<table><tr><th>From:</th><th>mwalkermd@aol.com</th></tr><tr><td>Sent:</td><td>Monday, June 13, 2011 6:25 AM</td></tr><tr><td>To:</td><td>jeevacation@gmail.com</td></tr><tr><td>Subject:</td><td>Re:</td></tr></table>

The city has not issued bonds related to anything that touches the po=r. Ocean rights, fishing, roads, airport etc. I can ask our 4 reviewing teams to look again but from the list bill=gave us, we see nothing pro-poor.

The big thing he wants is something around sanitation since it is ver= difficult to actualize otherwise since the beneficiaries largely can't=pay for it.

In some cities I ma able to use returns from the carbon finance with=solid waste to cross-subsidize the sanitation costs but i don't really wa=t to start up carbon stuff in senegal. too hard.

We have a team traveling with me and the mayor is really knowledgeabl= too. The city financial team knows their stuff.

From: jeffrey epstein <jeevacation@gmail.com>
To: mwalkermd@aol.com <mwalkermd@aol.com>
Sent: Sun, Jun 12, 201110:43 pm
Subject: Re:

The country issued 500 million dollars bonds last year. You need to=review

Sent from my iPad

On Jun 13, 2011, at 1:19 AM, mwalkerm=@aol.com <mailto:mwalkermd@aol.com> wrote:

This is an email for you, please DO NOT FORWARD= Sorry about formatting, AOL not very good at it. The son of the pres has=a master's in "financial engineering" and would likely find this interestrng given that he could lead W Africa. Small dollars compared to the size=of the need, but certainly a step forward. Your friend does not like the=mayor of Dakar so this could be tough if we only limited it to Dakar. My=plan would be to see how ECOWAS tolerates this and then push deeper into=Senegal, maybe Mali. Pikine and Saint Louis are other Senegal cities that=might be do-able. And please don't make some rude comment about my skill=set. This is my job and I am doing my best.

Ratio=ale for Investing in Municipal Finance

In the developing world, most cities=finance major infrastructure investments in two principal ways. They rely=on transfers or on direct expenditures from central governments, or they=allocate resources incrementally from their own limited budgets. As devel=ping cities look anew at the plight of the urban poor, and as much needed=investments in overall slum improvements, housing, transportation, potabl= water provision, sanitation infrastructure, and urban food security l>=80. to name but a few of the topics of interest to the foundation and=to our partner cities — neither option holds much promise of maki=g a dent in long term urban poverty alleviation. Central governments, par=icularly in Sub-Saharan Africa, often pay only lip service to decentraliz=tion and de-concentration of

services—or at the very least, these=processes have yet to mature into reliable, accountable mechanisms for eq=itable transfer of investment funds to local governments. Scarce financia= resources, political differences between national and local leaders, or=simply bureaucratic inefficiencies have been the chief culprits in explai=ing why promised devolved funds often fail to materialize at the local le=el. Left to their own devices, cities have few alternatives but to financ= infrastructure or long term capital investments through resources genera=ed from their annual budgets—or to postpone or, most likely, igno=e the much needed investments.

Investments that directly benefit the=urban poor suffer disproportionately from this state of affairs. Whereas=governments may occasionally step in to fund major road or energy project= that can benefit the urban population at large, they rarely if ever focu= on initiatives that specifically target the poor or the informal settlem=nts where the poor usually reside.

In select cases, the foundation has=an opportunity to use the lure of increased access to capital as an incen=ive for cities to re-direct their attention on poor urban families. Speci=ically, in cities with potential access to capital markets and where fisc=l conditions sound are in place, debt financing of long-term projects can=be a useful substitute for annual budget earmarks—as is the case=for most cities in the developed world.

Cities working under this theme would recei=e support from the foundation to enable themselves to access the debt mar=et, in exchange for a guaranteed commitment that the majority of funds ra=sed through the first round of cro=s-subsidizing financing would ongoing be dedicated foundation to projects addressing=issues (i.e., sanitation). of urban Support poverty wou=d — in some fall into cases two even broad targeted categories. towards The first would be support to the city=to solidify finances, obtain a credit rating, and issue a bond on the com=ercial market(1). The second would be to support participatory exercises=with both city officials and organizations of the urban poor to plan the=use of the anticipated resources, and funding for small scale, jointly-im=lemented pilots to test and refine the models/concepts selected so that=when the financing comes through, they are ready for investment. While th=s theme involves significant external risks — including national-=evel regulatory approval, the evolution of global debt markets, etc. etc.=— it also offers perhaps the greatest opportunity for leverage,=sustainability and replicability across developing world cities with a sm=ll investment on our part and the majority of the risk borne through capi=al markets.

