The Supplementary Wamz Payment System Development Project the Gambia,Guinea Sierra Leone and Liberia


  • Reference: P-Z1-HZ0-002
  • Approval date: 09/11/2010
  • Start date: 02/02/2011
  • Appraisal Date: 16/09/2010
  • Status: OngoingOnGo
  • Location: The Gambia, Guinea, SierraLeone Liberia


4.2.1 The sectoral and specific objectives of the reappraised project have not changed (see Document: ADF/BD/WP/2008/48, dated 6 June 2008); these are to achieve full economic and monetary union of WAMZ countries, to foster a more conducive environment for private sector-led growth, and to improve the basic infrastructure of the financial sector in WAMZ through the upgrade of the payment systems. The sector indicators have however changed. The original design had only one impact indicator, that is to increase the share of intra trade to total trade in the WAMZ region. An additional two indicators have been incorporated in the reappraised project. These are:

(i) deepening financial sector integration, as measured by broad money supply (M2) as a percentage of gross domestic product (GDP); and

(ii) increasing private sector investment. It is important to monitor progress on these additional indicators, because the objectives of deepening regional financial integration, and enhancing environment for private sector development, are strategic priorities of the WAMZ member states, as well as of the Bank. The project continue to improve the basic infrastructure of the financial sector in The Gambia, Guinea, Sierra Leone, and Liberia. Except for incorporating Liberia in the project design, there are no other changes in the objectives, descriptions, and key outputs (see the project's Result-based Logical Framework). Further, the project's expected outcomes, remain the same: to increase the participation of the private sector businesses, and the citizens of The Gambia, Guinea, Sierra Leone, and Liberia in the formal financial sector, and to enhance the efficiency of funds transfers across the four WAMZ member states (see Box 1). The project beneficiaries include: the entire population of the four WAMZ countries ? of which a majority are women ? (through increased participation in the formal financial sector); and commercial banks, and private sector businesses - especially small and medium enterprises ?, (through more efficient transfers of funds). Finally, the project will continue to be organized in five components: (A) Real Time Gross Settlement (RTGS); (B) Retail Payments Automation (RPA); (C) Central Banking Application (CBA); (D) Infrastructure


4.1.1 The WAMZ economy, with a combined GDP of US$390.6 billion (PPP), accounts for 73.3 percent and 19.1 percent, of the total ECOWAS' and Africa's GDP, respectively. The zone covers a total land area of 1.60 million square kilometers and a total combined population of 194.7 million people, representing 77.3 percent and 20.6 percent of the population of ECOWAS and Africa, respectively. Nigeria is the dominant economy, with over 76.5 percent of the population, and 85.6 percent of the zone's GDP. Ghana follows with 9.2 percent of the zone's GDP, while Liberia and The Gambia are the two smallest economies constituting 0.4 and 0.6 percent of the GDP, respectively. While there has been major intra-industry trade in the WAMZ countries, agricultural products remained the major exports of The Gambia, Ghana and Sierra Leone, followed by manufacturing. Crude oil accounts for over 97.0 per cent of Nigeria's exports. In Guinea, ores and metals form the greatest share of merchandise exports, while in Liberia rubber (86.1), gold (5.1) and diamonds (4.1) constitute main exports.

4.1.2 Since October 2002, the Bank in collaboration with the World Bank, has been promoting the growth and economic integration of the West African Economic and Monetary Union (UEMOA) by upgrading basic payments system infrastructure in UEMOA member countries: Côte d'Ivoire, Sénégal, Mali, Niger, Burkina Faso, Togo, and Guinea Bissau. Both the UEMOA project and the ongoing WAMZ project are important pillars for establishing and installing an appropriate set of regional payment mechanisms to satisfy the evolving needs of all market sectors in the Economic Community of West African States (ECOWAS). However, within the WAMZ region, the Bank through the ongoing project remains the lead donor in the financial sector (see Annex IV - The West African Monetary Zone (WAMZ) - Strategic Partners). Nevertheless, capacity-building efforts to restore basic banking and payment system functions in post-conflict countries such as Liberia and Sierra Leone, is an agenda that is strongly supported by the International Monetary Fund (IMF) through its technical assistance program.

4.1.3 The Authority of the Heads of States and Governments of the WAMZ in July 2009 announced that the commencement of the monetary union in the WAMZ will be on or before January 2015. Furthermore, the 2010-2015 Strategic Plan of WAMI (see extract of the Strategic Plan in Technical Annex I) underscores the crucial role that payments system will play in the development of the WAMZ economy. As the channel through which financial resources flow from one segment of the economy to the other, it represents one of the major foundations of the modern market economy. The ongoing project will therefore continue to contribute to regional financial integration efforts, and to support WAMI's strategic objectives by creating an enabling environment for the financial system stability through the development of payments system infrastructure and telecommunication networks.

4.1.4 At the time the ongoing project was appraised, Liberia did not participate as the country was still pre-occupied with the challenges of post-conflict rehabilitation. Liberia acceded into the WAMZ program on 16 February 2010, and soon thereafter both WAMI and the Government of Liberia made a request to the Bank to extend the ongoing project to country. Liberia's membership of the WAMZ requires transformation of its payments system to the same level as those being implemented under the ongoing project. The Bank/World Bank's Joint Assistance Strategy for Liberia (2008-2011) and Eligibility to the Fragile States Facility asserts that the country would benefit from regional operations consistent with the Bank Group's regional Integration Strategy. Furthermore, the Bank, through its Medium-Term Strategy (2008-2012), has committed itself to investing in infrastructure and governance as a means of contributing directly to regional integration, and fragile states assistance.

