Divisions, and other support staff. The SDF is structured into four departments: Finance, Administration, Micro Credit, and Community
Development. SDF’s strength lies in the strong field offices which are mandated to mobilize communities provide information and follow-up on project activities’ implementation.
2. Areas of Operation: SDF’s primary operational focus is wholesale and retail lending of microfinance with a focus on promoting rural entrepreneurship and MSMEs in The Gambia. The assistance provided includes credits, equity capital as well as training. Clients could be enterprises, co-operatives, institutions or individuals. Loans are provided to entrepreneurs in the following sectors: manufacturing, craft, agriculture, agro-processing and fisheries, and services as well as to NBFIs for further retailing to end clients. SDF has continued to finance part of its operations through management of credit funds for various
ADB projects grants and other donors (see section 3.3.5). Under the Bank’s earlier Poverty Reduction Project, SDF also coordinated the implementation of community demand driven socio-economic infrastructure development. Its training and other developmental assistance is predominantly financed through grant resources provided by donor agencies.
3. The bulk of SDF’s operations are financed using third party investment funds. These are funds provided by the donor agencies for the development of entrepreneurship and MSMEs for poverty reduction in The Gambia. In this regard, SDF has recently been given a USD 1 million revolving fund by the Government of Taiwan to be managed and on-lent to communities.
Under the various lending agreements, SDF is responsible for loan application screening, evaluation of business proposals, preparation of loan agreements, disbursements and monitoring. SDF also organizes, on behalf of the donor agencies, credit workshops, and business and financial management training for loan beneficiaries, and other networking activities. With regards to the drafting of the NSMD, SDF co-chaired the task force and was key to coordinating the consultation process.
4. SDF field officers, located in the Divisions, evaluate loan applications which involves reviewing loan application documents submitted by the prospective borrower, visit to the business site, assessment of guarantees, as well as seeking information on the personality of the borrower. The loan officer submits his/her brief to the SDF Micro Credit Department for approval. Regular monitoring of projects is undertaken by SDF during project implementation. Analysis of the distribution of the loan disbursement by Division from 1999 to 2003 shows that the greatest percentage (36.7%) of the loans went to GBA where the majority of youth entrepreneurs operate, while the smallest percentage (5.0%) went to LRD.
5. Profile of the Loan Portfolio: SDF had total outstanding loans of GMD 10.93 million (about US$ 437,396; including reinvestments) as at 31 December 2003 (more recent audit reports are not yet available). The portfolio comprises 22 wholesale loans to NBFIs, at an average loan size of GMD 365,000 (about US$ 14,500). Moreover, as of December 2003, SDF had given individual loans to 40,156 clients (72% group lending and 18% individual lending; 78% women clients); individual loan sizes vary from GMD 100 to GMD 5,000. Agricultural enterprises make up the largest group of borrowers, followed by small scale manufacturing enterprises, transport and services, vegetable gardening, and rural commerce. SDF prices its loans using the Central Bank of Gambia discount rate as the base rate, and applying a small spread (as agreed with the respective donors) to cover management costs. Effective lending rates are generally in line with the market interest rates in the country. SDF has continued to follow stringent policies concerning repayments and arrears which has resulted in an average 97% repayment rate for both individual and NBFI loans. Nevertheless, SDF follows a policy of maintaining full provision for loans in arrears for more than 180 days and 2% for bad loans.
6. SDF has a total balance sheet footing of GMD 11.74 million as at 31 December 2003. The bulk of the assets are in the loan portfolio, amounting to 93% of the total assets. The loan book is expected to grow significantly over the next three years, reaching at least GMD 10 million by end of 2008 (without the ADB project). The composition of the SDF funding base is expected to change mainly due to the grant of USD 1 million from the Government of Taiwan. This would add about GMD
25 million to the proportion of total assets increasing the amount of microfinance funds available for on-lending to about
GMD 35 million.
7. Since 2001, SDF has been able to cover its costs from its operating revenue, and record modest profits. From an operating loss of GMD 62,160 in 2001, SDF recorded an operating profit of GMD 867,181 2003. This increase in operating profit should have been greater, had it not been for the macro-economic fluctuations in the country during 2002 – 2003 which led to high inflation rates, increased deficit, which resulted in high interest rates and low lending portfolio. As a policy, all profits are reinvested into the microfinance fund to provide more resources for lending.