Illustrative Grant under Preparation: Munici=al Finance in Dakar

The proposed intervention would help=Dakar become the first West=African city to tap into capital markets to finance long-term investments=benefitting the urban poor.

The Dakar Municipal Finance Program=would be implemented over a period of five years. It would cost five mill=on US Dollars and unlock an expected $35 million by 2015. This would be=achieved by enabling Dakar to issue its first municipal bonds and raise=funds in city-backed debt financing, serving as a model for other West Af=ican cities. The condition for providing the support would be that a majo=ity of the proceeds generated from the first bond issue would be jointly=allocated with the poor to projects that benefit them directly. </=ONT>

Dakar, with almost four million inhabitants=in its metropolitan area, is one of the largest and most economically vib=ant cities in Sub-Saharan African. As the capital of Senegal, one of the=most democratically stable and financially dynamic countries of the conti=ent and as the de-facto economic center of the French-speaking CFA econom=c zone(?) <http:/=mail.aol.com/33790-111/aol-1/en-us/suite.aspx#_ftn2> ,=the city has emerged as an ideal candidate for pioneering municipal acces= to capital finance in the West African region. Indeed, as a member of th= West African CFA community, Dakar's potentially trail-blazing ro=e in viable municipal financing offers the promise of full-scale replicat=on in a dozen cities across the region and beyond its frontier. The munic=pality has a track-record in pro-poor policy implementation (notably in=the areas of education and health(3)) as well as ambitious urban revival plans for=the city, which would benefit the poor, estimated to constitute 80% of Da=ar's population. The mayor has also devoted considerable efforts=to putting his financial house in order (with support from France) and to=good governance.[4] <http://mail.aol.com/33=90-111/aol-1/en-us/suite.aspxtftn5> According to an the AFD city (=gence has demonstrated "the Francaise abi=ity de of political Developpement) Dakar's commit=ent mayor to representative,[5] restructure to the poor. (the For city) example, financially formal is spe=tacular." consultative Furthermore, processes[6]<=SUP> <http://mail.aol.com/33790-1=1/aol-1/en-us/suite.aspx#_ftn6> have been set=up and appear to be functioning, allowing stakeholders to voice their opi=ions. The project would build upon this pre-existing pro-poor orientation=by creating a requirement, a structure, and enhanced capacity for the urb=n poor to play and active role in the planning, implementation, and monit=ring of the investments funded by the bond.

The program's principal munic=pal government partner would be the Municipality of Dakar, which is heade= by a pro-poor mayor who improved the financial position of the city. The=civil society partner will consist of a network of a

dozen neighborhood=and city level committees representing the urban poor. A Program Manageme=t Unit (PMU) long-term would viability. be set up Oth=r within partners, the Municipality including the to help Institut guide Africain key pr=gram de Gestion activities Urbaine, and wi=l to ensure provide responsiveness additional support. and

## A. Program Desc=iption, Objectives and Results

The Dakar Urban Municipal Finance Pro=ram would be implemented over a period of five years and would be expecte= to cost approximately five million US Dollars. The Program would include=four main phases:

• &nbs=; Involving the Poor in the Program.=/B> This phase of the program would ensure that the voice of the poor is=heard by the city from the day the program begins and beyond the life of=the program. It would also reduce the risk of municipal bonds proceeds go=ng to projects that are not relevant to the poor. Involving the poor in=the program could be done by: a) holding meetings with civil society at=the city hall, and in neighborhoods to announce and explain the program,=b) involving the poor in quarterly decisions on how expected resources wo=ld be used, c) creating a formal mechanism (for example through an SDI af=iliate), to enable the poor to monitor the use of funds and d) implementi=g small pro-poor pilot projects.

