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PROGRESS IN RESTRUCTURING ROAD FUNDS TOWARDS THE SECOND GENERATION

PROGRESS IN RESTRUCTURING ROAD FUNDS TOWARDS THE SECOND GENERATION. THE CASE OF NIGER. Presented by Mme MAYAKI HADJARA SOUNA Director of the Autonomous Road Maintenance Fund (CAFER) 6 th General Meeting of ARMFA 8 – 12 October 2007 - ANTANANARIVO (MADAGASCAR). SUMMARY.

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PROGRESS IN RESTRUCTURING ROAD FUNDS TOWARDS THE SECOND GENERATION

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  1. PROGRESS IN RESTRUCTURING ROAD FUNDS TOWARDS THE SECOND GENERATION THE CASE OF NIGER Presented by MmeMAYAKI HADJARA SOUNA Director of the Autonomous Road Maintenance Fund (CAFER) 6th General Meeting of ARMFA 8 – 12 October 2007 - ANTANANARIVO (MADAGASCAR)

  2. SUMMARY I- Introduction II- Recall of 2nd Generation Road Fund principles III- The CAFER since its creation up to 2005 IV- Progress since 2005 V- The perspectives (ongoing reforms) V- Conclusion

  3. I- Introduction • The autonomous Road Maintenance Fund (CAFER) was created by Ordnance of 22 October 1999, as a Financing Public Establishment with responsibility for collecting the resources needed to finance routine maintenance works of the national road network. • From its creation till date, the CAFER has evolved in three phases which are still ongoing: • From its creation in1999 and the start of its activities in 2001 to 2005; • Progress from 2005 with the first reforms; • The perspectives with ongoing reforms which should give it the status of a true 2nd generation RF whose principles are as follows :

  4. II- RECALL OF principles OF 2ND generation RF • Give absolute priority to road maintenance • Get Road Users to pay User Charges • Really Involve the Road Users • Manage the road as a commercial service • Demand the highest level of rigour in terme of governance

  5. III- THE CAFER FROM creation TO 2005 In view of the principles cited above of 2nd Generation RF, the CAFER had its strength and weaknesses at its creation in 1999, The Strengths • At the institutional level, the first texts of creation of the institution had laid the foundation of an autonomous Road Fund with an management team recruited from the job market, and a Board (the Roads Council) made up of a majority of representatives from the private sector.

  6. III- THE CAFER FROM creation TO 2005 • The Weaknesses • At the institutional level, relations with the PWD, (Public Works Department) in charge of managing road maintenance works were poorly defined and not formalised • At the level of resources, the budget of CAFER was based on the amount voted in the state budget • The resources came from levies on fuel transiting through the national treasury, considerable delays were observed in the supply of funds • Maintenance works were programmed and executed based on amounts inscribed in the budget and not on the bases of resources effectively put at the disposal of the CAFER by the Treasury.

  7. III- THE CAFER FROM creation TO 2005 The consequences • In 2005, the financial situation of the establishment was characterised by : • A permanent strain of the accounts • A huge debt because of unpaid bills • A rupture of confidence withpartners who are SME and even the banking system

  8. IV- progrESs SINCE 2005 The observed difficulties made the State to start the first reforms in 2005. These were aimed at making CAFER a 2nd generation RF. These first reforms certainly brought about true progress in the following areas. • Institutional • Financing • Good governance • Involving Road Users

  9. IV- INSTITUTIONAL progrESs SINCE 2005 • The notable institutional improvements made are • Ordnance n° 99-55 of 22 October 1999 was modified and replaced by law n°2005-22 of 28 June 2005 ; • Three Decrees of application were adopted bearing respectively on approval of the statutes, organisation and the financial regime of CAFER; an inter-ministerial order fixing the modalities of collecting and the paying of fuel levy to the CAFER; • Statute : Public Financing Establishment ( EPF) ; • In conformity with the law, CAFER applies the rules of public accounting;

  10. IV- INSTITUTIONAL progrESs SINCE 2005 (Cont’d) • Object : financing of the national road network. CAFER intervenes also in support of local authorities for the maintenance of rural roads up to 10%, and urban roads up to 10% of its annual road maintenance programme; it equally finances overheads of the DGTP (PWD) to the tune of 5 % of the annual cost of works committed; • Road Board or Roads Council is made up of 12 members with 5 representatives of the State, 4 representing economic operators and 3 representing the Road Users; in other word 5 from the public sector and 7 from the private sector ;