ANNEX IX
SDF FINANCIAL PROJECTIONS (WITH THE PROJECT)
Loan Portfolio
Loan Outstanding
Principal Reimbursement
Interest earnings
9
A. Depreciation Expense
B. SERVICES
C Communication & Internet
D. Support staff salary
E. field allowances
F. Transport & Vehicle
Maintenance
G. Office Rent
Total Expenses
Net income
Y1 - UA Y2 – UA Y3 - UA Y4 - UA Y5 - UA
600,000 750,000 1,000,000 1,050,000 1,100,000
510,167 653,333 724,833 803,000 825,000
171,500 606,833
Income statement
12,658 60,433 79,625 89,017 98,000
1,955 1,955
43,218
1,955
46,305
1,955 1,955
41,160
4,400 4,400 4,400
48,620
4,400
51,051
4,400
3,840
2,445
11,200
15,000
4,032
2,445
11,200
15,000
4,234
3,600
11,200
15,000
4,445
3,780
11,200
15,000
4,668
2,100
11,200
15,000
70,000 72,250 76,694 79,401 80,374
-57,342 -11,807 2,931 9,616
Y1 Y2 Y3 Y4
17,626
Y5
600,000 750,000 1,000,000 1,050,000 1,100,000
510,167 653,333 724,833 803,000 825,000
171,500 606,833
Income statement
Loan Portfolio
Loan Outstanding
Principal Reimbursement
Interest earnings
10
A. Depreciation Expense
B. SERVICES
C Communication & Internet
D. Support staff salary
E. field allowances
F. Transport & Vehicle
Maintenance
G. Office Rent
Total Expenses
Net income
12,658 60,433 79,625 89,017 98,000
1,955
41,160
1,955
43,218
1,955
46,305
1,955
48,620
1,955
51,051
4,400 4,400 4,400
3,840
2,445
4,032
2,445
4,234
3,600
4,400
4,445
4,400
4,668
11,200
15,000
11,200
15,000
11,200
15,000
3,780
11,200
15,000
2,100
11,200
15,000
70,000 72,250 76,694 79,401 80,374
-57,342 -11,807 2,931 9,616 17,626
9
It has been assumed that the reimbursement rate is 98%.
10
It has been assumed that the reimbursement rate is 98%.

ANNEX X
THE GAMBIA – SOCIAL DEVELOPMENT FUND
DRAFT TRUST DEED FOR FIDUCIARY FINANCIAL INSTITUTION
THIS TRUST DEED is made the ……….. day of ……………………….20…… by the SOCIAL DEVELOPMENT FUND , an incorporated
Fiduciary Financial Company (NOT FOR PROFIT, hereinafter referred to as TRUSTEE COMPANY) ESTABLISHED UNDER THE
Companies Act (Cap 95.01) with its registered office situate at GARBA JAHUMPA ROAD, BAKAU NEW TOWN, THE GAMBIA .
1) Whereas the said Trustee Company is established as on Apex Funding Institution for the Development of Micro-finance Institutions (MFIs) including VISACAs, Credit Unions, Rural Financial Bureaus, Community Financial Bureaus, Micro-Savings and Credit Institutions, Savings and Credit Companies recognised by the Central Bank of The Gambia; Non-Governmental Organisations (NGOs) registered and recognised by the Association of NGOs; Community Based Organisations (CBOs) operating within the overall recognition of the Department of
Community Development; Women Grassroots Production Organisations under the umbrella of Women’s Bureau; Self Help Groups (SHGs) that may come under the ambit of any of the aforementioned umbrella organisations; Youth Organisations under the umbrella of National
Youth Council (NYC); for the provision of credit and/or grants through any such organization or organizations with the view to:
ƒ promoting and increasing the access of the rural and urban poor, especially women, the youth and vulnerable to socioeconomic opportunities,
ƒ providing training and institutional development interventions to strengthen the capacities of grassroots institutions,
ƒ providing wholesale credit to MFIs for lending as well as assisting them in institutional development and capacity building, and
ƒ assisting local public services in building the capacities to oversee the implementation of poverty focused policies and programmes..
2) It is agreed with the partners that the said monies will be administered and managed by the Trustee Company in accordance with the provisions of this Deed.
3) Provisions relating to the contribution of any specific Trust (whether a loan, grant or gift) including but not limited to provisions stipulating a specific target beneficiary group, terms and conditions for the management of the Trust, or charges and other fees to be levied by the Trustee
Company for the administration of the Partner’s money, shall be set out in a Trust Management Contract or Loan Agreement, as the case may be, to be entered into by the Trustee Company and such Partner. (Any previous Memorandum of Understanding for fund management stands valid).
IN FURTHERANCE OF ITS PURPOSE THE TRUSTEE COMPANY SHALL:
(a) Provide wholesale lending of money (with or without collateral) at market determined interest rates to non-bank financial institutions, micro savings and credit institutions, development committees, groups and kafos (collectively as identified in section 1 and referred to as intermediaries to finance rural, semi-urban and urban communities engaged in sustainable income generating activities in agriculture, retain trade and commerce, small-scale and cottage industries, micro-economic enterprises and local socio-economic projects without access to formal bank credit) through short term, medium term and long term loans or grants.
(b) Assist in the rural credit delivery system through the provision of financial assistance for the training of staff of grassroots organisations and their beneficiaries and of eligible agencies connected with savings and credit activities.
(c) Provide assistance for self-help community infrastructure projects through the provisions of monies made available by partners for their purpose.
(d) Provide and contract out where appropriate, such ancillary services as may be necessary for the effective administration and monitoring of the funds of the Trust.
(e) Borrow or raise money from any sources including commercial institutions on such terms and on such security as may be thought fit with such consents as are required by law for the purposes of this Trust.
(f) Do all such other things as are incidental or conducive to the attainment of the objects of the Trust.
END-USERS: The area of benefit of the Fund shall be the rural, semi-urban and urban areas of The Gambia.
THE BOARD OF TRUSTEES
The Fund shall be administered by the Board of Directors of the Trustee Company (hereinafter called the Board of Trustee or Board) who shall be the administering Trustees thereof in accordance with the provisions of this Deed and the Articles of Association of the company and any other rules made pursuant to such rules. Provided that if there is a conflict between the said Articles and this Deed, this Deed shall prevail.
CONTRIBUTIONS TO THE FUND
The minimum contribution of each Partner to the Fund shall be GMD 1.5 million. Provided that the Trustees shall allow a Partner to pay such contribution by three (3) installments not less than GMD 0.5 million each. Monies contributed to the Fund shall be by way of loan, grant, subscription, contribution, management fees, donation or gift.
APPLICATION, APPORTIONMENT AND DISTRIBUTION OF INCOME
After payment of any expenses of administration, the Board shall as and when they shall think fit apply or cause to be applied the yearly income of the Fund and also the cash and investments and other property thereof if and in so far as the same may be applied as income in furthering the purposes of the Fund. Every appropriation of the benefits of the Fund shall be made by the Board at meetings thereof and not separately by any individual member or members. Provided that the Board may appoint a sub-committee consisting of not less than three members and in case of urgency, the benefits of the Fund up to an amount or value not exceeding GMD 100,000 or as may be determined by the Trustees in any one case may be applied by such sub-committee.
ACCOUNTING AND REPORTING TO TRUST PARTNERS: (1) The Board may open and maintain in the name of the Trust Company a bank or bank accounts as shall be consistent with the Bank Guidelines, provided that the account is not utilised for the operations of the company at such bank or banks as the Board shall think fit and may pay any monies held on account of the Fund to the credit of any such account or accounts and any cheques and orders for the payment of money shall be signed by two persons including the Fund Manager designated by the
Board. (2) Proper books of account shall be kept by or on behalf of the Board and entries made thereon of all receipts and payments and such accounts shall be audited annually by a qualified Chartered Account to be selected by the Company at its Annual General Meeting.
(3) At each Annual General Meeting of the Fund the Board shall present the report and accounts of the Fund for the previous year.
(4) The Board shall provide such periodic reports and accounts to each Partner as may be agreed by the Board and such Partner in the Fund
Management Contract between them.