• &nbs=; Helping Dakar Issue Municipal Bond=. This phase of the Program would focus on helping the Municipality=continue to get its "house in order" from a financial per=pective, and would result in the issuance of municipal bonds. Over a peri=d of up to two years, we would work with municipal authorities to ensure=that Dakar can fulfill all fiscal, financial and regulatory conditions re=uired to issue long-term debt in the ECOWAS region's capital mark=ts. This is notably expected to include: (a) helping the city clean up an= better document its tax base in order to maximize future fiscal revenues= (b) obtaining a favorable credit rating, by building on the city.=99s recent work with international partners and financers (notably the Fr=nch Agency for International Development or Agence Francaise de Developpement); (c) working with=the city and its national government counterparts to ensure that the gove=nment will have what it needs to provide its non-objection at the require= time; and (d) preparing all appropriate documentation necessary to go to=market, including an explanation of program objectives, repayment cash fl=ws, and guarantee or credit enhancement mechanisms.

long-term financing • &nbs=; for pro-poor Help Obtain inves=ments Investments (sanitation, for Future=Financing. etc.) that cannot This be phase=of financed the through program the Municipality=E2,40s consists in raising recurrent budget. Through this grant, we expect the city to rai=e approximately $35 million by 2015 in city-backed debt financing. The ty=es of programs that could be piloted in the first few years of the projec= to prepare them for greater levels of financing when the bond is success=ully issued include (1) upgrading of the DKL neighborhood(7J <http://mail.aol.com/33=90-111/aol-lien-usisuite.aspx#_ftn7> (including=investments in water and sanitation infrastructure); (2) improving food=security in Dakar and Pikine, by scaling up urban agriculture initiatives=and capitalizing a municipal fund in support of urban micro-gardens; (3)=investing in revamping outdated city-wide solid waste in Grand Yoff and=Parcelles Assainies (primary collection) management infrastructure; and=(4) other capital investments in informal or poor neighborhoods (such as=street paving or potable water provision) that would increase access to=basic services and help create jobs. &n=sp;

• &nbs=; Scale up Investments Once Financin= Obtained. This phase=would begin only after financing has been obtained, in the third or fourt= year. Our partners would now ensure that municipal investments are pro-p=or and aligned with stated objectives.

## B. Monitoring=and Evaluation (M&E) Indicators

The basic indicators that project par=ners would track, with guidance from DIG, could include some of the follo=ing:

	= Diagnosti= of city's debt capacity concluded;

• &nbs=; Amount=of financing raised through municipal bonds on capital markets or private=debt placement;

	&nbs=; Increase=in revenues for the urban poor;

• &nbs=; Number=of people with improved neighborhoods;

- Increase=in number of poor urban families with access to water;

	&nbs=; Increase=in number of poor urban families with access to sanitation services;

• = Increase=in number of streets serviced (primary waste collection);</=iv>

## B. Monitoring=and Evaluation (M&E) Indicators (cont.)

## C. Risks/Potent=al Challenges

The risks and potential challenges DI= envisions are mostly political and inherent to any municipal work. The=Mayor of Dakar's term expires in three years. He and the presiden= are from different political parties, which can be a source of tension.=How capital markets in the region would react to an innovative municipal=bond issuance is unknown. =evertheless, based on our initial assessment in Dakar (March 2011), these=risks are low, can be managed and are out-weighed by enormous potential=benefits for the city's poor population.

D. Opportunitie= for Scale and Replication

tra=l-blazing effect The opportunities at a national for level scale (for and cities repli=ation like Saint are Louis compelling. for exa=ple), Dakar's at a regional example level would (for have other an ECOWAS important countries sharing the stock=market) and even at a Sub-Saharan level.

[6]<SPAN> <http://mail.ao=.com/33790-111/aol-1/en-us/suite.aspx#_ftnref6> These mechanisms include a consulta=ion committee and neighborhood level committees (called the Conseil Consultatif, the Comité Consultatif and the Conseil des Quartiers.)

(7)<=SPAN> <http://mail.a=l.com/33790-111/aol-1/en-us/suite.aspxtftnref7> This 10-15 year project is an urban=renewal of Dakar to transform the city into a hub for the private sector.=lt focuses on the Grand Yoff area, which has high levels of poverty.

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