4.1.5 Key lessons, drawn from the implementation of the ongoing project and the Bank/World Bank's implementation of the BCEAO Regional Payment Systems Project have informed the design of this operation. The implementation of the BCEAO project, show that there is need for strong leadership, and continuity of staff dedicated to the project. This is an area where WAMI and the countries' Central Banks continue to demonstrate their commitment to the project. In the area of monitoring and evaluation (M&E), a key lesson emerging is the unavailability of statistics to enable adequate measurement of achievement of developmental indicators. However, this is an area where WAMI has put adequate mechanisms to measure evolution for quantitative indicators, as evidenced by the high quality quarterly reports being received by the Bank. Delays in procurement were experienced because of lack of knowledge of the Bank/World Bank's procurement process. This issue that has also emerged from the ongoing project did adversely impact the length of procurement process for the initial contracts. To reap maximum efficiency gains, it is anticipated that all contracts for goods and services under the ongoing project, except those for infrastructural upgrade, will be renegotiated to cover the extension of the project to Liberia. Another lesson learned from both the implementation of the ongoing project and the BCEAO project is the need for consultations with a wide range of stakeholders on complexity issues that will emerge regarding technical aspects of the new systems. Steering Committees at the country level were sent up for the ongoing project and that were not part of the original design. This practice will be extended to Liberia.

4.1.6 The additional grant amounting to UA 5 million is intended to cover ADF's contribution to the additional costs arising from the planned extension of the project to Liberia. The project remains economically and financially sustainable in line with the initial design (see page 15 of the Document: ADF/BD/WP/2008/48, dated 6 June 2008). There is continued commitment and ownership of the new payment systems by the Central Banks and the commercial banks in the four countries. As the project would introduce new ways of doing business, its design incorporates extensive user training, and change management techniques, that are expected to enhance acceptability. Further, the Central Banks in the four countries aims to levy user charges on commercial banks, to ensure that operational costs of systems are covered after implementation.

4.1.7 As detailed in the document: ADF/BD/WP/2008/48, dated 6 June 2008 (pages 2 and 3), the project concept and rationale, and its strategic context of removing the constraints on regional integration, and governance, have not changed. Several constraints still persist including, underdeveloped financial infrastructure, inefficiency of financial intermediation, weak liquidity management practices, and shallow financial sectors. Therefore, the Bank's involvement will catalyze the process of WAMZ coming into being and the eventual introduction of a regional single currency through the provision of resources to finance a harmonized payments system. The recent global financial crisis showed that central banks need to continue to sustain their efforts to improve governance over payment and settlement systems; a primary goal of the ongoing project (see Document: ADF/BD/WP/2008/48, dated 6 June 2008, page 16). As such, by extending the project to Liberia, the country will enhance its financial system stability through the implementation of the WAMZ harmonized payments system law, and by effecting high value funds transfers through the RTGS systems to minimize the risks of fraud associated with check payments. Further, by efficiently integrating the settlements of funds and securities, the WAMZ payment and settlement systems will play an important infrastructure role that would contribute to the reliability and stability of the financial system throughout the WAMZ region. Crisis management will be strengthened through the development of backup-systems and business continuity plans. Importantly, the project would enhance the integrity, and efficiency of the financial system, including its auditability by making visible the integrity-related controls, and by enhancing the finality of financial transactions settlements. These actions would then reduce a wide range of risks incurred in financial transactions.

4.1.8 The Bank held extensive consultation with Liberia's stakeholders who will be impacted by the project, within the Central Bank of Liberia, and at all commercial banks. Commercial banks were enthusiastic of the project. They expressed their commitment and readiness to implement the project's activities. They informed the Bank that the project would transform Liberia's predominantly, cash-based economy, to one where the general public's confidence in the banking system is enhanced, and use of paper instruments as a medium of exchange increases. The Central Bank reiterated that it would bring banking services to the unbanked, including an estimated 400,000 salary earners that are outside the banking system . As a result, the Bank will improve the Liberia's general economic and financial system efficiency. From the stakeholder consultations, it was evident that project is of broad public interest and benefit.


5.1 The project sustainability, risks, and benefits (including environmental impact) remain the same as stated in the original design (see Document: ADF/BD/WP/2008/48, dated 6 June 2008), with the exception of inclusion of Liberia's project stakeholders as beneficiaries. Inclusion of Liberia implies that project implementation will be extended by 12 months to December 2012. However this is not expected to delay the start of realization of project benefits in The Gambia, Guinea and Sierra Leone, where implementation had commence by end-2008. Indeed, the implementation period for the activities under the supplementary grant is shorter than for the ongoing activities because the implementation teams in WAMI, and Central Banks have learned from the experience and process of the implementation of the ongoing project

Key contacts

IJEH Samuel Chukwuka - OSGE2


Finance source Amount
ADFUAC 5,000,000
GovernmentUAC 760,000
Co-financierUAC 935,000
DeltaUAC 255,000
TotalUAC 6,950,000

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