Banking Division Manager
Wholesale MFI
Unit
Retail lending to
MSMEs Unit
ANNEX XI - SDF – FFI ORGANOGRAM
(The shaded boxes outline the departments which will provide the technical services for project implementation)
Board of Directors
Legal Adviser Internal Auditor
Social Services Division
Manager
Social Services Unit
Programme Manager
Capacity Building Unit
Programme Manager
Fund Management Team
Executive Director
EPMDP Project
Coordinator
TAs and Support Staff
Finance and Administration
Division
Accounts Unit
IT and
Multimedia Unit
Administration
Unit
6 Divisional
Offices (DFOs)
DSPRACs
Entrepreneurship Development
Division Manager
Entrepreneurship
Development Expert
Business Development and Training Unit
Marketing Unit
Outreach and Monitoring
Division
Research Unit
Documentation Unit

Category of Expenditure
A. Civil Works
B. Goods
C. Services
D. Miscellaneous
E. Operating Costs
TOTAL
ANNEX XII
PROVISIONAL LIST OF GOODS AND SERVICES
Foreign Exchange Local Cost
172,710
452,830
2,084,129
645,750
UA (million)
538,699
Total
711,409
159,986 612,816
1,997,973 4,082,102
1,506,750 2,152,500
28,686
3,384,105
412,707 441,393
4,616,115 8,000,220
ADF
711,409
Financiers
GoTG
612,816
4,075,640
2,152,500
447,856
8,000,220
894,573
894,573
-
0
0
-
Beneficiaries
40,042
38,565
-
-
-
78,608

ANNEX XIII
HIGHLIGHTS OF THE PROJECT REVIEW PROCESS
1. Project Identification: was undertaken during January 2005 by a Bank team from OCSD consisting of a Principal Health Expert, a Senior Gender Expert, and a Senior Architect. The
Identification mission report was reviewed within the Bank during March 2005. from OCSD, a consultant Microfinance Expert, and a consultant Entrepreneurship Development expert.
The preparation mission was reviewed in the Bank during August 2005.
3. Pre-appraisal mission was found necessary due to the GoTG’s request to include specific activities with regards to entrepreneurship promotion and microfinance development while reducing substantially activities related to development of vocational training institutions. This mission composition included Principal Health Expert, Principal Socio-economist, and a Senior Architect. The mission was undertaken in September 2005 and the pre-appraisal report was discussed in the Bank during
November 2005. economist, Principal Procurement Officers and Senior Microfinance Expert. The document has been reviewed by thoroughly according to the Bank Review Procedures and the grant has been negotiated with the
Government of the Gambia.