  11. IV- progrESs SINCE 2005 IN THE AREA OF financing • In the area of financing, the reforms of 2005 have contributed to the sustainability and the diversification of resources of CAFER • Fuel levy no longer transits through the Treasury public. It is collected directly by customs cordon and deposited by the SONIDEP into the account of CAFER opened at the BCEAO (Central Bank of West Africa) • The sources of funds have been diversified, mainly: • Fuel levy up to (30 FCFA/litre) : 74% increase • Road Tolls on the national road network and the overloading penalties increased by 22% • Contribution ( GERTA) : 4% • Sales of tender documents • etc.…

  12. IV- progrESs SINCE 2005 IN THE AREA OF GOOD governance • The reforms since 2005 laid a true foundation for good governance. Thus, it can be noted that at the level of management: • Under the authority of the Road Board (CDR) with a majority private sector representation, CAFER is managed a team of 8 persons. A cell of operators of Toll and Weigh bridges (CEPR) created in 2005 with a special status and adjoined to the management, is responsible for the collection of tolls and overloading penalties. It is made up of 356 agents. • The President of the Road Board is elected. He is from the private sector. • In keeping with the dispositions of the new law of 2005, the composition and the level of representation of members of the Board was reviewed to take into account all the actors of the sectors on the one hand, and to raise the quality of members, on the other hand.

  13. IV- progrESs SINCE 2005 IN THE AREA OF GOOD governance (cont’d) • The director is recruited by public tender under the responsibility of the Road Board. The director recruits the rest of the personnel; • Annual technical and financial audits ordered by the Board are financed by the budget of CAFER;

  14. IV- progrESs SINCE 2005 IN THE AREA OF GOOD governance (end) • A revised and updated manual of procedures should help to clearly define the activities of different actors intervening in the programming and the financing of road maintenance works and the management of funds. • The building of capacities of members of the Board will allow them to better carry out their duties. • A training programme for personnel of CAFER and that of the PWD as well as the members of the Board is the process of execution with the support of partners.

  15. IV- progrESs SINCE 2005 IN INVOLVING ROAD USERS • A great deal of effort has been put into this are especially: • Regular Publication of a quarterly magazine giving an account of the activities of the institution and diffused on a large scale; • Elaboration of a three yearly plan of communication aimed at sensitising the road users on the preservation of the road heritage and the gathering of new sources of financing.

  16. IV- progress since 2005 (the constraints) • Despite the progress registered in 2005 towards putting in place a veritable 2nd generation RF, more effort is still needed in the light of constraints which subsists among which: • The adequacies noted in the texts, which bring about poor functioning especially in the relations between CAFER and the PWD. • The insufficiency of collected resources (to the tune of 4,6 milliards at best in 2007), corresponding at least at 50% of the maintenance of network needs under the PWD (about 10.100 km), which cost 11 milliards FCFA.

  17. V- THE perspectives (reforms in progress) • Make CAFER a veritable second generation RF with sufficient resources and sustainable, with autonomous management and resolutely engaged in good governance. The State of Niger with the support of technical and financial partners especially European Union and the World Bank, has decided to continue and deepen the reforms started in 2005. In this light, the actions in progress aim at: • At the institutional level to: • (i) clearly define and in a formal manner the relations between the PWD and CAFER, including the responsibilities of the two parties; • (ii) harmonise the regulatory texts and adopt amendments of the statutes of CAFER leading to putting in place of a veritable second generation road maintenance fund;

  18. V- THE perspectives (reforms in progress) (cont’d) • On financing, to sensibly increase the resources of CAFER by: • Increasing the rate of Fuel Levy to take it from de 30 FCFA per litre to 40 FCFA per litre from 2008 • The taking over of the responsibility for the cost of maintenance and damages caused by user of the road. • Putting into concession (to the private sector) of road tolls, directly managed by CAFER since 2005. • The carrying out of studies to seek new sources of financing for example a road user charge for mining companies with the promising mining industry in Niger.

  19. V- the perspectives (the reforms in progress) end • The putting in place of these new reforms is or will be accompanied through diverse support to the principal actors of the sub sector of road maintenance European Union (9th and 10th FED) and the World Bank within the framework of a Transport Sector Programme (PST) envisaged for 2008. • This support will enable CAFER to be endowed with sufficient institutional and financial means to play its veritable role of a 2nd Generation RF.

  20. CONCLUSION • Since its creation, CAFER has evolved at its rhythm towards a 2nd generation RF through reforms initiated and carried out with the support of technical and financial partners of Niger. • The perspectives for achieving this change are promising; however, we are conscious that no matter the level of reforms engaged, the objective sought after of the putting in place of a 2nd generation RF can not be attained without a sincereadhesion of all the partners (State, PWD, Road Users, Funding agencies) and proper insight on the part of management and of the Road Council in charge putting the reforms in place.

  21. THANKS FOR YOUR KIND ATTENTION

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